Senior Housing

Boston Mayor Michelle Wu Preparing To File Comprehensive Rent Control and Just Cause Eviction Bill

Update (3/8/23): Learn About The Disastrous Rent Control Bill Passed By Boston City Council

Yesterday all the major Boston news outlets reported that City of Boston Mayor Michelle Wu is readying a proposal to bring back rent control to Boston. Voters statewide rejected the controversial idea three decades ago in 1994, and several new economic studies, including out of Cambridge, MA, have definitively proven it is a failed policy. Wu’s rent control ordinance would cap annual rent increases between 6% – 10% depending on the Consumer Price Index and Inflation Index. While very small owner-occupied buildings are exempt from the law, this may be negated by Wu’s “just cause” eviction protections, which make it nearly impossible for landlords to bring “no-fault” evictions and remove “at will” tenants.

Under the Home Rule Amendment, “Wu Control” would need full approval from the entire state Legislature and Gov. Maura Healey. According to the Boston Globe, House Speaker Ronald Mariano has “questions” about the policy, including fears that it could discourage investments in housing. “It’s been voted down a number of times,” the Quincy Democrat noted. Gov. Healey, meanwhile, avoided taking a position on Wu’s proposal, saying, “It’s something I have to look at and review.” Similarly, a spokesperson for Senate President Karen Spilka said only that she would review “any finalized proposal” that came before the Legislature.

Predictably, property owners are vehemently opposed to bringing back rent control. As I have written here, the great thing about the 1994 vote banning rent control is we now have empirical data and a reliable study from prominent economists which has compared the Cambridge housing market during rent control vs. after rent control. We also have data and a similar study out of San Francisco. Both studies (and others from the past) have found that rent control did not work at all, and actually had the exact opposite effect — contributing to gentrification, displacement of tenants and income inequality.

If Wu is successful in getting rent control passed in Boston, rest assured that lawyers like myself will be seriously contemplating lawsuits challenging the measure, perhaps even all the way up to the U.S. Supreme Court, which showed a willingness to strike down overreaching eviction moratoria laws during the Covid pandemic. The same rationale could easily apply to rent control.

What far left progressives like Mayor Wu fail to appreciate is the basics of micro-economics and supply vs. demand. There is far too little affordable housing in Massachusetts, due in large part to burdensome zoning, lack of available buildable land, and NIMBY neighborhood groups. Imposing an artificial government price control does nothing to address the critical supply issue. To the contrary, it will just make it worse, as studies show rent control results in deferral of landlord repairs and capital improvements and depression of nearby housing stock. If Wu is serious about tackling housing, she must have the City build its own affordable housing projects and incentivize developers to do the same. Otherwise, she’s just playing politics.

I spoke to Dan Rea on his “Nightside” show on WBZ Radio about Mayor Wu’s rent control proposal. Listen HERE.

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Rent Escrow, Security Deposit Reform, and Elderly Housing Legislation Filed By Trade Group

Historically, Massachusetts rental property owners have struggled to overcome the coordinated and organized political lobbying of tenant rights and rent control groups at the State House. I remember just a few years ago I testified on Beacon Hill for the rent escrow bill against a small army of tenant advocates. That is now changing in a big way.

Previously splintered across many small groups, property owners have consolidated their lobbying efforts through a state-wide organization, MassLandlords.net. Created by Executive Director Doug Quattrochi, MassLandlords.net has hired a full time lobbyist, and has been instrumental in filing a record number of legal reform bills during the current legislative session. This is really important given that tenant rights groups have been very active recently in pushing just cause eviction, rent control and other socialist proposals.

Here is a summary of some of the bills backed by MassLandlords filed in the current legislative session:

H.D. 1191 – Rent Escrow (sponsored by Rep. Boldyga) — Tenants must pay rent into court if they are invoking rent withholding due to code violations or necessary repairs

H.D. 1194 – Elderly Tenants (sponsored by Rep. Boldyga) — Creating rental voucher program for elderly tenants (age 75+), protections during evictions

H.D. 1205 – Equal Counsel (sponsored by Rep. Boldyga) — Allowing rental companies to represent themselves in court without an attorney

H.D. 1192 – Late Fees (sponsored by Rep. Boldyga) — Changing late fees on unpaid rent to 10 days overdue from 30 days

H.D. 1202 — Tenant Sale Disclosure (sponsored by Rep. Boldyga) — Requiring property owners to notify tenants upon advertising of property for sale

H.D. 1457 — Security and LMR Deposit Reform (sponsored by Rep. Barrows) — Eliminating triple damage penalty and streamlining payment of deposit interest

H.D. 1474 — Rent Escrow (sponsored by Rep. Barrows) — Requiring tenants to pay monthly rent into escrow during pendency of any eviction action unless it would cause undue hardship

S.D. 231 – Rent Escrow (sponsored by Sen. Tarr) — Requiring rent escrow where tenant is withholding rent due to code violations

Whether these bills will advance through committee hearings to actual vote and passage is unknown. But this is a great start for the up and coming MassLandlords group, and I’ll be monitoring the progress of the bills in the coming months.

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Update: Hearing On Proposal Scheduled for March 14, 2016 at 4PM at Boston City Council Chamber Room

Rent Control Thinly Disguised As “Just Cause” Eviction Proposal

Citing skyrocketing rents and lack of affordable housing, several activist pro-tenant groups in the City of Boston, with the assistance of the Harvard Legal Aid Bureau, have submitted a home-rule petition to the Boston City Council to create a wide-ranging “just cause” eviction protection for all Boston tenants. Harking back to the days of rent control, the petition would prohibit a landlord from evicting any tenant except for certain “just cause” grounds. These grounds and their related procedural impediments to eviction are shockingly socialist in nature, and in practice would make it nearly impossible (or cost prohibitive) to evict tenants, raise rents and sell occupied rental property in the City of Boston. Rental property owner groups are vigorously opposed to this proposal.

“Just Cause” Grounds for Eviction

The petition provides that landlords may only evict tenants for eight (8) specified reasons. The most troubling situations are outlined below.

  • Non-payment of rent. A tenant’s failure to pay rent must be “habitual” (which is left undefined) and “without legal justification.” Ordinarily, if a tenant fails to pay rent even once, the landlord may terminate the tenancy and evict. Under the just cause standards, the standard is significantly higher. What exactly is “habitual”? Two late payments, three, four? No one knows, but the petition puts the burden of proof on the landlord.
  • Damage by tenant. In order to evict, the tenant must have “willfully caused substantial damage to the premises beyond normal wear and tear and, after written notice, has refused to cease damaging the premises, or has refused to either make satisfactory correction or to pay the reasonable costs of repairing such damage over a reasonable period of time.” This would make it much more difficult to evict based on damage caused by a tenant.
  • Disorderly conduct. The tenant has continued, following written notice to cease to be so disorderly as to destroy the peace and quiet of other tenants at the property.
  • Illegal activity. The tenant has used the rental unit or the common areas of the premises for an illegal purpose including the manufacture, sale, or use of illegal drugs.
  • Failure to provide access. The tenant has, after written notice to cease, continued to deny landlord access to the unit as required by state law.

Rent Increases and No Fault Evictions

The most fundamental impact of the just cause eviction petition is how it attempts to severely curtail landlords’ legal right to raise rents and file no-fault evictions. Make no mistake about it, the underlying premise of the petition is rent control – to keep rents (even under market) from increasing and stabilizing “affordable housing.”

Resurrecting the old Boston Rent Control Board, landlords are required to participate in a City-approved mediation session with that agency before raising rents or even declining to renew an expired lease. The board is then required to notify all tenant advocacy groups in Boston of the situation. These groups are invited into every eviction or rent increase process. It will be one landlord against many tenants and advocates. There is no stated limit as to how long the mediation process can last, and after which a landlord still must go to Housing Court which can take anywhere from 6-12 months to complete a no-fault eviction under current law. A landlord’s failure to follow these requirements will result in the immediately dismissal of their eviction case and can also subject them to a $1000 fine by the City.

Moreover, in true socialist form, there are also substantial roadblocks to evicting tenants even where the unit will be used for the owner’s own personal residence. Owners are banned from evicting tenants who are 60 years old, disabled or have children in the school system and have lived in the premises for 5 or more years. (Landlords can only end tenancies after the school year is over.) Seeking to turn private properties into government subsidized elderly and disabled housing, the petition thereby creates lifetime tenancies for these classes of renters. This will greatly discourage investment and capital improvements for these properties many of which are double and triple deckers in struggling neighborhoods.

Rent Control Does Not Work

As counsel for landlords across Greater Boston and having testified at the State House in support of various landlord tenant legal reforms, I am strongly opposed to this proposal. This petition is the fourth attempt by Boston tenant advocates to bring back rent control, all of which have failed after voters rejected rent control state-wide in the mid-1990’s. The idea of rent control has been debunked as a failed policy by countless economists, and actually makes affordable housing stock shrink. A restrictive price ceiling reduces the supply of properties on the market. When prices are capped, people have less incentive to fix up and rent out their property, or to build new projects. Slower supply growth actually exacerbates the price crunch. Those landlords who do rent out their properties might not bother to maintain it, since both supply and turnover in the market are limited by rent caps; landlords have little incentive to compete to attract willing tenants. Landlords may also become choosier, and tenants may stay in properties longer than makes sense.

The problem of skyrocketing rents in Boston and affordable housing is complex and certainly worthy of out-of-the-box thinking. As an old city with little if any developable land left, Boston has always dealt with a supply vs. demand problem. Boston developers have long been required to pay into linkage funds designed to promote affordable housing. Mayor Walsh recently announced a plan to build 53,000 new housing units by 2030. The city’s colleges can also do a better job of creating new student housing. But even with all of this centralized planning, the influx of people to the city, drawn by jobs and Boston’s quality of life, have made this problem a very tricky one to solve.

However, rent control disguised as a just cause eviction proposal is not the answer. It’s not fair to make small property owners to bear the burden of creating affordable housing across the city. That’s just flat out Un-American. If we want more affordable housing, create economic incentives to build more, and encourage the City to buy their own properties and create housing. Rent control has never been a successful solution.

If and when the Just Cause Eviction proposal rears its ugly head in the Boston City Council again, email your local city councilor and the Mayor.

A copy of the Just Cause Home Rule Petition can be found below.

Boston Just Cause Ordinance Draft Sept 2015

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Hull-Wind-Turbine-from-seantyler-via-FlickrControversial Wind Turbine Project Approved, Over Neighbors’ Opposition, Appeals Court Rules

Plans for a controversial wind turbine on top of Turkey Hill in swanky coastal Cohasset could soon move forward after the Massachusetts Appeals Court upheld a land court ruling that the town’s planning board acted appropriately when it approved the project. The court dismissed opposition arguments by neighbors and a nearby skilled-nursing home who challenged the project’s legality.

The wind turbine is proposed to be sited at the apex of 410-foot-tall Turkey Hill in the northwest corner of Cohasset, in the 314-acre Whitney Thayer Woods, and would be within 1,000 feet of the Golden Living skilled-nursing home and homes on the Hingham side of the border. The nursing home and neighbors complained that the turbine would emit excessive “shadow flicker,” noise and also risk various public safety issues. 

In 2011, the Cohasset Planning Board held hearings on the wind turbine plans, and issued a special permit with numerous conditions for which the operator must comply. The abutters focused on the “flickering shadows” that the 150-foot blades would cast on nearby properties. Land Court judge Gordon Piper in 2012 upheld the board’s approval, determining that the permit’s special conditions adequately address safety concerns and follow zoning bylaws. For example, the permit requires that the organization monitor flickering and make sure that it doesn’t exceed 30 minutes per day or 300 hours per year.

The Appeals Court quickly shot down all of the neighbor’s concerns, holding that it would not second-guess the judgment of local officials who granted the permit.

According to the Patriot Ledger, Jim Younger, the director of structural resources and technology at the Trustees of Reservations said that the group is “very pleased” with the court’s ruling and grateful for the widespread support for the project. “At this time, we are still very interested in moving forward with the project and will be reassessing our options following the lengthy delays to the project. We will keep the community informed as we complete this review.”

Wind turbine projects are becoming increasingly more accepted by towns to boost both power and revenue so they are less reliant upon the “grid.” This ruling shows how difficult it is for abutters and neighbors to challenge a wind project once the town planning board has issued a permit.

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P_154_092811110348Guest Post By:  Philip B. Posner, Esq., 

Part independent living, part assisted living and part skilled nursing home, a Continuing Care Retirement Community (CCRC) offers a tiered approach to the aging process, accommodating residents’ changing needs. Upon entering, healthy adults can reside independently in single-family homes, apartments or condominiums. When assistance with everyday activities becomes necessary, they can move into assisted living or nursing care facilities within the same community. CCRCs give older adults the option to live in one location for the duration of their life, with much if not all of their future care already figured out.

With the Baby Boomer generation hitting retirement age, CCRC’s are now a multibillion-dollar industry, particularly among the upper-middle class and affluent. At least 745,000 older adults now live in such communities, according to the American Association of Homes and Services for the Aging. And those numbers are expected to rise as baby boomers hit their 70s.

This Isn’t Your Grandparents’ Nursing Home

Building styles of CCRCs run the gamut from urban high-rises to mid-rise suburban campuses to garden apartments, cottages cluster homes, or single-family homes. Some are as luxurious as five star hotels. Some CCRCs provide units that are designed for people with special medical conditions, such as Alzheimer’s disease. Because of the substantial up front Entry Fee, CCRCs are targeted toward a middle and upper middle class demographic. All CCRCs have large staffs, necessary to provide the diverse and elaborate services and amenities which are provided as part of the CCRC model and are demanded by those seniors interested in this type of housing and lifestyle.

CCRC residents typically pay a hefty entry fee and a monthly fee in return for the “promise” of care for the rest of the residents’ lives. Of course, this “promise” sets CCRCs apart from over-55 and assisted living facilities and nursing homes. And CCRCs are very distinct from the ‘aging in place’ model which may require extensive adaptation of a residence for the physical needs of an aging senior and the delivery of services through various community and other means. CCRCs are designed from the ground up to provide increasingly intensive services under the ‘continuum of care’ model to accommodate the needs of their residents.

The continuum of facilities and services available to CCRC residents typically includes:

  • An independent residential unit with one or more meals, housekeeping, social and recreational activities, and some transportation.
  • A separate assisted living area on the same campus, where additional support services are provided. Some of these are secure for people with memory loss.
  • A separate health care and skilled nursing facility on the premises, with nursing and/or physical rehabilitation, either short-term or long-term.

The on-site community, services, healthcare and activities are factors that attract many people to CCRCs. In addition entry into a CCRC requires only one major transition to a new “home” for those resident for whom stability is appealing or necessary. The facilities and options will vary widely so residents and their families considering this housing option are cautioned to thoroughly review each project on an individual and intensive basis.

It is also important to recognize that entry into the skilled nursing facility that is a part of the CCRC cannot in all cases by guaranteed. In the event that the nursing units are filled or otherwise unavailable, typical CCRC agreements permit placement of an ailing resident in an alternate nursing facility.  This reality should be carefully reviewed with the CCRC and with a potential resident and information gathered with regard to the likelihood of such an event.

CCRCs generally maintain a diverse suite of on-site medical and social services and facilities. Residents may enter a CCRC while still relatively healthy and then move on to more intensive care as it becomes necessary. CCRCs offer various options for lively communal living not available in many age-limited (over-55) properties and available only with more effort for seniors who may choose to remain in their own homes.

MI-BF100_Family_NS_20100806204302CCRC Fee Structures:  Costly, Confusing And Not Without Risk

The downside of a CCRC is the substantial cost of the Entry Fee and the confusing structure of the contracts and agreements between the CCRC and the resident. Prices depend on the amount of care provided, the type of contract, and the unit’s size and geographic location. Entry fees may range from $100,000 to more than $500,000 depending on the CCRC project, real estate market and factors such as whether or not the Entry Fee will be refunded in full or in part at such time as the resident leaves the CCRC or passes away. Monthly Service Charges and Fees range widely based, not only on the real estate market and prevailing regional costs but also the type of contract between the CCRC and the resident. Unlike other types of senior housing, the costs of CCRCs is highly variable and has been difficult to quantify in national surveys. For more info, here are links to a recent cost surveys by Metlife Mature Market Institute and Genworth Financial.

Seniors often use the proceeds from the sale of their home to pay the Entry Fee of the CCRC. However, the resident should be cautioned than in most CCRCs, the payment of the Entry Fee is not the same as the purchase of an apartment or real estate of any kind. The agreements in many cases are akin to a lease. Moreover, to the extent that the current federal and state tax law (also highly changeable) results in a taxable gain upon the sale of the residence – no “roll over” to defer a gain of potentially highly appreciated real estate will be available upon entry into a CCRC.

Nationally, CCRCs typically provide for three basic fee schedules:

  1. Extensive contracts, which include unlimited long-term nursing care at little or no increase in the monthly fee. This arrangement requires residents to pay a higher fee initially.
  2. Modified contracts, which include a specified duration of long-term nursing care, beyond which fees rise as care increases.
  3. Fee-for-service contracts, in which residents pay a reduced monthly fee but pay full daily rates for long-term nursing care.

CCRC contracts have evolved over time with new and confused variations within each fee schedule. For example, a CCRC might offer two different extensive contracts and one modified contract, with different levels of refundability for each. CCrcdata.org provides a national directory of CCRCs and general information regarding the amenities provided by a CCRC and the contract terms.  Many facilities now provide samples of the their contract and related documents on-line in PDF format. Care should be taken, however, to review not only the CCRC contracts but also the financial information and individual project data to determine whether or not the particular CCRC being reviewed is financially stable and likely to remain so over time.image2

CCRC Entry Requirements

Most CCRCs require that a resident be in good health, be able to live independently when entering the facility, and be within minimum and maximum age limits. As a prerequisite to admission, facilities may also require both Medicare Part A and Part B, and perhaps Medigap coverage as well. A few are now even requiring long-term care coverage as a way of keeping fees down. Some CCRCs are affiliated with a specific religious, ethnic or fraternal order and membership in these groups may be a requirement. Of course, applicants will have to demonstrate that they have the means to meet the required fees. The applicant may be placed on a waiting list, since CCRCs have, until relatively recently been highly sought after.

CCRC residents usually self-fund their residency and care out of their own pockets. As noted above, CCRCs are generally targeted toward seniors with middle to upper class means.  However, Medicare, and at times Medicaid, can be used to pay for certain services, and most CCRCs accept either Medicare or Medicaid. Although Medicare does not generally cover long-term nursing care, it often covers specific services that a CCRC resident might receive, such as physician services and hospitalization. Because the financial requirements for residence are fairly strict and the costs are relatively high, very few CCRC residents are eligible for Medicaid.

Recent Financial Challenges

According to a recent survey prepared by underwriter of financing for non-profit senior living providers, there were approximately 1850 CCRCs in the United States as of the end of 2009. Approximately 30% of CCRCs currently under development are for-profit status according to the survey. This represents a shift from the current norm of non-profit ownership of CCRCs. Profit and non profit projects alike, are developed utilizing complex financial instruments including municipal bonds, tiered financings, and oftimes complex management contracts between ongoing non-profit management companies controlled by the project developer. Moreover the CCRC “model” relies on the up front provision of large sums of money from each resident raising issues of financial management, disclosure and security of such deposits.

Due, in part, to the recent financial crises, the Erickson Retirement Communities, Inc. (the developer of the various ‘Erickson’ communities) was forced to reorganize in Chapter 11 Bankruptcy and its real estate and financial assets under management were acquired by in an auction. New capital was injected into the operations of all of the individual CCRCs by the successful bidder. Notwithstanding the financial concerns, occupancy rates and confidence in the individual Erickson communities (as well as other CCRCs nationally) has remained high.

The risk in the CCRC industry has led the U.S. Senate Special Committee on Aging to seek a Government Accountability Office investigation into CCRC operations and finances. Although the prospects for the industry remain positive, given importance to seniors of maintaining stability in their housing accommodations, a thorough review of a particular CCRCs financial position is an important component of counsel’s overall review of a CCRC project.

Despite their risks, CCRCs still hold widespread appeal. They promise to alleviate one of the biggest worries facing families with aging loved ones: how to secure, and in many cases pay for, future long-term care.

How To Evaluate A Facility And CCRC Contract

Deciding on a CCRC may be an once-in-a-lifetime choice, and it is a decision that should be made carefully and with the benefit of expert counsel. CCRC contracts are extremely complex and variable. An experienced elder law attorney’s assistance is, in my opinion, invaluable in selecting a community and reviewing its contract. Assistance from a certified financial planner may also be beneficial.

For your information, please download my own FREE CCRC Checklist For Clients.

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pposner_photoPhilip Posner, Esq. is a Massachusetts attorney with offices in Wakefield, Massachusetts. Phil practices primarily in land-use law. Phil can be reached at [email protected] or 781-224-1900.

 

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