Advocates eye referendum after Wilmington rent stabilization fails

Why Should Delaware Care?
Since last year, the conversation around rent control measures in Wilmington has gained momentum. A measure aimed at curbing excessive rent hikes has drawn both support from residents and criticism from local and state officials. But after a failed vote to pass the legislation, residents are now preparing to initiate the city’s first referendum in decades.

The fight over rent hikes has pushed Wilmington residents to the brink, prompting local organizers to take the fight to the ballot box with a bold rent stabilization referendum. 

“We are here to remind you of who you work for, who votes you in, and who will hold those accountable,” Daisy Rivers, a city resident, said at Thursday’s Wilmington Council meeting.  

Last week, dozens of residents and advocates stormed out of the city council chambers, chanting that they would “shut it down” after a measure to control rent increases failed by just one vote. 

The conversation around rent increases has been ongoing in the city of Wilmington since last year, after City Councilwoman Shané Darby began working on a proposal that would limit how much landlords could increase their rent each year. Last year, the legislation didn’t even make it to the discussion phase between council members. 

But this year, the council came very close to making Wilmington the first city in Delaware to implement the measure.

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“I am disappointed that they listened to all those people’s stories, the community did all that organizing work, and they still said, ‘No.’ It’s disappointing, but it’s not shocking,” Darby said. 

Darby’s bill has faced criticism from council members and landlords who said that the proposal was unclear, and that enacting rent stabilization could hurt local landlords and force them and developers to sell properties and leave the city. 

Wilmington’s proposal even reached state officials when Matthew Heckles, the Delaware State Housing Authority director, sent an email to Councilwoman Maria Cabrera last month voicing concerns about the legislation and asserting that the solution to affordable housing is building more affordable homes. 

Mayor John Carney and Gov. Matt Meyer have also openly criticized rent control and rent stabilization measures. 

What the bill would do

Darby made amendments to the previous version of her rent stabilization ordinance, with many councilmembers and landlords pointing out the lack of support the measure offered for landlords who don’t charge exorbitant rents. 

The most recent proposal would have prohibited landlords of private rental units in Wilmington from raising rents by more than 5% a year or by the consumer price index, whichever was higher. The cap was previously set at 3%. 

The bill would exempt certain places such as public housing units, owner-occupied properties with three or fewer units, school-provided student housing, and new buildings during their first 10 years of existence. 

Units being rented for the first time ever would also be exempt, but would then be stabilized after the first year.

The measure also allowed landlords who have owned their property for more than a year to request to raise their rent by more, if they can show financial burdens, such as rising taxes, insurance, maintenance, renovations and operative expenses. 

The city’s Department of Land Use and Planning would be in charge of handling the requests. Darby amended the bill so that the office had to decide on a request within 10 business days. Landlords could also appeal the decision, which would require a response within 20 calendar days. 

However, city officials previously said that the city did not have the manpower or skill set to enforce the bill.

Impact of policy debated

The adoption of various forms of rent stabilization — or rent control, which freezes rent prices — have been most common in coastal areas of the United States, such as New York and San Francisco.

But the effects of those measures are not agreed upon.

One study from Stanford University concluded that rent stabilization in San Francisco reduced the number of rental units within the city and caused developers to shift toward building higher-end units.

Another study, jointly produced by researchers from the Urban Institute and from several universities, concluded that rent stabilization can increase the number of units in an area that are affordable to the lowest-income renters.

Residents, landlords weigh in

Last week’s city council meeting was filled with dozens of rambunctious residents and advocates from the H.O.M.E.S. Campaign and the City of Wilmington’s Autonomous Tenant Union who came to voice support for the rent ordinance and expressed frustration with exorbitant rent spikes in the city. 

Throughout Delaware, average rents 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 rent continued upward another 14.5%. Rent prices began to stabilize thereafter. 

In Wilmington, current data around rent varies. Apartments.com reports that average rents have held steady over the past year, nearing $1,600. But Rent.com currently shows a small decline in rental costs year-over-year for one-bedroom homes to $1,425. 

About 54% of city residents are renters, and almost a quarter of the city’s residents live below the poverty line, according to U.S. Census data. The median household income in Wilmington is $55,269, or 30% less than the state average. 

Council spent two hours hearing public comments, as residents described how rising rents have outpaced wages. Some reported annual increases of several hundred dollars, while others cited difficulties affording their rent on fixed incomes.

One resident, Erin Ghallager, said that her $70,000 income wasn’t enough to keep up with the rent on her Trolley Square home, where the rate increased by 6% each year. 

“Between student loans, medical expenses, pets, inflation and the rising cost of living, rent hikes pushed me out of my apartment and the community I’ve loved for nearly a decade,” she said. 

Some community members made indirect criticisms aimed at members like Alexander Hackett, who had previously asked Darby to hold the bill for further discussion. Before his election, Hackett had campaigned on rent stabilization as one of his key priorities.

A small group of landlords came to the meeting to speak in opposition to the proposal, saying the bill would negatively impact their ability to maintain the quality of their units, invest in properties, and disincentivize small landlords from developing units in the city. They also raised concerns about the possibility of being denied approval to raise rents. 

“We have never raised our rent more than 3% and have accepted all cosmetic changes and upkeep requests by our tenants. If this ordinance passes, this will no longer be the case. We will need to maximize our increase and decline unnecessary changes in the case that an emergency arises,” said Jacqueline Flowers, a local landlord. 

Advocates eye referendum

The measure needed seven votes to pass, but failed by a 6 to 5 vote. 

Councilmembers Darby, Coby Owens, Michelle Harlee, Christian Willauer, Alex Hackett, and council president Ernest “Trippi” Congo voted in favor of the bill. 

Council members Cabrera, Latisha Bracy, Zanthia Oliver, Nathan Field, and James Spadola voted against the proposal. 

Councilwoman Yolanda McCoy did not vote, and Councilman Chris Johnson was absent due to a family medical emergency. 

Spotlight Delaware reached out to council members opposed to the bill to seek their reasoning for not supporting it. 

Cabrera noted concerns with the lack of data showing that the rent stabilization works, and potentially penalizing landlords who do not spike rents. 

McCoy and Oliver said that they weren’t necessarily opposed to the measure, but highlighted uncertainty around how efficient enforcement would be and how it would impact new affordable housing developments in the future. 

“I’m 100% in favor of measures to sustain and increase affordable housing. Could the council absolutely take on this challenge? Of course. But before implementing, it is imperative that we understand the potential impact of such legislation on future affordable housing development, residential mobility, and the impact of housing supply considering significant policy change,” Oliver said. 

Oliver said another short-term solution could involve increasing the amount of housing vouchers for residents. 

Johnson said that he was not in favor of the original legislation, but because he was not familiar with the amended bill, he did not know how he would have voted. 

Field declined to comment, and Spadola did not respond to requests for comment. 

If the measure had passed, the council would have then had to gather an additional 9 votes to override a potential veto from Carney. But now that the bill has failed, Darby said she and supporters of the proposal will push for a referendum, which would allow residents to bypass the council’s vote on the bill, but only through a strenuous process.

This process would start with a petition signed by at least 10% of city voters to elect a seven-member charter commission. Once elected, the commission can draft the proposed amendment, hold public hearings, and place it on the ballot. 

If a majority of voters approve the measure, it moves to the state level, where two-thirds of the General Assembly would have 30 days to veto it. If the legislature takes no action, the amendment becomes law.

The measure had gained over 2,500 supporters, and if the advocacy continues, residents could pass Wilmington’s first referendum in decades. 

“I hope the community keeps organizing, protesting, and doing what they’re doing. And then on my end, I wanna continue to have conversations about it to make [the legislation] better,” Darby said.