If we decide not to sign, Akelius could launch a petition on difficult cases, another loophole in the law on rent control. This loophole allows landlords to increase rents in a sustainable way to get a 12% return on their investment. Contrary to a voluntary agreement, an emergency petition does not offer protection to current residents. But one aspect was clearly not negotiable. Both potential buyers made it clear that we would be forced to sign a “70% voluntary agreement.” This loophole in the Rent Control Act allows landlords to increase future rents beyond the rent level controlled if they have the agreement of 70% of tenants. These agreements often include a promise to current residents that the new rents will only apply to future tenants. So when a new tenant moves in, the unit is rented only in the name, and the rent goes up tremendously. At Harvard Hall, rents currently controlled generated about $3.31 million in rental income per year. As described in our voluntary agreement, Akelius could eventually generate up to $6.97 million. If exercised together, the petition on difficult cases and voluntary agreements are a powerful force. The threat of an emergency petition forced us to sign a voluntary agreement that limited our ability to negotiate changes that could keep rents stable in the long run.
Units that were affordable for those earning $60,000 a year can now only be affordable for those earning at least $116,000, and those moving from Harvard Hall (or moving to Harvard Hall) will likely have to look for housing in more affordable buildings, creating additional market pressure. But it also left us with the risk of increasing rents. To give you an idea of the order of magnitude, Akelius` annual return would probably be about 3.8% if rents are maintained at Harvard Hall, about $3.9 million less than the 12% return sanctioned by the petition lasts2. And that`s what we did. The Reclaim Rent Control coalition platform would focus in part on the failures of the voluntary agreement process. You can read the full platform here and sign a petition to further support a broader law on rent stabilization. (GGWash joined the coalition last month.) “There is no way to support the current law,” said Ed Lazere, executive director of the DC Fiscal Policy Institute and Policy Group Institute, and backed off when Bonds asked him and other relaim Rent Control Coalition participants to identify the most important items on the list of improvements they are asking for.