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Boston Mayor Michelle Wu pushed back against criticism of her proposal to slap a cap on rent increases city wide would harm housing production in an interview on GBH News’ “Boston Public Radio” Tuesday.
“We went through intense balancing and calculations to make sure we won’t harm our ability to create more housing,” Wu said in response to a question from co-host Jim Braude, who relayed criticism from commercial real estate organizations that any form of rent control.
“Rent control is a proven way to slow the production of new housing. Further, it negatively impacts existing housing by reducing the overall supply of rental units and, as we saw when this was last in effect in Boston, it decreases the quality of the existing units,” NAIOP-MA CEO Tamara Small told Banker & Tradesman in an email when word of Wu’s plan first leaked two weeks ago.
An advisory committee of real estate industry figures and housing advocates is still refining the specific details of the mayor’s proposal, but in broad outlines it would cap rent increases at 6 percent plus an additional allowable increase based on inflation as measured by the consumer price index, for an overall ceiling on annual rent increases of 10 percent – a formula Wu characterized Tuesday as “basically set by market conditions.” Buildings would be exempted for the first 15 years after construction, or around twice as long as the typical investor holds a property and small, owner-occupied properties would also be exempted.
“We’ve done our own research. We’ve done reports. We’ve done a year of digging in. We’ve looked at the comps of different real estate proposals. Most financial institutions, when they give the finances to help build new rental buildings, the estimates they have as to what revenues are going to be and all that they’re not projecting 5-7 percent rent increases anyway,” Wu told Braude.
Instead, Wu claimed, the policy is intended to put “guardrails” in place, saying some landlords in areas of the city growing in popularity “are imposing double-digit rent increases that are unnecessary and very destabilizing for our community.”
City Wants to Hire More
But even if it makes it into law, Wu said, any rent control proposal won’t be enough to make Boston more affordable.
“I want to be clear … Rent control, as an individual tool, will not solve our housing crisis. It is not a way to generate more housing and increase the number of units that are affordable to our residents,” she said.
Wu touted her administration’s plans, initial details of which were announced Monday, to spur more housing production by speeding up development approvals and rezoing the city to allow for more as-of-right development, as an important part of any solution to the city’s affordability woes.
Boston Planning & Development Agency Director Arthur Jemison told Banker & Tradesman in an interview Tuesday that more information on how the city will execute those plans will come as part of the city’s budgeting process in April. The agency wants to hire more planners to speed up rezoning efforts, he said, with an explicit goal of enabling more and denser multifamily development in the city’s squares and commercial corridors.
But the BPDA, like many employers, has struggled to fill empty positions over the last year. It and other city departments are also bound by a requirement to only hire Boston residents.
Healey Confirmed Her Support
The mayor’s proposal must first be approved by the Boston City Council, where some members have argued the plan isn’t restrictive enough, by state legislators who historically have been cool on the concept and by Gov. Maura Healey.
In a separate interview earlier in the program, Healey told GBH’s Braude and co-host Margery Eagan that she continues to back local-option rent control measures like Wu’s proposal.
“I support the efforts of local communities to make those decisions,” she said.
Wu acknowledged that some opposition to the proposal is driven by fears of a “slippery slope” that could see other communities also impose rent control. Privately, some real estate industry figures have also said they fear either Wu or a future mayor might try to ratchet down the maximum allowable rent increase.
Real estate trade groups have also emphasized that Wu’s proposal, if approved, could tarnish the city’s reputation among investors and lenders whose money is essential to building new housing.
“There’s also a larger feeling that when capital and when funds are so fluid across the country you have to create a feeling, a vibe that this is a welcoming community and that we’re not antagonistic. I believe that the best way to create those feelings is in fact to speed up our processes, be reliable, predictable and change our zoning code” to allow for more as-of-right development, Wu said.
