To All Members of the Massachusetts General Court,
The email sent Wednesday, July 15, 2020 4:44 PM by Representative Mike Connolly RE: H.4878 HD.5166 S.2831 SD.2992 the COVID-19 Housing Stability Act contained errors and omissions which are here corrected.
First, it is important to state that the members of MassLandlords, Inc. share these goals with the legislature:
- No one should be evicted due to COVID-19 or resulting impact.
- Housing providers should be given the resources needed to provide safe and sanitary housing.
- We should have more safe and sanitary housing in MA.
- We particularly need more rental housing.
At issue is whether H.4878 HD.5166 and S.2831 SD.2992 (hereinafter refered to as H.4878 HD.5166) with or without modification is capable of achieving these goals. Sadly, H.4878 HD.5166 is unsalvageable except in name.
First and foremost, know that there is a fully funded alternative waiting to be filed and enacted: A Fair and Equal Housing Guarantee via Surety Bonds. This bill would produce $300 million a year in additional housing stabilization in a way that simultaneously solves the housing crisis.
Before we explain A Fair and Equal Housing Guarantee via Surety Bonds, know that MassLandlords has not to date taken any position on litigation against the eviction moratorium. We recognize that during a stay-at-home order people need to stay at home, and we recognize further that we are far from a national resolution of COVID-19. This pandemic will play out for a long time yet.
I now turn to correcting the errors and ommissions made by Representative Connolly in his email:
1. The Statistics Require Context
Representative Connolly: “75% of Massachusetts residents support an extension of the Eviction Moratorium, according to MassINC.”
A sample of 1,531 residents does not reflect those who are tasked with providing housing for our residents. We sampled an equivalent percentage of housing providers, and learned that 65% disagree or strongly disagree with the moratorium as written, and only 20% agree.
This opposition remains despite more than half of the same members understanding (without any need for discussion) the public health reasons underlying a moratorium. The current moratorium has been poorly drafted.
Representative Connolly: “City Life/Vida Urbana and MIT researchers recently issued a report warning of a “tsunami of evictions” that will disproportionately impact Black people and communities of color.”
MassLandlords were the first to publish such a report in “Estimates of Post-Moratorium Eviction Filings Now Exceed Housing Court Annual Caseload,” and our report shows a forecast that extending the moratorium without funding will only increase the size of the coming tsunami.
H.4878 HD.5166 recognizes that extending the moratorium will exacerbate the wave, and therefore is an extension in name only. It is actually separate and far-reaching legislation that depends on rent cancellation to avoid the tsunami.
Representative Connolly: “WinnCompanies and the Boston Housing Authority both recently announced they are unilaterally extending the eviction moratorium for their tenants.”
It should be noted that large corporate landlords with white collar work-from-home renters and/or large populations of residents receiving permanent rental subsidy do not reflect the situation of mom and pop landlords, who provide two-thirds of the Commonwealth’s rental housing in most wood frame construction buildings with few units. Whereas such large landlords already receive ample public support, most small landlords and their subsidy-less renters do not.
Representative Connolly: “Suffolk University Law School recently reported on an investigation showing racial discrimination in housing is “egregious” and “outrageously high” in the Greater Boston area.
Yes, but hold that thought because the conclusion offered by H.4878 HD.5166 does not follow from the real problem with system racism present in the Commonwealth.
2. The Scope is as Broad in H.4878 HD.5166 as in the Current Moratorium
Representative Connolly: “The scope here is narrower than the current Eviction Moratorium law, in that this proposal for extended protections would apply only to COVID-impacted tenants.”
The language of the actual bill is:
“it shall be a rebuttable presumption that the tenant or occupant was unable to pay such rent or use and occupancy payments because of such lost income or other change in economic circumstances, and such presumption shall be rebutted only by clear and convincing evidence that the failure to pay rent was not based in whole or in part upon such lost income or other change in economic circumstances.
The rebuttable presumption language is intended to cancel rents, and you will note Representative Connolly assiduously avoided mentioning this in his lengthy email.
To rebut the presumption of impact due to COVID-19, a landlord would have to meet judicially exacting standards for evidence, including but not limited to sub poenas for renter tax returns and bank statements, dumpster diving in the hope of finding such documents, or hiring a private investigator to track down employers, supervisors, or family to attest to a renter’s financial wherewithal.
H.4878 HD.5166 was drafted to be an impossible standard for most landlords, and as a result it offers carte blanche to anyone seeking to avoid rent for any reason. This is no improvement over the current moratorium. Masslandlords member data shows that already 50,000 households (5%) are withholding rent without COVID-19 impact under the current moratorium.
H.4878 HD.5166’s language is described by many as rent cancellation, consistent with some national proposals for the same. It is purpose built for that effect. The number of households not paying without regard to COVID-19 impact will reach into the hundreds of thousands, a significant fraction of our housing.
3. H.4878 HD.5166 Will Definitely Cancel Rents
Representative Connolly: “This is a distortion or oversimplification of what the bill actually proposes.The obligation to pay rent remains in effect and landlords can still seek to recover any rental arrears in housing court.”
Actual bill text:
nor shall such rent or use and occupancy payments be recoverable in any proceeding under chapter 239, where the failure to pay such rent or use and occupancy resulted from a loss of income or other change in economic circumstances caused in any way, directly or indirectly, by the conditions and/or events described in the Emergency Declaration.
To recover rents, a landlord would have to file an action unrelated to chapter 239, which means after eviction, taking the renter back to court a second time under the small claims statute, after the renter had already moved out.
First, sending renters into court twice for the same event ought to be a political non-starter.
Second, as a practical matter, Massachusetts law prohibits all judgments, even in small claims, from being collected if the renter receives any form of public assistance, including section 8, unemployment, SSI/SSDI, SNAP, WIC, or government pension. Since most of our renters are on some form of public assistance during the pandemic, and possibly for long after, such judgments will never be collected.
As stated above, the intent of this bill is to make it impossibly difficult to collect rents lawfully owed, with the result that rents are canceled.
4. Mortgage Relief is Not Material Relief
Representative Connolly: “Section 7 of our bill provides mortgage forbearance (i.e. deferment) to landlords with 15 or fewer rental units, and specifies that landlords who obtain this mortgage forbearance are correspondingly obligated to offer rent forgiveness to COVID-impacted tenants.”
The actual language:
(c) A mortgagor who has requested and received mortgage forbearance under this section or under Section 5(b) of Chapter 65 of the Acts of 2020, as amended by this statute, must, for each month of the mortgage forbearance period, waive and forever hold tenants harmless from the obligation to pay that month’s rent for each rental unit located on the property that is secured by the mortgage
Note the asymmetry: As Rep Connolly states, the mortgage is only deferred, whereas the rent is forgiven.
Note also that brokers often tout the wisdom, “If you are paying more in rent than a mortage would cost, you should buy a house!” This is a gross misunderstanding of ownership costs.
For most housing providers, the mortgage represents only half of the expense of owning. Owners must also pay real estate taxes, which fund municipal budgets, insurance, utilities (water and sewer in most cases, heat and electrical in many), and repairs.
Note further than housing providers have generally been ineligible for pandemic unemployment assistance and unemployment (we aren’t W-2 earners), small business and paycheck protection loans (we don’t hire W-2 workers, only 1099), and CARES Act mortgage forbearance (we tend not to owner-occupy).
5. There is No Funding in H.4878 HD.5166
Representative Connolly: “The fund is designed to prioritize the property owners who are most vulnerable.”
Actually, the fund is not designed at all. The wording:
The said Fund shall consist of public and private sources such as revenue from appropriations or other monies authorized by the general court and specifically designated to be credited to the fund, funds from the federal government, and all other sources. Money remaining in the fund at the end of a fiscal year shall not revert to the general fund.
That’s the full extent of the funding language. “Private sources” means passing the hat. A separate act of the legislature would be required to come up with money, otherwise this portion of the bill remains an election year empty promise.
6. Landlords are not like Pubs
Representative Connolly: ““Some landlords are insisting that the only way we can consider any further protections for vulnerable tenants is if the Commonwealth guarantees and fully indemnifies landlords against any and all lost income due to the ongoing pandemic. However, such a principle isn’t applied elsewhere, and other businesses aren’t asking for such a guarantee. For example, the owners of pubs and taverns aren’t saying, “The state cannot close our businesses during the pandemic unless and until we are guaranteed full compensation for any lost income as a result of the shutdown.” In the same way that bars need to be closed for the sake of public health, the eviction of COVID-impacted tenants must be stopped for the sake of public health.”
Landlords are not like barbers and restaurateurs who were free during the shut-down to become amazon delivery drivers or landscapers to make ends meet, or to watch Tiger King and enjoy time with family. We are the barbers and restaurateurs forced to serve for free. We have had to continue snaking drains, repairing appliances, mowing the lawn, and exterminating infestation in many cases at risk to our own health and without any compensation during the moratorium.
The only certainty that housing costs are being met long-term is full rent, as agreed by both parties prior to the pandemic. To the extent that the Commonwealth’s renters are coming up short, the public (the Commonwealth as a whole) must pay for this needed housing.
7. Systemic Racism Makes Rent Control Surprisingly Harmful
Representative Connolly: “As the economy recovers, it is important to ensure that investors don’t take advantage of the situation through speculative rent increases. Massachusetts was experiencing an affordable housing emergency before the pandemic stuck — and the just cause and rent freeze provisions of this bill are designed to ensure the situation doesn’t get even worse. Suffolk University Law School recently reported on an investigation showing racial discrimination in housing is “egregious” and “outrageously high” in the Greater Boston area.”
The history of rent regulation, just cause eviction, and other similar measures in Massachusetts has been studied extensively by economists. Cambridge, Boston, and Brookline had self-imposed renter protections in the class of rent control and just cause eviction through the 1980’s and 1990’s. These regulations were repealed by referendum in 1994.
Here are the surprising true facts from our own history:
- Rent control in Massachusetts resulted in only 12% of renters of color occupying rent controlled units, even though 24% of the residents in those cities were residents of color, implying an adverse disparate impact against renters of color (Sims 2007).
- When rent control was repealed, the number of renters of color in formerly controlled housing doubled back to where it should have been (The Economist Magazine, 1998).
Why should this be so? Because landlords who aren’t racist – who use objective screening criteria without even knowing an applicant’s name – exacerbate systemic racism:
- The Economic Policy Institute shows 2018 median household income was $41,692 for black households and $70,642 for white households.
- The Urban Institute shows 21 percent of black households have a FICO credit score above 700, whereas 50 percent of white households do.
- And a report from the Sentencing Project shows African Americans constitute 53 percent of drug convictions, despite representing 14 percent of drug users.
How can we all have high income when some of us haven’t had access to well-funded schools? How can we all have good credit when some of us have been redlined out of credit-building opportunities? And how can we all have a clean CORI when some of us get convicted when others get off scot free?
Until we are prepared to deal head-on with the black-white wealth gap and put every applicant on the same footing, we must exercise extreme caution when enacting policies that will encourage tougher application standards.
Put another way, the only people helped by rent control are the ones fortunate enough to already have all the rental housing they will ever need. Rent control hurts everyone else forever after.
Additional negative externalities are caused by rent control, described in detail on our site.
7. Eviction Sealing Leads to Bribery and Secret Courts
Representative Connolly didn’t address either of these concerns. Our initial point stands.
Furthemore, consider the following example (real story submitted by a member but names changed) to show how more court data – not less – exonerates tenants:
“Tina was evicted for nonpayment from her last place eight months before I met her. Since then, she, along with her boyfriend and two kids lived in a homeless shelter.
“Reason for eviction: Tina & Tony both worked for the same company, which abruptly went out of business. They were not able to financially recover from the unforeseen loss of both incomes.
“Eight months later, their combined gross monthly income is $4,200. I was prepared to accept them despite the eviction because this double loss of income had since been corrected and was unlikely to occur in the future.
“She disclosed the eviction, claiming that she owed the landlord zero dollars. Masscourts.org does not divulge the details because it was settled in mediation.
“We called the previous landlord for details. He confirmed the nonpayment eviction and said she owed him $1,600 in back rent, much different from the $0 she has told us. He confirmed that Tina had moved out on the date that she claimed and left the place in good condition. He said he no longer had the written mediation agreement/judgment.
“This damning piece of information would have been the end in a lot of landlords’ screening. What reason did the other landlord have to lie? Tina had already left his unit. But Tina wants my unit, and does have an incentive to lie.
“Before rejecting Tina and her family, I asked Tina if she could put her hands on the judgment. As fortune would have it, she found the court papers.
“The mediation agreement clearly states that the last month’s rent and security deposit would be used for the remaining tenancy and that she owed zero dollars. The landlord lied. Tina had told us the truth.
“Tina almost didn’t have a home because of a bad landlord reference. If masscourts.org were to show the detailed judgments generated form mediation, which make a substantial percentage of housing court cases, then landlords can make decisions based on the facts. If landlords are rejecting someone because of an eviction where facts that are actually beneficial to the renter are hidden, then perhaps MORE facts are the answer instead of NO facts.
“For people like Tina, the current system places the burden of documentation entirely on the renter. Eviction sealing will only increase the burden on the renter. If Tina didn’t have that piece of paper, she would have remained homeless indefinitely because we still would have called the previous landlord regardless. We would have been forced to take the landlord’s word over hers and would have rejected her. It was a court record that saved her.
“I guarantee that if I asked Tina, who has now been our resident since September 2017, if she would be willing to attest to this, that she would. She is very grateful that a court record got her family a home.”
This example shows how objective court data can be more freeing than inaccurate or gossip-style landlord references. However eviction sealing advocates might try to tamp down on landlord speech, nothing will tamp down inaccuracy better than an objective public record.
8. An Alternative is Written, Funded, and Ready to Go
As we have shown above, there is basically no part of H.4878 HD.5166 that can be salvaged. The fundamental premise of H.4878 HD.5166 is that the public cannot fund the rents lost due to COVID-19, and that therefore the costs should be put onto mom and pop housing providers. This premise is false.
We offer instead a “Fair and Equal Housing Guarantee via Surety Bonds.” This is a landscape-changing policy that would guarantee rental housing during the pandemic and simultaneously address the housing crisis.
Eligible landlords would purchase surety bonds to guarantee full rent for every rental unit affected by COVID-19. In exchange for a guarantee of being paid back, however long it takes, landlords cannot evict for nonpayment.
The bonds would be paid for and underwritten by the Commonwealth, specifically by a $300 million increase in the Chapter 64 excise tax applied only to deeds for land zoned single family. According to MLS, $27 billion worth of single family deeds were transferred in 2019. The tax is a small part of closing costs and can be financed.
To avoid the tax, simply convert the single-family zoned lot to multifamily as-of-right.
Single family zoning has in large part caused the housing crisis with which we entered this pandemic and resulted in the housing instability we must now correct.
With this 1% excise tax on deeds for land zoned single family, no mortgage forbearance or further subsidy will be required to stabilize rental housing through the pandemic however long it takes.
We urge the Representatives and Senators of the General Court to amend H.4878 HD.5166 by striking the contents in the entirety and placing therein the Fair and Equal Housing Guarantee via Surety Bonds, or by filing and passing alternative legislation for this purpose.