Will Rent Control Make a Comeback in Boston?
How tenants' efforts to reinstate rent regulation in Boston were thwarted, for now.
This article is from the July/August 2003 issue of Dollars and Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org
This article is from the July/August 2003 issue of Dollars & Sense magazine.
at a discount.
Tenant leaders in Boston sat across the table from representatives of a large real estate company in negotiations. The building owner wanted $400 rent increases from each of 32 residential units. Tenants sought much smaller increases. The conversation went something like this:
Owner: I have a big new mortgage to cover.
Tenants: You decided to take on that mortgage, not us.
Owner: I want to charge market rent. Your area is much more desirable than it was.
Tenants: We made it that way, not you. Your rent hikes would displace us. Our proposal will more than cover your expenses.
Owner: I didn't buy the building to cover expenses. I bought it to make a profit. And I can legally charge as much as I want.
The exchange above captures what the fight for rent regulation is about. Without regulation, landlord profiteering is perfectly legal, whatever the cost to renters. And tenants have no legal basis to pose the questions: "How much rent increase is too much?" and "How much profit is enough?" In fact, landlords are not even required to give a reason for eviction. Rent regulation is the only way that tenants can gain legal protection from being displaced by the drive for real-estate profit.
Tenants in greater Boston used to have such protection. Until 1994, Boston and the neighboring towns of Brookline and Cambridge restricted rent increases and arbitrary evictions. "Rent control" had strong support in those cities and seemed unassailable, despite fierce opposition from real-estate interests. The real-estate industry eventually overcame this local popular support by sponsoring a statewide ballot initiative that asked all state voters to eliminate rent regulation in those three cities. After the real estate lobby outspent affordable housing advocates by at least a 7 to 1 margin, the ballot initiative passed, 51% to 49%, in 1994.
Following this defeat, rents doubled and more in neighborhoods throughout greater Boston. Thousands have been displaced. In response, the tenant movement began waging building-by-building battles against rent hikes, mass evictions, and poor conditions. Many tenant groups, organized by community groups like City Life/Vida Urbana, have won multi-year collective bargaining agreements that limit rent increases and evictions. As stunning as some of these victories have been, tenant leaders know this is no way to adequately respond to the housing crisis. A building-by-building response simply cannot keep up with the city-wide surge in rents or the waves of displacement that result. As tenant pain has intensified—the citywide average monthly rent is $1,483 and almost a quarter of renting households spend at least 50% of their income on rent—so have calls to restore legal protections for tenants.
The Boston Tenant Coalition (BTC) began organizing and drafting a new rent-regulation petition in early 2002. On June 15 of last year, 300 people rallied in support of the petition, chanting, "What do we want—Rent control!" as they marched through the streets of Boston. After the march, tenant leaders spoke passionately about the housing crisis at a gathering of community members at the Charles Street AME Church.
In response to growing public concern and BTC mobilization, Boston Mayor Thomas Menino announced his support for the petition. BTC, City Life, and tenant association leaders met with the mayor's staff to draft the Tenant Protection and Rent Stabilization Act. The mayor submitted this proposal—the most important initiative of its kind in the state in a decade—in October. It had two core features vital to preventing displacement. First, it set clear standards for "just cause" eviction, and second, it gave tenants the right to grieve increases above 5% or 10%, depending on tenant income.
The Mayor's proposal was modest. It exempted all one- and two-family buildings and all owner-occupied three-family buildings. And it was a "rent grievance" proposal. Rather than automatically restricting landlords from increasing rents (above 5% or 10%), it would require tenants to grieve an increase in order to trigger protections. And after a tenant moved out, rents could increase substantially.
It allowed for an annual scaling up of rents indexed to inflation, to preserve owners' profit margins. It also allowed landlords to set a higher rent if they could substantiate a "reasonable, necessary, or unavoidable" increase in operating expenses or capital improvements. The proposal did include limitations on realtors' fees and clarified existing protections of single room occupancy (SRO) buildings. But considering the dire state of the housing crisis, the mayor's proposal was quite restrained, and was careful to protect owners' rights to property income. Nevertheless, the real-estate industry organized hard to oppose it.
The so-called Small Property Owners Association (SPOA) sent out 120,000 anti-rent regulation newsletters to property owners in two weeks. The newsletters made outrageous claims such as:
•"Your house will fall apart. Then the government will take it over."
•"Do you live in a nice neighborhood? It won't stay nice if rent control gets in."
•"Single family and condo owners hit, too! Rent control devalues your non-controlled property." (In reality, single family and condo owners would have been exempted under the law.)
•"Rent to be frozen!" (In fact, the law allowed 5% to 10% increases without review and more than that with review.)
At the city council hearing November 13—called by some "The Brawl in City Hall"—over 500 people came out to chant "yes" or "no" to rent stabilization (often at the same time). Thanks to the fusillade of real estate propaganda, small property owners appeared in droves, many unaware that they were exempt from the law. Although tenant activists "turned around" the thinking of many small owners that night, the SPOA mailings did succeed in producing calls and emails to the City Council opposing the bill. This pushed some skittish councilors to vote "no." And the mayor's proposal was defeated six to four.
This episode was typical of housing wars in Massachusetts. SPOA has long provided the troops, and the Rental Housing Association (RHA) the financing, for attacks on rent regulation, beginning with the referendum campaign in 1994. SPOA is a right-wing libertarian organization that declares its base to be small investor owners—owners who do real estate full time but don't have a work force. In actual fact, their membership includes many large property owners. And SPOA has consistently defended the interests of very large owners. For instance, when City Life protested at the offices of notorious Boston landlord Leonard Samia (who owns more than 1,000 units) to demand collective bargaining with organized tenants, SPOA counter-demonstrated in favor of Samia. SPOA has adamantly opposed housing regulation, even regulation that would be limited to giant absentee corporate owners.
SPOA has gone so far as to deny that there is a housing crisis at all. They argue that displacement after rent control was not severe, and that the market is successfully adjusting. These implausible claims have at times caused the more politically savvy Rental Housing Association (representing larger owners) to distance itself from SPOA. The RHA has taken the approach of admitting that a housing crisis exists but arguing that the solution is to allow them to build more luxury housing in Boston's neighborhoods, on the theory that any increase in supply will reduce rents.
Well-financed real estate opposition is not the only obstacle in the path of new tenant protections. Massachusetts Speaker of the House Thomas Finneran has been adamantly opposed to any form of rent regulation. Even the regulations covering only HUD multi-family housing, consistently passed by the Senate and supported by huge majorities in the House, have failed to pass because Finneran refused to allow them to get to the floor.
Despite obstacles, tenant activists hope to reintroduce a new draft of rent stabilization this summer. Discussions continue with the mayor's staff and key councilors about exact language for this draft. The BTC wants the new draft to retain the two core principles in the original, but it attempts to make common cause with truly small owners by exempting more buildings, providing protection for small owners with problem tenants, and including language on predatory lending. The BTC and City Life understand that the issue is not really one of "landlord versus tenant," but "working class residents versus large investors and developers." The language of the new rent regulation proposals must reflect this reality.
In response to these changes, the list of organizational endorsers for the rent regulation campaign has grown to over 60 groups, including neighborhood associations and community development corporation (CDC) boards that are primarily homeowners. At the same time, the terrible cuts in housing budgets at all levels of government have increased the relative importance of regulation as a governmental tool.
Of course, none of this seems to have dampened real estate industry opposition. SPOA recently spent significant resources opposing a mayoral proposal to inspect apartments upon turnover. They, and the RHA, will oppose any regulation of rents and evictions.
But tenant activists remain passionately committed and determined they can convince their homeowner neighbors to support it. "The question of rent stabilization is not going away," insists Roxan McKinnon, an organizer with the BTC. Polls show most Bostonians favor some form of tenant protection, and Boston city councilors could face a second high-profile vote on the issue just before council elections this fall.