Cambridge's City Manager Speaks on Housing Crisis

"I must point out that we do not simply have a housing problem in this city. We have a markedly abnormal real estate market, influenced by forces unique to Cambridge."

(In recent months, much public debate in Cambridge' has centered around the City's "housing crisis," primarily about the shortage of housing for low-income families. Here is the text of a speech which City Manager James L. Sullivan delivered to a City Council hearing on housing last week.)

THIS REPORT to you this evening is presented as an interim report of progress by the City Manager for the purpose of placing into perspective the Housing Problem in the City and the action being undertaken by the City Managers Task Force on Housing in an attempt to define and overcome the obstacles to providing decent reasonable lousing for the citizens of Cambridge.

The problem is of long standing and is becoming increasingly worse due to the inflationary spiral and also forces particularly peculiar to Cambridge. A figure that must be kept constantly in mind in evaluating our present condition is that almost 85% of the housing units in Cambridge are over 40 years of age.

I must point out that we do not simply have a housing problem in this city. We have a markedly abnormal real estate market, influenced by forces unique to Cambridge. We have intense pressure on existing housing, and inflation in the price of it. We have a relatively inactive new construction market, in spite of intense demand. Part of the reason for this is that Cambridge is already a densely developed city, Scarcity and cost of land on which to expand the supply of housing is a constant barrier. We have families forced to leave Cambridge, or to tolerate poor housing conditions at continually increasing rents, because they have no other choice. I purpose tonight to face the housing crisis and a pledge to do everything I can as the City Manager to solve it.

I am here tonight to state as a matter of public policy that the housing crisis is not simply an unfortunate but predictable result of 'the law of supply and demand" or "an economic fact of life." We cannot be satisfied merely to remark that the lack of adequate housing at reasonable prices is a natural consequence of the fact that more people want to live in Cambridge than the number of units available can absorb. New construction to expand the supply of housing is a need for the highest priority, but not simply so that more people can live here. We must protect the ability of long-term residents of Cambridge to stay here. What we must do, as a matter of public responsibility, is to insure that housing is produced that the private market will not produce under any circumstances--housing for the elderly on small, fixed incomes, for large families and families with limited incomes who cannot pay the price the market must charge. But as I have noted, there is a limit to the amount of new construction that land in Cambridge, developed to its highest tolerable density, can support. Not everyone can live here; there will inevitably have to be hard choices made. There is no choice to be made for or against a 'free" market; no market in a just society has ever been free to abuse the people it serves. And I will declare now, as a matter of public policy, that the City has no other possible choice than to protect first those who are least able to protect themselves.

The City government's role in housing is complex, but one element of it emerges clearly. The most direct way we can insure an adequate supply of housing at reasonable cost is to produce one. We must stop talking about "low-cost" housing, at least in the short range; there simply is no such thing, given the high costs of land, labor, materials and mortgage financing. What we can prouce is housing for for low and moderate income families. The only way we have to do that, at present, is to build housing whose cost to those who live in it can be reduced with public money to a level consistent with their ability to pay. That solution, obviously, cannot be implemented by any city alone. Public money in adequate amounts to reduce the cost of land and operating expenses simply is not in our hands at the municipal level of government. It can--and must--be put into our hands by the Commonwealth and the Federal government. That has not been done so far. (Cited figures on national spending for housing in comparison to other purposes). A complete answer to the Cambridge housing crisis, and the housing problem in any city, depends ultimately on a fundamental, dramatic shifting a national spending priorities.

POINTING A FINGER of responsibility at the Federal and State governments, however, does not excuse us from using the tools we now have. The programs administered by the Cambridge Housing Authority are the means by which the public sector can most directly prove that it has answers to the problem, and we have fallen intolerably short of providing that proof. As of today, we have used only about 200 of the 1500 new units allocated to the Authority by the Federal Government. The Modernization Program for Public Housing, approved only this month, took seven full months to make its way through local and Federas agencies. I think we must all commit ourselves to the simple but forceful position articulated by the late Senator Robert Kennedy in response to the same kinds of problem: we find this unacceptable, and we must do more. I propose that we do it in the following ways.

First, we must have the remaining 270 units, allocate to the Authority under the short-team lease program, under lease and occupied no later than the end of the summer. If additional units will be available which cannot be put under lease until after that time, the Authority should make application quickly for additional Federal authorizations. Allocations for another program, which allows leases up to 40 years to be made by the Authority, will be sought concurrently.

Second, we must have plans finalized and beginning to be implemented as soon as humanly possible to use the other 1100 units presently allocated, for new construction and for acquisition and rehabilitation of existing housing. This means we must all move quickly and effectively than we have been. We must not build more institutional "projects," isolated from the rest of the community, no matter how hard that is to do under restrictive Federal cost and design regulations. We must stop talking about the need for more housing for low-income families, but objecting when a site in our own neighborhood is proposed. The Council and the Authority must respond promptly and positively to proposals put before them. We have not yet been able to meet the housing must go beyond that difficult task to the even more challenging problem of housing for low-income large families. Failure to do that has been a weakness of public housing programs in city after city, but we cannot let it be here.

Meeting that challenge will take more creativity and boldness than we have used. We should create opportunities for home ownership for low-income families, who can build up equity in apartments they occupy as purchasers rather than as tenants. We must shape the physical design and administrative procedures of public housing to make that possible. We should shift our thinking about management responsibilities to provide for cooperative management or even ownership of publicly-subsidized housing by tenants. We should be wiling to test new methods of producing techniques, scattered-site development, the "turnkey" method of housing built more quickly and efficiently by private builders and then sold to the housing Authority upon completion. All of these possibilities are before us now in the form of authorizing legislation. We have only to use them imaginatively, so that the product of public action in housing can be imitated rather than rediculated.

None of this will be possible without changes in the staff capability of the Housing Authority. The Authority now, with 1700 units to manage and several new programs to initiate, has one less staff member than when it administered a single project. If recruitment is a problem, we can solve it; it staff cannot be found, we can contract for services. The job is there to be done; we must have people to do it.

If we are totally successful in revitalizing our public housing program, only part of the job will be done. The two universities which have done so much to make Cambridge what it is--both good and bad--have a special responsibility. It is futile to argue much longer about how much or which parts of the pressures on the housing market are generated by students, faculty, staff and spin-off activities traceable to Harvard and MIT. The point is not whether the response of the universities will be proportional to the degree to which they are responsible for the problem. The question is whether they will do all they can, and should.

FIRST, THEY must build more housing for their students and faculty because the available housing simply cannot absorb them, and because the students themselves cannot really be served the housing market they find in Cambridge. When they do enter it, they are forced to accept housing conditions fully as bad as those experienced by other residents. This is equally true of single or married graduate students and younger faculty or staff members, who often live on genuinely moderate incomes.

Second, the universities should adopt and announce publicly a policy, of no future acquisition of residential property in Cambridge. They should pledge maximum development of land now held in institutional ownership before other, nonresidential, land is acquired. Clearly, corporation with endowments in the hundreds of millions of dollars do not need Cambridge real estate as part of their investment portfolio. They should be prepared to accept the costs of maintaining rents at moderate levels, in housing units they have already acquired for future development, as a cost of doing business.

Finally, Harvard and MIT should help to expand the non-university housing supply in Cambridge--not because they owe that to the City, and not in a spirit of largesse--but simply because they resources to do it that no one else in the City has, and a clear responsibility to use them. MIT has already begun that process, although many details of the proposal that has been announced must be clarified before the City can evaluate it and help to implement it. We hope, and expect that Harvard will reveal soon how it intends to participate.

The private real estate industry also has a role to play, although it must be carefully defined and neither exaggerated non underrated. The primary incentive of business is return on investment--and the cost constraints inherent in the provision of low and moderate-income housing do not leave much room for profit. What the real estate industry can do is to build housing units, because developers and contractors have done it over and over again, and have expertise at it. The industry also has access to private mortgage money, which is required because there simply is not enough public money to support an adequate rate of construction. To be able to tap that expertise and those financial resources, we must pay the costs--in the form of fees, profits, or tax incentives to private builders. There are Federal and State programs to do that, and they involve the cooperation of City. We are willing and eager to provide it, as long as it means more or better units produced, and not merely larger margins of return for investors.

There must be commitments from the real estate industry in return, however, besides willingness to participate in programs which provide a guaranteed, and reasonable, rate of return. We will expect, and require, of any developer who needs the cooperation of the City in building Federally supported housing, that a substantial number of the units to be built be made available to low income families through either rent supplements or leasing to the Housing Auhtority. To make that possible, cost of building in the first place must be limited, since there are cost constraints in both subsidy programs. Builders of housing which will rent at full market levels must understand, while the City recognizes their right to produce middle-income or luxury housing and understands the desire of families with adequate incomes to live in Cambridge, that such housing must clearly have the lowest priority in terms of public funds, energy or involvement. This is not because one group of residents is less important than the other. It is simply because they need less help, and have a better chance of having their needs met in the market. All builders or owners of private housing, at whatever rent levels, must also recognize that under no conditions is there any justification for taking advantage of the tight market to make excessive profits by capitalizing on the need of all our citizens for a home.

This brings me to the question of rent control, which has been so much before this City Council in recent weeks. I'm sure there is no need to say again how aware my office is of the seriousness of this problem of unreasonable increases in rent.

First let us acknowledge that the fundamental problem is an inadequate supply of housing at a time when the demand is unusually high. But let's be precise about that. More luxury housing will not relieve the pressure on the low income housing market in Cambridge. The "Filter down" theory simply does not work here. More construction of subsidized low income housing will help and that is a public responsibility on which my staff is presently hard at work.

IT IS CLEAR, however, that any new housing will not be available for at least two more years, and we must do something immediately. I think that "something" must aim as precisely as possible at the core of the problem. We must control the unreasonable rise of rents with a tool that deals with those rents directly.

The City Council has had before it in recent weeks a rent control ordinance proposed by the Cambridge Housing Convention. I am certain that the City Council will weigh and evaluate the proposal before it in the light of the present housing crisis and the need to control the unreasonable and excessive rises in rents.

Another important piece of the machinery which shapes housing in Cambridge are the regulatory codes. At this point in time, we are only able to enforce our housing code--which applies to buildings after they are built--with respect to conditions which seriously endanger health and safety. To enforce it more strictly would reduce the available housing stock, particularly in the critical low rent brackets. We don't want any of our citizens living in unsafe or unhealthy housing, but to force a family out of housing units because there are no screens, or because lighting is inadequate seems absurd in the context of our present crisis.

We also, have a building code in Cambridge, which regulates the construction of new buildings. If we are to encourage innovative new methods of constructing lower cost housing, we must adopt a "performance standard" building code, specifically the BOCA code which has received considerable national attention and has already been adopted by a number of localities. This code, rather than limiting construction to a select few methods, sets up minimum standards of strength, durability and safety. Then any system of building which meets those standards can be accepted for use in the city. It is an inclusive rather than exclusive code. It is my feeling that we must be inclusive in an effort to explore every avenue that will drive down the cost of housing or expand the safe possible alternatives for increasing our housing stock.

The Building Commissioner has at my request ordered a number of copies of the BOCA Code which will in the next few weeks be presented to a committee of Architects and Builders for review during the summer with the intention of proposing any amendments or recommendations that will make it more adaptable for the City of Cambridge. When their report is received it will be presented to the City Council for their consideration.

There is another tool which the City has at its disposal to assist in the provision of housing for low and moderate income families--urban renewal. In the past, urban renewal has often been a dirty work in our city and many others. But that need not be the case. Urban renewal provides a critical element in the process of providing more reasonably priced housing--it reduces the cost of assembling and preparing property for redevelopment or rehabilitation. There are new, more flexible renewal procedures such as Neighborhood Development Program and the advance availability of rehabilitation funds for future renewal or code enforcement areas.

In the past, a barrier to using renewal tools has been the justifiable suspicion on the part of the community of urban renewal being used "on" them. If we are to take advantage of renewal, we must wipe out these suspicions. I therefore recommend that the council adopt as a matter of public policy a procedure which will allow the approval of residential renewal projects only after a policy committee, composed solely of residents of the project areas, with full veto powers over the plans, approves those plans. It is in this manner, and only in this manner that we can establish the kinds of trust and rapport that must exist if urban renewal is to work for the citizens of Cambridge whom we serve.

TONIGHT we have placed a wide range of facts about the housing situation in Cambridge before you and I have touched on my feelings about progress we can make in a number of areas related to housing. Much of this has come from the work of the Task Force on the Housing Crisis which I called together in early April. A special committee of that Task Force is now at work developing a specific implementation plan for the 1500 units of various types of publicly subsidized housing now allocated to the City, and in planning for new applications for more such units.

Among the things which have become clear to us in the past months of intense work on the housing problem is the need for strengthening the Citys entire housing development and maintenance capacity. The Ford Foundation funded study, still in progress, is pointing toward assembling all housing-related functions is one agency responsible to the City Manager. I believe this is a good direction to move in, and if the report is adopted I will recommend its implementation as soon as possible.

If we are to be successful in resolving the housing crisis in the City it is absolutely imperative that all cooperate and coordinate their activities toward that end. None can afford the luxury of standing idly pointing the finger of criticism at somebody else. If you are not part of the solution then you are port of the problem.

In closing--I would like to emphasize that I have been extremely impressed by the sincere efforts of so many citizens who are concerned, interested and willing to participate to help their community become a better place to live for all its citizens. With the government and the people working together we can't help but succeed