By Stephen J. Bremis
As the City of Somerville tries to put their own spin on SPOC’s flyer and the overbearring City Condo Ordinance…SPOC responds to the City of Somerville as we also file a revised lawsuit against the City…our mailing met with immediate response from the homeowner community…This will get you up to date…quickly!!! The crippling Somerville Condo Ordinance that has frozen condo development and attacked the values of local property owners is in affect. The City-selected portions from the SPOC flyer are below with the City’s response. The SPOC’s responses follow in rebuttal which further clarify our concerns with the new CCO. Our neighbors should note that the City Council scheduled two public hearings on this important matter, but cancelled the second public hearing and immediately voted to implement the new CCO.
Flyer: “The new CCO takes away your fundamental right to control YOUR private property.”
City: “There has been a condominium conversion ordinance in Somerville since 1985. Property owners always had to appear before the Condominium Review Board to convert existing property to condominium units.”
SPOC: The new CCO barely resembles the 1985 ordinance with its broadly expanded rules which not only expands the City’s control of private property, but imposes costly and burdensome obligations and timelines upon property owners wishing to convert and sell their private property. Additionally, the Acts of 1985, c.218 did not expressly authorize the City to initiate or reinstitute rent control, or to regulate the conversion to condominiums of properties with fewer than four rental units, or to introduce and grant itself a mandatory exclusive right to purchase such property as a part of the regulatory process.
Flyer: “Owners of 2 and 3 family homes can no longer convert, or sell to a developer to convert, their private property, without first offering units ‘as is’ to tenants, a ‘non-profit’, or the City and before offering to the open market.”
City: “The tenant right to purchase already exists under both state law and Somerville’s current ordinance. The City/designee right to purchase is a new provision and runs concurrent with the tenant’s right – no additional time is added for the City/Designee. The right to purchase is structured so that the price, which is set by the owner, will reflect current market values.”
SPOC: The Acts of 1976, c.37, by their express terms, did not apply to rental units in an owner-occupied two or three family house, so any provision to control conversion of these properties should not fall under the rules of the CCO at all. Under the old ordinance, tenants had a 30-day right to purchase. The new CCO extends this right up to 180 days and has now included “non-profits” plus the City with a right of first refusal. And although the owner can set the offer price for these rights of first refusal, true market value can never be realized without offering units to an open market and allowing the buyer pool and end-users to set the market value. The City’s artificial price structure fundamentally impacts what a property owner can actually sell their unit for and, by default, lowers the property value.
Flyer: “Tenants now have up to 7 years to move out of your property!”
City: “All tenants are entitled to one years’ notice. Seven years is the maximum, which only applies if a property owner willfully neglects to fulfill their obligation to assist in housing search for vulnerable tenants who are either low/mod income, elderly and/or disabled being displaced through conversion. Otherwise, vulnerable tenants who are either low/mod income, elderly and/or disabled are entitled to five years’ notice.”
SPOC: We live in a close-knit, diverse and compassionate community. No one wants their neighbor or tenant to suffer undue hardship. But why is it the property owner’s “obligation” to find their low/moderate income, elderly and/or disabled tenants alternative housing, within Somerville, at their current rent which, may likely be below market, and then may be considered “willfully negligent” if unsuccessful in doing so? The owner themselves may fall under the “vulnerable” category and need to sell quickly. So to require this rule on such owners, let alone all owners, to control the terms of their leases and ability to sell their properties for up to 7 years, is clearly misplaced. Also, the City excludes from their response that a lease can automatically extend for at least one year and up to five/seven years, regardless of a lease or tenant-at-will situation. It also excluded from their response that during the notification period, the tenant can break their lease with 30 days’ notice while still obligating the property owner to wait a year to apply to convert.
Flyer: “During this time: You are not allowed to raise rents without permission from the City. You cannot improve your units without permission from your tenants.”
City: “City review of rent increases is done to verify that the rents do not exceed market rents. Necessary repairs required by State Sanitary and Building Code are permissible, and vacant units can be renovated during the waiting period. Cosmetic and other discretionary improvements that have in the past had the effect of disrupting tenant ‘quiet enjoyment’ rights to their units are limited.”
SPOC: When a lease contract has been fulfilled, landlords should have a right to offer (or not) a new lease at the market rate. The City does not account for existing rents that are already below market rate when calculating a rent increase, thereby controlling any increase an owner has a right to offer. And virtually any work to a property may disrupt a tenant’s “quiet enjoyment”. Unfortunately, a tenant’s control of landlord improvements may become unintentionally retributive in nature, further burdening the property owner’s ability to add any increased level of value before offering a unit for sale.
Flyer: “You must pay up to $10,000 to relocate your tenants! You must find ‘comparable’ housing within the city of Somerville for your tenants!”
City: “All households are entitled to a relocation payment of $6,000. The $10,000 payment provision is limited to especially vulnerable households including elderly, disabled or low/mod-income tenants. Owners must make a good faith effort (defined in CCO Rules) to assist vulnerable tenants who are either low/mod income, elderly and/or disabled in finding comparable housing.”
SPOC: The prior CCO allocated a relocation payment of “actual moving expenses to a maximum amount of $300.00 or one month’s rent per rental unit, whichever is higher.” (Emphasis added). But this only applied to “any tenant and the tenant’s family whose total income for the previous year was equal to or less than the qualification income for Section 8 Housing Assistance for the city.” (Emphasis added). The new CCO expands beyond the vulnerable tenants to include entitling all tenants a $6,000 – $10,000 relocation payment from a property owner. Add in the return of a security deposit and the tenant is not only “profiting” from an owner who just wants to convert their property, but also has guaranteed housing for up to 7 years at the property owner’s expense, not to mention incalculable lost opportunity costs for the property owner. Small property owners should not have to subsidize tenant relocation just because they want to convert to condos.
Flyer: “The restrictions of the CCO have now devalued your property because it makes it harder to sell.”
City: “City staff are unaware of any empirical data demonstrating that the ordinance has devalued property since its passage.”
SPOC: The City staff has enough resources and data to extrapolate that offering units “off market”, “as-is” and outside a “competing bidding” environment will not only bring all property values down, but effectively impact the desirability of buying/renting in Somerville in general. The SPOC is in the process of collecting their own data that will be posted on our website in order to inform the community of the impacts already experienced, in some instances from the time the new CCO was being drafted, through the time of its implementation, including recent denials for removal permits by the Condominium Review Board.
Flyer: “Your tenant, a nonprofit or the city can buy your property, without first offering it to the open market – develop the property themselves and FLIP it at a profit, and capitalize on your loss.”
City: “The tenant right to purchase is recognized by state law. If the City/Designee were to purchase a property, it is required to be for the purposes of maintaining the unit as an affordable unit, in perpetuity. In other words, it cannot be sold at a profit.”
SPOC: The City’s response above did not address the fact that a tenant, who may actually have a higher income than the property owners themselves, can literally buy an “as-is” property and flip it for profit. How does the City reconcile allowing one party to profit from another party’s property equity? How does this contribute to retention of rental housing? Additionally, there is a clear conflict of interest with the City both making the rules and participating in a regulatory taking without compensation based on those rules. Our hope, too, is that affordable housing remains a stepping stone/catch net for our vulnerable neighbors and that our community promotes a desire for property ownership, and not focus on the city collecting, holding and expanding government controlled property. This only further distances all tenants from acquiring stable housing, ending a cycle of perpetual tenancy and building personal wealth.
Flyer: “The city is setting the rules for how, when and to whom you sell your property.”
City: “This ordinance only applies to transactions involving Condominium Conversion. All other transactions are not impacted. Condominium Conversion remains allowable, so long as owners abide by the Ordinance.”
SPOC: This ordinance is fundamentally unbalanced and unfair to the property owners who have earned the right to profit from their years of ownership, provided housing to tenants and paid their fair share of property taxes. The City is not going after the retirement accounts and pensions of our neighbors — so why did they pass an ordinance that literally controls the largest and likely single asset of small property owners (and in many instances, multiple family members’ nest egg) all of whom will be relying on their property’s equity for their future survival? We believe there is a much better way to ensure all residents’ needs are supported and addressed without discriminating against a specific group of neighbors.
The SPOC invites the community to read the full content of our flyer in context. We especially encourage everyone to read the new CCO and judge for yourselves if it equitably balances our community housing needs with private property rights. An informed community will foster fairness, balance and respect for each other. Concerned community members (property owners and tenants alike) can reach us at: firstname.lastname@example.org. Reach out to your Ward Councilor, too!! Our mission is to work cooperatively with our neighbors to keep Somerville a place where homeowners, landlords and tenants can continue to thrive together as one community!