Monday, March 28, 2016

TENAC Supports Office of the Tenant Advocate (Guest post from Jim McGrath, Chairman)

Jim McGrath has given many good years to the fight for housing justice in DC.  He has been especially militant in his advocacy for lower income renters.  Below his testimony I will also add information about other factors that reduce lower cost rental availability especially which could be provided by individual property owners.  These factors include the arduous procedure for acquiring a Basic Business License needed for anyone wishing to rent out one or two rooms, raising property assessments 10% and more throughout a neighborhood based on one or two sales of highly renovated properties, and laws that allow actual criminals to scam the rental market and frustrate small owners to opt out of the rental market.  

Testimony of Jim McGrath, Chairman
D.C. Tenants’ Advocacy Coalition (TENAC)
OTA Oversight Hearings
Committee on Business, Consumer and Regulatory Affairs
Council of the District of Columbia
February 29, 2016

     For the first time since the creation of the Office of Tenant Advocate (OTA) as an independent agency in the District of Columbia, due to continued convalescence from spinal surgery, I am unable to appear in person to offer public testimony on behalf of OTA.  Heretofore, I have attended and testified at every oversight and budget hearing on behalf of OTA.  So “While the spirit is willing, but the flesh is weak,” and while I cannot be there this morning, I am pleased to submit this statement for the record, and thank you for receiving it.
     Thank you Chairman Orange for the opportunity to be heard.  I will be brief.  TENAC has had a long, positive and productive relationship with OTA since its founding.  We strongly favored their creation; we have consistently commended their operations; and we believe they are one of the great D.C. Agency success stories.  The reasons for that are simple.  They are due to the outstanding leadership of D.C. Tenant Advocate, Johanna Shreve and her outstanding staff, including General Counsel, Steve Taylor, Legislative Director, Joel Cohn, and their colleagues. 
     Tenants, of course, comprise the great majority of the District’s population – an estimated two-thirds, in fact.  They need and deserve, therefore, special attention.  As the sole D.C. government agency established to protect and advocate for tenants’ rights, the Office of Tenant Advocate is vital to the welfare of this city.
     Never has the need for tenant advocacy been more crucial.  Never has the importance of rent control, affordable housing, and tenants’ rights been more important or under greater threat.  Everywhere one hears the cry for “affordable housing,” but there is no affordable housing left in this city.  A floodtide of affluence flowing into it has seen to that.  The mayor’s commendable allocation of $100 million to the Housing Trust Fund is welcome, but is a drop in the bucket insofar as addressing this problem. 
     Tenants are especially hard hit, with escalating rents outstripping even middle-class incomes, let alone those on low-income, fixed-income, or the poor.  We  have a model rent control law on the books, but is doing little to alleviate the plight of those seeking affordable housing, or those struggling to retain it.  $1,200-$1,500 per month for a tinker-toy efficiency apartment is not rent control; $1,800-$2,500 for a one-bedroom apartment is not rent control; the sky’s the limit for anything over one-bedroom apartments is not rent control.  The solution to affordable housing in this city is effective rent control; you can’t have one without the other. 
     OTA and TENAC have long worked together to resolve these problems.  OTA does yeoman work in that regard, but we believe needs significantly larger staffing.  Among other things, the rent control law needs to be amended and strengthened to include new rental buildings, and repeal of the absurd 2% add-on to the annual rent increase formula.  Pro-Bono counsel needs to be provided to tenants facing eviction, 95% of whom go into Landlord-Tenant Court without any legal assistance.  Finally, Department of Labor standards advising a limitation of no more than 30% of income allocated for rent payment needs to have some enforcement attached to it, instead of mere wishful thinking.
     Those in our city who favor rampant gentrification, market-rate housing, the condominium conversion craze, and the wish to convert the whole city into an instant Georgetown need to be reminded:  Housing is not a commodity. We are not talking about oil futures, gold-bullion, or pork bellies; we are talking about the roof over people’s heads, the basic means of survival for residents in this city and elsewhere across the nation.
     OTA works hard to achieve these goals, so does TENAC.  We applaud Johanna Shreve’s efforts, and wish her and her excellent staff Godspeed.

P.O.  BOX 7237    WASHINGTON ,  DC   20044   (202) 288-1921

The Basic Business License:

     This license which anyone grossing more than $4000 should have [this is a figure I saw several years ago], was foisted on us in early 2000s and has made it much harder for anyone wishing to start a small business including renting out rooms.  This property owner describes how difficult it can be for a person trying to rent out one or two rooms.  He points out "The World Bank has a fairly crude measure of how easy it is to start a business in different countries and ranks the US 13th.  Canada ranked third with just one "procedure"--a paperwork filing, basically--needed to launch a business.  In America, it takes more like six."  He says DC has a score of F, as do NY and other large cities.  [Is this on purpose to speed up gentrification and drive lower income people out?]
      An elderly acquaintance with hip, knee and shoulder joint replacement surgeries wanted to hire a company to handle rental of her apartment while she was out of town.  They said she needed the BBL and they would be happy to do the work for $300 plus cost of BBL.  Having a low SS payment she tried to do it herself.  Spent many painful hours waiting and shuttling back and forth between DCRA and OTR, then had to drive all the way to Anacostia to finish the process.  What senseless cruelty!!

      Here the issue of renting space out within one's own home is discussed.  Apparently almost no one is getting a BBL for this but if the rental is income, a DC tax form D-30 should be filed if gross income is above $12,000.  This figure has not been upgraded for inflation since 1986.  I spent years trying to find out how to file the D-30.  Finally in the 1990s I spoke with a tax lawyer at a tax service who said that people with so little income usually didn't bother to file the D-30 and he didn't know how to do it.  Recently the mandatory minimum tax of $100 was raised to $250.  This must be paid even if there is no profit, but the $12,000 was left unchanged.
     My solution to the BBL is to not require it for anyone grossing less than $250,000. Require a half day training in doing the D-30 with a modest payment like $35.  Requiring the BBL after the first year the business has grossed at least $250,000 would discourage entrepreneurs less.
     In addition, simplify the D-30 for those with only IRS Schedule C and Schedule E income and where appropriate allow those Schedules to be submitted to meet some requirements for income only earned in DC.

Inflated Tax Assessments for Neighborhoods:

     I'll never forget the year my  property assessment was raised 79%.  When I examined assessment increases for neighboring properties I discovered they had all been raised 79%. Then I checked properties further down the block--same increase.  The whole block had been raised 79%.  Fortunately I won my tax appeal.  Unfortunately, I was not politically active at that time, so did not organize my neighbors in this fight.  Last year I saw tax increase of 10% to 14% in homes with no improvements based solely on sales of high end renovations with granite counters and stainless appliances nearby.  With regular annual increases at the level the tax rate will double in about 7 years, even with NO improvements.
     Without improvements, taxes should only increase with inflation.  Increases based on changing neighborhood should only occur when properties are sold to people who know what they will be paying, and consequently what their tax rate will be.  How can property owners be expected to keep their rental rates  low when their taxes are increased so unfairly.

Eviction Processes Unfair to Owners:

     In 2014 I became acquainted with 2 cases of owners who were trying to evict tenants for non payment of rent.  Non payments had begun in August.  One owner discovered that the deadbeat tenant had cheated the previous owner out of 4 months rent, which the old apartment's manager had not known when the previous rental history was checked by the new landlord.  Since the new rental was considerably higher it was an obvious intent to defraud.  Then a more detailed internet check discovered the tenant was a wanted criminal.
     In Landlord & Tenant Court, the fraudster lied to the judge who then said it would have to go to trial and the tenant should deposit the monthly rents with the court.  This never happened and the next month they did not show for the trial.  With all the times and documents required for eviction, by this time it was December.  Since eviction could not take place unless there were 24 hours above freezing with no precipitation, eviction did not occur until mid March.  The eviction crew charged $300.  Thus, in addition to court costs, the owner lost over 7 months rent and now plans to get out of the rental business.  The deadbeat no doubt is off defrauding someone else.
     The 7 1/2 months it took to evict could have been shortened by about 2 months if the naive owner had started eviction proceedings a week after non payment.  Instead they swallowed the hard luck story they were given.  They also should have included a "waiver of the 1 month notice of intent to evict" in the signed lease.  More than a week could have been saved if the lease had also contained a "signed statement from the tenant that they were not in the military nor did they expect to be," provided that this was true, of course.  Upon receiving court approval for the eviction, the owner still had to contact all the military services to determine that the tenant was not a service member before contacting the eviction service.  
     With the bad weather the time limit on the eviction expired, and a new payment had to be made at the courthouse.  In all, 6 to 8 trips are most likely needed to accomplish any eviction, and all done during regular business hours.  There are also court costs.  The second person mentioned was still having problems in December, and I have no information on how that turned out.  Both people said they would probably want to sell their property soon rather than continue to provide modest cost rentals.

     After learning about this, I decided to check on what evictions are like in Baltimore.  There apparently evictions only take a month or two.  This seems a bit quick, especially if the tenant is sincere and having temporary fixable difficulties.  If the DC eviction process continues in its present form it will only force more small landlords to give up and sell.  This will not help the low and moderate income rental picture in DC.  Political activists should consider how the above problems could be reduced with appropriate legislation.

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