BARRY BLUESTONE
‘Unintended consequences’
As a vote on rent stabilization in the city looms, Boston has been listed one of five cities that experienced the biggest drop in median rents last year, according to a study released last week by the National Low Income Housing Coalition.
The study, “Up Against the Wall: Housing Affordability for Renters,” found that nearly half of America’s renter households lived in unaffordable housing last year and in every state more than one-third of renter households lived in unaffordable housing. Massachusetts was ranked as the sixth most unaffordable state for renter households.
But Boston also was listed as one of the top five cities experiencing the greatest loss in median gross rents last year. According to the study, Boston’s median gross rent was $933 in 2003, a 7.6 percent decrease from the prior year. Only Aurora, Colo., where the median gross rent was $687, experienced a greater decline, according to the study.
Still, the rent affordable to households earning the area’s median income in Boston was $803, significantly less than the $933 median gross rent, and half of renter households in Suffolk County were found to have cost burdens, while 25 percent had severe cost burdens.
The study was released as real estate developers and landlords squared off last week against advocates who are trying to pass a measure to give tenants some relief from rent increases in Boston.
A City Council hearing last Tuesday was packed with supporters and opponents of the Community Stabilization Act: Tenants and Small Property Owners Act, a measure pitched by the Boston Tenant Coalition.
Under the proposal, elderly, disabled and low- to moderate-income tenants could challenge rent increases of more than 5 percent, while other tenants would be able to grieve rent increases of more than 10 percent.
The measure would apply to units built before 2002. New construction and landlords who own up to six units in the city would be exempt. In addition, once a unit is vacated, a landlord is not restricted in increasing rents.
Supporters also point out that the measure includes foreclosure and predatory lending protections for low- and moderate-income homeowners, as well as protections from “unjust evictions.” According to the Boston Tenant Coalition, “just cause” does not include the sale or optional renovation of a property.
Opponents argue that if the measure is passed it will discourage investment and development in the city. They also maintain that the act would cause many rental property values to drop, and properties would deteriorate because landlords wouldn’t have the resources or incentives to make improvements. The tax burden ultimately would be shifted to single-family homeowners and other property owners who do not fall under the measure, they say.
Roxan McKinnon, assistant coordinator of the Boston Tenant Coalition, said property values won’t drop because the proposal does not call for a rent cap, and landlords do not have to seek permission for rent increases, unlike the old form of rent control that was eliminated statewide in 1994.
“It’s up to the tenant to seek mediation,” she said
About 64,139 renter-occupied units in buildings with 10 or more units would be affected by the measure, according to McKinnon.
McKinnon disagrees with real estate industry leaders who say that the act would discourage housing development. “We see this proposal as harmonious to development,” she said.
Rich Rogers, executive secretary of the Greater Boston Labor Council, said the act “puts the brakes on unconscionable rent increases” and stabilizes communities.
“If Boston wants to be a real world-class city we need to build communities that welcome working-class families, not just affluent ones,” Rogers said.
Mike Stella, a landlord who owns 100 apartments in Roxbury and Dorchester, said the measure is an “extremely fair proposal that protects the right people.”
“This is not rent control,” he said.
‘Hostile Message’
But some remain unconvinced by the proponents’ arguments.
“This measure, no matter what is being said, is a form of rent control,” said Robert L. Beal, president of The Beal Cos.
Beal said major investment firms have signaled they would not invest in the city if the Community Stabilization Act is approved.
Samuel Tyler, president of the Boston Municipal Research Bureau, said the act creates a “chilling effect” on financing that comes from outside of Boston. “The uncertainty that it creates is not worth the limited benefit it might have on the short term,” he said.
“We believe the solution to the housing problem is greater production, not control,” he said.
William McLaughlin, senior vice president for AvalonBay Communities, said if the act passes it sends a “hostile message” to developers and investors, and many will choose to develop condominiums instead of rental apartment communities.
Real estate developers and landlords say the proposal is unnecessary, coming at a time when rents have declined and vacancy rates have climbed.
Citywide rents have dropped by 11.8 percent between 2001 and 2003, and the vacancy rate during the third quarter of the year climbed to around 7 percent, according to Barry Bluestone, director of Northeastern University’s Center for Urban and Regional Policy.
Bluestone said the proposal would not only have a chilling effect on future housing development, but it would also have some unintended long-term consequences. For example, landlords would be more eager to rent to higher-income tenants who would be less likely to challenge rent increases, and some property owners would be more eager to convert their rental units into condominiums.
“While we fully share the concern of those who have put forward this proposal, we fear that if enacted it will inadvertently lead to a series of unintended consequences that will end up making the long-term problem of shelter costs even more difficult to solve,” Bluestone said in written testimony that he and another professor presented to the City Council.
Bluestone also said the Community Stabilization Act could “partially and maybe even substantially undermine” Chapter 40R, a measure approved by the Legislature earlier this year that is designed to provide financial incentives to communities that establish smart-growth overlay districts where housing can be built.
A rent stabilization act, proposed by the Boston Tenant Coalition and endorsed by Mayor Thomas M. Menino, was rejected by city council two years ago. Since then, the Boston Tenant Coalition has met with homeowners and various community groups to try to craft a plan that addressed many of the concerns raised by city councilors and small-property owners about the last proposal.
City Councilors Felix Arroyo, Charles Yancey, Maura Hennigan, Chuck Turner and Michael Ross have said publicly that they support the Community Stabilization Act. Councilor Jerry McDermott has said he opposes the proposal, and five other councilors have not publicly stated their position.
McDermott acknowledges the council vote will be close. “I’m pretty confident that we will have the majority of the Boston City Council voting this measure down,” he said.
City Council is scheduled to vote on the proposal on Dec. 8.
