(a) Where an election has been made under § 42-3502.06(c) to seek a rent adjustment through a hardship petition, the Rent Administrator shall, after review of the figures and computations set forth in the housing provider’s petition, allow additional increases in rent which would generate no more than a 12% rate of return computed according to subsection (b) of this section.

(b) In determining the rate of return for each housing accommodation, the following formula, computed over a base period of the 12 consecutive months within 15 months preceding the filing of a petition under this chapter, shall be used to:

(1) Obtain the net income by subtracting from the sum of maximum possible rental income which can be derived from a housing accommodation to which this section applies and the maximum amount of all other income which can be derived from the housing accommodation the following:

(A) The operating expenses, but the following items shall not be allowed as operating expenses:

(i) Membership fees in organizations established to influence legislation and regulations;

(ii) Contributions to lobbying efforts;

(iii) Contributions for legal fees in the prosecution of class action cases;

(iv) Political contributions to candidates for office;

(v) Mortgage principal payments;

(vi) Maintenance expenses for which the housing provider has been reimbursed by any security deposit, insurance settlement, judgment for damages, agreed upon payments, or any other method;

(vii) Attorney’s fees charged for services connected with counseling or litigation related to actions brought by the District government due to the housing provider’s repeated failure to comply with applicable housing regulations as evidenced by violation notices issued by the Department of Consumer and Regulatory Affairs; and

(viii) Any expenses for which the tenant has lawfully paid directly;

(B) The management fee, where applicable, of not more than 6% of the maximum rental income of the housing accommodation unless an additional amount is approved by the Rent Administrator as follows:

(i) The housing provider shall first file with the Rent Administrator a petition which contains information the Rent Administrator may require, including, but not limited to, the name of the payee; and

(ii) If the Rent Administrator determines, based on the petition and other information the Rent Administrator may require, that the excess over 6% of maximum possible income or part of income is reasonable, the Rent Administrator may permit the same excess or so much of the excess as is reasonable;

(C) Property taxes;

(D) Depreciation expenses to the extent reflected in decreased real property tax assessments;

(E) Vacancy losses for the housing accommodation of not more than 6% of the maximum rental housing income of the housing accommodation unless an additional amount is approved by the Rent Administrator;

(F) Uncollected rents; and

(G) Interest payments;

(2) Then, divide the net income by the housing provider’s equity in the housing accommodation to determine the rate of return.

(c)(1) At the housing provider's election, instead of any adjustment authorized by § 42-3502.06(b), the rent charged for an accommodation may be adjusted through a hardship petition under this section. The petition shall be clearly identified as an election instead of the general adjustments authorized by§ 42-3502.06(b). The Rent Administrator shall accord an expedited review process for these petitions and shall issue and publish a final decision within 90 days after the petition has been filed.

(2)(A) In the case of any petition filed under this subsection as to which a final decision has not been rendered by the Rent Administrator at the end of 90 days from the date of filing of the petition and as to which the housing provider is not in default in complying with any information request made under § 42-3502.16, the housing provider may conditionally implement an adjustment of the rent charged, at the end of the 90-day period, in accordance with this paragraph.

(B)(i) The conditional adjustment of the rent charged that shall be available to the housing provider for an affected unit shall be based upon the Rent Administrator's hardship petition form completed by the housing provider and returned to the Rent Administrator.

(ii) If the hardship petition form indicates that the net income of the housing provider for the affected units is negative, the conditional adjustment of the rent charged for the affected units shall not exceed 5% of the current rent charged.

(iii) If the hardship petition form indicates that the net income of the housing provider for the affected units is positive, the housing provider may not implement a conditional adjustment of the rent charged.

(3) A conditional adjustment of the rent charged shall be subject to subsequent modification by the final decision of the Rent Administrator on the petition. If a hearing has been held on the petition, the Rent Administrator shall, by order served upon the parties at least 10 days before the expiration of the 90-day period commenced pursuant to paragraph (2) of this subsection, make a provisional finding as to the rent increase justified by the order, if any. Except to the extent modified pursuant to § 42-3502.06 or this section, the adjustment procedures of § 42-3502.16 shall apply to any adjustment.

(4) If the Rent Administrator denies the requested rent increase or approves a rent increase that is less than the amount of the conditional adjustment of the rent charged by the housing provider, the housing provider shall refund to the tenant within 21 days of the Rent Administrator's order any rent paid in excess of the amount approved by the Rent Administrator, except that the tenant may elect within 14 days of the Rent Administrator's order to apply any amount of the refund not yet refunded by the housing provider to the tenant, as a credit against future rental payments.

(July 17, 1985, D.C. Law 6-10, § 212, 32 DCR 3089; Aug. 5, 2006, D.C. Law 16-145, § 2(a), 53 DCR 4889; Feb. 18, 2017, D.C. Law 21-197, § 2(b), 63 DCR 15030.)

1981 Ed., § 45-2522.

This section is referenced in § 42-3502.05, § 42-3502.06, § 42-3502.08, § 42-3502.13, and § 42-3502.16.

D.C. Law 16-145, in subsec. (c), substituted “rent charged” for “rent ceiling”.

Termination of Law 6-10

See Historical and Statutory Notes following § 42-3502.01.

For temporary (90 days) amendment of this section, see § 2(b) of Rent Control Hardship Petition Limitation Emergency Amendment Act of 2016 (D.C. Act 21-483, Aug. 18, 2016, 63 DCR 10730).

For temporary (90 day) amendment of section, see § 2(a) of Rent Control Reform Emergency Amendment Act of 2006 (D.C. Act 16-470, July 31, 2006, 53 DCR 6772).

For temporary (90 days) amendment of this section, see § 2(b) of the Rent Control Hardship Petition Limitation Emergency Amendment Act of 2014 (D.C. Act 20-430, Oct. 7, 2014, 61 DCR 10706, 20 STAT 4145).

For temporary (90 days) amendment of this section, see § 2(b) of the Rent Control Hardship Petition Limitation Congressional Review Emergency Amendment Act of 2014 (D.C. Act 20-575, Jan. 13, 2015, 62 DCR 1068, 21 STAT 717).

For temporary (90 days) amendment of this section, see § 2(b) of the Rent Control Hardship Petition Limitation Emergency Amendment Act of 2015 (D.C. Act 21-160, Oct. 16, 2015, 62 DCR 13722).

For temporary (225 days) amendment of this section, see § 2(b) of Rent Control Hardship Petition Limitation Temporary Amendment Act of 2016 (D.C. Law 21-169, Nov. 30, 2016, 63 DCR 12597).

For temporary (225 days) amendment of this section, see § 2(b) of the Rent Control Hardship Petition Limitation Temporary Amendment Act of 2014 (D.C. Law 20-164, February 26, 2015, 61 DCR 11095).

For temporary (225 days) amendment of this section, see § 2(b) of the Rent Control Hardship Petition Limitation Temporary Amendment Act of 2015 (D.C. Law 21-49, Jan. 9, 2016, 62 DCR 13990).