Dear Billy T and Somerville Speakup Line,
In response to John L Sullivan’s Letter to the Editor on “First Right of Refusal” the city needs more rental units not fewer. Reducing the number of rental units by removing them from the pool will result in fewer rentals, higher demand, escalating rents.
Tenants should think about this and protect their interests. 1st right of refusal is promoted as ‘affordable’ housing – when in reality it will raise rental costs for the majority of Somerville residents. If a tenant can afford to buy the unit at market value, say 550, they not only can compete in an open market, but they don’t meet the threshold of those most in need of assistance.
Some renters have no interest in buying, planning to settle in a different community eventually or in some other cases not knowing where employment will take them. Property owners will be hurt – developers will be hesitant to invest here with all these strings attached – giving up to 120 days for a tenant to purchase.
A developer wont’ wait patiently bypassing other opportunities while keeping their money. They’ll invest elsewhere, say in Medford w/o delays and conditions. Market value is another issue altogether. If a property has conditions attached, there will be fewer prospective buyers, damaging to achieving highest value from the sale and damaging property owners financially.
As far as affordability and displacement, as someone born and brought up here I can speak to this issue. It’s always been the case, where blue collar working class Somervillians, large families, and others could not afford to stay. My family managed to stay by my dad working 2+ full time jobs and my mother working. It’s an age old problem and will continue to be.
Lynne Thompson
I don’t believe any of their schemes to further extort the property owners will work —tax incentives like the transfer tax and right-of-first-refusal will fail. Here’s why—
Implementing a tax transfer will create even less supply of existing housing than we have now.
Many local homeowners are not forced to sell. Those who do are only doing so due to retirement, divorce or planned relocation.
I see few homes for sale in my area of Ward 7.
Let’s do the math— if a homeowner is sitting on $1.1 million dollar property— the seller must factor in the following which will deplete their final pay-out:
Deduction for distressed home
Restrictions imposed by Zoning Overhaul to the buyer which may prevent them from expanding on the footprint, creating condos, additions, etc.
Deductions for Capital Gains, Inheritance Tax, other taxes or liens, any other hidden costs (what city will impose before the owner can sell).
Now after all that—the Transfer Tax is imposed.
If the seller becomes desperate to sell, the buyer could reduce their purchase price and demand the seller pay the $10,000.00 to the city’s transfer tax to their so called imaginary “affordable housing”, fund which really means that a local non-profit will be given that money to build housing which will not benefit any of the working class locals. We have already witnessed who developers have intentionally avoided building affordable housing through the same slight-of-hand, now you see it- now you don’t. If the building allows for 7 condos- one must be for affordable housing. Instead, the developer will set aside which equates to proceeds for 1.5 condo. Residents now think this is great because the developer is paying extra- (.5) since there is no such 1.5 condo. Nothing but a rotten shell game they all play to trick taxpayers into thinking they win.
As far as the Right-To-First-Refusal:
It’s just another form of imposing RENT CONTROL, which the same devious handlers gain.
Tenants who want to sign up for this will be forced to take loans from the same non-profits who will gain from the tax transfer (city insiders).
Basically,how it works is this—a group of tenants sign up with a designated lender through the non-profit entity (could be one in the same), and any equity gained on the property going forward will revert back to the non-profit lender.
It sounds like what I had read a few years ago when allegedly GSachs was getting into the housing business as property managers.
As they did to unsuspecting lenders which crashed the economy in 2008– they will now prey upon the tenant who believes they will get rich on homeownership—
But instead will become the fly stuck on the spiders web, being sucked dry from loan sharks.
I’ll find the article I read on this because it provides a better outline than I described.
But my take away is this — only winners are politicians and their non-profit lenders who will benefit from these tax incentives and schemes to pretend that tenants can buy their way into homeownership.
We already saw how that worked for taxpayers and homeowners in 2008 when they took their properties back and made money again after the bailouts.
Why should we believe ONE WORD THEY SAY NOW!!!
More info on why ROFOs and ROFRs, don’t work:
https://commercialobserver.com/2013/11/why-rights-of-first-offer-and-rights-of-first-refusal-dont-work/