CHARLES TURNER
‘Scare tactics’ used
Boston City Councilors are poised to make a decision this week on a controversial proposal that could alter the residential rental market for years to come.
On Wednesday, the City Council is scheduled to vote on a “Fair Rent and Tenant Protection Act” – a proposal that opponents say is the same type of rent control Boston had in the past. If approved, the proposal submitted by Mayor Thomas M. Menino last month in the form of a home rule petition would have to be passed by state lawmakers and then turned back to city leaders, who would write an ordinance.
Property owners and tenants packed an often-contentious public hearing that lasted more than five hours last week to debate the policy. The hearing was disrupted several times by landlords and tenants who stood outside of City Council Chambers and chanted “yes” and “no.” Angered by hecklers and outbursts from the public, some councilors lost their composure at times throughout the Wednesday evening forum.
Tenants and housing advocates argue that some form of rent stabilization is needed to help working families, many of whom have been displaced by escalating rents. Opponents, including small property owners, real estate executives and developers, maintain that any form of rent control would discourage additional apartment development and investment in Boston and could force landlords who couldn’t afford to make repairs to neglect properties.
“In many homes, families are working two or three jobs to make ends meet,” said Roberta Jones, a city resident who belongs to a tenant association. “The rents are out of control … The landlords are out of control.”
“There’s no question that housing is a problem. It’s a statewide problem. It’s a countrywide problem,” said Ronald M. Druker, a Boston real estate developer. But Druker – like others who maintain that the high rents are the result of a limited supply of rental units in the city – said rent control has never been a solution because it inhibits the development of new housing.
“Rent controls, however small, will not create one new apartment in the city,” he said.
Under the proposal, tenants would have the right to protest rent increases above a certain percentage – 5 percent or the consumer price index for elderly and disabled residents and 10 percent or twice the consumer price index for all others – to a specially appointed rent grievance board. That system would be based on rents that property owners were charging as of Sept. 1, 2002.
The plan also proposes a limit on the fees that real estate agents charge to find apartments, provisions for landlords to prove a “just cause” in order to evict a tenant, and a “right of first refusal” to be given to community development corporations and other nonprofits to purchase for-sale properties with four or more units. Newly constructed units, single-family and two-family homes and owner-occupied triple-deckers would be exempt from the policy.
Rent control was passed in 1969 but was abolished by a statewide ballot initiative in 1994. Past rent control policies included rent rollbacks.
“This legislation does not propose any rent rollback,” said Pat Canavan, a policy adviser who helped the mayor craft the proposal. Canavan opened the hearing with a presentation featuring graphs, which showed that the median advertised rent for a two-bedroom apartment in the city has climbed to $1,700.
“Because housing prices are so high we are in danger of killing the economic engine” of Boston, said Canavan. “We’re in danger of becoming the city of the very rich and the very poor.”
The end of rent control did not spur a significant production of rental units in the city by the private sector as some opponents suggested it would, said Canavan. Most of the new housing units that have been built have been condominiums and only a few hundred have been rental units, she said.
Beacon Hill Bust?
But some disputed Canavan’s figures. Edwin J. Shanahan, chief executive officer of the Greater Boston Real Estate Board, cited numbers provided by the U.S. Department of Housing and Urban Development that showed that the number of rental units produced from 1998 through 2001 – in the years after the full phase-out of rent control – increased six-fold. More than 2,500 units have been produced in those years, according to the HUD statistics.
“Production is taking place. It’s just not taking place quickly enough,” said Shanahan, who called the proposal “ill advised.”
After hearing a panel of tenants testify about the need for some type of rent relief, Shanahan said, “They underscore the fact that we have an insufficient supply of housing.”
But the legislation would “chase development dollars out of the city,” according to Shanahan. “This legislation will hinder housing production,” he said.
There are roughly 9,700 rental units in the pipeline to be built over the next four to five years, according to Tom Meagher, president of Northeast Apartment Advisors in Acton, a company that researches apartment statistics in the Boston metropolitan area. But rent control will “harm rental production,” he said.
Other opponents echoed those remarks, saying that developers and investors would avoid Boston knowing that controls and restrictions are in place. Even though newly constructed units would be exempt, discussion of the plan is already causing hesitation among developers and investors because it creates uncertainty, they said.
Meagher pointed out that years ago when Devonshire Place on Washington Street in Boston was developed and rent control was in effect, the developers were told rent control wouldn’t apply to the units within the project. Under the proposal now being discussed, that apartment building would be subject to rent control, he said.
Some, including City Councilor Charles Turner, didn’t buy the argument that rent control would chase developers out of Boston. Turner said the real estate industry was employing “scare tactics” and threatening the city to defeat the measure.
“We shouldn’t be cowardly and scared of an industry that hasn’t worked with us,” he said.
Turner also dismissed comments that the proposal comes at a difficult time because of the softening rental market, saying that now is the time to implement a rental plan before the market and economy recovers.
The proposal comes at a time when rents have flattened in Boston, and in some cases been reduced, and vacancies are up, according to rent control critics.
The vacancy rate crept up to 8 percent this year in Boston, according to a recent GBREB survey. The survey, administered in October, questioned GBREB members with property in Boston about rents and occupancy over the past three years. The results are based on 37 questionnaires that were returned representing 83 properties with 3,300 units.
According to the GBREB survey, despite low vacancy rates in the last two years, property owners are having a harder time keeping occupancy up this year. About 40 percent of the property owners reported giving some type of concession this year – a free month’s rent, for example – compared to only 2 percent in 2000 and 2001.
“This is sending the wrong message at the wrong time,” said Robert L. Beal, president of the Beal Cos. Beal said investors have indicated they would “redline” the city if rent control return.
Councilor-at-large Mickey Roache said he was “baffled” at the timing of the home rule petition, and wondered why councilors were being asked to vote on it this week, particularly since there are signs that it won’t survive on Beacon Hill.
“Why do we have this before us?,” asked Roache.
State leaders like Governor-elect Mitt Romney and House Speaker Thomas M. Finneran have indicated that they would reject rent control, according to some opponents. Yet supporters have been buoyed because some state leaders have said they would give the proposal, at the very least, a hearing.
Councilor Maureen E. Feeney expressed skepticism that the proposal would alleviate high rents in the city. After hearing a pediatrician testify about how many children suffer health ailments from living in substandard housing, Feeney asked how “freezing” rents that are “astronomically high” would solve that.
“How is that going to address this problem?” she asked.
