Boston Rent Control Presented to Council

2023-02-17 Business Update - Boston Rent Control Presented To Council

Resource Person:

Douglas Quattrochi - Doug

[Start 0:00:00]

Hi! My name is Doug Quattrochi. I’m the executive director of MassLandlords. For today’s business update, I’d like to walk you through the proposal that Boston Mayor Michell Wu has sent to the Boston City Council as of Monday, February 13th, asking for rent control.

As you know, this is a story that we’ve been following for a long time. The Rent Stabilization Advisory Committee was formed in Boston in March of 2022, almost a full year ago, and we can now finally see what they’re proposing, based on allegedly all of this public input.

But before I get to that text, let me just say if you’re a property rights supporter, thank you so much. You’re the reason we’re able to do this work. If you’re a member and not yet a property rights supporter, we really encourage you to make that extra donation because as you know, membership dues pay for themselves for the services that we provide, but then the policy work is additional on top of that.

If you’re not a member yet, even if you’re a service provider and you’re not thinking that MassLandlords is a place where you can join, everybody can join if you provide housing or if you provide services to those who do, and we really like to grow and have everybody join because we’ve got a lot of work to do.

If you see this by the way before February 21st, you can join me and legislative affairs counsel, Atty. Peter Vickery, at an event where we will talk about proposed litigation against Boston or ongoing litigation against the state for rental assistance and also some good things that are happening like our lead credit bill has been duly filed in the house and senate.

With that said, let’s actually look at the text here from the mayor to the city council. It’s four pages. I’ve highlighted the things that jump out at me. I’ll just scroll down quickly, seeing in the sense where we’re headed.

Let’s zoom in here to the front letter. Notionally, this letter is to express intent, but it could also be to deceive. The mayor is looking to be legitimate by comparing this rent control proposal to Oregon, but we actually studied the Oregon proposal. There’s an article on our site that’s been up there for a long time. I can state with confidence that the Boston proposal is not like Oregon in any substantial way. For instance, Oregon has an inflation plus 6 percent or they have a different percentage, but inflation plus a percent for rent control is the published number. There are no rent control boards. There are no eviction restrictions. It’s a number plus whatever your local market is doing. That’s pretty sensible and objective, and although all rent control creates scarcity, that’s the kind of objective system that a lot of folks would understand.

Now what the mayor has done right off the start here is set a maximum cap of 10 percent per year, so even if you had a high inflation era like at the end of the ‘70s or early ‘80s, housing providers would be crammed down unable to keep pace with the cost of housing going up over time. That’s not good, and as you’ll see in a minute, when we look at the actual proposal, the mayor is calling for the creation of a rent control board that can disregard these numbers and all this math and just look at individual property or landlord profitability and decide whether any increase is merited at all. That’s a real problem and nothing like Oregon.

Another thing that’s pretty different from what we were led to believe based on the leak a week and a half ago is that we were told this proposal wouldn’t impact the creation of new housing. We were told that anything permitted or opened in the most recent 15 years would be exempt, but as a matter of fact, that’s not at all that we see. I’ve read through this thing twice, and I couldn’t find any mention of new construction or 15 years or any of that. The only exemption we see is for owner-occupied properties with six or fewer units. I guess if you wanted to build something new and live in it, that new property would be exempt but not because it’s new, but because you were living in it.

The last thing about the front matter to note is that mayor is talking about just cause eviction, so there’s basically two paths for someone who wants rent control to choose. They can either choose to recognize inflation and market forces are real and keep pace with inflation at least, or they can reject economics and say, “We’re going to cram owners down.” But at some point, something has to give because otherwise housing just ceases to exist, so they have what’s called vacancy decontrol where they reset rents every once in a while like when a tenant lives.

Given the harsh cram down proposed, the mayor has to reset at some point and that’s where we have just cause eviction come in because in order for it to be a renter protection, in order for rent control to be enforceable, we can’t have landlords terminating no fault, so you have just cause eviction which says the reasons why a landlord can terminate a tenancy. That’s a major part of the proposal here. We’ll look at that.

Just a quick note on drafting. There is this concept of a no-fault just cause eviction, so it’s something a renter didn’t do but they did deserve to be removed, it’s kind of an oxymoron. It doesn’t make a lot of sense. I think they’re referring to if an owner wants to move into the property for themselves, then there would be relocation fees, but again it’s pretty poor drafting and it doesn’t actually say anything in the text about where those would apply.

[0:05:08]

Let’s look at the actual text here. This is a matter of statewide concern because although it’s Boston’s proposal for local rent control, what they keep saying they have to get approval from the legislature because Massachusetts Law Chapter 40P already stipulates how a rent control scheme is supposed to work. You have to reimburse owners the difference between the controlled rent and market rent, and that’s it. No boards or any of that. Now what the mayor has got to do is get the Boston City Council to approve this, and then it goes before the legislature. If they approve it, any other town or city that wants the same kind of rent control in contradiction to our current rent control law under 40P could have it, and so that’s why this is a matter of statewide concern because if Boston gets it, everyone can get it.

Alright, there’s some front matter that talks about the housing crisis. It’s a real problem. We’ve had it for 120 years, and zoning came into the scene in Massachusetts. Of course, our solution is create more housing and have a workable safety net with rental assistance, but the major doesn’t talk about any of that, just says this is necessary to prevent all these bad things, and therefore, Boston needs the power to regulate rents.

It starts by exempting all the usual exempts. Nonprofits, colleges, hospitals, and short-term rental facilities like hotels, other transient guests, are not going to be subject to rent control, and then there is the owner-occupied six-unit exemption again.

Scrolling down a little further, we come to this CPI. There’s a lot being said about this and how it’s going to be fair and done, but let’s just hold that thought. Paragraph B here is completely invalidated by paragraphs G and then E, so let’s down here. The city may establish or designate an administrator or board, a rent control board, so that’s somebody who’s going to have the power to do something. What?

Look at paragraph E, fair return standards, so that means exactly what Cambridge had in the ‘70s and ‘80s. They looked at a landlord’s application to renovate. Landlord says, “I need a new water heater, and therefore, I need to increase the rent to this much.” The Cambridge Rent Control Board will look at this. We scanned decades of records of these minutes. The rent control board will look at this and say, “Uhm. See if you can make that water heater last another two years. Rent increase rejected.”

If the water heater breaks, the landlord has to go back and reapply and if they have to replace it on an emergency basis, there is no guarantee whatsoever that the rent control board would approve it. They could say, “You already put it in the water heater. We don’t need to approve any additional rent.” It’s a huge bureaucracy.

These two paragraphs combined completely invalidate all the nice intent, all the soft wording about consumer price index, all completely invalid because the board will look at actual income statements and actual renovation decisions, as backed up further by a paragraph later on.

I’ll mention as well, here’s the vacancy decontrol part, so if a tenant doesn’t actually stay for as long as you’d expect under rent control, then you can actually reset the rent to market rents. But of course, what we know from data in New York and studies, rent controlled units tend to be occupied two to ten times longer than average, so that’s a tenancy average duration of 4 to 20 years, so you’re not going to have any kind of reset to market with any frequency.

Let’s scroll down and look at these just cause eviction protections. Whereas the front said it would be exempt if you were owner-occupied six units, this clearly contradicts that and says, “Just cause eviction applies to every landlord.” There is some weird drafting here where they specifically asks the housing court to enforce just cause eviction, but there are three courts with jurisdiction over summary process matters in Boston. There’s housing, but there’s also district court and Boston municipal court, so who knows what their intent is here. Maybe they want landlords to get unjust evictions in district court, or maybe they want all cases to go to housing court. Really poor drafting. You have to wait for the board to come up with their regulations to see what they’re actually getting into with this proposal.

If you take it for face value though, look at what it says here. It’s talking about how a landlord can only evict a renter if one of these things applies, and so “the tenant has violated an obligation of his or her tenancy not inconsistent with 93A.” What does that say? 93A says anything that’s unfair is unlawful. Here you have a situation where if a renter alleges unfairness, it doesn’t even matter what the law says. The courts would be asked, or the rent control board would have power to arbitrarily decide on the basis of equity that they’re not going to allow an eviction to go forward just because something the landlord did was unfair. Similarly, you think you’d think you’d be able to evict a tenant who’s causing damage to the property but not a little damage, not in Boston. It has to be substantial damage for you to get an eviction under this just cause.

[0:10:06]

Another thing to point out here, they’ve put in all kind of words designed to be litigable, so for instance the most litigated word in the English language is reasonable. What does it mean to have reasonable access? If there’s a leak, if there’s water pouring down from one unit to another, is it reasonable to get in there within an hour, within a day, sometime next week? You’ll have to ask the rent control board for permission and for a decision on that.

Boston is asking for condo conversion powers. There’s already a statewide condo conversion law. They already have a large ability to regulate these things. They’re asking for ability to stop renovation. This puts us right back into the ’70s and ‘80s with Cambridge where every decision, as I mentioned, had to be approved by the Cambridge Rent Control Board. It means Boston’s housing is going to fall into decline. It certainly means that Boston’s housing won’t be zero emissions by the 2050 target that we’ve established in Massachusetts.

Finally, because they know that this is going to get sued by every which way by all different organizations, they’ve got a severance clause here, so you’ll probably have to sue on the basis of each separate clause to strike down this monster ordinance. That’s what the mayor has proposed.

As I mentioned at the start, the inherent disconnect between what they’re saying and what the actual law is really makes you concerned that maybe these people don't know what they’re doing or they’re not being honest about their intentions. Either way, it’s not good public policy and it’s something that we’re going to oppose strongly at each step of the way in Boston City Council and in the legislature. We’ll keep you posted.

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