City of Rockville - File #: 25-1682

Date	Action By	Action	Result	Action Details	Agenda e-Packet	Video
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Subject

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Chapter 18 - Rental Facilities and Landlord-Tenant Relations - Rewrite: Transparency (Data Collection, Reporting, and Posting Requirements)

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Department

Housing and Community Development

Recommendation

Staff recommend that the Mayor and Council receive the presentation, discuss, and provide direction on strategies to improve transparency in the city’s rental market. The feedback received from the Mayor and Council will guide staff’s research and be incorporated into recommendations for the comprehensive update to City Code Chapter 18 (Rental Facilities and Landlord-Tenant Relations).

The following feedback is requested from the Mayor and Council to guide next steps:

1. Does staff’s definition of transparency accurately reflect how the Mayor and Council were thinking about transparency in the context of the Chapter 18 update?

2. Do you agree with staff’s preliminary recommendations for data collection and reporting requirements?

3. How should rent increase information be displayed?

Discussion

Background

Staff is currently in the research and engagement phase for a comprehensive update to City Code Chapter 18 (Rental Facilities and Landlord-Tenant Relations). In previous discussions, the Mayor and Council have noted their interest in measures to improve transparency for current and prospective renters, which also relates to the city’s data collection and reporting requirements for landlords. Through this work session, staff hope to gain a clearer understanding of what rental transparency strategies the body is interested in pursuing in order to best guide the Chapter 18 update process. The preliminary recommendations included in this report will be further developed in future work sessions.

Rental transparency, including data collection and reporting, is only one of many components to Chapter 18. This chapter also covers landlord and tenant rights and responsibilities, the Landlord-Tenant Affairs Commission, inspections, lease and notification requirements, rental licensing, minimum facilities requirements, and more. Staff will ultimately review the entire chapter and provide recommendations in accordance with the following goals:

• Provide clarity on existing code elements.

• Consider alignment with surrounding jurisdictions’ codes.

• Improve housing stability and opportunities for tenant agency.

• Require greater transparency for tenants.

• Ensure alignment with state of Maryland law.

• Review local and national best practices.

• Better connect data collection and city goals.

The implementation and enforcement of Chapter 18 is primarily shared responsibility between the Community Enhancement and Code Enforcement Division of the Department of Community Planning and Development Services (CPDS), which handles code enforcement and rental licensing, and the Housing Programs Division of the Department of Housing and Community Development (DHCD), which handles landlord-tenant affairs.

Data Collection and Reporting Requirements

Current Code

Chapter 18 Article V covers rental housing data collection and voluntary rent stabilization guidelines. It applies to all rental units in the city. However, the mandatory reporting requirements only apply to apartment complexes with eight or more units. Apartment complexes owned and operated by a non-profit organization are exempt from the requirements.

Firstly, the code requires landlords to provide tenants and the Director of DHCD with information related to rent increases 90 days prior to the effective date of any rent increase. Landlords of single dwelling units are specifically not required to provide the information to the Director of DHCD.

Secondly, the code requires landlord to provide the following information monthly to the Director of DHCD:

• “The location of the rental facility;

• The type of structure;

• The year the structure was built;

• The distribution of units by standard bedroom sizes;

• The number of units by bedroom size which were rerented during the month;

• The number of vacant days applicable to those units;

• The rent charged for each rental unit;

• The rent charged for each rerental unit prior to vacancy; and

• The new turnover rent charged for each rerented unit.”

The Director of DHCD is required to prepare and make available a survey form to the landlord for them to submit the data. The Director is also supposed to provide a quarterly report to the City Manager summarizing the information accumulated from the required information submitted by landlords.

Fourthly, there is a record holding requirement so that the city can request such information after the Director of DHCD has determined that it is relevant and necessary. This includes the following:

• “A description of the utilities which are included in the rent;

• The landlord's actual monthly utility costs including gas, electric, heating, fuel, trash removal, and water and sewer;

• The availability of certain amenities including air-conditioning, wall-to-wall carpeting, dishwasher, garbage disposal, washer/dryer in apartment unit or on-site, patio-balcony, swimming pool and tennis courts;

• The actual operating expenses by category;

• The actual operating revenues by category;

• A schedule of any other fees and income; and

• Tenant rent/income ratio for prospective tenants which protects the confidentiality of personal information and which is available to the landlord as part of the normal renting process.”

Fifthly, Chapter 18 Sec. 147(b) (not a part of Article V) requires “any type of lease used by any landlord” to be filed with the City Manager.

Current Data Collection Practices

Staff currently collect some but not all of the required data. The data that is collected is done so through the annual rental licensing process. The city does not have the staff capacity to collect all the required data at the frequency provided in the code. Upon revising Chapter 18, staff will analyze the additional support needed to fully implement the new code.

Below is a list of the data that is currently collected through the annual rental licensing process:

• Location of the rental facility

• Type of structure

• Year structure was built

• Distribution of units by standard bedroom sizes

• Rent range charged by bedroom sizes

• Utilities included in rent

• Amenities

• Standard multi-family leases and individual leases for single-family

Preliminary Recommended Changes

• Lease Collection: Amend the requirement for “any type of lease used by any landlord” to be filed with the City Manager. Instead, staff recommends requiring landlords to submit standard leases, but not individual leases for each tenancy. This is a substantial regulatory and administrative burden and does not provide staff with useful information in support of the goals of the Chapter 18 update.

• Applicability: Remove the exemption for apartments owned and operated by a non-profit organization whose rents are based upon standards imposed by housing programs of local, state, or federal governments. Staff would like to include properties with affordable housing opportunities on any future public dashboard and without data from those properties, that would not be possible.

• Notice of Requirements of Rent Increases: Remove the requirement for landlords to provide the Director of DHCD with rent increase information for individual units. To do this for every lease renewal would be a significant burden on landlords to report as well as staff to review and collect. The department would be able to receive the information necessary to monitor general rent increase trends by collecting the data recommended in the next section. Landlords would still be required to provide rent increase notice and information to the applicable tenant, even if they are not reporting it to the department.

• Mandatory Reporting Requirements: Alter the mandatory data reporting to include the following:

o Location of the rental facility

o Type of structure

o Owner information

o Year structure was built

o Amenities

o Utilities included in rent

o Fees charged

o Total number of units

o Individual unit information:

§ Unit number

§ Number of bedrooms

§ Square footage

§ Current monthly rent

With this information, staff would be able to track the year-to-year rent increases of individual units and calculate the average rent increases across all units.

• Reporting Frequency: Change the reporting frequency from monthly to annual at the time of rental license renewal and collect the data through the regular rental license rental process. Rental licenses are renewed annually in March. This would better integrate the reporting into existing processes, reducing the burden for landlords and minimizing the additional staff capacity needed to implement the data collection and analysis. Additionally, remove the requirement that the Director of DHCD provide monthly reports to the City Manager since staff also propose that data would be publicly posted online.

• Record Holding Requirement: Remove the requirement for landlords to maintain certain records for each property to be made available to the city upon request. Some of these records, such as available amenities, would be included in the mandatory data reporting.

• Fines: Chapter 18 does not currently have a specific enforcement mechanism outside of standard code infractions. Staff recommend that if a landlord has not fulfilled mandatory reporting requirements, the landlord would be charged a daily fine, and then after a certain period of time, their rental license would be revoked.

Publishing and Displaying Data

The data collected by the city will only be helpful to the public if it is published in an easily accessible, user-friendly place. Staff would like to display the data on an interactive online map where a user may click on any given rental property to see the following information:

• Location of rental facility

• Type of structure

• Owner information

• Year structure was built

• Total number of units

• Amenities

• Utilities included in rent

• Fees charged

• Rental license status

• Code infractions

• Rent information:

o Average monthly rent by unit bedroom size

o Average monthly rent per square foot

o Annual increase of monthly rent information

There are several ways in which rent increase information could be displayed:

• Option 1: Average year-over-year monthly rent increase for all units in the past year.

o Staff do not recommend this option because the most recent average increase may not be indicative of that property’s typical behavior. Additionally, rental properties may be able to use this information to artificially inflate rents if they see that many other rental properties have recently increased their rents to a certain rate.

• Option 2: Average year-over-year monthly rent increase for all units in the past five years.

• Option 3: Use the data from Option 2 to create a color-coded or tiered system so that the raw percentage is not shown but so that the general level of increase is still indicated. For example, a property with an average five-year increase of less than three percent could either be labeled as a “green” or “low increase” property, and so forth, with properties with consistently high increases labeled as such.

o Staff recommend this option because it further obfuscates the raw increase percentage while still providing prospective tenants with useful information.

Summary

Table 1 provides a summary of the data that is currently required to be collected or held, currently collected, recommended to be required, and recommended to be published on a public dashboard.

Table 1. Summary of the Data Collection for Rental Properties

Data	Current Requirement	Currently Collected	Recommended Requirement	Recommended for Public Dashboard
	Note: Gray cells indicate that that data type is included in the corresponding column’s category. Any text provides further information about the specific data that is either currently required, collected, recommended to be collected, or recommended for a public dashboard.
Rental Facility Characteristics
Location of rental facility
Type of structure
Year structure was built
Total number of units
Distribution of units by standard bedroom sizes				N/A
Square footage of each unit				N/A
Amenities	*Record holding requirement
Rent Information
Number of units by bedroom size which were rerented during the month
Number of vacant days applicable to those units
Rent charged	Rent charged for each rental unit / New turnover rent charged for each rerented unit / New rent	Rent range charged by bedroom sizes	Current monthly rent	Avg. monthly rent by unit bedroom size / Avg. monthly rent by square foot
Rent charged for each rerental unit prior to vacancy / Old rent
Effective date of the increase
Rent increase	Percentage of the increase		N/A - staff would calculate based off other reported data
Additional Costs to Tenant
Utilities included in rent	*Record holding requirement
Actual monthly utility costs	*See above
Fees charged
Other
Owner information
Rental license status	N/A	N/A	N/A
Code infractions	N/A	N/A	N/A
Lease	Any type of lease used by any landlord	Standard lease for multi-family and individual lease for single-family	Standard lease for both multi- and single-family
Operating expenses	*Record holding requirement
Operating revenues	*See above
Schedule of any other fees and income	*See above
Tenant rent/income ratio for prospective tenants	*See above

Lease Requirements

Staff recommend considering requirements for certain information to be provided on leases or at the time of lease signing, such as:

• A simplified renter’s bill of rights, with language to be provided by the city.

• The property’s average and/or unit’s last three rent increases.

• Recent code violations.

• Average utility costs, if not included in rent.

• Schedule of fees not included in rent.

• Information about Rockville and State Office of Landlord-Tenant Affairs.