Rent Control in Cambridge: Is the Solution in Sight?

Last month, the City Council's Rent Control Subcommittee unveiled the most comprehensive reform proposal in the system's 20-year history. Will this attempt appease the city's frustrated tenants and property owners?

From its inception 20 years ago into the fabric of Cambridge's real estate market and political structure, the city's rent control system has been the subject of more controversy than any other issue in City Hall's Sullivan Chamber.

After two decades of scattered alterations, defeated amendments and unending political and legal bickering, the system, which proponents say has singlehandedly provided low-income tenants with affordable housing, now stands at the crossroads of a comprehensive revamping.

Late last month, the City Council's Rent Control Subcommittee published a 38-page, 18-point proposal to address the numerous maladies which currently plague Cambridge's system. The subcommittee called upon third-year Harvard Law School student Richard Ford to orchestrate the package dealing with the city's "hottest issue."

And the best way to achieve this goal, he said, was to hear what all involved parties had to say. From the time he began working on the project in November, Ford said he talked to city councillors, the mayor, tenants, property owners and officials from other rent control programs.

"A good part of what I had to do was get rid of the opposition and tension so that it would no longer be viewed as a 'tenants versus landlords' system," Ford said.

The proposal which emerged from Ford's four laborious months addresses a wide range of complex issues, but Jonathan S. Myers, who sits on the subcommittee alongside fellow city councillors William H. Walsh and Kenneth E. Reeves '72, said the report succeeds in addressing three "real concerns."

"Beyond the implicit, obvious aim to limit rent increases to a level that low and moderate earners can afford," Myers said, "we want to make the times for increases as predictable as possible for both the tenants and the property owners, and to maintain and improve the overall condition of the housing stock."

While the report recommends a 30 percent increase cap and regulation of the timing of the rent adjustment to address Myers's first two concerns, its suggestions for maintaining the city's deteriorating, rent-controlled housing stock allow for a number of options.

These options include a two to five percent Affordable Housing Preservation Fund fee, to be levied on middle and upper income tenants, and a revolving loan fund allowing property owners to borrow money at low interest rates to maintain the rent-controlled buildings.

"It's a good, strong report which speaks to the issues and captures the essence of what Cambridge rent control needs," Myers said. "We must improve and strengthen the system by making it fairer to everybody, taking the tension and the anger out of the system."

David E. Sullivan, a city councillor for 10 years in the 1970s and 1980s who chaired the rent control subcommittee, said he supports most of the proposal, "as long as some of the technical inaccuracies are corrected in the final version."

"The property owners and the tenants will definitely benefit from the proposal, for the owners will now know flat out when they are entitled to receive rent increases, and the tenants will know ahead of time when to expect them," Sullivan said.

"Also, there will be some money set aside to prevent the buildings from deteriorating. The two to five percent fee on tenants makes sense, provided that it is limited to those earning upper and middle incomes."

Tentative Support

This year's plan far exceeds the scale of the most recent major attempt at rent control reform, Proposition 1-2-3. The controversial effort, which would have allowed some tenants in rent-controlled housing to eventually purchase their apartments, was defeated in the 1989 city elections.

While many changes have occurred since 1970, some say that a regulation written by Sullivan in 1979 saved the system, which at the time was losing many units to outright sale. Sullivan says that his amendment, which restricted the conversion of apartments to condominiums, is "working extremely well to this day."

The Tenants

Michael H. Turk, co-chair of the Cambridge Tenants Union (CTU), labelled Ford's proposal "a mixed bag for tenants and for Cambridge," arguing that certain aspects of the report, such as the Affordable Housing Preservation Fund fee, are unfair, and that the proposal fails to give other issues the necessary emphasis.

"I'm somewhat disappointed," Turk said. "Our strongest opposition is against the tenant tax because it is regressive, unworkable and illegal--you can't just tax tenants because they are tenants. Also, the tax would eventually find its way down to the low-income tenants."

"Instead, the money for building improvements should come from other, more reasonable resources," he said. "For instance, the revolving loan fund is a great idea, but we should put aside at least two times the amount that was projected. And the idea to put pressure on the banks to reinvest is a good one, but we should expand that approach."

Turk said that yet another source of improvement funding should be the "slum lords," who divert much of their funds away from maintaining their buildings, allowing them to deteriorate. "It's all a matter of enforcement," Turk said.

Turk also disagrees with the proposal's survey method, in which the city would examine the condition of all Cambridge's units within two years--without first evaluating the number of units under the system.

"The weighting of priorities needs to be reversed, for the first and foremost task is to find out how many units are under rent control," Turk said. "There has been a dramatic loss of rent control housing by illegal removal of units that has not been accounted for by the city."

He said one study estimates that 1900 of about 14,000 rent controlled units were converted into condominiums between 1980 and 1986--in defiance of Sullivan's 1979 amendment.

"There is no reason that the city shouldn't be able to prevent this illegal activity with enforcement, and no reason that it shouldn't know exactly how many units are available."

Turk's third complaint centers on the "loose, weak" rent increase cap of 30 percent over two years, which he said would allow for a 120 point increase within six years due to compounding rates.

Robert Edbrooke, a member of CTU who said his rent has skyrocketed by $400 in the past five years, said the proposed cap will not soothe his anger.

"A 30 percent cap would still hoist my rent by $270 over the next two years," Edbrooke said. "That doesn't strike me as a good idea. I think a set dollar amount would be more reasonable."

And the Landlords

Yet Edward Zuker, president of Chestnut Hill Realty, said the 30 percent ceiling is not high enough if property owners are expected to maintain the quality of their buildings.

"The proposed cap might be high enough if our only obligation were to cover general expenses such as building structures and heating, but what about units that need appliance repairs or new stoves and fridges?" Zuker said. "I hope other property owners don't try to improve properties the way I did because it's economically unfeasable."

Members of the Small Property Owners Association (SPOA), a group of Cambridge landlords who own 12 rent-controlled units or less, have expressed similar complaints regarding the lack of funds for maintaining the housing stock and the lack of means for accumulating such funds.

John Natali, who stepped down as SPOA's chair last year, said the proposal would work to the disadvantage of the city's 750 small property owners.

"A loan fund of a million dollars wouldn't even come close to solving the money problem, and I wouldn't want more debts anyway," the Cambridge native said. "Also, why can't the owners just get more money through a higher cap than with a tenant tax? Give me the money and I'll put it into the buildings. I don't want a third party involved."

SPOA member Lenore M. Schloning '59 said that a large number of tenants pay much less than they can afford.

"More than 30 percent of rent control tenants earn salaries above the median income and many live in apartments much larger than they need," Schloning said. "Therefore, both the low-income citizens and landlords like myself lose out--the ones who really need low-priced housing don't get it, and I'm forced to borrow money just to keep up my building."

But Councillor Myers refuted complaints that the wealthy are taking advantage of the system. He said that owners like Schloning have repeatedly exaggerated the situation to the point where the distortion is a widely accepted myth.

"It's less of a reality than the owners make it out to be," Myers said. "Only nine percent of the tenants are considered high income. And the housing access office, which would be established by the proposal, would provide landlords with incentives for renting to lower income tenants.

But Natali said SPOA does not favor this measure either. "I don't want a system with strings attached, especially when we're dealing with high-risk customers who may not pay rent at all," he said.

The group also compiled a list of 14 points neglected by the proposal, Natali said, including inaccurate calculations of owners' fair net operating income, and the lack of an exemption on two rent control units for properties with four to twelve units.

Natali said the latter measure would allow owners like himself to move out of the rent-controlled complexes to more comfortable living arrangements while charging a higher rent on the vacated units.

But Ford said he attempted to compress as much as he could into the 18 points--a difficult task considering the complexity of the system.

"I know that many weren't happy with only 18 issues in the proposal, as there could have been 50, but we tried to address the most pressing issues," he said.

Compromise On the Way?

While both tenants and property owners maintain that they are still unsatisfied, most admit that the report contains the first steps necessary for a compromise.

Terry Morris, executive director of the Rent Control Board--the city body which makes all rulings on rent increases and other tenant-landlord disputes--said that while he doesn't support all of the points of the proposal, he does sense that the situation will be resolved in the near future.

"I'm most encouraged by the cooperative tone of the report," Morris said.

Myers said public testimony on the report will be considered at the subcommittee meeting on March 19, and a revised proposal will be brought before the City Council on March 25.

"I just hope the report has some significant impact on Cambridge's rent control system," Ford said. "Most of the recommendations seem to have a lot of support amongst council members, so at worst it should convince everyone that some changes must be made. At least it's a start in the right direction."

The study recommended that the Rent Control Board:

1--Review rents annually.

2--Set a cap of 30 percent on rent increases over a two year period.

3--Charge a two to five percent fee on rent control tenants to create a fund for repairing deteriorating rent-controlled buildings.

4--Revamp Cambridge's housing code inspection and enforcement efforts.

5--Survey all of the city's rent-controlled buildings within two years.

6--Pre-approve non-controversial improvements to rent-controlled buildings.

7--Resolve all disputes involving small landlords within 90 days.

8--Process eviction cases within 45 days, unless the tenant files a defense.

9--Create an experimental mediation program for landlord-tenant disputes.

10--Create a Housing Access Office, which would help low and moderate income people find rent-controlled housing.

11--Hire an enforcement officer to ensure compliance with the Rent Control Board's rulings and regulations.

12--Eliminate transitional rent exemptions. The exemptions are now used to evict tenants, but were originally created to protect purchasers.

13--Consider converting more than 2000 units of federally subsidized housing, which will soon be on the open market, to rent control.

14--Make rent control information more available to the public.

15--Define and certify affiliated rent controlled housing.

16--Offer low interest loans to small property owners who wish to repair their rent-controlled buildings.

17--Delay discussion of a minimum rent until verifying key facts.

18--Deposit city funds only in banks that loan money to repair and improve rent-controlled buildings.