Rent Deregulation in Boston: Disruption, but Also Construction

New York Times, June 10, 1997
BOSTON -- In the two years since Massachusetts voters ended most rent controls for the cities of Boston, Cambridge and Brookline, two distinct interpretations of the results are beginning to emerge: While tenant advocates and landlords agree that noticeable disruptions and turnover have occurred in some neighborhoods, landlords say there are also signs that eliminating the rules has encouraged new housing construction and repairs.

One scenario is on display at the Hemenway Hotel apartments, a rambling eight-story building in the Boston neighborhood known as the East Fens. Sitting in her apartment in the building recently, Susan Starr counted the stalwarts: the former Avon lady who had lived in her apartment for 40 years; the retired merchant marine who had been there almost as long; the man who ran the cluttered antique shop on the ground floor, a fixture for two decades.

They were among the few longtime tenants who had gone to court to fight rent increases and remain in their building, as other neighbors were replaced by college students and young professionals.

The other side of the complicated rent decontrol story unfolding in and around Boston comes from landlords, who say the return to a market system here has already been beneficial citywide, leading to an increase in property tax revenues and appearing to cause new housing construction, which could eventually bring prices back down.

Furthermore, while landlords concede that some neighborhoods have been inevitably and sometimes even painfully changed, they say that the most vulnerable tenants, the poor and the elderly, have been affected much less than expected.

It is difficult to draw significant economic comparisons between New York and the Boston area because Boston's huge student population skews the market and New York has higher demand and 20 times more rent-regulated apartments, but both sides in New York have plucked examples to use as lessons for lawmakers in Albany.

Citing the Hemenway and buildings in other neighborhoods where prices have risen sharply, tenant leaders say Boston has already proven that ending rent regulations, whether quickly or over several years, forces the working class and middle class out of desirable neighborhoods.

Tim Davis, a tenant advocate with the Fenway Community Development Association, a nonprofit housing group, said: "There are now only two kinds of people here who are able to afford to live in a lot of the buildings in this neighborhood: People who make $50,000-plus or students who are willing to double and triple up."

Blocks in the neighborhood once had an eclectic mix -- from municipal and college employees to hotel dishwashers to lawyers, artists and students -- but, Davis said: "There's really no mixture anymore."

Ms. Starr, a secretary at Northeastern University who makes $24,000 a year, has fought the owners of the Hemenway, as the building is still called, although the name was formally changed to the Parkside when it was bought and renovated in late 1994. She said the owners wanted to increase the $565 monthly rent for her one-bedroom apartment to $850. And while she has succeeded in keeping her old rent for two years, she does not think she or many other old tenants can stay much longer.

"In December of 1994, the Hemenway had about 160 tenants, most of whom were rent-controlled," she said. "As of today, there are fewer than 20 of those people left -- in a mere two years. It's not the same building."

The owners of her building, Forest Properties and Fenway Parkside Limited Partnership, did not respond to several requests to be interviewed for this article. But as a group, the city's landlords do not dispute that tenants have been pushed to other neighborhoods and sometimes to other cities by rising prices. They are not apologetic, however, saying that it was grossly unfair for landlords ever to have been saddled with the the rent rules.

"The hypothetical secretary might have to come to the realization that she's not entitled to an apartment in a given block," said Edwin Shanahan, the managing director of the Rental Housing Association, Boston's largest landlord group.

He said the end of the rent controls appeared to be having a beneficial effect for the city as a whole and the housing industry, which could eventually increase the stock of affordable housing.

A study released last week by Henry Pollakowski, an economist at the Massachusetts Institute of Technology, reported that in Cambridge, which had the strictest controls, building permits increased in 1996 and assessors predicted that residential property tax revenues would rise 9 percent.

Since the Boston area was in the middle of a housing boom when the rent controls were lifted, Pollakowski's study said, it is difficult to know how much of the building can be attributed to rent deregulation. But the current high level of renovation and repair of Cambridge buildings once under rent control had not been matched during the previous market peak, in the late 1980s, the study concluded.

Those on all sides of the issue agree that Boston rents have increased on average, but the effects of decontrol are still developing. and it is hard to pin down exactly how much they have risen and where.

In Cambridge, which adopted rent controls in 1971 and had about 15,000 regulated apartments two years ago, Stanley Lastoff, owner of Porter Square Realty, said that one-bedroom apartments then renting for $433 a month can now fetch about $900.

While landlords say that such increases were bound to happen in some neighborhoods, they contend that the effect on residents has been much less predictable. And they argue that there were far fewer elderly, disabled or poor people who had to look elsewhere than originally expected.

When rent controls were ended in January 1995, the state Legislature provided for two-year extensions for the elderly, the disabled and the poor, if they qualified under certain income guidelines. But in the three affected cities of Boston, Cambridge and Brookline, where about 45,500 units were subject to rent controls, only 3,090 units eventually qualified for the exemption, according to Shanahan and the MIT study.

At the Hemenway, Ms. Starr and the remaining holdouts said they had begun to accept that they would not be able to stay much longer. The antique shop owner has already decided to move and close his store. "I probably won't be around here in a couple of years, either," Ms. Starr said.

But while she remains, she said, she will continue to argue that the landlords' purely economic viewpoint overlooks a lot: "Whatever happened to neighborhood stability and civic pride and human connections?"