EDWIN J. SHANAHAN
‘An important vote’
Boston city councilors said “no” to rent control last week, but a message may have been sent that will be hard to erase from the minds of lenders and apartment developers, according to local real estate observers.
By a 6-4 vote last Wednesday, the council rejected Mayor Thomas M. Menino’s “rent stabilization” proposal that would have capped rent increases at 10 percent a year for most residents and allowed tenants to protest rent hikes.
In a press release issued the day after the vote, Menino criticized councilors for siding with real estate developers who have promised to build more housing at the end of rent control but haven’t delivered. According to the release, the city has created nearly 2,500 affordable rental units and has worked with universities to create about 900 dorms, while the private sector has added less than 700.
The vote was a victory for property owners and real estate developers who fought against the initiative, which they said resembled the same rent control policy rejected by voters about eight years ago.
“Clearly it’s an important vote by the council, and it’s one we’re very pleased to have them make,” said Edwin J. Shanahan, chief executive officer of the Greater Boston Real Estate Board.
But Shanahan acknowledged that the proposal had an immediate “chilling effect” on development. “There are a number of developers who had things on the drawing board who said, ‘let’s hold off and let’s wait and see,'” said Shanahan.
Now that the “distraction” is over, Shanahan said, it’s time to start working on getting more housing produced.
Despite the failure of the proposal, some worry that the mayor’s promise to bring back some type of similar proposal in January could be detrimental.
“The ‘signaling effect’ of the promise to reintroduce rent control in the New Year clouds financing prospects of new rental development in Boston,” said one source. “You can’t put a shovel in the ground because at any given moment a new rent control bill may come out with unknown and perhaps even more onerous implications than the failed bill, making your project totally infeasible.”
‘Not Going Away’
Tenant advocates had pushed for the rent stabilization and “unjust evictions,” arguing that many working people couldn’t to afford to live in the city, and that landlords were gouging residents with excessively high rents. In a study by the National Low Income Housing Coalition, Massachusetts was listed as the least affordable state for renters, while Boston ranked as the fifth least affordable metropolitan region, behind such metro areas as San Francisco and San Diego. According to the study, minimum-wage workers in the Boston area would have to work 157 hours a week – or earn $42,040 annually – to afford an average two-bedroom apartment.
Last month, Menino, who has been a strong advocate of affordable housing, filed the Fair Rent and Tenant Protection Home Rule Act. The plan would have allowed tenants to “grieve” rent increases beyond a certain percentage to a special board. It also would have restricted the fees that real estate brokers charge to find a rental unit. About 70,000 rental units would have been affected by the proposal.
After a City Council committee held a hearing and recommended rejection of the plan, Menino – who did not attend the hearing – made changes to the measure. The measure also needed the approval of state lawmakers. Several councilors said last week they couldn’t support the initiative because it wouldn’t have created additional housing units and immediately helped tenants.
“We’re really disappointed by what happened and how the votes came down,” said Kathy Brown of the Boston Tenant Coalition, a group that was instrumental in getting the mayor to file the act. But Brown added: “The issue isn’t going away and we’re not going away.”
Brown said she was frustrated by the “misinformation” that a group of small property owners was spreading about the proposal. Many property owners panicked because they were mistakenly led to believe that they would have been affected by the changes. Tenant advocates didn’t have the resources to match the real estate industry’s, which lobbied heavily against the rent plan, nor the time to explain the proposal to concerned property owners, said Brown.
The plan was supported not only by tenants, but by many homeowners who are concerned about the displacement of tenants and want to see a limit on rent increases and evictions, she said.
“We’re disappointed that the majority of the council came down on the side of those that have vs. those who don’t have,” Brown said.
Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance, echoed those remarks, saying, “It’s a disappointing vote. It definitely is a setback for tenants.”
Callahan said the proposal would not have rolled back rents but would have “stabilized” rents in the long term. Since it was rejected, Callahan said the “burden” is now on city councilors and the real estate industry to come up with a plan to alleviate Boston’s housing crisis.
“They realize that there’s a serious housing crisis in the city, but I think they’re going to have to do some soul searching about what it is they’re willing to support,” said Callahan.
Voting against the measure were Council President Michael Flaherty, Councilor-at-large Stephen J. Murphy, and Councilors Maureen E. Feeney, James M. Kelly, Paul J. Scapicchio and John Tobin.
Voting in favor were Councilor-at-large Maura Hennigan and Councilors Charles Turner, Charles C. Yancey and Michael P. Ross.
Councilor-at-large Francis M. Roache was absent because of a death in his family, and Councilor Rob Consalvo was absent because of the birth of his first child.
