Short History and the Metrics of Rent Control in Cambridge
Under pressure from tenant organizing, the Massachusetts State Legislature passed the Enabling Act of 1970 allowing cities with over 50,000 residents to limit rents in buildings that were constructed before 1969. Buildings with three or less units were exempted from the law. Those cities were Cambridge, Boston, Brookline, Somerville, and Lynn. Despite initially adopting rent control, four cities eventually moved away from strict controls:
Lynn repealed rent control in 1974
Boston approved vacancy decontrol in 1974
Somerville’s Board of Aldermen repealed rent control in 1979
Brookline phased out most of its rent-controlled units in 1991
While other municipalities moved away from controls, Cambridge went in the opposite direction. Cambridge alone had the strictest form of rent control and kept adding regulations. They earned the tongue-in-cheek moniker, “People’s Republic of Cambridge.” A five‑member rent control board was created. Its members were appointed by the Cambridge city manager who in turn was appointed by the nine city councillors. The rent control board was a quasi-legal body that conducted hearings about rent increases, evictions, and landlord‑tenant disputes. Rules of evidence applied at hearings. Most landlords were unprepared and highly offended by the adversarial nature of interactions at hearings. They bridled at the accusation of gold plating and disallowance of reimbursement for many home improvements. They suspected the pro-tenant administrative staff was advising tenants on how to challenge their landlords.
One of the most infamous examples of the tyranny of the Rent Control Board was the case of Helen and Peter Petrillo. In 1988, they were ordered by the Rent Board to jack up their Victorian three-family home in Cambridgeport to legalize a low-ceiling apartment in their basement, turning the three-family into a four-family house, and thus under rent control. On the day the order arrived, Peter Petrillo had a heart attack and later died.
Robert Montcreiff was a Cambridge City Councillor who voted for rent control. He explained his thinking on an episode of a popular local CCTV show, Cambridge Inside Out, that aired in 1996. He said, “Times were very different in 1970. It was a different world—Lyndon Johnson’s Model Cities were great, landlords were wicked, and no one studied anything.”
The Small Property Owners Association (SPOA) was formed in 1987 by a handful of small landlords. They asked for reform of rent control laws and presented the Cambridge City Council with a list 26 grievances. Other cities with rent control were easing their regulations, but Cambridge was becoming more restrictive. There were hours upon hours of discussion in housing committee hearings and in front of the Cambridge City Council, but not one reform resulted. By 1993, the Cambridge Rent Control handbook had swelled to 103 pages of regulations.
Cambridge renters were in the majority by about five tenants to each owner. They were not going to vote to raise their rents. Politicians exploited this situation and didn’t budge an inch on reform to the system. John E. McDonough, a former Massachusetts state representative, described this in his book, Experiencing Politics, A Legislator’s Stories of Government & Health Care. He devoted a chapter to the rent control story in Cambridge, explaining why there could be no change or reform in Cambridge. He cited an old political theory called the Iron Triangle. Simply defined, it is an alliance of bureaucracy (the Rent Control Board), legislature (the Cambridge City Council) and lobby (the Cambridge Civic Association, Cambridge Tenants Union and the Eviction Free Zone).
Partially in response to the criticisms leveled by SPOA, the city commissioned a study of the system by a Cambridge consulting group, Abt Associates, Inc. It was known as The Abt Report. The study showed that rent-control tenants were predominantly young, white, single adults or childless couples. Incomes were virtually identical with market rate tenants. Still, the City Council did not enact reform because they had the power of the Iron Triangle to preserve the status quo.
At about the same time, in 1988, another Cambridge resident named Arthur Maringas, an engineer and a federal auditor by profession, began to suspect that something was amiss in the way rent controlled and unregulated property was taxed by the city. He called the Abt Report a “political masterpiece because everybody thought the report substantiated their viewpoint.” Maringas explained, in front of the City Council, that he didn’t have a viewpoint, he was just an engineer looking at data to come up with a viewpoint.
The Abt Report had 545 units in its data base. The Maringas report had 12,385. Using public data, Mr. Maringas examined every single rent-controlled unit and to the extent possible, every single rent‑controlled tenant. He worked pro bono and spent hours working at the Cambridge Rent Control Board. He cross-referenced rent controlled units with public data. When he presented his research to the city council, he explained somewhat ironically that doing his work was like reading a good novel as his findings were so dramatic and revealing. For instance, by cross referencing tenant addresses with the city’s auto excise tax records, he learned that many rent-controlled tenants drove luxury cars. Other more specific findings he found were:
Only 13% of the tax subsidized rent-controlled units were occupied by people 62 and older.
32% of the doctors in the City of Cambridge lived in tax-subsidized rent-controlled units.
39% of the lawyers in the City of Cambridge lived in tax-subsidized rent-controlled units
There were only 347 families living in a total of 12,385 rent-controlled units.
4% of the tax-subsidized rent-controlled units were occupied by college students.
The City of Cambridge did not know the dollar amount of the rent-controlled tax subsidy.
Again, because of its political power, the City Council was unmoved. The Maringas Report was never officially published. There was no Internet in 1988 so the report was not widely distributed or publicized. However, SPOA did not give up. The story of the statewide Q9 initiative referendum and the repeal of rent control in 1994 is legendary and the subject of many other articles.
SPOA commissioned their own study published in 1994. They hired Rolf Goetz whose report was titled “Rent Control: Affordable Housing for the Privileged, Not the Poor, a Study on the Impact of Rent Control in Cambridge, Massachusetts.” The four key findings were:
Rents in controlled communities were held well below market
The housing market tightened under rent control
Rent controlled apartments became gentrified
Gentrified tenants achieved light rent burdens
There is a persisting myth that rent control made for a more diverse citizenry. Fast forward to today and the ability to review census data. That data shows that Cambridge is now a more diverse city. In 1980, during rent control, the population of Whites in Cambridge was 82%, Blacks, 10.9% and Hispanics, 4.9%. In 2020, long after rent control was eliminated, the population of Whites decreased to 66.1%. Blacks decreased only slightly to 10.7% and Hispanics increased substantially to 9.5%. Clearly, there is more diversity today than during rent control.
Perhaps an even more important metric is the property tax subsidy. Rent controlled housing was taxed at a much lower rate than uncontrolled property. Rent controlled rent saved tenants hundreds of dollars each month. During the rent control years, the city’s tax base was artificially depressed. It is safe to say that Cambridge did not publicize what that amount was or if it was ever calculated. However, MIT economists calculated that in the decade after decontrol the city gained more than 7.8 billion dollars in appreciation on rising assessments on residential property between 1988 and 2005.
Cambridge tax coffers were further enriched by an additional levy on property owners known as the CPA or Community Preservation Act. In a last-minute, backroom deal at the State House when the legislature was hacking out the new decontrol law in 1994, the CPA and a two-year phase out plan for low income rent control tenants was accepted by SPOA’s Q9 committee as a compromise. As a result of this deal, Governor Weld put his stamp of approval on the new law and thus began the new era of rent decontrol in Cambridge.
The burden of this failed social and economic program fell squarely on small property owners in the city but less transparently on never controlled property. Rent controlled landlords subsidized their tenants directly and the non-controlled property owners provided a tax subsidy to all rent control tenants. In conclusion, rent control was a redistribution of wealth on the backs of both rent control landlords and other property owners in Cambridge, for the wrong people.
by Linda Levine
About the author: Linda B. Levine, MBA, board member of SPOA since 1987, Co-president and President 1993-1994.
References
McDonough, John E. Experiencing POLITICS A Legislator’s Stories of Government & Health Care. University of California Press, Berkeley, 2000, pages 105 – 118.
Cambridge Inside Out, CCTV cable show, 1996, episodes 157 and 158. Accessed on Youtube.com March 7, 2022.
The Harvard Crimson, 19 Nov. 1971. “Who was Robert Moncreiff?” Retrieved from the Internet, 7 March 2022.
Moncreiff, Robert, The Repeal of Rent Control in Cambridge, New England Journal of Public Pol-icy at the University of Massachusetts. Vol. 12: Issue 1, article 6, retrieved from the Internet March 7, 2022.
Goetz, Rolf, Phd, The Goetz Report, GeoData Analytics, August 1994. Retrieved from the Inter-net, March 8, 2022.
Palmer, Pathak, Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts, June, 2014. Retrieved from the Internet March 2022.
