An Act Establishing a Pilot Program for A Fair and Equal Housing Guarantee via Surety Bonds and Decreasing the Prevalence of Single Family Zoning

Summary of Surety Bonds

This bill would establish a new kind of rental assistance available at any participating insurance broker. The rental assistance would be administered in two steps. First, a landlord buys a bond to cover a unit. This takes time. Then, if there's a claim afterwards, the payout would be instant.

Since this pilot requires additional public funding for rental assistance, the bill would increase the excise tax on land restricted to single family use. Why specifically single families? Because single family land use is the primary reason we have a scarcity of rental housing in Massachusetts. Land rezoned to duplex or land that is already multifamily would be exempt from the new excise tax.

This would be a pilot program only.

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Full Text of the Surety Bond and Zoning Bill

To be posted.

Explanation of the Surety Bond and Zoning Bill

This law would take effect upon passage.
A pilot program is not a permanent commitment. We'll try this and see how it goes.
This bill requires money. We're going to try a new type of rental assistance.
The Department of Housing and Community Development (DHCD) will make rules, but licensed insurance companies will administer the bonds. This is different from today, where regional administering agencies (RAAs) administer rental assistance.
The surety company will charge an admin fee. Since the state underwrites the bond itself, the admin fee will be subject to market forces and presumably small.
Unlike current rental assistance, this bond is more about whether the address is real than whether the tenant is eligible.
This pilot will apply to rental agreements made before the law is passed, to prevent people signing unsustainable rental agreements after the fact.
If you cannot document a tenancy, you can state under oath that it is nonetheless a real rental agreement.
The bond covers a lessee's inability to pay. The lessee cannot simply choose not to pay.
A lessee has to show their expenses increased or their income went down. A rent increase is a valid expense increase, as long as it's not above market rent.
You have to notify the state soon after there's a nonpayment event. This limits public liability.
The renter still has to pay what they can afford. You can ask for next month's rent.
You can go back and ask for unpaid rent over the course of a year. The lessee has to prove they're doing something to try to afford rent, or that through disability they cannot.
You cannot double dip.
There will be paperwork. Most of the paperwork burden will be with the insurance companies.
We want to see if this works.
We need to inspect where these bonds are used, especially to make sure they help us all equally.
Rather than asking an RAA to tell us whether an application for rental assistance is pending, anyone can enter the address of an apartment to see if it has been bonded.
You cannot evict a renter for nonpayment if you buy a bond, because the bond guarantees your rent. You cannot evict no-fault, either, because some landlords unfairly use that as a work-around. You can still evict for cause.
To file, you will have to say whether or not you have a bond. The court can check this.
We need money to make this work.
DHCD will receive $1 million for administration. There will be $10 million of rent paid.
The excise tax at sale of any land or property zoned single family will be $10 per $1,000, approximately three times higher than currently. The higher excise will not apply if, at time of sale, the land or property is zoned or has been recently rezoned to duplex or higher.
This excise tax earns the public back the $11 million spent on this bill.





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