SPOA Letter to State Legislators Regarding TOPA

Dear Legislators:

As the legislative session comes to a close, SPOA (“Small Property Owners Association”), is contacting you today to raise the alarm on proposed legislation that negatively impacts small housing providers. 

SPOA is a state-wide landlord advocacy group, representing small housing providers in Boston, Cambridge and throughout the state. Small landlords provide 60% of all rental housing, especially affordable housing, in the Commonwealth. We have a reach of 30,000 small landlords.

We urge you to oppose any Right of First Refusal legislation or TOPA, Tenant Opportunity to Purchase legislation (see H.1426/S890). 

While sounding innocuous, TOPA is simply deadly for small housing providers.

We will detail below our specific objections to the bill, but proposed legislation such as this is already forcing small landlords to sell their property out of fear that it could become law. This harms tenants, by removing existing affordable housing stock from the marketplace and promotes gentrification. For example, when a small landlord in South Boston or Jamaica Plain sells their three-decker, most likely two to three new multi-million-dollar condominiums take the place of three units of affordable housing.

The very policies put in place to appease housing advocates are taking out small housing providers and paving the way for large corporations to come into the market and gobble up existing rental housing.

i. TOPA will reduce the production of new affordable housing. If this policy is adopted, without a viable exit strategy (essential to any business enterprise) developers will take their dollars and their projects elsewhere. The way out of our affordable housing crisis is supply, supply and more supply. There will be far less production if TOPA is passed. This is exactly what happened in Washington, D.C. when they passed TOPA legislation.

ii. TOPA punishes small landlords who supply 60% of the rental housing in the Commonwealth. If you couldn’t cash in your 401K without lengthy delays and time constraints placed by the legislature, what impacts would that have on your retirement? Small landlords have struggled through the pandemic, many of us have made rental payment deals with our tenants during hard times and now we’re to bear the brunt of the lack of affordable housing?

iii. Time is essential to real estate transactions. There are bank and financing implications, tax ramifications and estate planning impacts. The Right of First Refusal mandates up to 227 days or seven months of delays, which is simply untenable. Any businessperson can discern the harmful impacts this will have on real estate sales. Very simply, you will have fewer of them.

iv. The concept in the proposed legislation vaguely outlines “Tenant Associations”. What and who are they? How are they defined? This vagueness sets the stage for arduous and expensive litigation. This provision in the law only further takes existing housing offline.

v. The exemptions do not help the people they are supposed to. Most landlords own their income properties in LLCs and Trusts, for liability reasons. It’s the way real estate holdings are structured. No LLCs or Trusts are exempt. The exemptions are written to reassure legislators that TOPA is less restrictive than it really is. In actuality, TOPA will apply to almost all real estate sales and transactions of rental properties.

vi. TOPA complicates bank financing. The delays and mandates included in the bill add burdensome layers to community and larger banks that provide housing providers with mortgages. It is essential for both financial institutions to complete real estate transactions.

Small landlords, housing advocates, tenants and the legislature must come together to create innovate solutions for the Commonwealth’s affordable housing crisis. We applaud the efforts made during the last legislative session when the legislature passed the Housing Choice Bill. We believe easing zoning, combatting NIMBYism and providing incentives is the right policy agenda to create more affordable housing.

Unfortunately, there are many proposed laws like TOPA which take a punitive approach towards property owners, especially small landlords in particular. Why are we harming productive people who pay commercial taxes and are providing a vital service instead of finding real solutions where multiple parties benefit?

TOPA is dangerous housing policy. Inserting governmental regulation into transactions between buyers and sellers will have catastrophic impacts on the state’s housing market. Many parties will suffer – but simply put, when small landlords sell their property, tenants lose affordable places to live.

Please consider these impacts and vote no on TOPA.

Sincerely,

Small Property Owners Association