Crazy condo proposal is
‘BACK DOOR’
RENT CONTROL

Once again, Cambridge activists are pushing a proposal that puts all 3-family homes and larger properties under a harsh condo ban.

Owner-occupied properties are not exempted in the proposal drafted by Cambridge and Somerville Legal Services for the Eviction Free Zone, Cambridge’s tenant activist group.

It’s a clever trick to get rent control again, even broader than before, but disguised as a condo ban.

If enacted, 2-family properties would be the next target of regulation, because most condo conversion occurs in them.

And condo owners? Watch out! The next step is to restrict owner-occupancy of condos. Cambridge did exactly that under the old rent control system.

Continuing their campaign to get rent control back, tenant activists in Cambridge are targeting 3-family homes for a harsh condo ban that effectively brings back rent control on all 3-unit and larger properties.
The proposed condo conversion ordinance will immediately reduce the value of all multi-family properties in Cambridge – by limiting their highest value use. And it will put all multi-family owners except two-family owners under rent control. (Just wait if you are a two-family owner. Most condo conversion is now occurring in two- and three-family properties).
How is this condo ban really rent control? Under the proposal, a rent increase more than the rate of inflation is automatic proof of "intent to condo." "Intent to condo" then automatically brings forth numerous tenant "protections," including rent control. So to avoid being accused of "intent to condo," owners must keep ALL rent increases below the inflation rate.
A city agency – the Community Development Department – is appointed to administer the act. They will have to set up a board. It will be just like the old rent control board. If an owner wants to increase any rent beyond the inflation rate and NOT be accused of "intent to condo," they will first have to go to the new rent control board.
It is a clever way to disguise rent control as condo conversion control. But it is still rent control. Only this time it will apply to 3-family properties. And eventually, 2-family properties.

Here’s how the proposed condo conversion ordinance would have a substantial adverse impact on every Cambridge multi-family homeowner and their family, all the way from 2-family properties up. AND an adverse impact on condo owners.

1. Broad coverage. The proposal is drafted to include three-family properties and to impact all owners, not just real cases of condo conversion. Every property owner who might conceivably condo is subject to the ordinance and can be accused of condoing for flimsy reasons. Once accused, the owner will be dragged through
2. Increase owner burdens and administrative delays. The intention is to substantially raise costs and burden owners so that condo conversion is effectively banned. The enforcement, therefore, will be harsh. Once accused of "intent to condo" for any reason the tenant dreams up, the owner must prove in an adversarial format that he or she has no "intent to condo."
3. De facto rent control is imposed. It’s very simple. Owners will fear costly administrative battles to prove they have no "intent to condo," so they will avoid any rent increase over the inflation rate or any other action that could lead to an accusation of "intent to condo."
4. Administered by a city agency. Just like the old rent control board, a city agency with pro-tenant officials will adjudicate all disputes under the ordinance. The concepts are similar to rent control and include rent control. The ordinance makes rental owners and condos and condo owners into the official enemy.
5. The ordinance will expand. If adopted, the enemy status would expand, including two-family homeowners and all condominium homeowners. Condo owners can expect a re-occupancy restriction. In other words, if they ever rent their condo, it must remain permanently rented. Re-occupancy by any future owner would be outlawed. That is exactly what Cambridge did under the old rent control system.
   

The obvious purpose of the condo proposal is to stop ownership opportunities, preserve as much tenant-occupied property as possible, and create a rent board – all in the vain hope that rent control will return.

Intended
& unintended
consequences:

DISCRIMINATION
People will not rent to the elderly, to families, to low-income or to disabled persons – those give special and extravagant protections.

NEIGHBORHOOD INSTABILITY - I
Short-term transient tenants will be preferred by owners, to get rent increases by high vacancy turnover and avoid the rent board.

NEIGHBORHOOD INSTABILITY - II
Temporary tenants, uncommitted to their local community, remain dominant. A lower density of owners is maintained. Homeownership unequivocally improves local neighborhood involvement.

DRIVES UP THE COST OF CAMBRIDGE’S
MOST AFFORDABLE HOMEOWNERSHIP OPTION
New condos will be banned. Those few that go through will cost much, much more. In a market deliberately closed and made scarce, condo prices will rise. Yet "condo-ing" turns high-rent apartments into the best homeownership bargains in Cambridge.

DENIES HOMEOWNERSHIP
TO CAMBRIDGE’S MANY TENANTS
The rest of the country is two-thirds homeowners. Cambridge is one-third homeowners, two-thirds tenants. Many of Cambridge’s tenants would love to own their own home, right here in Cambridge.

DIVIDES CAMBRIDGE ONCE AGAIN
Multi-family homeowners and condo owners will once again become the despised of Cambridge. Harsh fighting can be expected whenever a minority gets stereotypically profiled.

A state condo conversion law already exists!
This state law protects tenants facing real condo conversions very similarly to the Cambridge proposal.

So why do tenant activists want the Cambridge condo proposal?

Because, unlike the state law, it can be used by any tenant in any property to stop a rent increase and gain rent control and eviction protection, by the tenant simply asserting an "intent to condo" even if such intent does not exist.

A long, arduous hearing will ensue before a city agency, just like hearings at the old rent control board. Simply to avoid this long arduous process, owners will not raise rents. That is "back door" rent control.

Comparison of the state law
and the Cambridge proposal:

WHO. The state condo conversion law applies to four-unit buildings and larger. The Cambridge proposal applies to three-unit buildings and larger.

WHEN. The state law requires one complete notice to tenants. The Cambridge proposal requires 10 separate notices to tenants.

WHY. The state law defines "intent to convert to condos" very broadly. The Cambridge proposal adds a few more grounds for charging "intent to condo."

Intent to condo, under the Cambridge proposal, is evidenced by any one of the following: filing a master deed; applying for a conversion permit; preparing a purchase and sale agreement; advertising a unit for sale; showing a unit to a prospective buyer; any communication, written or oral, to any person, expressing indicating an intent to condo; having a unit measured or inspected; having land surveyed, an engineering study performed or architectural plans drawn up; having an annual rent increase over 10% or the Consumer Price Index, whichever is less; having "excessive" evictions, terminations of tenancies, or "other deprivations of use"; holding units vacant. Many of these are also included under the state law.

Tenant rights of action. Under the state law, the tenant must file suit in court if the tenant believes the owner has violated the state law. Under the Cambridge proposal, the tenant can assert "intent to condo" to the city agency, the Community Development Department, charged with enforcing the ordinance. A hearing then ensues during which the tenant gets rent control and eviction protection until the dispute is fully adjudicated by the city, even if the tenant’s assertion is wrong.
Rent increases. A rent increase greater than the rate of inflation is automatically deemed as "intent to condo" if the tenant merely brings the case to the city agency. The rent increase cannot go forward until the owner proves NO intent to condo.

Burden of proof. The state law uses the customary standard of "preponderance of the evidence." The Cambridge proposal "assumes guilt" when a tenant accuses an owner of "intent to condo" and places the burden of proof on the owner to prove NO intent to condo. The owner must prove this twice to achieve an eviction order, first before the Cambridge Community Development Department (just as the old rent control board ruled first on evictions). Only if the owner succeeds at the city agency can the case be brought to court, where the owner must once again carry the burden of proof of NO intent to condo.

Eviction. The state law defines the law-triggering eviction simply as evicting a tenant in order to facilitate sale of a unit as a condo. The Cambridge proposal is much broader. Besides a regular eviction, any action an owner does that shows "intent to condo" or that could be interpreted as forcing the tenant to move by some other means is presumed to be a "constructive" eviction. Thus, raising a rent over the inflation rate is automatically considered a "constructive" eviction prohibited under the Cambridge proposal.

Administration. The state law is enforced through the courts, by the tenant filing suit. The Cambridge ordinance would be enforced at all points through the Cambridge Community Development Department (equivalent in power and scope to the old rent control board), by the tenant coming to the city agency with a complaint.

Penalties. The Cambridge proposal is about 20 times more punitive against owners who violate the ordinance. The fines and jail time remain the same, BUT a violation is defined differently. In the state law, a violation is each unit illegally converted. In the Cambridge proposal, a violation is each infraction of the very complex ordinance. Thus, if an owner is judged to have made a condo conversion and failed to give the 10 required notices, that alone imposes a minimum of 600 days in jail or $10,000 fine.

Permission. The Cambridge proposal requires a conversion permit from a city agency. The state law does not.

Time to move. If there really is a condo conversion occurring, tenants over 80% of median income get one year to move under the state law and two years to move under the Cambridge proposal. Tenants under 80% of median income or elderly or disabled get four years to move under both state law and the proposal. State law is thus fully protective of the most vulnerable tenants. The Cambridge proposal gives one extra year for those tenants who need it least.

Relocation payments. If there really is a condo conversion occurring, relocation payments differ in small ways. Tenants over 80% median income get $750 under state law, $1,000 under the Cambridge proposal. Tenants under 80% median income or elderly or disabled get $1,000 under state law and $2,000 under the Cambridge proposal.

Housing search assistance. If a condo conversion is really occurring, both state law and the Cambridge proposal require the owner to help find comparable housing in Cambridge for tenants under 80% median income or elderly or disabled. The Cambridge proposal stipulates a minor further requirement: the new housing must be in the same school district if children are involved.

Right to purchase. If a condo conversion is really occurring, the tenant gets one 90-day period in which to buy the condo under state law. Under the Cambridge proposal, the tenant gets a second, 14-day period to buy it. A minor change.

But this ordinance is not about condo conversions, it’s about bringing back rent control on even more properties than before.

The consequences?

Every eviction in Cambridge will be construed as an eviction with "intent to condo," forcing the eviction to go through a city agency first and forcing the owner to prove no "intent to condo."

Every rent increase over the inflation rate will be construed as "intent to condo" and trigger rent control and eviction protection, at least until the owner proves to a city agency in a long, arduous hearing that there was no "intent to condo."


Explosive political impact

Affected owners are a large group
The old rent control covered about 1,000 buildings and the families who owned them. These larger rental properties had many tenants and relatively few owners.
By dramatically expanding the law to include three-family properties, this condo proposal would cover 2,600 buildings. It about TRIPLES the number of owner families affected. BUT the number of tenants affected in these smaller buildings is few.
With most condo conversion taking place in two-family properties, these two-family owners are quite correct in assuming that they will be next if the City Councilors take an anti-ownership position.
Including two-family properties, the number of properties actually or potentially affected by this condo proposal is over 5,700 buildings and at least twice as many affected owners and adult family members. This large group of owners is six times bigger than the small group of owners who got rid of the old rent control system.
And SPOA will let this large number of owners know exactly who votes for and against this proposed ordinance.

From the Cambridge Assessors Office, current data as of 1-1-2000:

PROPERTY SIZE / CLASS	No. of PARCELS (equals no. of owners approximately)
Condominiums	8,194
Single-family homes	3,550
Two-family homes	3,120
Three-family homes	1,623
4-to-8 unit buildings	740
9-or-more unit buildings	226
Rooming houses	40

1999 ASSESSORS DATA
The following data is based on computer printouts by City Assessor Sally Powers for condo conversions in 1999, the last full year for which there is complete data.

Building size No	No. converted to condos
2-family	39
3-family	32
4-to-8 units	22
9+ units	11
TOTAL BLDGS CONVERTED	104

Total multi-family bldgs in Cambridge	5,813
Percent of bldgs converted in 1999	1.7%
Bldgs converted in 1998	50 ± (approx. estimate by Sally Powers)
Percent of bldgs converted in 1998	0.8%±

Conclusions:
Most condo conversion can be stopped or "protected" only if two- and three-family properties are included under the proposal. These owners, large in number, will simply not tolerate the proposed rent-control-like system.
But very little condo conversion is actually happening. So why regulate it?
According to Sally Powers’ informal assessment of recent history, very little condo conversion occurred after rent control ended. Developers chose instead to build larger rental apartment complexes, and some 600 new apartments are coming on line now and in the past few years (Museum Towers, Worthington Place, two high-rise projects near Lechmere, Bay Street, etc.). Only in 1998 did a noticeable rise in condo conversions occur, and it still constituted less than 1% of all multi-family buildings. Another upward rise occurred in 1999. But the economy is hot, and once the boom ends, condo conversion will end. Other cities and towns that did not have rent control experienced a surge of condo conversion during the 1980s and then a leveling off of the market. Cambridge can expect the same decline in demand, once basic demand is met. It is foolish to regulate something that will largely slow down by itself, that is already regulated by state law, and that provides the lowest-cost form of homeownership – unless your goal is to return to rent control, hostile anti-ownership policies, and a divided city such as Cambridge once was.

What are the next steps?

Once a strict, city-government-run bureaucracy enforces the all-encompassing provisions of the proposed ordinance, ‘back door’ rent control will be effectively imposed on all initially regulated properties.

Then the ordinance will be expanded.

What will the next steps be?

1. EXPAND COVERAGE TO TW0-FAMILY PROPERTIES where most condo conversion activity now occurs.
   
   
2. STOP or RESTRICT OWNER-OCCUPANCY OF EXISTING CONDOS
   The rule will be "once rented, always rented" or "once sold, always rented." These rules will infringe on owner rights and lower every condo’s resale value. Cambridge did it before under the old rent control system; it will do it again.
   

Condo owners should have the right (as all property owners should) to rent their property to others and repossess it promptly after proper notice.
Maybe you, as a condo owner, would like to keep your condo in the family rather than sell it. You could rent it for a while, keep it as an investment, keep it as a place to return to, keep it as a place for your children to use someday. Owners should have this option. It’s good for them. It’s good for the community. To be able to owner-occupy OR rent your condo maintains the flexibility of the housing stock to respond to the times and everyone’s needs. Condo associations will be happy when owners can maintain practical controls over a unit’s occupants, and very unhappy if this proposal passes and their owner-occupancy is restricted.

Read the fine print!
Here are critical excerpts from the proposed condo ordinance:

Intent to convert or condo creates presumption. Sec. 6(d)(iii): "...an eviction shall be presumed to be a condominium or cooperative conversion eviction if the owner has the intent to convert as defined herein."

Owner must rebut ‘intent to condo’ with clear and convincing evidence. Sec. 6(d)(iv): "Where a presumption of a condominium or cooperative conversion eviction exists, such presumption may be rebutted by the owner only through clear and convincing evidence that the eviction was not a condominium or cooperative conversion eviction and that the owner had sufficient independent justification for seeking possession or taking other action and would have in fact taken such action, in the same manner and at the same time whether or not the owner intended to sell the unit as a condominium or cooperative. Where the owner is unable to rebut the presumption provided for in this Section, the owner cannot regain possession of the housing accommodation."

Eviction defined broadly. Sec. 2(d): "For purposes of this ordinance, the word "eviction" shall include, without limitation, any action by an owner of a housing accommodation which causes substantial deprivation of a tenant’s beneficial use of such housing accommodation, materially impairs such tenant’s beneficial enjoyment of such housing accommodation, or is intended to compel such tenant to vacate or to be constructively evicted from such housing unit."

Three-family properties included. No owner-occupancy exemption. Sec. 2(j): "Definitions." "Housing Accommodation: Any building, structure or part thereof...rented or offered for rent for living or dwelling purposes,...including without limitation, houses, apartments, condominium units, cooperative units, rooming or boarding house units, and other properties used for living or dwelling units,...but not including: ....(iii) Buildings or structures containing fewer than three residential units, except that housing accommodations which together consist of two or more adjacent, adjoining, or contiguous buildings under common legal or beneficial ownership which are used in whole or in part for residential purposes, and which contain three or more units shall constitute a single structure for the purposes of this ordinance..." [emphasis added]

Intent to convert or condo. Sec. 2(l): "Definitions." "Intent to Convert: ...Factors which shall be considered in determining whether an owner has the intent to convert shall include, but not be limited to the following:
(i) the owner has applied for a conversion permit [as required by this ordinance],
(ii) a master deed or articles of organization has [sic] been prepared or recorded,
(iii) the owner has prepared, or is preparing a purchase and sale agreement...,
(iv) the owner has advertised for sale any unit...as a condominium or cooperative unit,
(v) the owner has shown to any prospective purchaser any unit...for sale as a condominium or cooperative unit,
(vi) the owner has made any communication, written or oral, to any person residing in the housing accommodation, or to any other person, expressly indicating an intent to sell any unit as a condominium or cooperative unit;
(vii) the owner has had any unit...measured or inspected to facilitate the sale of the unit as a condominium or cooperative unit;
(viii) the owner has had the land surveyed, an engineering study performed or architectural plans prepared for the purpose of converting such housing accommodation into one or more condominium or cooperative units;
(ix) the owner has sought rent increases, or proposed rent increases, for the housing accommodation, in excess of ten percent or the Consumer Price Index, whichever is less, for the twelve month period prior to the termination of the tenancy or the commencement of the eviction;
(x) an excessive number of evictions, terminations of tenancies, or other deprivations of use by tenants in the twelve month period prior to the termination of the tenancy or the eviction; and
(xi) the owner is holding units vacant in the housing accommodation with the intent of facilitating the sale of said units as condominium or cooperative units; provided, however, that vacancies due to tenant turn-over, or to permit repairs in the ordinary course of business shall not by themselves be considered as a factor in determining whether an owner has the intent to convert."