City of Alexandria, Virginia
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MEMORANDUM
DATE: OCTOBER 3, 2012
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER /s/
DOCKET TITLE:
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Consideration of Resolution from the Landlord-Tenant Relations Board Regarding the Voluntary Rent Guidelines. [ROLL-CALL VOTE]
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ISSUE: City Council consideration of the Resolution from the Landlord-Tenant Relations Board regarding the Voluntary Rent Guidelines.
RECOMMENDATION: That City Council approve the attached Resolution (Attachment I) establishing the City's Voluntary Rent Guidelines at a percentage increase of not more than 5% where the tenant pays utilities and not more than 7% where the owner pays utilities, as recommended by the Landlord-Tenant Relations Board.
BACKGROUND: Virginia localities are prohibited from enacting rent control. However, for over 20 years, the City has encouraged landlords to limit rent increases in accordance with the City's Voluntary Rent Guidelines, which are suggested maximum rent increases for existing tenants. These voluntary guidelines provide no enforcement authority against landlords who fail to comply with them, as under Virginia law, the City has no authority to place mandatory limits on rent increases.
The Landlord-Tenant Relations Board reviews the Guidelines annually and makes recommendations to City Council regarding their adequacy. In preparing its recommendations, the Board considers rent data, market forecasts and vacancy surveys by Delta Associates, a national real estate consulting firm as well as data prepared by the Office of Housing in its annual apartment survey. The Office of Housing survey covers all rental complexes in the City with ten or more units. Delta Associates' survey is based on a representative sample of complexes in smaller area submarkets within the City, and distinguishes between "Class A" and "Class B" apartments. The Board considers these data to formulate recommendations that will account for market trends without unduly burdening tenants. Table A in Attachment II illustrates voluntary rent guidelines since 2002. Delta Associates' data, shown in Table B in Attachment II, reflect fourth quarter, year-end 2011 data. Office of Housing data, also shown in Table B, reflect data collected in January 2012.
DISCUSSION: The current guidelines recommend a rent increase not to exceed 5.5% if the tenant pays utilities and 7.5% if the landlord pays utilities. For the reasons below, this recommendation would decrease both by 0.5%.
Staff estimates that most landlords in the City are in compliance with the guidelines. Complaints of rent increases exceeding the guidelines with staff mediation decreased from 33 in fiscal year 2010 to 14 in fiscal year 2012. While staff is generally successful in mediating reduced increases, not all cases result in the landlord's full compliance with the guidelines.
Alexandria's rental apartment market remains strong when compared to national trends. According to the Office of Housing's January 2012 survey, apartment vacancy Citywide decreased slightly from 3.9% to 3.21% since January 2012. Delta Associates' year-end report for 2011 also indicated decreasing vacancy rates for all Alexandria submarkets compared to year end 2010. Both the City survey and Delta Associates reported vacancy rates well below the national rental vacancy rate, which U.S. Census Bureau News reported as 9.4% in the fourth quarter of 2010.
The Office of Housing survey shows that Citywide average rents increased 2.3% from January 2010 to January 2011. Delta Associates' survey reported very modest rent growth in Alexandria submarkets of between 1% and 3.6% for the fourth quarter 2011 compared to the same period in 2010. Two submarkets surveyed by Delta Associates showed slight rent decreases.
The Landlord-Tenant Relations Board considers it critical that the guidelines be reasonable and consistent with market conditions for landlords to comply and recommends increasing the percentages when market rent increases indicate a strong rental market. However, the purpose of the guidelines is to encourage property owners to keep increases reasonable for lease renewals. Based on the modest growth in market rents to reflect changing market conditions, the Board recommends decreasing the guidelines for FY2013.
Therefore, at its September 5, 2012 meeting, the Landlord-Tenant Relations Board voted unanimously to recommend that City Council adopt the attached resolution encouraging landlords to limit increases for current residents to a maximum 5% increase for properties with tenant paid utilities, and 7% for properties with utilities included in rents.
FISCAL IMPACT: None
ATTACHMENTS:
I. 2012 Resolution
II. 2012 Data Summary
STAFF: Mark Jinks, Deputy City Manager
Melodie Seau, Division Chief, Office of Housing
Mildrilyn Stephens Davis, Director, Office of Housing