TED JANKOWSKI
‘Wrong signal’ sent

At a time when some real estate industry watchers are saying that the residential rental market is just beginning to recover from a period when vacancy rates crept up and rents were flattening or declining, the Boston City Council is once again considering a proposal to control rent increases.

Supporters maintain that the proposal, pitched by the Boston Tenant Coalition, is designed to stabilize Boston neighborhoods and protect both tenants and small-property owners. Critics argue that the measure will hurt housing production and discourage development in the city.

“This measure is counterproductive and sends the wrong signal nationally that Boston is not the right place to invest in housing,” said Ted Jankowski, chief executive officer of the Greater Boston Real Estate Board. “And it is the right place to invest in housing.”

The draft of the rent proposal was released last September during a press conference at City Hall Plaza, but it was not officially introduced to the City Council until last Wednesday when Councilor Felix Arroyo sponsored it. Councilors Maura Hennigan, Michael Ross, Charles Turner and Charles Yancey co-sponsored the measure, which was referred to the council’s Government Operations Committee.

“We think it’s a really reasonable proposal,” said Kathy Brown of the Boston Tenant Coalition, which floated a rent stabilization proposal two years ago that was rejected by the City Council.

Brown said the proposal was modified to include protections for small-property owners after the coalition heard the concerns of city councilors and landlords and met with groups that represent homeowners.

Unlike the proposal two years ago, the new measure exempts more properties, and it doesn’t include a cap that would prohibit landlords from increasing rents more than 20 percent once a unit is vacated, according to Brown.

Under the measure, tenants would be able to challenge rent increases of more than 5 percent or 10 percent depending on their income. Newly constructed properties would be exempt from rent restrictions, and so would landlords who own up to six units.

In addition, the plan includes sections on foreclosure protections for small-property owners and protections against predatory lending. In cases where a tenant is withholding rent because of health code violations or poor living conditions, low- and moderate-income property owners could seek financial assistance or possibly refinance an existing loan in order to pay for property improvements. Tenants could then be ordered to pay the rent as long as the landlord presents a repair schedule that can be monitored.

‘Very Benign’

At the council meeting last week, Hennigan noted that the plan does not prohibit landlords from increasing rents. “This is not rent control. This is rent stabilization,” she said. “This is a very, very benign piece of legislation.”

But some city leaders are wary. Councilor Jerry McDermott, who has already said he will oppose the measure, cautioned councilors to read the proposal carefully.

Calling rent control a “vestige of the past,” GBREB leader Jankowski said, “There’s no body of evidence anywhere that shows that it works. Clearly it doesn’t work.”

The issue is resurfacing at a time when some property owners are just starting to see the first signs of a recovery in the rental market.

In April of this year, the Boston Housing Authority compiled data that showed that rents in some parts of the city had decreased by approximately 10 percent. The Housing Authority compared average rents for more than 700 apartments that utilize Section 8 rental vouchers administered by the BHA from Nov. 1, 2003, to April 8, 2004, with average rents for 3,000 apartments using vouchers from Jan. 1, 2003, to Oct. 31, 2003. The average rents for the later period showed a “marked decrease” compared with the earlier rents, according to the BHA.

For at least the last two to three years, apartment vacancies have risen and property owners have offered various concessions to fill empty units. In particular, owners of smaller properties had to reduce rents to attract tenants. Some property owners are still offering concessions, but industry watchers are reporting that occupancy has improved and the incentives are lessening.

But Brian Kavoogian, president of the Greater Boston Real Estate Board, said rents have fallen from the rental market’s peak in 2000 and 2001 by more than 25 percent, and the vacancy rate has reached between 7 percent and 8 percent. The market has yet to stabilize, he said.

And Kavoogian, a principal of The Davis Co., maintained that only more housing creation will help to moderate the region’s high housing costs. “Everyone understands it’s an issue of supply. We’re simply not producing enough housing.”

By introducing any form of rent control, the city will “not be able to attract the capital necessary to build” more housing, he added.

The Boston City Council rejected a home rule petition for rent stabilization in November 2002 by a 6-4 vote. The petition was supported by Mayor Thomas Menino, who in the weeks following the vote vowed to reintroduce the measure. Menino indicated last year that he would introduce a new version of rent stabilization, but never did.

Meanwhile, in Cambridge, voters last year voted against a ballot question to revive rent control. The effort to roll back rents, led by the Committee for Cambridge Rent Control, was unrelated to the Boston rent proposal.

Brown said over 70 groups support the Boston Tenant Coalition’s plan, including the Greater Boston Central Labor Council and the Boston Teachers Union. Richard Stutman, president of the Boston Teachers Union, said tenant and homeowner protections would help create a more stable home environment for the city’s students.

Students in Boston schools have a higher mobility rate than those who attend schools in wealthy suburbs, according to Stutman, who explained that poor housing conditions and constant moving can disrupt a student’s education.

“It makes teaching and learning more difficult,” he said.

In a letter sent to the City Council, Stutman wrote: “Anything that can stabilize and improve housing conditions will have a positive effect on our students and their families.”

Community development corporations based in Boston neighborhoods such as Jamaica Plain, Fenway, Allston-Brighton and Roxbury are also in support.

Ava Chan, a community organizer with the Allston-Brighton CDC, said she hopes the measure will ease the transitory nature of her neighborhood, where many families have been displaced by college students.

“There is a lot of competition for those larger family-size apartments,” said Chan, who provides tenant counseling.

The measure favors tenants and small-property owners “against the investment landlords, the corporate landlords, because they’re the ones who are benefiting the most,” Chan said.

Brown said while the city has done a lot to address the housing supply, with limited city, state and federal resources another strategy is needed.

“This is another tool to add to the chest to address the housing crisis that exists especially for low- and moderate-income households,” said Brown.