RENT CONTROL: A Reformer's Perspective

Protection of the poor has always been advanced as the primary justification for rent control; however, it is the middle-and upper-middle classes who are the primary beneficiaries of the system. Such middle-and upper-middle income people are given a subsidy unrelated to their needs and a "moral justification" for receiving it. After all, rent control in Cambridge, according to its enabling act, was a response to a housing emergency that was burdensome "especially for families of low and moderate income." The truth is that the system doesn't especially benefit low-and moderate-income people.

A 1980 study by Herbert Leonard of Harvard found that one third of people living in rent controlled housing in Cambridge were upper-income and professional people. While studying at MIT, Ann Jaroscewicz found that this proportion had increased to 55 percent by 1985.

In a recent study of rent control in Berkeley and Santa Monica by Richard Devine of the "Center for Community Change," a non-profit organization dedicated to the empowerment of the poor, the author concluded that "the overwhelming majority of benefits...accrued to middle-class households who were given the unique and ethically comfortable opportunity of maximizing their interest by voting to protect the poor from exploitation." He found that expenditures for discretionary goods such as stereo equipment and gourmet food to be unusually high in these communities. Such items were paid for with increased disposable income due to articially low rent.

For too long, some Cambridge politicians have heralded the "progressive" character of rent control. In fact, it is a reactionary system which allows the politicians to buy votes through putting more money in their constituent's pockets.

It's time for a change. Let's have a truly enlightened housing policy which targets people who need the help. I have drafted legislation which reforms our system of rent control. The main components of this are a means test and a regulated set aside of units by landlords for low-income people. Eviction controls would remain the same as they are now.

Under my proposal (see below), landlords could continue operating under the present system or could elect to subject their property to a new law. Added tax revenue from decontrolled units and fees paid by landlords under this section would be used to form a fund that would subsidize rents for tenants and mortgage interest for limited equity homeonwers.

A recent Boston Globe article referred to a former member of the Rent Control Board who earns over $100,000 and lives in a controlled apartment. Given that the average controlled rent is about $300 per month, including heat, this man is probably paying well under 10 percent of his income for rent. Low-income people are often paying 50 percent or more of their income for rent. How can any intelligent person call our present system of rent control "progressive?" How ridiculous!

My legislation is an equitable method of addressing the housing needs of low-and moderate-income people in Cambridge. It displaces no one. For too long, the debate over rent control has been dominated by ideologues and those who would do only what is politically expedient. My proposal is characterize by logic, common sense and economic reality and should be adopted by the Cambridge City Council.

The following is the applicable section of my revised "Rent Control Act":

SECTION 10: Dedicated Units and Vacancy Decontrol

...Any owner of one or more units in any one building may elect to subject his property to this section. An owner so desiring shall file a notice with the Board. The Board shall then inform all tenants of that owner living at the property of the landlord's intention to decontrol the property.

Each tenant will then be given a tenant profile form to fill out and to be returned to the Board within 14 days, and each profile shall contain sufficient information to allow the Board to determine whether the tenant's status is low income, moderate income, handicapped or elderly. The Board shall promulgate definitions of low-income, moderate-income, handicapped and elderly tenants ("qualified tenant(s)") in conjunction with the Cambridge Housing Authority and consistent with current guidelines promulgated by HUD.

Upon notification to the owner by the Board of the names and addresses of low-and moderate-income and elderly tenants, the owner shall thereafter prepare a list on which a portion of the units are designated for qualified tenants, designating which units are designated to be decontrolled and designating which units he proposes to dedicate as low-and moderate income and elderly housing for qualified tenants...Unless otherwise provided herein, units not designated as dedicated units shall be subject to vacancy decontrol subject to this act.

(i)The following factors shall be considered when determining which units shall be dedicated units.:

1. current location at the property of qualified existing tenants;

2. needs of elderly tenants for easily accessed units;

3. needs of qualified tenat families for family-sized units; and

4. fair distribution in terms of size, condition and building location of dedicated units and decontrolled units.

(ii) In determining the number of units to be dedicated, the following formulas shall be used:

1. For structures (or part thereof) containing four to six rental units, one unit shall be dedicated;

2. For structures (or part thereof) containing seven or more rental units, the Board shall multiply the number of units by 30 percent and then round to the nearest whole number to obtain the number of dedicated units;

3. For structures containing one, two or three rental units, the owner shall be able to have each such unit decontrolled by making payment of $2500 per unit to the City of Cambridge Fund.

Upon filing of the landlord's proposal, the Board shall review the proposal and hold a hearing only if necessary to designate which units shall be dedicated units. Only the owners of the dedicated units shall have standing to appeal the Board's designation.

b) Once the dedicated units are identified, the Department of Inspectational Services shall inspect the dedicated units, and the owner shall promptly make all repairs required. Upon notification to the Board of the completion of the required work, the Board shall amend its records to show the dedicated units, and all remaining units shall be decontrolled units. The owner of the dedicated units ahll keep the units up to all code standards and inhabited with qualified persons. For purposes of determining qualification, the Board shall promulgate a form which shall be completed by any proposed qualified person, which form shall be submitted to the Board for its approval, updated not less often than biannually and kept by the owner in the ordinary course of business.

c) Each qualified person shall be required on a bianual basis to update and re-file his tenant profile and transmit same to the Board and to the owner. Any tenant who no longer is a qualified person shall be given a reasonable period to locate alternative housing, and the entire cost of an eviction, if necessary, shall be borne by the non-qualifying person. No landlord/owner shall knowingly permit a nonqualified person to reside in a dedicated unit.

d) Each dedicated unit shall remain rent-controlled, and the owner shall be entitled to receive the rent as set by the Board pursuant to this Act. Notwithstanding anything contained above, nothing shall prevent an owner from accepting subsidized rental payments from federal or state sources for qualified persons.

e) No dedicated unit may be occupied by a nonqualified person unless the Cambridge Housing Authority is unable to provide the owner with the names of not less than three qualified persons who would desire to occupy the dedicated unit.

f) All existing tenants shall remain rent-controlled tenants until voluntarily vacate or are evicted pursuant to this act. Any acts of harassment on the part of an owner shall be subject to the full penalties permissible under this act.

g) Once an existing tenant vacates, the owner of a unit designated with the Board as vacancy decontrolled shall file notice with the Board that the unit is vacant and shall pay a one-time charge of $1,000.00 to the City of Cambridge Fund. Thereafter, the unit may be rented for the fair market value.

h) For the purposes of Proposition 2 1/2, all units shall be deemed new construction when registered as decontrolled units. All dedicated units and all controlled units containing existing tenants shall be deemed rent-controlled property consistent with Proposition 2 1/2.

i) Nothing in this Act shall prevent the Board, in individual cases and for good cause shown by the owner, from providing compliance alternatives to decontrol the owner's property. Examples of such good cause include but are not limited to the following:

1) dedication of units in other structures; or

2) payment of a one-time tax in lieu of dedicating unit(s); or

3) waiver or deferral of the need for any payment.

SECTION 11. Condominium Conversion and Owner-Occupancy of Condominium Units.

a) All property currently subject to chapter 183A of the Massachusetts General Laws which contains rent-controlled units must be registered pursuant to section 10 of this act; provided, however, that any condominium unit which is currently legally owner-occupied shall not be subject to the fee requirement of subparagraph A(ii)3 of section 10 unless or until the owner desires to decontrol the property. All units subject to Ordinance 966 prior to this Act shall be decontrolled before the owner may occupy the unit.

b) Any property in the City of Cambridge which otherwise qualifies may be subjected to chapter 183A of general laws, the statute governing condominium conversion, and the City hereby adopts chapter 185 of the general laws ("chapter 185"), the statute governing tenants rights in condominium conversions.

1) Procedures to be followed for conversions made prior to decontrol: Prior to or contemporaneous with the notices to tenants required pursuant to chapter 185, the notices to tenants required pursuant to section 10 of this Act shall be sent. Upon notification to the landlord of those tenants who desire to purchase their units, the landlord shall designate among the remaining units those which are to be dedicated; provided, however, that the owner shall dedicate 60 percent of the units which are not purchased by the tenants or 30 percent of the total number of units in the structure, whichever is less. The Board shall promulgate a legend to be added to the unit deeds of dedicated units advising all interested parties that these units are dedicated for use as housing for low-and moderate-income, handicapped or elderly persons and may not be occupied by nonqualified person(s).

2) Procedures to be followed for conversions made subsequent to decontrol:

i) Tenants in decontrolled units shall have the right to purchase their units; and

ii) Tenants in dedicated units may not purchase their units unless a decontrolled unit is not purchased, in which event the owner and tenant may petition the Board to change the designations of the units, which petition the Board to change the designations of the units, which petition shall not be unreasonably denied. No tenant in a non-dedicated unit may be evicted for condominium conversion.

3) All dedicated condominium units shall have a right of first refusal running to the City so that they may be purchased at a price equal to 10 times the adjusted gross rent. Adjusted gross rent shall mean the rent-controlled rent minus the sum allowed for heat, hot water and other unit utilities provided by the landlord, if any. The money to make such purchases shall come from the City of Cambridge Fund as well as public and private sources. Nothing herein shall prevent the City of Cambridge from selling, on a limited-equity basis, dedicated units to qualified persons.