Developer Mulls Options as Rent Control Looms

BOSTON-As the city council mulls over City Mayor Thomas M. Menino’s recent home rule petition to reinstate rent control, some developers are considering their next move should the proposal become law.

Christopher Reilly, area vice president of Chicago-based Equity Residential Properties Trust tells GlobeSt.com that the prospect of rent control forces his company to “take a hard look” at the residential project it is currently proposing to build on Cambridge Street at Charles River Park. The company is seeking to build between 300 and 600 units, depending upon city approval, with a small affordable-housing component.

But Reilly notes that the prospect of rent control could compel his company to look elsewhere to build. Despite the fact that new construction does not fall under Menino’s recent proposal, projects that were developed in the mid 1990s until now, when the city had no rent control, will now fall under the law. From 1972 to 1996, the city had rent control but the legislature abolished it in 1994.

“We can’t trust the regulatory environment that [this project] won’t come under rent control.” Reilly points out that two buildings Equity purchased between three and five years ago in the city will now fall under the new law if it passes. “We’re a national company,” he says, adding that other cities without rent control become more appealing to build in.

But Pat Canavan, a policy advisor to Menino contends that national developers have not been building “much in the way of rental housing anyway.” She adds that developers are “overreacting to the prospect of rent control. What we’re trying to do is create a mechanism for landlords and tenants. When [rent control] passes the statehouse, developers should come talk to us.”

Canavan tells GlobeSt.com that this rent control is not very onerous. She points out that while the proposed law does limit rent increase it allows for increases of 5% a year on low income housing and twice that on moderate income housing. Also, if an owner invests in capital repairs the city is prepared to work with those owners, she says.

Canavan acknowledges that for owners whose buildings escaped the city’s previous bout with rent control but whose buildings would now fall under the law, it is an issue. “We need to look at that because we don’t want to be perceived as changing the rules,” she notes. “If buildings were under one set of rules, we need to put a safeguard so the rules don’t change on them.”

Canavan emphasizes that after the legislation is passed, the city writes the ordinance on the legislation. This is where the rules get laid out and the law gets down to the specifics. “We expect to work with property owners then on how the program would function,” she says.

After a public hearing on the petition next week, the city council plans to vote on it the following week.