Why Should Delaware Care?
The recent spike in housing costs have been attributed to why 50% of Delaware renters, who make up more than a quarter of the state population, are cost-burdened. In the city of Wilmington, this financial burden has contributed to a lack of clean, safe, and affordable housing. A proposed city legislation that would regulate rent may offer a remedy to the issue.
A new proposal is seeking to slow the rise in rents in Wilmington after Delaware experienced some of the highest increases in the nation since the COVID pandemic began.
Wilmington City Councilwoman Shané Darby has proposed an ambitious rent-stabilization ordinance that would provide relief for tenants. However, city developers and the mayor’s office say the ordinance will only hinder their progress in creating affordable housing.
Average rent costs in Delaware surged almost 24% in 2021 – marking the second highest increase nationwide behind only Florida, according to a report from Rent.com. The following year, the average continued upward another 14.5%.
While last year provided a bit of a respite as rents rose only 1.4% statewide on average, Delaware’s $1,900 average rent now exceeds both Pennsylvania and Maryland’s averages.
The sharp increase has squeezed Delaware residents financially, especially in cities like Wilmington, where many grapple with financial constraints. City households earned less than $53,000 annually in 2022, or 35% less than the statewide average, according to Census data.
A freeze on hikes
The proposed ordinance would prohibit landlords of private apartment complexes from raising rents by more than 3% a year, or by even less during years that the consumer price index falls below that figure.
Filed May 29, the ordinance’s rent ceilings would match the New Castle County’s Housing Authority’s base payment standards that are already lower than most market-rate units in the city’s newest complexes.
Rent increases at the end of a lease would not be able to exceed the housing authority’s payment standards. And if the agreed rent amount is already above their payment standards, it can’t be raised at all.
Darby says she plans to soon revise the legislation to allow landlords to account for inflation, however, and given the tight provisions of the ordinance, she is well-prepared for its uphill climb to approval as well as the criticism she will receive from landlords and developers.
The bold legislation would only apply to multi-unit residential properties that are not owner-occupied and not operated by public housing authorities – which puts it in the crosshairs of some of the city’s biggest landlords, such as Buccini/Pollin Group, who already list most of their units at rates well above the housing authority maximums in private market competition.
Need for affordability
The affordable housing crisis has become an ongoing issue statewide, leading to the displacement of 8% of the population and a severe shortage in affordable housing options. Last year, the Delaware State Housing Authority estimated a need for nearly 20,000 affordable rental units to fill the gap.
Although the state legislature recently passed several bills to address the ongoing issue, they largely focused on development, failing to tackle the issue of rising rents.
A quarter of residents live below the poverty line in Wilmington, where average rents range between $1,500 and $1,900.
And the supply of affordable housing to those earning less than $25,000 has decreased by 31%, according to DSHA.
“When I thought of this legislation, I thought of the relationship with landlords and tenants in the city of Wilmington, and how COVID impacted us and a lot of people saw rent increases. And with some of these rent increases, people couldn’t afford their original rate,” Darby said.
The ordinance was developed in collaboration with the City of Wilmington Autonomous Tenants Union and the H.O.M.E.S Campaign, two advocacy groups that focus on tenants rights and housing accessibility. Both groups, in addition to city residents, were shown the legislation to provide input and suggestions before it went to council.
Darby is not alone in seeking to stem the rising tide in the cost of living though.
State sees similar proposal
Earlier this year, Rep. Larry Lambert (D-Claymont) proposed a similar statewide bill near the end of the legislative session. The bill didn’t get far, but it opened the door for more discussion around the rent crisis and its urgency.
To address the affordability issue, local and state leaders have largely focused on housing development, and although many see it as a long-term solution, others feel there is room to create a more prompt remedy.
“We don’t currently have an existing completed plan to address the deficit of 24,000 affordable housing units. So in regards to those cost-burdened renters in Delaware, it’s imperative that we find creative solutions now,” Lambert said. “And the solution that I propose is that we look at potentially rent stabilization, that’s been successful in numerous municipalities across the U.S.”
Seven states, including New Jersey and Maryland, impose rent controls at a local level.
Montgomery County, Md., currently caps its maximum rent increase at 6% a year and only about 7% of their residents live below the poverty line, according to Data USA.
Jersey City, N.J., also caps its rent at 4%, and it has a poverty rate of 15%.
Absentee landlords complicate issue
In addition to the issue of rent itself, low-income and middle-income residents struggle to find affordable housing that is both safe and clean, said Shyanne Miller, a coordinator for the CWATU.
Longtime resident Takia Johnson was one of many who was subject to poor living conditions while experiencing a rent spike. After living in her residence for a year, Johnson’s landlord raised her rent by $250, a 50% increase from her original. As a single mother of two, who at the time, only made slightly more than minimum wage, Johnson became significantly burdened by housing costs.
“Most of the things that they asked for, a lot of people don’t have. Like a lot of people don’t make three times the rent, a lot of people don’t have credit scores that are in the 600s and better. So we have to go for slum landlords,” Johnson said.
DSHA reports that renters in Delaware are five times more likely than homeowners to report living in poor or fair housing conditions, with single parents experiencing the highest rates.
According to Johnson, her unit, as well as others in the building, had several inspection violations that were never addressed.
“[The landlord] never fixed anything. My daughter and I were in there with a toilet that didn’t flush. So we had to pee in our tub and clean it out every day,” she said.
While residents like Johnson face inferior conditions alongside increased rent rates, the issue of rising rent is one that affects all sides of the spectrum.
Last month, Darrion Ransom, a father and small business owner, experienced a sudden rent increase of almost $400 that resulted in many of his neighbors leaving the residence. Due to the lack of affordable options, Ransom and his family chose to stay put, but now he is forced to adjust his budget to cover housing costs.
“We need a mouthpiece because, if not, regular people are gonna start being criminals so they can live,” Ransom said.
Builders anxious about caps
Despite the locals who see potential in the legislation, not everyone is in favor of it.
According to a statement from the mayor’s office, there are concerns about its long-term implications for the city’s housing market.
“We believe it could lead to fewer market-rate and affordable housing units being built in the city, as housing developers operate on very thin margins. If a new housing development is projected to be unprofitable due to the loss of revenue on affordable units, the project is unlikely to make it past the planning stage,” wrote Paul Ford, the director of communications for the mayor’s office.
BPG also says they are “anxious” about the legislation.
Mike Hare, executive vice president for development of BPG, said they believe there are better options to resolve the issue such as increasing housing vouchers, and raising the amount of low-income tax credits to create more affordable housing.
“For our portfolio, we have about a 65% inherent retention rate year to year. So, we would like to at least be a voice toward a solution toward the problem. I’m not sure that rent stabilization is the way to get there,” Hare said.
BPG has almost 2,000 rental units in the city and over 600 more are currently under construction. Their monthly rents typically range between $1,100 and $3,200 for a 12-month term, depending on the number of bedrooms, according to online listings. Most units at BPG’s newest communities are priced between $1,700 and $2,100 a month.
The developer does own and operate one income-based community, Market Street Village, that offers studio and one-bedroom apartments for less than $1,000 a month.
The city ordinance has been referred to the Community Development and Urban Planning Committee for further discussion before it is considered by council.
“What I’ve been doing now is talking to different stakeholders for support on the legislation, and then also to get some feedback,” Darby said.
The legislation is being revised with the help of local tenants, CWATU, H.O.M.E.S campaign and Clasi, a civil legal advocacy group.
Johnson, the Wilmington tenant, said that she remains hopeful that the bill proceeds.
“It would help a lot of single struggling mothers and fathers like me in a major way,” she said. “There are a lot of people out here who are struggling to pay their rent and bills, moving from paycheck to paycheck.”
Make Your Voice Heard
Wilmington City’s Community Development & Urban Planning Committee will meet at 5 p.m. Sept. 12 in the Louis L. Redding City/County Building at 800 N. French St. They will review Darby’s legislation among other bills and the public will be allowed to comment. To see the agenda and more details, click here.
To provide Councilwoman Darby any feedback or comments on this legislation, contact her via email at sndarby@wilmingtonde.gov.
