An Open Letter to Boston City Council about Rent Control and G.L. Chapter 40P

Dear Councilor:

This letter might surprise you, but I’m going to tell you how Boston can have rent control without a home rule petition. You can have it today, or more realistically, at the next city council meeting. First, a little history.

Rent Control in Boston would take us back to the middle of the 20th century when towns subsidized this terrible policy. Derivative of Licensed Unsplash

As you know, rent control was repealed in 1994 by a statewide ballot initiative. This initiative succeeded despite local support for rent control because of the state aid formula. Towns with rent control, in the case of 1994, Cambridge specifically, had rent control regimes that did not keep pace with inflation, imposed eviction oversight, and discouraged renovation of old buildings. Over many years of enforcement, this system led to a decline in assessed values, a reduced tax base, and increased state aid. The towns and cities without rent control did not want to pay for this policy. This remains true today.

This is why, when the ballot initiative was drafted, an exception was granted. This exception remains in force today. General Laws Chapter 40P Section 4 allows any town or city to have rent control under a few conditions. These are conditions landlords can live with because we wrote the petition that became law.

The first condition is that a municipality must reimburse owners for the difference between market rents and controlled rents. This is sensible. In all the talk about rent control, no one has ever mentioned real estate tax control, insurance premium control, plumbing bill control, or any other measure that would balance the equation for operators of real estate. Housing is expensive. If a municipality wants to limit what a renter pays in rent, the municipality must make up the difference to the owner. Although easy in principle, in practice this would mean Boston would have to come up with funding for the program. We can’t change economics. Someone has to pay for housing.

The second condition under 40P is that rent control cannot be applied in certain circumstances. Read the law for yourself on this one. It says, “nor may such regulation apply to any rental unit that is owned by a person or entity owning less than ten rental units or that has a fair market rent exceeding $400.” $400 per what? This is our mistake. The landlords of that era probably meant to write “$400 per month.” But they didn’t. And you know what? We don’t mind if you interpret this limit liberally. “Per day” would grant rent control for units less than $12,000 a month. Who would object to such an interpretation? Not us.

Rent Control’s Racist Disparate Impact

Rent control is universally disregarded by economists for its unintended consequences. The most pressing and urgent of these is its disparate impact on the basis of race. When landlords are hemmed in at or below inflation, with eviction restrictions, they hold units vacant longer waiting for a perfect applicant with high income and perfect credit. In America and in Boston no less, we have a Black-White wealth gap that previous housing policies have exacerbated. For this reason, the applicants who obtain rent controlled housing are disproportionately well-off, and as was seen in the ‘70s and ‘80s, unfairly, disproportionately white. I refer you to the work of David Sims 2007, who showed with data from Cambridge what Heikki Loikannen predicted in 1985. Rent control helps folks who have an apartment the second the law is enacted, but it hurts everyone else forever after.

If we were able to have a conversation about the housing crisis, I would want to direct your attention to the Metropolitan Area Planning Council’s zoning atlas. This resource shows zoning for many towns on the basis of not just intended zoning, but actual limitations accounting for floor-area ratios, setbacks, and parking requirements. It shows half of Boston is zoned effectively single family. Zoning reform is the long-term solution. I mean density not just where Boston has already done more than its fair share, but density in neighboring communities through coordinated statewide action.

We know there are many households in your district unable to pay rent today, such that zoning reform is no immediate help. For these households, the rental assistance safety net must work. This is why MassLandlords is currently going into year two of litigation against the Department of Housing and Community Development over their having lost 47,000 of the 151,000 applications for pandemic rental assistance as of January 2022.

Long-term, we need zoning reform and a lot more housing. Short-term, we need rental assistance. But if today you wanted a form of rent control to which landlords would not object, you could have it under Chapter 40P.

Sincerely,

Douglas Quattrochi

Executive Director

MassLandlords, Inc.