The People's Republic and Rent Control

Pictured: Harvard Square; Image Credit: Chestnut Hill Realty 

While last week's post explored the idea of rent control as stalling to exodus of middle class urbanites from pricey neighborhoods, this week we're taking a closer look at the watershed rent control debate in Cambridge, MA- a city that prides itself as a scholarly place committed to diversity and equal opportunity (and also hometown to some of the best affordable housing research, thanks to Harvard and MIT economists and urban planners). The City of Cambridge first implemented rent control in 1970, limiting price caps to rental properties built before 1969. As a result of the City's decision, affected units in Cambridge rented for between 25 and 40% less than comparable noncontrolled apartments in Cambridge and surrounding cities. While rent control did provide opportunities for low-income residents and students to remain in Cambridge, price caps eventually led to quality issues, as landlords had no incentive to renovate or maintain their buildings. Habitability concerns comprised part of the campaign to end rent control. While the 1994 referendum to decontrol rent in three Massachusetts municipalities- Boston, Brookline, and Cambridge- narrowly passed statewide, the measure received robust support among Cambridge voters, with approximately 60% approval. See Mass. Ann. Laws ch. 40P, § 4 (West 2010). At the time, members of the Small Property Owners Association (SPOA) hailed the referendum as addressing concerns about the inequality of living conditions between noncontrolled and rent-controlled units.

Since rent-stabilization ended in Massachusetts on January 1, 1995, property values of formerly rent-controlled and non-controlled units in Cambridge rose, especially those in neighborhoods that once featured many rent-controlled buildings. Rising rents led to a spillover effect in a majority of other Cambridge neighborhoods and, by 2011, the median rent of a 2-bedroom apartment Cambridge was $1,537, well above the state average. Community activists claim that the lack of rent control has threatened Cambridge's identity as an economically diverse community, as more affluent residents have pushed moderate-income residents out of the area and magnified the income gap. What does the future hold for Cambridge, a city trying to reap the benefits of price controls without quality concerns? Urban planners and housing advocates have recently pushed for more sustainable affordable housing (both larger and smaller units) in mixed-used projects that combine commercial and residential tenants or the possibility of providing housing vouchers to low and moderate-income residents who would otherwise have occupied rent-controlled apartments. Such proposals seek to develop low-cost, high-quality housing and avoid the criticism that rent control sacrifices quality for affordability.

Rent Control and the Middle Class as Urban Unicorns

Earlier this week, The New York Times addressed a question that has circled my brain while watching (and helping) friends stake reserve their own bite of the Apple during the postgrad urban migration: how can middle class people afford Manhattan? Amy O'Leary's piece, What Is Middle Class in Manhattan? explores behind the curtains of those who cling to apartments in pricy neighborhoods like TriBeCa and the Upper West Side and pinpoints the difficulties of New Yorkers who have moderate incomes- think teachers and police officers- trying stay afloat on an island where an annual income of $166,000 provides you the same purchasing power that an Atlantan or Clevelander enjoys with an income of $70,000.
The article moves beyond the realm of housing and delves into the existential crisis confronting many New Yorkers who are unsure whether they can confidently provide an all-American affirmative responde to the question "Are you middle class?", but not before confronting the reality that middle-class Manhattanites are being irreversibly pushed to the outer boroughs and suburbs. In searching for possible ways to counteract this trend, O'Leary notes that there are few options for those feeling the squeeze in an increasingly tight market: she notes the relatively high income ceiling to qualify for New York City public housing and institutional benefits such as a Columbia faculty housing stipend present options for some in an increasingly tight market. However, her portrayal of rare rent-controlled apartments as golden opportunities for those who may not meet Section 8 qualifications to stay in Manhattan, turned my attention toward the potential of rent regulations, first upheld by the Supreme Court in Block v. Hirsh, 256 U.S. 135 (1921), to keep middle class residents in other urban areas with skyrocketing sticker prices. After all, Zip codes beyond the George Washington Bridge have seen a steady appreciation in property values corresponding with a diminished presence of middle-income residents in recent decades. Neighborhoods like San Francisco's Mission, Atlanta's Virginia-Highland, Nashville's Hillsboro Village, and much of Cambridge, MA have transitioned from economically diverse to increasingly wealthier addresses out of reach to many in the middle class, particularly prospective homebuyers. These areas exist across all schemes of rent regulation, as states broadly falling into one of three categories- the states allowing municipalities to enact rent control (California, D.C., Maryland, New Jersey, and New York); states preempting rent control through a variety of Rent Control Preemption Acts that range from a ban on rent control except when authorized  by the governor in times of disaster (e.g. Texas) to a prohibition of local governments passing rent control laws without state authority (e.g. Illinois); and states that have not enacted rent control.
Even a cursory glance at the rent-controlled lanscape reveals that rent regulation is not a guarantee of affordable housing options to retain a robust middle class population- otherwise parts of New York (Manhattan and elsewhere), San Francisco, and D.C. would not be so entrenched in their various gentrification wars. Additionally, landlords and investors continue to despise rent control, even in cities like New York. In a recent and notable case,  an Upper East Side property owner attempted to strike down a rent-stabilization regulation as an unconstitutional taking which, under the Fifth Amendment, would require just compensation from the City (SCOTUS denied cert in 2012). But could more widespread rent control with fewer restrictions in places where it is currently permitted, legislative relaxation of rent control preemptions that exist in the majority of states, or the introduction of rent control in jurisdictions where it is currently not practiced solve some of our cities' middle class affordability problems? Would they cause more problems? Have mixed-income and mixed-use projects become the preferred method for city planners and real estate lawyers to achieve socioeconomic integration in the urban lanscape?
These questions, stoked by the Times's frank discussion of the middle class disappearance from Manhattan, direct my next post to my own backyard to Cambridge, MA which continues to be a hotbed of discussion surrounding the merits of rent control even the city curbed regulations more than a decade ago.

A Blog With a View

Let me start by describing my current street view: rows of lush, attractive streets lined with luxury buildings standing cheek by jowl with crowded and poorly constructed housing, abandoned properties, oversubscribed shelters, and large numbers of people who simply do not know where their next bed is located. I am watching urban growing pains unfold not in Bangkok or Bangalore but in Boston's South End, where three decades of gentrification have threatened the neighborhood's long history as a mixed-income melting pot and epicenter for the city's Puerto Rican and gay communities. A casual glance down Washington Street catches both the greatest challenges U.S. housing policy faces and some of the most promising solutions to the availability crisis of affordable housing that has perpetuated so much economic inequality. The notion that access to housing is a problem reserved for planners and policymakers in the developing world ignores the reality that we face in this country every day. This blog is a place to discuss policies that create more sustainable, attractive affordable housing options, to share exciting projects and partnerships that are cropping up around the country, and examine laws (from the admittedly formative and inexperienced viewpoint of a stressed law student) that are shaping and redefining how we plan our cities and suburbs and how we live while inching towards the goal of affordable housing for all those in need.