WELCOME!

The Commonwealth's Joint Committee on Housing will be holding a hearing on proposed landlord/tenant legislation on Tuesday, January 14, 2020, from 10:30 a.m. - 3:00 p.m. at the Statehouse's Gardner Auditorium.
 

The Small Property Owners Association (SPOA), another amazing group supporting property owners, is sharing the below comments to the 12 bills being heard on Tuesday (on rent control, tenant right of first refusal, R.E. transfer tax and much, much MORE).
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SPOA's Comments on the Bills and Topics:
 

Rent control: OPPOSE  (HB3924, HB1316)
These bills overturn SPOA's 1994 victory outlawing rent control in Massachusetts. BAD, BAD, BAD. The first bill would allow any Mass. city or town to adopt rent control, with almost no restrictions. They could freeze rents, roll them back to rents in past years, deny all increases for repairs and capital improvements -- anything they want. Not even a requirement to give landlords a "fair operating income." It is recklessly drafted.
 

We oppose all forms of rent control because of its widely-known negative impacts:   
(1) It gentrifies by kicking out the poor and families. After 25 years of rent control, only 6% of rent-controlled tenants qualified as low- or moderate income, elderly, or disabled for two extra years of rent control.   
(2) The housing steadily deteriorates badly.  
(3) Because low rents cause lack of repairs and improvements,
(4) It stops all new rental housing construction. More units need to be added, as the only way to bring rents down. As economists say: high rents are caused by lack of supply.  
(5) With no new units and no improvements, it harms the construction industry.
(5) Two MIT studies showed that rental housing in Cambridge lost $1.8 billion in assessed valuation because rent control devalues housing, and that rent control in Cambridge brought crime with it.
(6) Rent control is not a housing policy, it is a power grab to motivate tenants to vote for pro-rent-control lawmakers to press for lower and lower rents -- damn the housing.
(7) For this reason, "mild" versions of rent control always get stricter. San Francisco's rent control started 40 years ago at 7% annual rent increase cap. After more than 125 amendments, the annual rent increase cap is now 60% of the Consumer Price Index of inflation. 

Impose deed-restricted "affordable" rents on newly renovated units to make them permanently "affordable" in order to get a variance OPPOSE (HB3925)
This bill is really AWFUL and a version of rent control. Any city or town could require that all newly renovated units that may need a variance be subject to "affordability" restrictions, in other words, rents limited to 30% of renter household income. 

The impacts: NO ONE will renovate and do a high-cost project like this, only to be put under rent control. It defeats its goal, and many renovations will be done without a permit. Moreover, no one will rent to lower-income tenants whose rents will be severely restricted.  All "affordability" restrictions are just like rent control: they stop any new rental housing from being created. 

Late Fees: SUPPORT  (HB1254)
Would allow landlords to charge late fees after 10 days instead of present 30 days. We definitely need this.
 

Protect elderly tenants: SUPPORT AND OPPOSE  (HB1255)
This bill proposes a voucher program to help needy elderly pay rent. We would support a voucher program for all lower-income tenants, not just the elderly.  But this bill would also impose a delay on all "no fault" evictions, which we OPPOSE. Landlords often have a good reason to evict someone, but do a "no-fault" eviction, which avoids the costly court costs of a "tenant-fault" eviction and helps the tenant not have a bad public record on evictions. We also OPPOSE another provision that would require nonprofit organizations to pay 75% of would-be property taxes to fund this elderly voucher program. Such a payment demand on nonprofits will reduce their programs. All taxpayers should pay for such a fund.
 

Tenant right to purchase:  OPPOSE in all forms (HB1256, HB1260, HB1303, SB786, SB801)
Several bills would allow tenants to get a first chance to buy any property when it is up for sale. This right (also called "right of first refusal") will seldom be exercised, but will slow down sales for up to half a year or even a year while tenants decide and get financing. In Washington DC, which has this right, lawyers go around looking for "for sale" signs and get the tenants to demand $$$ payoffs to give up their right so the owner can sell quickly. Sometimes, landlords need to sell quickly to cover medical or other high expenses, to retire after incapacity, etc.
 

Rent escrow: SUPPORT (HB1259)
Rent escrowing would stop the "free rent trick," in which nonpaying tenants claim "rent withholding" under state law, get code violations cited, and then block repairs, undo repairs, and damage their units to keep code violations alive, which blocks their eviction -- a vicious attack on landlords, on lower-income housing mostly. And who pays? The other good-paying tenants whose own needed repairs will be put off and who will get rent increases to pay for the lost rental income and high repair costs caused by the "free rent trick." This bill would require tenants who claim they are "withholding rent" (rather than just not paying rent) to escrow the withheld rent to prove they are making a bonafide demand for neglected repairs, not just to live rent-free longer at a serious cost to the housing and to other good-paying tenants who will get rent increases to cover the owner's increased losses. The bill under discussion is NOT as good as the bill language that SPOA and legal services lawyers agreed on during negotiations in 2016 and 2017 facilitated by the late Rep Chris Walsh.
 

Rent arrearage program: SUPPORT (HB1264)
Instead of the damaging "free rent trick," a bill would establish a small loan or grant program for low- and very-low-income tenants not able to pay rent. This approach is the far better way to go.
 

Emergency supplemental funding for "affordable housing": OPPOSE  (HB3878) 

So-called "affordable housing" is entirely tax-funded and costs $1 million per unit to build it and subsidize the rent for 30 years. At this cost, they need lots of tax money to build it (this bill would authorize $1 BILLION in state financial assistance for it), but only a tiny quantity can ever be built, never enough to increase supply sufficiently to lower rents broadly, and only a few households get this huge tax-paid benefit. VERY WRONG, VERY UNFAIR. SPOA opposes "affordable housing" as the wrong way to go.  
The only effective way to lower rents is to increase the supply of rental housing (as economists keep telling us). In other words, allow the private rental housing market to create substantially more new units to help lower rents broadly. Specifically, SPOA proposes that private owners be allowed to convert one large unit into two smaller ones within EXISTING housing, which will have "naturally lower" rents because the units will be smaller and will not have luxury amenities. Today's households are much smaller than households long ago when most of today's rental housing was first built. The best and easiest way for today's households to lower rents is to move into a smaller unit -- if such units are made much more widely available.  
 

Security deposits & last month's rent  MAINLY OPPOSE (HB1252)
The only good things in this bill are repealing the 5% interest payment on security deposits and last month's rents (interest would be actual interest earned) and repealing the requirement to give tenants receipts for deposits. BUT, it requires landlords to give tenants notice of accumulated interest with 30 days of a request. Failure to respond to a request causes forfeiture of the deposits, must give them back. Easily abused, tenants could ask repeatedly for notice of accumulated interest just to harass a landlord and/or to trap the landlord into refunding the money. This bill gives no realistic benefit to tenants. A year-end or end of tenancy notice or payment of accumulated interest should be sufficient.   
 

Make landlords keep rents low even when subsidies end, for up to 5 years OPPOSE (HB1306)
The chief problem with this bill is that it will make landlords refuse to take subsidized tenants because it traps them in low rents. There should be no such restrictions at all. This bill violates Chapter 40P, the "Massachusetts Rent Control Prohibition Act," which resulted from SPOA's 1994 victory ending all rent control in Massachusetts.   
 

Requires landlords to include any "no smoking" rule in every lease; failure costs 3 months rent to tenant OPPOSE  (SB2299)  
Many tenancies are "tenancies at will" without a written agreement. Does this bill therefore require written agreements for all tenancies? Very technical requirements like this one will be, unknowingly and without malice, violated and will cost many landlords, especially in lower-income neighborhoods, a huge sum: 3 months' rent. And tenants often do not read leases, so often nothing is gained. Posting a "no smoking" sign should be sufficient.
 

Would allow Somerville to divert "affordable housing" funds to other "tenant services," including hiring legal services lawyers (free lawyers for tenants) OPPOSE  (SB2421)
We do not support costly, tax-funded "affordable housing," but to allow a city to divert funds to any "tenant service" it wants is a clever way to avoid the State Legislature, which has sole authority over landlord-tenant law. Letting Somerville do such a diversion of funds will set a precedent for all other communities. If "affordable housing" is really so important, why is Somerville asking for this? Any decision on "affordable housing" and its funding also needs to happen at the State Legislature. 

SPOC has replied to the City’s response in The Somerville Times to our community flyer which outlined how the new Condominium Conversion Ordinance overreaches and severely restricts property owners’ rights compared to the 1985 Condominium Conversion Ordinance.

Italicized statements are City-selected portions from the SPOC flyer to which the City responded. The bold text is the SPOC’s responses which further clarify our concerns with the new CCO. Our neighbors should note that the City Council scheduled two public hearings on this important matter, but cancelled the second public hearing and immediately voted to implement the new CCO. 

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Flyer: “The new CCO takes away your fundamental right to control YOUR private property.”

City: "There has been a condominium conversion ordinance in Somerville since 1985. Property owners always had to appear before the Condominium Review Board to convert existing property to condominium units."

SPOC: The new CCO barely resembles the 1985 ordinance with its broadly expanded rules which not only expands the City’s control of private property, but imposes costly and burdensome obligations and timelines upon property owners wishing to convert and sell their private property.  Additionally, the Acts of 1985, c.218 did not expressly authorize the City to initiate or re-institute rent control, or to regulate the conversion to condominiums of properties with fewer than four rental units, or to introduce and grant itself a mandatory exclusive right to purchase such property as a part of the regulatory process.

Flyer: “Owners of 2 and 3 family homes can no longer convert, or sell to a developer to convert, their private property, without first offering units ‘as is’ to tenants, a ‘non-profit’, or the City and before offering to the open market.”

City: "The tenant right to purchase already exists under both state law and Somerville’s current ordinance. The City/designee right to purchase is a new provision and runs concurrent with the tenant’s right – no additional time is added for the City/Designee. The right to purchase is structured so that the price, which is set by the owner, will reflect current market values."

SPOC: The Acts of 1976, c.37, by their express terms, did not apply to rental units in an owner-occupied two or three family house, so any provision to control conversion of these properties should not fall under the rules of the CCO at all. Under the old ordinance, tenants had a 30-day right to purchase. The new CCO extends this right up to 180 days and has now included “non-profits” plus the City with a right of first refusal. And although the owner can set the offer price for these rights of first refusal, true market value can never be realized without offering units to an open market and allowing the buyer pool and end-users to set the market value. The City’s artificial price structure fundamentally impacts what a property owner can actually sell their unit for and, by default, lowers the property value.

Flyer: “Tenants now have up to 7 years to move out of your property!”

City: "All tenants are entitled to one years’ notice. Seven years is the maximum, which only applies if a property owner willfully neglects to fulfill their obligation to assist in housing search for vulnerable tenants who are either low/mod income, elderly and/or disabled being displaced through conversion. Otherwise, vulnerable tenants who are either low/mod income, elderly and/or disabled are entitled to five years’ notice."

SPOC: We live in a close-knit, diverse and compassionate community. No one wants their neighbor or tenant to suffer undue hardship. But why is it the property owner’s “obligation” to find their low/moderate income, elderly and/or disabled tenants alternative housing, within Somerville, at their current rent, which may likely be below market, and then may be considered “willfully negligent” if unsuccessful in doing so? The owner themselves may fall under the “vulnerable” category and need to sell quickly. So to require this rule on such owners, let alone all owners, to control the terms of their leases and ability to sell their properties for up to 7 years, is clearly misplaced. Also, the City excludes from their response that a lease can automatically extend for at least one year and up to five/seven years, regardless of a lease or tenant-at-will situation. It also excluded from their response that during the notification period, the tenant can break their lease with 30 days’ notice while still obligating the property owner to wait a year to apply to convert.

Flyer: “During this time: You are not allowed to raise rents without permission from the City. You cannot improve your units without permission from your tenants.”

City: "City review of rent increases is done to verify that the rents do not exceed market rents. Necessary repairs required by State Sanitary and Building Code are permissible, and vacant units can be renovated during the waiting period. Cosmetic and other discretionary improvements that have in the past had the effect of disrupting tenant ‘quiet enjoyment’ rights to their units are limited."

SPOC: When a lease contract has been fulfilled, landlords should have a right to offer (or not) a new lease at the market rate. The City does not account for existing rents that are already below market rate when calculating a rent increase, thereby controlling any increase an owner has a right to offer. And virtually any work to a property may disrupt a tenant’s “quiet enjoyment”. Unfortunately, a tenant’s control of landlord improvements may become unintentionally retributive in nature, further burdening the property owner’s ability to add any increased level of value before offering a unit for sale.

Flyer: “You must pay up to $10,000 to relocate your tenants! You must find ‘comparable’ housing within the city of Somerville for your tenants!”

City: "All households are entitled to a relocation payment of $6,000. The $10,000 payment provision is limited to especially vulnerable households including elderly, disabled or low/mod-income tenants. Owners must make a good faith effort (defined in CCO Rules) to assist vulnerable tenants who are either low/mod income, elderly and/or disabled in finding comparable housing."

SPOC: The prior CCO allocated a relocation payment of “actual moving expenses to a maximum amount of $300.00 or one month's rent per rental unit, whichever is higher.” (Emphasis added).  But this only applied to “any tenant and the tenant's family whose total income for the previous year was equal to or less than the qualification income for Section 8 Housing Assistance for the city.” (Emphasis added). The new CCO expands beyond the vulnerable tenants to include entitling all tenants a $6,000 - $10,000 relocation payment from a property owner. Add in the return of a security deposit and the tenant is not only “profiting” from an owner who just wants to convert their property, but also has guaranteed housing for up to 7 years at the property owner’s expense, not to mention incalculable lost opportunity costs for the property owner. Small property owners should not have to subsidize tenant relocation just because they want to convert to condos.

Flyer: “The restrictions of the CCO have now devalued your property because it makes it harder to sell.”

City: "City staff are unaware of any empirical data demonstrating that the ordinance has devalued property since its passage."

SPOC: The City staff has enough resources and data to extrapolate that offering units “off market”, “as-is” and outside a “competing bidding” environment will not only bring all property values down, but effectively impact the desirability of buying/renting in Somerville in general. The SPOC is in the process of collecting their own data that will be posted on our website in order to inform the community of the impacts already experienced, in some instances from the time the new CCO was being drafted, through the time of its implementation, including recent denials for removal permits by the Condominium Review Board.

Flyer: “Your tenant, a nonprofit or the city can buy your property, without first offering it to the open market – develop the property themselves and FLIP it at a profit, and capitalize on your loss.”

City: "The tenant right to purchase is recognized by state law. If the City/Designee were to purchase a property, it is required to be for the purposes of maintaining the unit as an affordable unit, in perpetuity. In other words, it cannot be sold at a profit."

SPOC: The City’s response above did not address the fact that a tenant, who may actually have a higher income than the property owners themselves, can literally buy an “as-is” property and flip it for profit. How does the City reconcile allowing one party to profit from another party’s property equity? How does this contribute to retention of rental housing? Additionally, there is a clear conflict of interest with the City both making the rules and participating in a regulatory taking without compensation to property owners based on those rules. Our hope, too, is that affordable housing remains a stepping stone/catch net for our vulnerable neighbors and that our community promotes a desire for property ownership, and not focus on the city collecting, holding and expanding government controlled property. This only further distances all tenants from acquiring stable housing, ending a cycle of perpetual tenancy and building personal wealth.

Flyer: "The city is setting the rules for how, when and to whom you sell your property."

City: "This ordinance only applies to transactions involving Condominium Conversion. All other transactions are not impacted. Condominium Conversion remains allowable, so long as owners abide by the Ordinance. "

SPOC: This ordinance is fundamentally unbalanced and unfair to the property owners who have earned the right to profit from their years of ownership, provided housing to tenants and paid their fair share of property taxes. The City is not going after the retirement accounts and pensions of our neighbors -- so why did they pass an ordinance that literally controls the largest and likely single asset of small property owners (and in many instances, multiple family members' nest egg) all of whom will be relying on their property’s equity for their future survival? We believe there is a much better way to ensure all residents’ needs are supported and addressed without discriminating against a specific group of neighbors.

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The SPOC invites the community to read the full content of our flyer below in context. We especially encourage everyone to read the new CCO and judge for yourselves if it equitably balances our community housing needs with private property rights--the above is just a taste of what is included in this new ordinance. An informed community will foster fairness, balance and respect for each other. Concerned community members (property owners and tenants alike) can reach us at: somervillepropertyowners@gmail.com. Reach out to your Ward Councilor, too!! Our mission is to work cooperatively with our neighbors to keep Somerville a place where homeowners, landlords and tenants can continue to thrive together as one community! 

CRB=Condominium Review Board    NP=Non-Profit   L/M=Low/Moderate Income