of Columbia Council's authority to pass such measures, denied the landlord motions.

By July 26, 1974 the District of Columbia Council adopted Regulation 74-20 which was signed into law on Augst 1, 1974. This measure, the result of countless hours of work by tenants, landlords, Councilmembers and staff, provided a mechanism for landlord and tenant relief. An automatic increase formula allowed landlords to raise their rents a few percentage points and included a hardship provision for those landlords who could not live within the percentages established. Tenants were protected from caprious evictions, decreases in services and excessive rent increases.

Notwithstanding the almost self-regulating nature of the measure, the rent control program was not working well by November. Members of the Housing Rent Commission complained publicly that the $55,000 authorized to be appropriated by the Congress was insufficient to administer the program effectively. It was further charged that the Executive Branch of the District of Columbia was providing inadequate supplementary assistance. Some tenants claimed that the landlords were filing an excessive number of petitions in order to sabotage the work of the Commission. Some landlords claimed that the problem resulted from the irresponsible behavior of tenant representatives on the Commission. Whatever the reasons, the Commission could not process these petitions within the sixty days established by law. Landlords, subsequently, filed suit. The courts began allowing landlords to return their rents to the August 1st levels, whenever the Commission could not process their petitions. Landlords, unhappy that the Regulation was not held invalid, and the government, displeased with allowance of increased rents, appealed the decision. The D.C. Court of Appeals' decision of July 16, 1975 is interpreted as follows:

1. The pass through and reasonable rate of return requirements mandated in Public Law 93-157 (the Congressional Authority) had not been fully complied with in Regulation 74-20. [However, since the Council's legislative authority emanates from the Home Rule Charter, the Rental Accommodations Act (Bill 1-157) will not be directly affected by this decision.]

2. Inadequate administrative procedures which result in unduly long periods of time for landlords or tenants to receive remedies from their petitions may constitute lack of due process in Regulation 74-20. [These procedures with respect to time delays in landlords receiving rents, etc. have been remedied in the new Bill (1-157).]

On January 22, 1975, shortly after its inauguration, the Council of the District of Columbia held hearings on the need for continued rent control. The overwhelming testimony indicated that some form of rent control was needed. What seemed evident, however, was the need for substantially increased logistical support and a mechanism to expedite proceedings in order to reduce the backlog of cases.

In response to the testimony, Councilmember Nadine Winter of Ward 6, introduced on March 11, 1975, Bill 1-40, a bill to stabilize rents in the District of Columbia and to establish a Rent Stabilization Commission. The bill was referred to the Committee on Housing and Urban Development which is chaired by Ms. Winter. The bill was designed to resemble the previous regulation and to offer the same protection to tenants and landlords as accorded in that previous Regula

tion (74-20). The bill did, however, differ from the regulation in that it stripped from the Commission its administrative role. The Commission was designed to be a policy and appeal board with the administrative and denovo adjudicatory functions transferred to the Rent Administrator. The changes were made in an effort to expedite processing of petitions and to encourage the maximum attention to procedural details that a body unencumbered with numerous caseloads might give.

At approximately the same time the bill was introduced, the Mayor of the District of Columbia transferred to the Council, the District Budget for fiscal year 1976. Included with the budget of the Office of Housing and Community Development was a budget request for $529,000 for the Housing Rent Commission. The Committee on Housing and Urban Development added $140,000 to that budget request in anticipation of the increased workload likely to result in administering the new bill. Such a figure matches the Executive Branch's estimate of what would be required to administer the act. The Committee on Housing and Urban Development is determined to see the rent control program succeed in the District of Columbia.

Hearings on Bill 1-40 were held on April 9, 1975. Of the more than seventy witnesses testifying, few were landlords. Those landlords who appeared did not deny that there might be a need for controls. They pleaded for a higher percentage ceiling and a relaxation of some of the burden of paperwork. Tenants, many from the City-wide Housing Coalition, wanted no increases and were instrumental in providing evidence to counter the study by the Apartment and Office Buildings Association. (See Attachment A-Report from Bureau of Social Science Research)

The Committee chairperson requested that the members of the Coalition and AOBA meet in round table discussions in order to see if a consensus might be reached. They met and discussed differences without reaching a definitive argreement. The Committee staff maintained contact with members of both groups in an effort to clarify issues and develop a method for solving some problems.

The final mark-up session on Bill 1-40 was held by the Committee on May 2, 1975 and reported out at that session. The first reading of the Council was May 20, 1975 and the vote was eleven (11) years, zero (0) no, one (1) present and one (1) absent. The second reading was on June 10, 1975 and the Bill was unanimously passed by the Council. On June 27, 1975, the Mayor returned the Bill to the City Council with his disapproval while expressing full support of rent control. The Mayor suggested that the measure was primarily defective in its:

1. Failure to provide an equitable rent stabilization program which protects tenants against excessive rents while at the same time providing landlords with a reasonable return".

2. Creation of "unending adverse impacts on the city's housing supply".

3. Impairment of construction and rehabilitation of rental stock with "a significant loss and deterioration of the less than adequate existing rental stock". (See Attachment B-Mayor's veto message of June 27, 1975, specifying the other concerns relating to his disapproval of Bill 1-40.)

The Council chose not to override the veto, but to accept the Mayor's offer to be available with his staff to resolve the aforementioned

concerns.

The Mayor, the Committee, other Council members and appropriate staff persons from the Executive and Legislative branches diligently worked to resolve the differences during the following week and on July 15, 1975, a new Rental Accommodations Act (Bill 1-157) was passed by the Council. This new Bill (1-157) essentially embodied the fundamental thrust and intent of Bill 1-40 which had been vetoed by the Mayor. The major changes were:

1. The Rental Accommodations Office was changed from an independent agency to one established as an agency of the District of Columbia government within the executive office of the Mayor.

2. All new construction was exempted for units for which the initial certificate of occupancy was issued after February 2, 1973 for the initial leasing period or the first year of tenancy (whichever occurs first).

3. The formula for rent increases was changed to provide a floor of eight percent as opposed to seven percent as a reasonable rate of

return.

4. The maximum allowable rent increase was changed from four percent of the amount computed in Step 2 of the formula plus the pass-through provision for utilities to five percent, with no allowance for pass-through of utility costs.

5. The limitation on depreciation expense in the rate of return formula was removed and the Rent Administrator was provided with the authority to increase that limit if properly justified.

6. The registration and filing procedures were simplified and the time necessary for these procedures was reduced.

7. Hardship provisions were added to allow landlords to file petitions for an additional increase who (after allowable increases) can still show a negative cash flow.

The provisions of Regulation 74-20, extended on April 24, 1975 by Act 1-12 would expire on July 26, 1975. Therefore, it was necessary to insure that the city would not be without any form of rent control. Act 1-35, a transitional rent stabilization program was enacted on July 22, 1975 on an emergency 90 calendar day basis. The major provisions of this legislation were as follows:

1. The provisions of Regulation 74-20 remained in effect for a period of sixty days after enactment.

2. During this interim period, the Housing Rent Commission would not receive or act upon any petition for adjustment of rent filed with it and would continue action on those previously filed.

3. Landlords shall not raise any rents except pursuant to previous commission or court order.

4. The provisions of Bill 1-157 were incorporated into the Act 60 days after the effective date with the exception that the Mayor would appoint the members of the Commission to serve until such time as the confirmation process could be completed and that the bill would be subject to the following amendments:

(1) In section 202(b), strike "not less than 30, but";

(2) In section 204 (h) (2), strike out "60", each place it appears and insert in lieu thereof "30";

60-419 O 75-3

(3) In section 204 (h) (3), strike out "sixty" and insert in lieu thereof "30";

(4) In section 212(g), add the following additional sentence: "An appeal from a decision by the Rent Administrator respecting any rent adjustment shall not stay the effectiveness of the decision."; and

(5) Strike sections 401 and 404, and renumber the remaining sections accordingly.

Amendments (1), (2), and (3) are designed to substantially reduce the time involved in the registration procedures, thereby giving due cognizance of the intent of the Committee and the recent (July 16, 1975) court decision to expeditously administer all facets of the legislation so as to insure due process to both tenant and landlord. Amendment (4) was designed to clarify the fact that the effectiveness of the decision of the Rent Administrator would in no way be diminished during the appeal process. Amendment (5) deletes the repeal provisions and the effective date provisions which are addressed in Section 2 of this Act.

Bill 1-157 was passed at its final reading of the Council on July 29, 1975. The vote was 9 for and 3 against with one member being absent. There were no substantive amendments made at that time, only technical provisions designed to facilitate a smooth transition from the emergency Act 1-35 to the permanent legislation.

SUMMARY

I. COMPARISON OF PROPOSED ACT WITH REGULATION 74-20 (THE RENT CONTROL REGULATION)

The following is a list and explanation of the major differences between the proposed "District of Columbia Rental Accommodations Act of 1975" (Bill 1-157) and the existing Rent Control Regulation. 1. Implementation of Rent Stabilization

The functions of the existing Housing Rent Commission are divided between two bodies-the Rental Accommodations Commission and the Rental Accommodations Office whose director (the Rent Administrator) is appointed by the Mayor. Under the proposed act, decisions on hardship petitions and other exceptions to rent ceilings will be made by the Administrator, who will also be responsible for administration of the act. The Commission will rule on petitions only on appeal. In addition it will continue to function as the rule making body in implementation of the act.

The intent of the above changes is to (a) expedite administration of rent control through delegation of the decision process in hardships to the Administrator; (b) separate administration and factfinding from judicial review; (c) minimize partisanship within the Commission and maximize objective regulatory functioning.

2. Exemptions from coverage of rent stabilization

The following additional exemptions are provided:

(a) New rental units for which the initial certificate of occupancy was issued after February 3, 1975 for the initial leasing period or for the first year of tenancy (whichever occurs first). The intent is to provide incentives to new construction additional

to the more limited exemption provided in the existing Regulation. (b) Any rental unit which has been previously "boarded up" for two years, provided such unit is in compliance with the Housing Regulation. The intent is to provide incentives to return abandoned units to the housing market.

(c) Rental units rented to another by the occupant (owner or tenant) of a housing accommodation of not more than two units. The intent was not to unduly burden the small landlord who was not in housing rental business' but merely attempting to supplement their income as documented at Public Hearings of January 22, 1975 and April 9, 1975.

It should be noted that, under the proposed act, excluded rental units are exempted only from the rent stabilization program. In contrast to existing provisions, excluded units are covered by all other provisions of the proposed act, such as registration, eviction controls, etc.

3. Registration

Quarterly updating of the registration form is substituted for the current 30-day correction requirement. The purpose is to decrease paperwork for landlords and the Rental Accommodations Office. Additionally, rate of return data must be included on the registration form and a listing of outstanding housing code violations.

4. Registration Fee

A payment of an annual $2.00 fee for each rental unit is required. This fee, which will provide an income of approximately $370,000 annually, is to be deposited in the Treasury of the United States and credited to the General Fund of the District of Columbia to supplement (if so appropriated) budget allocations for the Office and the Commission.

This fee requirement reflects the strong conviction of the Committee, based on the experience of the last year, that adequate funding is indispensable to equitable rent control administration for both landlords and tenants. The previous chairman of the Housing Rent Commission testified on January 22nd that a minimum of $985,000 is required to administer the Rent Control Regulation. He freely admitted that, because of lack of adequate funding and resources, the Commission is unable to keep abreast of its petition caseload, much less institute general compliance mechanisms. Against this background, the proposed General Fund credits will be a necessary resource, even when combined with the fiscal year 1976 Council budget request for the administration of the act.

5. Rent Stabilization Formula

Regulation 74-20 provided a rent increase of 4 percent above base rent for 1973 and an additional 8 percent for 1974. The proposed act provides, for the two year life of the act, a relatively simple formula for the landlord to compute the rate of return for each housing accommodation. This formula includes the normal operating expenses and all rental property incomes. Management fees, an operating expense item as used in the formula, are limited to six percent of the maximum rental income unless and only to the extent any additional amount is approved by the Rent Administrator. Depreciation expense (computed