Subtitle: How TROFR/TOPA kills the accessory apartments and 2-family opportunities for tenants.
At the Cambridge City Council meeting of February 26 2018, my two minutes of public testimony were spent warning about the unintended negative consequences of a tenant right of first refusal (TROFR/TOPA) home rule petition, and how it would hurt more tenants, and hurt them much harder economically than it could help a minority of tenants. But my written comments were obtuse, pointing to a study by economists from Stanford University, who were pretty clear about the negative effects to most tenants in a San Francisco of law they studied.
So let me try to make it clear on a very specific example.
The TROFR is a mortal wound, a fatal blow, to the supply of new housing units encouraged by the current high demand from potential tenants, and enabled by the Barrett, et al. Zoning Petition for Accessory Apartments which is now law in Cambridge, and which was spoken of highly by the Boston Globe columnist Dante Ramos back in May 01, 2016: how grandma can help housing crunch
Ramos quotes Patrick Barrett, “we created 5 million square feet [of usable space] and potentially 1,200 units. And it didn’t require a crane.”
Why does TROFR kill the Accessory Apartments? Quite simply, because, if a person owns a single family dwelling, and out of a desire to stay in the neighborhood (stability) and help pay their property taxes opens up their home to a tenant in the form of creating an accessory apartment then the owner immediately creates a grave risk, encumbering the economic health of themselves and their heirs. Any owner occupant exemption in any TROFR law is simply not likely to be available to the owner or heirs when the most likely time comes for a property transfer; because that time would tend to be when the owner might be forced to leave their home for health or safety reasons, for example, to go live with relatives, or to enter an assisted living facility, or perchance to die.
Any owner of a 2 or 3 family building is at similar risk, for the same reasons. The number of ways to lose the owner occupant exemption are many, which will motivate some of the older landlords with a marginally profitable 2 family building to simply take their unit off the market. It is just too risky with TROFR hanging over their heads. During the era of draconian rent control in Cambridge many owners who had paid premium prices for their exempt 2 and 3 family buildings found themselves at risk of financial ruin when divorce, temporary separation, death or academic sabbatical brought the owner occupant percentage under that magic 51% required for the exemption. This after continuing to vote for and support through campaign donations the very city council members who created the noose out of the rope they sold them.
In fact, even having the local government considering a TROFR home rule petition sends a chilling notice throughout the cities and towns of Massachusetts that political risk is on the rise again, and may cause many 2 family owners, or people who have created accessory apartments to withdraw them from the rental market.
Here is AN ACT TO PRESERVE AFFORDABLE HOUSING IN THE CITY OF CAMBRIDGE THROUGH A TENANT’S RIGHT TO PURCHASE a pdf from the Cambridge City web site.
Washington DC has a similar Tenant’s 1st Right Law known as TOPA. Paul Alexander writing for the Huffington Post writes in OPPOSITION.
NBC NEWS 4 (Wash DC) also explains the pitfalls of their Tentant’s 1st Right of Refusal Law. The three person panel at the bottom of this page offers great insights. (the first 3 minutes of the audio for the panel discuss do not work, skip ahead.) Some DC Renters Make Tens of Thousands of Dollars Exploiting Decades Old Law
Follow the related posts to find the Stanford University economist work, etc.