SPOA's Rebuttal to Boston's Rent Control Proposal
Dear SPOA Members and Supporters:
It’s time to have a serious conversation about rent control.
The city of Boston’s rent control proposal isn’t just about imposing a rental cap. It’s a government takeover of the private housing industry.
It’s the creation of a rental regulatory board – an amorphous and autocratic government agency that will dictate the relationships between landlords and tenants, that will attempt to control the market supply and moderate demand. It redefines evictions into an obscure “just-cause” eviction concept, having one set of laws for the state of Massachusetts courts and a second, far more stringent set of laws for the city of Boston housing court; then subsequently any community that opts-in to rent control with a home rule petition.
This will redefine the way housing works in Massachusetts.
There is a housing supply crisis. There is a housing affordability dilemma. Both are dire.
Both are being exacerbated by a worsening economy – substantial interest rate increases lessening the supply of money that developers can use to build and invest in housing in tandem with record high inflation and surging energy prices. Banks need real estate deals to “pencil” out. They loan money where they too will profit. It is challenging with today’s market conditions. And that preempts any discussions on excessive new government regulations.
The housing shortage exists because sufficient new housing hasn’t been built. A lot can be traced back to market fear following the 2008 recession. Massachusetts and even Boston, despite the addition of 45,000 new units of housing built in the last decade, are both woefully behind. Growth must be stimulated through developer incentives, making zoning codes and permitting processes less stringent, and combating NIMBY-ism.
There is cognitive dissonance about the housing supply numbers. In rent control hearings, officials say the new laws won’t impact production, yet new housing units approved declined 74% in Boston from 2021 to 2022. Looking at building permits pulled in the same time period -- actual shovels in the ground -- the decline is 94%. We can deny the existence of this data, but at some point, the numbers are the numbers. That is the pre-rent control reality and there currently is, and will continue to be, greatly decreased supply of new housing built in Boston.
We should also mention that the investment sector is shying away from markets where excessive regulations are merely on the table. It may not be possible to quantify the billions of development dollars already lost, as reluctant investors fear Boston is unsuitable for present and future investment.
City officials tell us that demand for Boston is endless and will never cease. Industry voices we hear from our membership reflect concern about the burdensome conditions of potential rent stabilization; policies like the Tenant Opportunity To Purchase Act (TOPA); increased linkage fees; the potential restructuring of the Boston Planning and Development Agency delaying an already cumbersome permitting morass; Building Emissions and Reduction Disclosure (BERDO) reporting requirements; and exorbitant energy costs as reasons that they are looking elsewhere – Southern New Hampshire, Rhode Island, and, for now, the suburbs of Massachusetts among other places. Many of these policy ideas may have been apt for pre-pandemic realities, but they do not work in the economy we face today.
These market conditions are not the fault of housing providers. Yet landlords, and private industry, are being held accountable for this unfortunate conflation of circumstances. SPOA are the boots on the ground, and we hear regularly from small landlords leaving the sector, selling and moving on. These numbers too will begin to emerge, critically lessening the supply of current housing, much of it affordably priced.
This question will ultimately be decided in the Massachusetts legislature. This body should ask themselves some very serious questions – where does the financial health and well-being of the state rank on your list of priorities?
Capital is mobile. 110,000 people left the state of Massachusetts since the onset of the pandemic. The numbers will continue to emerge. For now, coffers are flush with COVID funds, but those won’t last forever. There is woefully little discussion about the revenue viability of the ailing Financial District. It is harder for property owners to divest of bricks and stones, but the pandemic brought quality of life issues to the forefront for all of us. What’s harder? Working through it or moving on? People like to be where they are wanted.
Innovative, smart, and hardworking people who run businesses need to be in states that are friendly to enterprise. These people pay taxes and fuel municipal budgets. The comment sections of the latest anti-business articles claim good riddance to these folks, jubilant that there will be less of us in Massachusetts. Those theatrics aside, the elected officials of Massachusetts need to decide what kind of state they want to lead.
SPOA is a landlord advocacy organization made up of volunteers. Our response to this crisis will be determined by our funding. In order to combat this intrusion into private housing we need your support. Please financially support our efforts today - the consequences of these actions may be dire. Housing providers must push back against these dire threats to our industry. Please donate what you can today, or send checks to “SPOA, Inc.” at 840 Summer Street, Boston, MA 02127.
Small Property Owners Association (SPOA)