What is the real intent or impact of Councilor Walsh's proposal? Who will it benefit? Who will pay the costs? When pushed, Walsh has pointed to the expanded opportunity for homeownership made possible by vacance decontrol of 70 percent of presently controlled units. Clearly, a prospective resident or an absentee owner with a downpayment and an income large enough to carry a huge mortgage can benefit. Clearly, a landlord or a condominium developer can benefit as rents double or triple to market rates or condos are sold to the wealthiest buyers. Clearly, the real estate brokers can benefit as market rate rental units will double in number and/or condos are sold with ensuing broker fees.
Who will fail to benefit or be hurt? Few native Cantabrigians will have enough resources to buy in the hottest real estate market in the U.S. Middle-income tenants who already can't afford to buy in the Massachusetts market and who can't or won't pay $1000 or more per month for old, small apartments will see the small supply of affordable rental housing in Cambridge disappear immediately. Essentially every tenant above the poverty income level will see his rent increase drastically despite no correspoonding increase in costs to the landlord or increase in the quality of the unit.
Protecting a Scarce Commodity
The Cambridge Civic Association has supported rent control but not because it is a welfare housing program. That's the function of the Cambridge Housing Authority, the Section Eight Program, the community development corporations such as the Riverside Cambridgeport Community Corporation, the various neighborhood initiatives for linkage or leverage such as those by Area Four Coalition, the Simplex Committee, and numerous initiatives in East Cambridge under Councilor Alfred E. Vellucci's guidance. We strongly support the adoption of a city-wide linkage plan to aid middle as well as low to moderate income residents.
We don't support rent control because it benefits one group of citizens to the detriment of another: tenants versus landlords, or "deserving tenants" versus ordinary low income tenants. We support rent control because it is a consumer protection program, a regulation of a scarce public good whose consumption is a necessity rather than a luxury or a lifestyle choice. As is the case with other publically regulated, but private utilities--natural gas, electricity, telephones, auto liability insurance--rental housing is regulated in the general public interest to realize the maximum public good. The good is seen as the balance between residents' need for safe, sanitary, affordable rental housing and property owner's right to a fair operating income which affords the incentive and the means to provide rental units in a city where approximately 70 percent of households rent, where 40 percent of all households are rent-controlled (60 percent of all rental units are controlled), and where the rental vacancy rate is rarely greater than one percent. In this view, rent control should be both a consumer protection plan and an "expenses plus fair profit" rent adjustment program.
Reform Proposals: Ombudsman and Adjustments
It is time for a reasoned, measured and effective response to the complaints of the low-rent landlords whether they are "small property owners" or "Class D" owners or are incapable by language, education or other reasons to effectively manage their rental properties. There is a crying need for an ongoing program to identify these "hardship" buildings and through an ombudsman position at the rent board to expedite appropriate adjustments. An ombudsman is authorized by the Rent Control Act, but has never been properly funded by the city council or the city manager.
Similarly, a close look should be taken at those properties where there is reason to believe that greater than 60 percent of the gross rent is net income or profit. A change in rent board policy toward adjusting rents on a building by building basis rather than groups or classes of building would address many of the present inequities including the "hardship" cases. This change in policy would require a reappraisal of the "presumption of fairness" in 1967 rents. After moving to an "expenses plus fair income" accounting, a few properties would require sharp adjustments to be within guidlines.
Such adjustments would seem to be a small price for greater rationalization of the policy and a better response to the perceived and actual inequities of the present situation. Such adjustment would take a year or two to fully implement, but seem fully realizable with a computer-based system.