KATHY BROWN
‘Wonderful’ plan
As Bay State residents braced for the effects of Hurricane Isabel last week, another storm has been quietly brewing over the latest efforts to resurrect rent control in Boston and Cambridge.
In Boston, the Boston Tenant Coalition recently finished drafting and has distributed a proposal to city leaders less than a year after a rent stabilization plan was rejected by City Council. In Cambridge, signatures have been collected to put a question on the November ballot to reintroduce rent control and a proposal has been submitted to City Council.
Real estate industry leaders and property owners’ groups are vowing to fight any efforts to bring back a system they say makes it more difficult for landlords to maintain and improve their properties and discourages future apartment development.
Critics argue that the Boston proposal, “Community Stabilization: Tenants and Small Property Owners Protection Act,” is too similar to the home rule petition pitched last year. But supporters maintain the new measure includes protections for low- and moderate-income homeowners.
“We believe this is a really wonderful, comprehensive package that protects both tenants and community homeowners,” said Kathy Brown of the Boston Tenant Coalition.
Brown said tenant advocates met with city councilors and tried to address their concerns by incorporating protections for Boston’s smaller property owners. “We’ve been working with groups that work with … homeowners and came up with this proposal that both protects tenants in larger buildings … and at the same time offers protections to small homeowners who could be at risk of losing their homes,” said Brown.
The proposal includes a section on foreclosure protections and predatory lending. In addition, landlords who own six units in the city would be exempt from rent increase restrictions as long as they live in one of the units. In last year’s proposal, a property owner could have up to four units and be exempt from the ruling.
Residents would be able to challenge rent increases of more than 5 percent or that exceed the consumer price index, whichever is higher, or 10 percent or twice the CPI, whichever is higher, depending on the tenant’s income level. Rent increases would not be restricted at single-family and two-family homes. The legislation would apply to rental units built before Sept. 1, 2002.
In cases where a tenant is not paying rent because of health code violations, low- and moderate-income property owners could seek assistance to obtain financial resources or possibly refinance an existing loan in order to pay for improvements. In addition, the proposal states that “the court could order a tenant to pay all or some portion of rent” if a repair schedule is presented and monitored by a third party.
“I think our industry would be very, very sorry to see this become the focus of the City Council again,” said Joy Conway, senior vice president of government and industry affairs for the Greater Boston Real Estate Board. “It repeats what was already thoroughly discussed very recently. From our point of view, it is really not a constructive approach to solving a very serious housing crisis.”
‘Local Control’
The Boston City Council rejected a home rule petition for rent stabilization last November by a 6-4 vote. The petition was endorsed by Mayor Thomas Menino, who in the weeks following the vote vowed to reintroduce the measure. But earlier this winter, Menino reversed course, saying he wouldn’t back a new rent control proposal.
Last year, real estate industry officials lined up to tell city leaders that the return of rent control would have a chilling effect on future housing development. Some maintained that housing developers would be pulling the plug on proposals.
According to Conway, this latest version extends into different arenas, adding complicated layers and regulations for lenders. In addition, the measure seeks to limit finders’ fees that rental agents charge, which is “quite an intrusion into the business lives” of real estate agents, said Conway.
The proposal, in the form of a home rule petition that would also require state approval, has been endorsed by more than 50 community groups. According to BTC organizer Roxan McKinnon, homeowners have also supported the proposal. The proposal was finalized Sept. 12 and distributed to city councilors. The BTC must find a sponsor to have it considered by the City Council.
“We’re just beginning the conversation with city councilors,” said Brown, who noted that the BTC wants to meet with councilors individually to get input. “We’re not quite sure who will be the best person to file [the proposal].”
While the home rule petition hasn’t been officially presented, at least one councilor has already made up his mind. Councilor Jerry McDermott, who represents Allston-Brighton, told Banker & Tradesman in August that he would oppose any type of rent control and lobby his colleagues to do the same.
Aides for several other city councilors contacted by Banker & Tradesman last week said the councilors are still reviewing the draft of the proposal and won’t comment until something has been officially presented.
In Cambridge, tenant activists want a board of tenants, homeowners and landlords appointed by the city manager to determine maximum rents. They also want to protect tenants from evictions unless there are “just causes,” such as nonpayment of rent or criminal activity. The proposal includes a component to encourage landlords to rent to low- and moderate-income residents by offering incentives like allowing them to exempt some units from rent control if they rent to lower-income tenants.
Opponents say the proposal mirrors the old rent control system that was in place.
“I think we could characterize it as rigid a rent control system as one could create,” said Conway. “It’s the kind of system that is designed to make it impossible to recapture the investment of funds to make improvements in your buildings.”
Cambridge property owner Denise Jillson believes the return of rent control will be harmful for the city. Jillson, who led the Massachusetts Homeowners Coalition in the statewide effort to defeat rent control in 1994, said owners neglected property repairs and rental units deteriorated when rent control system was in effect.
As soon as rent control was defeated, property owners started making improvements and new units were built, providing more housing choices for residents, according to Jillson. Cambridge rents increased as the demand, fueled by the booming biotech and dot-com industries, went up, according to Jillson. But as soon as there was a downturn in those industries, vacancies started to rise and rents eased, she said.
“We have more vacancies now than we’ve ever seen,” said Jillson. “We’ve seen a real market correction and we’re delighted with that, and what I find disconcerting is the potential damage that this petition does to that trend.”
The proposal was given to city councilors on Sept. 10 and a hearing is expected before the end of September. In the meantime, members of the Committee for Cambridge Rent Control said they have collected enough signatures to put the issue before voters on the November ballot. According to the committee, nearly 7,000 signatures have been collected. In Cambridge, the signatures of 8 percent of registered voters – currently 4,303 signatures – are needed for a ballot question.
If the City Council rejects the proposal, tenants want to place it on the ballot, said Karen Hoerst, campaign manager for CCRC. If voters pass the proposal, it must go the state Legislature in the form of a home rule petition to be approved.
Tenant advocates say something must be done to put a check on skyrocketing rents that have forced many out of their homes. They point to a study by the National Low Income Housing Coalition released earlier this month that ranked Massachusetts as the most expensive state in which to rent a two-bedroom apartment. In the Boston metropolitan area, renters would have to earn $27.29 an hour, or $56,760 annually, to be able to afford a two-bedroom apartment at fair-market value, which is $1,419 a month.
“The housing crisis in Cambridge continues,” said Bill Cavellini, a Cambridge tenant and activist. “The eight or nine years [that] have passed since the end of rent control have not produced a significant increase in the housing supply, particularly in the low- and moderate-income sector. And there’s been an exodus … of families from the city as evidenced by the closing of two elementary schools.”
Cavellini pointed out that in 1994, voters in Boston, Cambridge and Brookline overwhelmingly voted in support of rent control, while it was defeated by a narrow margin statewide.
“These three towns were told what to do from the state and they’re suffering from it, so it’s an issue of local control as well as us responding to housing emergency,” said Cavellini.
