IN THE LATEST TWIST over a potential November ballot question imposing statewide rent control, one of the three real estate groups that had been prepared to help bankroll a multimillion-dollar campaign to defeat the measure says it’s now open to a compromise proposal that would avoid the high-stakes ballot showdown.
The move, which other members of the opposition coalition are bristling over, comes two weeks after a separate group of real estate organizations signaled a willingness to work with rent control proponents to find middle ground on the issue. And compromise backers are feeling optimistic that they have some Beacon Hill support after Gov. Maura Healey, who had publicly opposed the ballot question, said she was also open to a compromise plan.
For months, a trio of industry groups have been fighting the proposal to impose a strict statewide cap on rent increases. But now that the tenant groups and housing organizers behind the campaign have offered a gentler alternative in discussion with some other real estate leaders, the unified opposition front is buckling.
Leaders of NAIOP, a commercial real estate group that last year dumped a quarter-million dollars into defeating the rent control ballot initiative, on Tuesday announced they were open to a deal with the measure’s supporters.
Following a vote by NAIOP’s board, the organization rolled out its own proposal to allow communities to opt-in to a limit on annual rent increases and implement new eviction protections, while avoiding some of the stronger elements of the ballot question and its statewide scope. It’s a major step that brings rent control backers closer than they have been in decades to getting a measure across the finish line.
Complicating the picture, however, the two other groups that were working with NAIOP to sink the question have not changed their positions.
Neither the Greater Boston Real Estate Board nor the Massachusetts Association of Realtors have followed NAIOP to the negotiating table. The real estate board’s chief executive on Tuesday signaled he remains wary of any form of rent control.
And unless something changes, that could force state policymakers to choose whether to enact a compromise plan into law or stand back and let the fight proceed to the November ballot.
Lawmakers privately acknowledged that it’s an open question whether buy-in from NAIOP alone — which seems possible but has not yet been guaranteed — is enough to prompt them into action, or if they would hesitate without the Boston real estate board involved as well.
Any such deal hinges on the Legislature. The Homes for All coalition pushing the ballot question has said it would drop its campaign, thereby not putting the measure before voters, if lawmakers enact compromise rent control legislation by July 1.
Proponents of the negotiated compromise seemed to take to heart pleas from some legislators to leave Beacon Hill out of the picture until both sides reached a happy medium. While being aware of the general shape of talks, legislative leaders have not been involved.
The prospect of a deal first burst into the spotlight on June 2 after months of private conversations. Five high-profile developers — WinnCompanies, Lupoli Companies, The HYM Investment Group, the Massachusetts Association of Community Development Corporations, and The Builder Coalition — worked with the campaign’s leaders on terms they found amenable, centered around a local-option policy that would limit annual rent increases to no more than inflation plus 5 percent, or 10 percent, whichever is lower.
NAIOP this week rolled out a counterproposal keeps the bulk of the original compromise pitch, like a limit on annual rent increases of the change in the Consumer Price Index plus 5 percent, capped at 10 percent. Under some circumstances, in both proposals, landlords would be able to reset rents to market rate between tenants.
However, the real estate group newly proposed that landlords be allowed to evict tenants if their relatives engage in criminal behavior, commit health or safety violations, or create a nuisance on the property, language that did not appear in the first-draft compromise. A landlord could also evict a tenant if the property owner wants to demolish the building, covert it to non-residential use, or allow a relative to occupy the unit under NAIOP’s idea.
Some provisions in the NAIOP pitch looked like they may be poison pills for tenant groups, which are already on edge.
The Easthampton Tenants Union voted Monday not to support even the initial compromise, calling it “a bad deal for tenants.” The group said, “the negotiation process that led to the compromise was not inclusive or transparent. Those involved in the process may have presumed our consent, but they don’t have it.”
So it would be an even higher bar to clear if two parts of NAIOP’s proposals are accepted: one that would exempt new construction for 30 years, rather than the initial compromise proposal of 15 years; and another preventing a city or town from opting into the rent control cap if it has a requirement that new residential construction make at least 10 percent of the units affordable.
“Increasing the supply of housing remains the most effective long-term strategy for improving affordability and meeting the needs of residents across the Commonwealth. At the same time, the real estate industry values certainty and predictability,” said Tamara Small, CEO of NAIOP, in a message to members. She described her group’s counterproposal as a balance between “protecting tenants from rent gouging while ensuring investment and housing production can move forward.”
That did not land well with the Greater Boston Real Estate Board, which had long been allied with NAIOP in fighting the ballot question. After NAIOP went public with its interest in a compromise, Greg Vasil, the real estate board president, doubled down on his opposition to rent control, calling it “failed public policy.”
“We are aware that some, including a member of our coalition, are acting independently to develop a compromise with the proponents of the proposed ballot question,” Vasil said. “While our board will review any responsible agreement put forward by the parties engaged in dialogue, we remain skeptical that any rent control compromise will result in good housing policy.”
He also questioned whether the Legislature has enough time to vet and approve a deal before the July 1 deadline by which every initiative petition campaign must file signatures with the secretary of state and thereby lock in a spot on the ballot. Lawmakers already have several other major topics to tackle in the coming weeks, including a major environmental bond bill and Healey’s energy affordability package.
Interest in a compromise seems driven by a lack of certainty on both sides over the likely outcome of a ballot question.
A further wrinkle in the maneuvering is a case challenging the question’s eligibility to go on the ballot that is still pending before the Supreme Judicial Court. A ruling is expected any day, so opponents and an anxious Legislature may prefer to delay any final decision on compromise, since the justices could knock the issue off the ballot.
Since the initial compromise took shape, multiple people close to negotiations said, both the governor and lieutenant governor have been actively engaged in efforts to find a middle-ground.
“We are continuing to have conversations with members of the real estate industry, legislators, and the administration in the hopes of passing legislation before the July 1 deadline,” said Andrew Farnitano, a spokesperson for the ballot question proponent group Keep Massachusetts Home. NAIOP, he said, is now at the table.
Healey surprised many when, over the weekend, she diverted from her prior anti-rent control position to appear supportive of a compromise.
The governor remains concerned “the ballot question, as it currently stands, would slow down housing construction, which will raise costs for everyone,” campaign spokesperson Kerry Lyons said.
“She encourages the proponents and opponents to reach a compromise and would be happy to review what they propose,” Lyons said.
One of the provisions that major real estate groups strenuously opposed in the initial compromise pitch involved the establishment of local rent control boards, which would be tasked with determining when or if landlords could charge more than the rent cap allowed.
Under NAIOP’s counterproposal, the Executive Office of Housing and Livable Communities and the attorney general’s office would instead be in charge of setting up uniform regulations to allow owners to apply for surcharges or rent increases beyond the rent cap if there are significant capital improvements, tax increases, or other significant costs or expenses.
The ballot measure coalition asserts that it has made serious concessions to get to the current compromise legislation, which the Massachusetts Association of Community Development Corporations presented with a letter of support to lawmakers on Tuesday.
Many members of the group “agree that ballot questions can be too blunt an instrument to enact nuanced policy,” according to the MACDC letter, “and this is one of the many reasons we are in such strong support of this thoughtful, balanced compromise.”
The only change to the initial compromise plan is language establishing that the housing office would be tasked with creating uniform guidelines for rent cap increase exceptions. There have not yet been additional negotiations over the length of exemption for new construction or bans for municipalities with certain affordable housing requirements.
“What would be really wonderful for the Legislature is if you all got together and figured out what a middle ground is,” Sen. Cindy Friedman, of Arlington, said in March.
Legislators will soon be tasked with piecing through just what a middle ground means, with some of the industry heavy hitters apparently at odds and just two weeks left until the deadline to act or let the measure roll onto the ballot.
