MassLandlords Testimony in Opposition to An Act Enabling Local Options for Tenant Protections 192 H.1378 S.886

The following testimony specifies opposition, by MassLandlords, Inc., to the proposed legislation, An Act Enabling Local Options for Tenant Protections 192 H.1378 S.886. This bill is proposed by representatives Mike Connolly and Nika Elugardo.

Peter Petrillo died of a heart attack after being ordered by the Cambridge rent control board to jack up this building. This intersection was named for him and his widow.

This legislation would legally re-enact rent control statewide, a failed policy that was attempted in Cambridge, Brookline and Boston from the 1970s to the mid-1990s. In 1994, a statewide ban on rent control, Chapter 40P, was enacted via referendum.

To attempt now to rewind the clock and again enact rent control laws would be to invite the same failed policies that inspired the need for Chapter 40P originally. Studies and experience have shown that rent control policies reduce housing and rental housing stock overall, deter maintenance of housing, discourage investment in new housing and force small rental property owners out of the market – all opposite outcomes of what is needed.

A well-known case of rent control disaster is memorialized on Magazine Street in Cambridge and detailed here. The case of homeowners Helen and Peter Petrillo ended in a fatal heart attack for Peter immediately following a dispute with the Cambridge rent control board over a basement apartment in the couple’s three-decker that would have cost them tens of thousands of dollars. Helen Petrillo eventually won their case, but a sign standing in front of the house remains as a reminder of rent control’s deleterious effects.

The Petrillos were only one example of property owners who suffered great loss in the failed experiment to control rental rates in Massachusetts.

The following points represent our testimony in opposition to proposed changes to Title VII, Chapter 40P, the Massachusetts Rent Control Prohibition Act.

Opposed to Bill Title Change – 40P Already Allows Rent Control

We are opposed to the Section 1 proposal to change the title of Ch. 40P to the TENANT PROTECTION ACT. The fact is that Ch. 40P already allows rent control. Any city or town in Massachusetts is allowed under current law to exercise rent control for apartments renting for less than $400, as long as the municipality reimburses the owner for the difference between market rent and the controlled rent price. The original bill title, while deficient, is more accurate than the proposed title and should remain in place.

Opposed to Changes to Local Control, Which May Worsen Housing Inequity

We are opposed to proposals to replace Ch. 40P, SECTION 2 sub-sections emphasizing and allowing local rent control. Dividing a statewide issue into local control can be problematic on many levels. Enabling local control to address the statewide problem of unaffordable housing could exacerbate the problem, and will promote inequitable housing prices from community to community.  Any action, including restrictive zoning, that needlessly and unhelpfully restricts housing supply, should not be tolerated, let alone written into law. This is one reason why the state legislature enacted the Housing Choice Act earlier this year.

Opposed to Subsection 4: Anti-Displacement Zones, an Invitation to Redlining

We oppose the SECTION 2, subsection 4, proposal allowing “anti-displacement zones,” in which municipal governments could opt to regulate rent and eviction specifically in designated areas with low-, moderate- or middle-income residents at risk of displacement. This proposal would be akin to encouraging the racist former practice of “redlining,” by allowing towns and cities to literally draw a red line around poor areas, and exempting wealthy areas from regulation. The disparate impact on people of color would be profound and would represent a big step backwards in achieving equitable housing.

Opposed to Subsection 4(d): Optional, Not Mandatory – A Path to Repeating Rent Control Abuses of 1970s–90s

Subsection 4(d) states: “Any city or town that adopts this section may (emphasis added) ensure that dwelling units governed by such measures are only eligible for those individuals or households who meet income-based eligibility requirements as provided for by the city or town.” This subsection is clearly an attempt to correct past failings of rent control by means testing, because too many rent controlled dwellings during the 1970s–‘90s iteration of the law were occupied by wealthy residents, including a mayor (Cambridge Mayor Ken Reeves, 1992 to 1995, lived in a spacious rent-controlled apartment) and a judge (state Supreme Court Justice Ruth I. Abrams also lived in rent-controlled housing).

The flaw with this suggested subsection is that it allows the option of means testing with the word “may” instead of requiring it with the word “shall.” This was one of the most flawed deficiencies of former rent control laws. To attempt to correct it by voluntary compliance shows that these proposed changes to Ch. 40P were written in ignorance and without due attention to context.

Opposed to Subsection 4(e): Rent Control Boards, One of the Worst Provisions of Past Rent Control Law

We oppose the recommended change in subsection 4(e), allowing towns and cities to establish boards to oversee local rent and eviction regulation. During rent control of the 1970s through ‘90s, local boards were increasingly appointed to govern rent control. These boards levied notoriously stringent regulatory thresholds for landlords, and were, according to anecdotal testimony, rife with corruption and favoritism.

Stories abound from property owners who became caught up in rent control boards’ bureaucratic webs and lost thousands, or their property, or both.

Jim Regan, a longtime landlord in Boston, well recalls the rent control decades and the board appointed to oversee rent control laws. “You were petrified [to go before the board],” he said, as reported in this article. “I remember, for example, a fridge would break down, you’d have to go out and buy a new refrigerator. It would take you three to six months to get a decision whether or not you could get more money because you put a new refrigerator in there.”

For the above reasons, we strongly believe that the proposed law, 192 H.1378 S.886, should not be considered nor enacted by the state legislature.

Opposed to Just Cause Eviction, Another Form of Rent Control

We strongly oppose the proposed law’s suggestion, in subsection 5, of enacting just cause eviction protection. Just cause eviction is simply another form of rent control. As practiced, just cause eviction makes it difficult or impossible to evict tenants who refuse to pay a rent increase, as explained in this article. The Just cause eviction provisions attempt to enumerate all the possible reasons that a tenancy may be terminated, but does not include refusal to pay a rent increase. In other words, within the provisions of just cause eviction, a landlord has no recourse if a tenant does not agree to pay the increase. This is tantamount to telling a property owner that they are not allowed to raise the rent and charge their tenant the higher rate – that the current rent is frozen and not subject to market forces.

It is impossible to thoroughly anticipate all the possible reasons why a tenancy might fail, as just cause eviction attempts to do. This is why the legislature created the tenancy at will, which allows an owner to terminate for no fault.

The suggestion to enact just cause eviction as part of the proposed legislation is another reason why bill 192 H.1378 S.886 should not be considered nor enacted by the state legislature.

Opposed to Sharing Notice to Quit Information, a Legally Questionable Form of Compelled Speech

Subsection 6, which addresses Notices to Quit, reiterates the inclusion of a verbatim statement in any Notice to Quit, as follows: “THIS NOTICE TO QUIT IS NOT AN EVICTION. YOU DO NOT NEED TO IMMEDIATELY LEAVE YOUR UNIT. YOU ARE ENTITLED TO A LEGAL PROCEEDING IN WHICH YOU CAN DEFEND AGAINST THE EVICTION. ONLY A COURT ORDER CAN FORCE YOU TO LEAVE YOUR UNIT.” The requirement for property owners to utter this verbatim language to tenants is akin to compelled speech. In theory, compelling someone to say something – and conversely, barring someone from saying something – are not legal actions and are under protection of the federal First Amendment. However, cases of compelled speech being allowed do exist in recent jurisdictional history.

Nonetheless, this compelled speech is legally shaky at the least, may be subject to legal challenges and bears watching.

Opposed to Subsection 6(b): Contradiction between Personal Info vs. Private Data

Subsection 6(b) outlines a concerning contradiction, stating both that personal identifying information on a notice to quit would be kept confidential by any officials with the executive office of housing and economic development and the chief officer of the municipality; yet may also be shared, “to the extent permitted under federal law,” with regional administering agencies (RAAs) or housing consumer education centers (HCECs) “for the purposes of providing housing stability resources (emphasis added) to tenants at risk of eviction.”

Either a notice to quit is considered a debt collection document for legal purposes, and therefore cannot be legally shared with a third party, or it is not a debt collection document, in which case it is public record. Personal identifying information on notices to quit cannot be both legally private and shared with third parties such as HCECs.

The above outlined examples of legal inconsistency and careless consideration add to our conviction that the proposed law, 192 H.1378 S.886, should not be considered nor enacted by the state legislature.

Opposed to Rent Roll Backs, a Way for Municipalities to Cancel Contracts and Invalidate Investments

We oppose the recommendation in Subsection 7 advocating for rolling back rental amounts in rent-controlled units to the monthly rate that was charged 12 months prior to a municipality’s acceptance of this ordinance.

Imagine a property owner who just finished investing in improvements to rental properties on the basis of offsetting some of the cost with recently raised rent revenue. Now that property owner is ordered to lower rents back to their former rate, potentially losing tens of thousands of dollars per order of the municipality.

Landlords would rightfully be outraged by this compelled revenue forfeiture and it would result in numerous legal challenges.

Further, this provision would require a town or city to nullify and rewrite legally established contracts, a legally questionable action in itself in this setting.

Finally, as with other forms of rent control, this proposed ordinance would have a similar effect of deterring rental upkeep and renovations.

Opposed to Local Regulation of Move-in Fees, A Recipe for Ensuring Higher Rents

In addition to rent control, this proposed legislation also promotes local regulation of move-in fees, allowing tenants to make installment payments for last month’s rents and security deposits. The potential problems with this proposal are many, foremost the increased risk for landlords of opening a lease with a fraction of a security deposit and last month’s rent in hand. In such cases, the monetary incentive is removed for tenants to comply with lease provisions, to care for the dwelling and to remain through the lease duration.

This provision would also result in higher rents as landlords forgo the risk of unpaid-up-front security deposits and last month’s rents and make up for it in an increased rental price. This is already taking place as landlords are increasingly moving away from security deposits, and raising rents to cover the equivalent cost, due to the monetary risks and confusion built in to the existing security deposit law. Adding an installment option to last month’s rents would multiply the trend.

To replace a security deposit and last month’s rent within the monthly rental price would equal an increase of 16%, or 1/6 (2/12) of annual rent. For an apartment renting for, say, $1,500, that equals a $240 hike per month.

Opposed to Local Establishment of Anti-Displacement Zones, a Precursor to Housing Discrimination

As stated above, the allowance of designating anti-displacement zones enables a regression to racist redlining practices of the past by empowering town and city government officials to draw highlighted barriers around poor neighborhoods and marginalizing them from wealthy and high-opportunity areas.

Subsection 9 of the proposed legislation recommends precisely that practice by allowing municipalities to establish anti-displacement zones either community-wide or by piecemeal as it sees fit. New construction would not be exempt from such designation.

In light of above reasons, separately and in total, we believe it is clear that the proposed law, 192 H.1378 S.886, should not be considered nor enacted by the state legislature.

Return to Rent Control is Not the Answer

Rent control is not the answer to a shortage of housing in Massachusetts, nor is it an effective measure for increasing affordable housing. Our past attempts at implementing rent control, in the 1970s into the 1990s, has demonstrated its fecklessness in addressing the housing conundrum.

Worse, the rent control legislation being proposed is written in a way that would result in duplicating the most poignant failures of that former ineffective experiment.

Better Solutions to Housing Shortage

Alternatively, MassLandlords recommends a two-tiered approach to alleviating the housing crisis and encouraging growth in affordable housing statewide.

First, in the short term, MassLandlords is suing the Department of Housing and Community Development to enforce a release of public records that would shed light on the agency’s uneven and confusing distribution of federal emergency rental assistance funding. We hope the data that we seek might provide information that could assist agencies in correcting and improving rental assistance so that more renters can remain in their homes.

Secondly, and in the long term, MassLandlords has long advocated for reform of the state’s zoning laws. Specifically, we promote reform of outdated single-family zoning laws. Property owners who choose to should be allowed to construct multi-families or accessory dwelling units on their property as long as their plans comply with building code. Homeowners who choose to have a single-family house on a lot with several acres should be free to, of course. But those who choose to benefit by offering housing options on their lots should have that option too.

Single-family zoning laws disallow such options. By doing so, these laws deter growth in affordable housing that could be substantial.

There is no shortage of examples of other states and communities across the United States taking such steps to reform single-family zoning. California and Oregon lead the way among states creating laws intended to expand housing through zoning reform.

California has passed a slew of recent bills, packaged as Building Opportunities for All, that allow property owners to subdivide parcels in two in order to build extra dwellings, such as duplexes and ADUs. Another bill gives municipalities the option to rezone neighborhoods in transit-rich and/or urban/infill areas to allow increased density of up to 10 homes per parcel. Other new laws in California allow residential housing to be built on commercially and retail-zoned properties, enable housing density increases, and provide support for affordable housing projects, among other measures.

Oregon passed a law in 2019 disallowing cities with populations of more than 10,000 people from preventing duplex and townhouse construction on single-family zoned land.

In 2020, Minneapolis, Minn., became the first major U.S. city to ban single-family zoning in every neighborhood as part of its Minneapolis 2040 comprehensive plan. The policy bans the prohibition of building duplexes and triplexes on single-family zoned land citywide. Washington, D.C., has taken recent steps to allow the construction of ADUs in most residential zones.

In Massachusetts, the Housing Choice Law passed in 2020 was a start. We urge our legislators to seek zoning reform similar to that in other states and that extends Housing Choice Law provisions instead of considering ineffectual rent control policies such as the one currently proposed.

Bill 192 H.1378 S.886 would only move us backward in the pursuit of housing for everyone.