Section 14-4209. PETITIONS BASED ON CLAIM OF HARDSHIP

 

4209.1A housing provider who elects not to take and perfect a rent ceiling adjustment of general applicability under § 206(a) of the Act may petition the Rent Administrator once during each calendar year for a rent ceiling adjustment authorized by §§ 206(b) and 212 of the Act (a “hardship petition”).

 

4209.2A housing provider shall be eligible to file a hardship petition if either of the following requirements are met:

 

(a)Nine (9) months have elapsed since the filing of any prior hardship petition under § 212 of the Act or prior rent control laws; or

 

(b)Nine (9) months have elapsed since the implementation of any increase of general applicability under subsection 206(b) of the Act or prior rent control laws.

 

4209.3The owner of property which has been determined to be abandoned or a continuing nuisance to the immediate surrounding area shall not be eligible to elect and file a hardship petition under §§ 206 and 212 of the Rental Housing Act of 1985 to abate the nuisance.

 

4209.4A housing provider shall file a hardship petition on a form approved by the Rent Administrator and the financial information required to be submitted with a hardship petition shall be in the same form as the financial information requested on Form FP-308 of the Office of Tax and Revenue.

 

4209.5The Hardship Petition Form shall contain instructions for computing the following:

 

(a)The net income of the housing accommodation;

 

(b)The housing provider’s equity in the housing accommodation;

 

(c)The rate of return the housing accommodation is yielding on the housing provider’s equity;

 

(d)The dollar amount of the rent increase that will be added to the rent ceiling of each registered rental unit in the housing accommodation; and

 

(e)The rent ceiling(s) before and after the rent increase.

 

4209.6When determining the net income of a housing accommodation, the following standards shall apply:

 

(a)The maximum possible rental income for the twelve (12) consecutive month period shall be the aggregate of the rent ceilings for each rental unit during each month of the period, whether or not actually rented;

 

(b)In determining the management fee under operating expenses, whether in an owner-managed building or where management services have been provided under a contract with a management firm, the owner must provide proof of management services provided and expenditures claimed; and

 

(c)In determining depreciation expenses as reflected in decreased real property tax assessments, a housing provider shall include the decreased assessments that are applicable to both the land and the improvements.

 

4209.7When determining the housing provider’s equity in a housing accommodation, the following standards shall apply:

 

(a)Encumbrances that will reduce the assessed value shall include all mortgages, liens, and secured claims, whether incurred or directly related to the purchase, the capital improvement, or the substantial rehabilitation of the rental property; and

 

(b)The assessed value of a housing accommodation shall be the official assessment of the property by the D.C. Tax Assessor during the twelve (12) month reporting period, or a weighted average of the assessments (if there is more than one).

 

4209.8A housing provider shall not include any of the following types of expenses as operating expenses on a hardship petition:

 

(a)Membership fees in organizations established to influence legislation and regulation;

 

(b)Contributions to lobbying efforts;

 

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

 

(d)Political contributions to candidates for office;

 

(e)Mortgage principal payments;

 

(f)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;

 

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

 

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

 

(i)Any court judgments relating to the operation of the rental property.

 

4209.9The hardship petition form shall require a housing provider to list and value all current encumbrances and certify that the status of the property, as presented, is correct.

 

4209.10A hearing examiner may require the housing provider to submit verification of the present status of encumbrances on the property.

 

4209.11When adjudicating a hardship petition, the issues to be resolved may include the following:

 

(a)The accuracy and verifiability of the income-expense data included on the hardship petition form;

 

(b)The determination that the financial data represents the experience of the housing accommodation during a base period of any twelve (12) consecutive months within the fifteen (15) months preceding the date of filing of the petition;

 

(c)The accuracy and verifiability of the financial information on the assessed value of the housing accommodation;

 

(d)The accuracy of the calculations made by the housing provider in completing the hardship petition form;

 

(e)The existence of a valid registration statement for the housing accommodation;

 

(f)The determination of whether substantial violations for the housing regulations existed on the date the hardship petition was filed, or whether violations exist on the date of the petition hearing; and

 

(g)Whether expenses for maintenance and repairs are ordinary, capital or extraordinary and whether they should be fully charged to the reporting period or depreciated for their useful life.

 

4209.12When filing a hardship petition, the following shall apply:

 

(a)A housing provider may elect to use either the accrual basis or the cash basis method of accounting;

 

(b)The hearing examiner shall accept the housing provider’s accounting method in determining the initial rate of return of a housing accommodation;

 

(c)Once the election has been made, all subsequent hardship petitions for that housing accommodation shall be filed using the same method of accounting for income and expenses; and

 

(d)The housing provider shall specifically petition the Rent Administrator to change the method of accounting for income and expenses used in any subsequent hardship petition. A change shall be allowed upon a finding that the different accounting method used for the petition being filed shall not materially distort, transfer, alter, or otherwise improperly state the income or expense data of the housing accommodation for the reporting period involved.

 

4209.13Under the accrual method of accounting, income and expenses shall be recognized in the hardship petition upon the vesting of the unconditional legal right to receive or pay.

 

4209.14When a petition is filed using the accrual method of accounting, the Rent Administrator may require, as proof of accrued income or expense items, evidence of subsequent (after the reporting period) receipt of payment.

 

4209.15For purposes of this section, the term “uncollected rents,” as defined in § 103(37) of the Act and § 4502.1 shall not be allowed as an expense under the accrual method of accounting.

 

4209.16Under the cash basis method of accounting, only those income items actually received or paid during the reporting period may be included in the petition; provided, that expenses reported shall not exceed expenses for more than a twelve (12) month period.

 

4209.17A housing provider shall provide to the hearing examiner, upon filing a hardship petition, underlying documents to substantiate the income and operating expense schedule of the housing accommodation. The documents shall include the following:

 

(a)Copies of bills received for the accommodation during the twelve (12) month period;

 

(b)Copies of cancelled checks and bank statements for the housing accommodation during the twelve (12) month period; and

 

(c)Copies of ledgers, journals, or other internally generated records on the financial transactions of the housing accommodation during the twelve (12) month period.

 

4209.18The Rent Administrator shall exclude the following expenses set forth in a hardship petition:

 

(a)Expenses, whether accrued or paid, before or after the twelve (12) months;

 

(b)Any expense prohibited in § 4209.7;

 

(c)Any expense which, while charged to the subject housing accommodation, was actually incurred for another housing accommodation;

 

(d)Any expense which cannot be verified by external financial documents listed in § 4209.16; and

 

(e)Any expense for which substantial evidence supports a finding that the particular expense does not reflect actual events or experiences in the housing accommodation.

 

4209.19At the time the hardship petition is filed, the housing provider shall provide the following:

 

(a)One (1) copy of the petition for each rental unit in the housing accommodation, plus two (2) copies of the petition for the Rent Administrator;

 

(b)Postage paid envelopes addressed to the tenant by name of each affected rental unit in the housing accommodation;

 

(c)Copies of the certificate of occupancy and housing business license (where applicable), and proof of payment of the annual registration fee; and

 

(d)A copy of the rent roll.

 

4209.20Notwithstanding the provisions of chapters 39 and 40, the Rent Administrator shall administratively consider and dispose of each hardship petition according to the following procedures:

 

(a)Promptly upon receipt of a properly executed and filed hardship petition, the Rent Administrator shall notify each tenant of a rental unit covered by the petition of the pendency of the petition, and of the procedures for disposing of the petition;

 

(b)The notice to tenants required by a § 4209.19(a) shall inform the tenants of their right to designate within thirty (30) days a tenant representative pursuant to § 4004 to appear and act on their behalf in all matters regarding the petition, and to form a tenant organization for this purpose if none exists;

 

source

Notice of Final Rulemaking published at 33 DCR 1336, 1393-1398 (March 7, 1986); as amended by: Notice of Final Rulemaking published at 33 DCR 2656, 2666-67 (May 2, 1986); and Notice of Final Rulemaking published at 33 DCR 3179 (May 23, 1986); as amended by Notice of Final Rulemaking published at 49 DCR 7487(August 2, 2002).

EditorNote

The District of Columbia Office of the Chief Financial Officer published a Notice of Public Interest at 44 DCR 2345 (April 18, 1997) which advised that "[t]he OFFICE OF TAX AND REVENUE will assume all of the duties and functions previously performed by the DEPARTMENT OF FINANCE AND REVENUE, as set forth in Commissioner’s Order 69-96, dated March 7, 1969." All references to the "Department of Finance and Revenue" in the original text of these regulations have been replaced with the "Office of Tax and Revenue."