Committee Report CR-3

The Housing Committee held a public meeting on November 1, 2005 beginning at four o’clock P.M. in the Sullivan Chamber.  The four P. M. meeting was held for the purpose of discussing how rents are set in private affordable housing developments and how the City can assist tenants in understanding their rights with respect to rent increases in these developments, and a discussion on condominium fees in inclusionary affordable condominium units was scheduled for four o’ clock and fifteen minutes P. M.

Present at the meeting were Councillor Anthony D. Galluccio, Chair of the Committee, Mayor Michael A. Sullivan, and City Clerk D. Margaret Drury.  Also present were Beth Rubenstein, Assistant City Manager for Community Development, Christopher Cotter, Housing Director for Community Development Department (CDD), Robert Vining, Homebuyer Coordinator, CDD, and Cassie Arnaud, Project Planner, CDD.

Councillor Galluccio convened the meeting and explained that the purpose was to look for opportunities for CDD to assist tenants in subsidized but privately owned buildings to understand their rights with respect to rent increases, and also maintenance issues.  He said that he would like to lay out and discuss the issues briefly and then come back for another meeting in three to four weeks to hear strategies from the CDD staff.  Councillor Galluccio then described the telephone calls that he gets from tenants in privately owned but subsidized units, with the rumors about rent increases and plans to eliminate affordability.

Christopher Cotter, Housing Director for CDD, stated that each development is different, with different funding sources and regulatory restrictions.  When CDD gets calls they look to the regulatory agreements.

Councillor Galluccio said that it would be helpful if the tenants could have a contact person at CDD that they could feel comfortable calling.  A lot of tenants are reluctant to deal with the management companies in their buildings.  Ms. Rubenstein said that if tenants call CDD, the staff would research the funding source and restrictions for the tenants.  They could be referred to the Just-A-Start mediation program or Legal Services if there seems to be a legal problem or a need for mediation between the tenant and landlord.

Mayor Sullivan asked if there could be some sort of matrix that sets out the various funding sources and rent regulations for the different buildings.  Ms Rubenstein said that they would look at the documents to see what is possible.

Councillor Galluccio said in those cases where the rents are capped for low-income tenants, the increases go to the moderate-income units.

Peter Daly, Executive Director of Homeowners Rehab, Inc., said that this is a timely discussion, this issue is going to get bigger.  He has heard that gas prices will go up 30 percent.  There is also talk of an insurance increase.  Owners are looking to pass on the increases.

Councillor Galluccio then moved to the 4:15 p.m. issue regarding condominium fees for affordable home ownership units, which are required in private condominium developments by the Inclusionary Zoning Ordinance.  Increases in these fees can mean that owners of the affordable units cannot afford the costs.  Sometimes the fee increase is for expensive repairs.  Other times, the owners want to make improvements that will increase the values of the condos.  He asked if the City should be looking at some sort of cap on the condo fees for the affordable units or whether the City should allow the owners fees to go up and allow the owners of the inclusionary units to receive a little more equity back at the end.

Mayor Sullivan asked whether this should depend on how many units there are in the building.  He pointed out that is easier for the other owners in a 300 unit building to absorb the cost that cannot be passed on to the affordable units than for owners in a 12 unit building.

Mr. Cotter said that this issue is reflected in the sales price of the units.  State law requires that condo fees be assessed based on value.  Cambridge requires that the value of the affordable unit reflect the limited equity restriction.  Mr. Cotter noted that with required condo fee increases that increase the equity, there is an allowance for an increase in the equity in the affordable units.

Councillor Galluccio pointed out that the allowance is capped at one percent per year.  He urged some thought toward solutions that will promote harmony and not separate affordable homeowner from the others.

It was agreed that CDD would review this issue and report on its recommendations at the next meeting, along with its overview of the rent increase issue discussed earlier.

Councillor Galluccio thanked all those present for their participation.  The meeting was adjourned at three o’clock and twenty-five minutes.