Rent Deregulation in California and Massachusetts: Politics, Policy, and Impacts

By Peter Dreier
International and Public Affairs Center, Occidental College, Los Angeles, CA 90041

Prepared for the Housing '97 Conference sponsored by New York University School of Law Center for Real Estate and Urban Policy and the NYC Rent Guidelines Board

New York University, May 14, 1997

Part I

Executive Summary
Introduction
Key Concepts
The Battle Over Rent Control
Rent Control in Massachusetts
The Politics of Deregulation in Massachusetts

Part II

Rent Control in California
The Politics of Deregulation in California
Comparative Analysis
The Consequences of Deregulation
Appendix: Arguments For and Against Rent Control
Interviews
Author Bio

Part III

Endnotes

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Executive Summary

In 1994, Massachusetts passed legislation restricting localities from enacting rent control. California followed suit in 1995. This paper examines the struggle over rent control in these two states. It begins with an overview of key concepts from the literature in political science, sociology, and public policy, focusing on the major institutional, political, and ideological factors necessary to analyze the mobilization of resources for and against public policy. This is followed by a brief history of rent control in the United States, focusing on the role of political mobilization by tenants, landlords, and their respective allies. A history of rent control and a description of the recent politics of deregulation in Massachusetts and California reveals the political calculations of tenants, landlords, and allies in these two states. The next section of the paper analyzes the major factors involved in the real estate industry's successful campaign to defeat or weaken rent regulations at the state level in these two states. It focuses on the various strategies used by the real estate industry and the tenants' organizations, the mobilization of "third parties," the role of the media and public opinion, and other factors.

The final section reviews the consequences of deregulation in these two states. It is reasonable to argue that rent deregulation had already taken effect in California and Massachusetts by the late l970s and early 1980s. The major cities in both states had already adopted vacancy decontrol policies (or no rent regulations at all). A key observation, therefore, is that the overall number of units subject to decontrol, compared with the private rental housing inventory in those metro housing markets and statewide, is quite insignificant. (This is in contrast to New York City, for example, where regulated units comprise a significant proportion of the city's and metro area's private rental housing inventory). Within the particular localities, however, deregulation will certainly increase hardship. The paper uses several kinds of data to indicate the possible short-term and long term consequences. But because the laws in both states were designed to be gradually phased-in, it is impossible to make definitive statements about their consequences, either for sitting tenants or for the availability of affordable housing.

Introduction

In 1994, Massachusetts passed legislation restricting localities from enacting rent control. California followed suit in 1995.[1] Both states limited localities to enacting vacancy decontrol, which allows apartment owners to raise rents to market levels when a tenant leaves.[2] Vacancy decontrol is, in effect, a method of gradually eliminating rent control as tenant turnover eventually allows owners to increase rents to market levels. The Massachusetts law eliminates even vacancy decontrol after two years. In both cases, only a few cities were directly impacted. In Massachusetts, only Boston, Cambridge, and Brookline had any form of rent control; Boston and Brookline had already watered-down their laws to versions of vacancy decontrol.[3] In California, only five cities -- Santa Monica, West Hollywood, Berkeley, East Palo Alto, and Cotati -- had rent control; nine others, including San Francisco, San Jose, Oakland, and Los Angeles, already had vacancy decontrol.

The real estate industry had been trying to pre-empt local rent regulations in both states since the l970s, when cities in both states began to adopt rent controls. They had tried a number of strategies over the years, but had consistently fallen short. What accounts for this dramatic turnabout- This paper examines that question, focusing on the political maneuverings of both pro- and anti-rent control forces in both states, looking for differences and similarities in the two states. The paper also briefly examines the consequences of this policy shift in several housing market areas. A thorough analysis of the impacts of deregulation cannot be done until more time has elapsed. Implementation of the Massachusetts law began in January 1995, while implementation of the California law began in January 1996, although both laws phase-in the implementation.

Key Concepts

Formal and informal political institutions, rules, and players play a key role in shaping the outcome of public policy contests. Whether through the referendum or the legislative process, they have a major influence in who wins and loses in terms of society's distribution of benefits. Key features of our political system -- the parties, the courts, the system of checks and balances, the role of money in campaigns, the rules governing voter registration, the ground rules for elections and ballot measures -- shape the outcome of public policy contests.[4]

Among western democracies, the United States relies most heavily on private market forces to house its population. In fact, despite our laissez-faire ideology, government is a powerful player in the housing market. This doesn't mean that the government is not involved in housing matters, but that American policy emphasizes bolstering market forces and minimizing assistance for the poor. Government's role dates primarily from two major turning points in our housing history. First, at the turn of the century, tenement reform laws set the precedent that local government would set standards and regulate housing safety. Second, during the l930s, the public housing program and banking reforms established the federal role in expanding homeownership and providing subsidies to the poor.

One of the most important but often overlooked concepts for understanding the battle over rent control is the role of federalism -- the way responsibility for public policy is divided between federal, state, county, and local governments.[5] Responsibility for implementing these policies is diffuse. Housing policy in the United States is made by a complex mosaic of federal, state, county, and municipal government. Government is quite involved in housing matters, including zoning, enforcing building code standards and health and safety standards, regulating rents and evictions, monitoring racial discrimination, insuring the banking system, operating a secondary mortgage market to promote homeownership, and providing tax and subsidy incentives for investors, owners, and consumers.

In the case of rent control, most (though not all) states require localities to seek permission (or "home rule" authority) to regulate rents and evictions. As a result, there is a wide disparity in terms of whether and how localities choose (or are allowed to) regulate rental housing. There are no federal mandates or requirements.[6] States can pre-empt localities from regulating rental housing, but they cannot require it. Even the federal government plays a role, not only in terms of whether it allows localities to regulate housing that have federal subsidies, but also whether it seeks to reward, punish, or remain neutral toward cities that adopt rent regulations. Political interest groups that are adept at maneuvering within the federalist system -- in other words, that can mobilize its resources at different levels of government (often simultaneously) to gain the most leverage -- will have an advantage in influencing public policy.

In simple terms, the battle between tenants and landlords can be viewed as a contest between organized people and organized money. Although a democracy is supposed to operate on the principle of "one person, one vote," it is obvious that the political playing field is far from level. The distribution of wealth and income in the United States is highly unequal. The disparity in financial resources gives some groups disproportionate influence in getting their voices heard and gaining access to political decision-makers. This does not guarantee that they will get everything they seek, but it does mean that they have an advantage. The political system is generally skewed toward those with economic wealth.

In general, tenants significantly outnumber landlords. If sheer numbers alone accounted for political influence, renters would be a powerful political force. For a variety of reasons, explored in detail below, renters have generally not been able to take meaningful advantage of their numerical edge. In part this is because tenants are disproportionately poor, which is generally associated with low levels of political participation. It is also because tenants are typically not very well-organized while their opponents (at least on the issue of rent control and other regulations), the real estate industry, are very well-organized. Concentrated among the poor, tenant organizing has inherent limitations. They generally move a lot (often because of eviction for non-payment of rent), vote infrequently, live from crisis to crisis, and lack the disposable income to pay steady dues to tenants' organizations. Resources from government and liberal foundations usually last only as long as tenants protest and disrupt "business as usual," but such activities are hard to sustain.

Sociologists have coined the phrase "resource mobilization"to explain how social injustice or even widespread discontent, on their own, do not inevitably lead to social protest or to changes in public policy.[7] From this perspective, the key factor in explaining effective protest is not simply the level of discontent or the motivation to organize, but how well discontented groups create opportunities to change their situation. In other words, it is important to examine both the internal dynamics of self-help efforts by disadvantaged constituencies and the external environment and resources that these constituencies can draw upon to effect change in public policy. The resource mobilization perspective focuses particular attention on how groups marshall organizational resources. It looks at such issues as leadership, strategic thinking, recruitment of new members, raising money, and influencing the media. Success depends not only on mobilizing the "base" but also on building coalitions with allies and converting neutral "third parties" into allies or sympathizers. When the discontent is among people with few material resources of their own, they have to enlist external resources from "third parties" who help pressure the targets of protest to negotiate and/or make concessions to the protesters.
Disadvantaged groups have at least three strategic approaches or channels available to them. Some approaches are considered more "acceptable" than others in terms of whether they are primarily "inside" or "outside" the normal rules of political participation. Of course, definitions of acceptable political behavior ebb and flow over time. Generally, however, the three main approaches, in their order of acceptability, are: electoral, lobbying, and protest.

Groups can endorse candidates, recruit people to work in election campaigns, and mobilize people to vote as a "bloc" in elections, hoping that their numbers are adequate to be considered a key constituency by officeholders. Whether or not they participate in elections, they can lobby for legislation by attending and testifying at public hearings, meeting with office holders, writing articles and letters to newspapers, appearing on TV and radio shows, and trying to generate publicity and pressure for their cause. Finally, they can engage in a variety of protest tactics -- from rallies, to rent strikes, to civil disobedience. To be effective, however, protest must be seen as legitimate and "moral." Riots and spontaneous rebellions rarely elicit widescale public sympathy. But organized protest, including civil disobedience, can often invoke sympathy if participants are viewed as protesting for a "just" cause, particularly if the public thinks they have exhausted other means to have their voices heard.

Finally, all debates over public policy occur within an ideological climate. This climate sets the boundaries of public debate and discussion. Academics and journalists discuss this in terms of the public's "mood" about particular issues or about broader concerns such as the proper role of government in society. Public opinion plays an important role in some, though not all, public policy battles. If public opinion is indifferent or ambivalent about an issue, then the public policy battle will be fought out primarily by the groups directly affected by the policy.

The news media play a key role in shaping the ideological climate. The media helps set the agenda of public debate. It may not influence what people think, but it influences what people think about. In other words, it helps determine whether an issue is "hot," and therefore worthy of scrutiny and analysis. In some cases, however, the media does influence how people view an issue. While the media may not sway people with strong beliefs to change their views, they may influence the views of people who were indifferent or ambivalent to take sides.

Even if an issue is not salient to the broad public, it can be critical to key people and institutions who may be indirectly involved. In particular, by either ignoring or drawing attention to an issue, the media can influence how third parties -- government officials, elected officeholders, targets of protest, or potential allies -- respond to an issue.[8] The cliche, "what if we organize a demonstration and no media come?" tells part of this story. Equally important is how the media "frame" an issue in terms of what is considered "fair" and "reasonable" versus what is considered "extreme" or "radical." If protest demands appear foolish, trivial, or extreme when they are voiced, they are unlikely to be taken seriously by decision-makers. In other words, the media can influence whether a group's concerns are considered legitimate.[9]

The ability to set the public agenda is not always visible to observers of the political scene. It often comes in the form of "non-decision making."[10] This occurs when individuals or groups have the power to keep certain issues from emerging as public controversies -- to keep some matters off the agenda -- thus preventing challenges to the dominant values or interests. Non-decision making is a way to suffocate demands for change before they are even voiced. From this perspective, "doing nothing" is actually a form of political behavior with real consequences. Some political scientists argue that the entire political system is skewed to protect dominant interests, so that challenges to existing power arrangements are viewed as illegitimate or "extreme." This is sometimes called the "mobilization of bias" within the system, "a set of predominant values, beliefs, rituals, and institutional procedures...that operate systematically and consistently to the benefit of others."[11] In other words, some groups can maintain their privileged position in society without having to exert themselves. Only when disadvantaged groups disrupt "business as usual" and inject their concerns onto the agenda do powerful groups have to utilize their resources in the political arena to protect their position.

Political scientists have devoted substantial analysis to the ways that powerful groups exercise influence informally, through parallel institutions (sometimes called "shadow governments") and social networks. These include participation in the governance and funding of universities, think tanks, policy-planning organizations, foundations, journals, and other institutions that can help shape the public agenda.[12] If one side has access to research and the capacity to circulate ideas through the media, and the other side does not (or not to the same extent), this represents a political advantage in shaping the agenda, the ideological climate, and the outcome of public policy.

This does not mean that relatively powerless groups cannot influence public policy, but that doing so requires them to be better organized and jump through more hoops than is required of people with greater material resources. We will employ these concepts in examining the battle over rent control in California and Massachusetts.

The Battle Over Rent Control

Americans have long cherished home ownership as a key element of the "American dream." Being a propertyless tenant has never been part of that dream. In the United States, housing is symbolized by the freestanding single-family home. Furthermore, a deeply rooted national belief in the sanctity of the "unfettered marketplace" has an especially strong claim in the housing sector which, perhaps more than any other economic arena, is seen as embodying individual choice unrestrained by the hand of government. In theory (though not in reality), the government enters the picture only as a last resort.

Renters, unable to afford their own home, face many problems: the threat of eviction, unaffordable and rising rents, and poorly-maintained buildings. As a result, the struggle between tenant and landlord has been a persistent one in American history. But only occasionally has this conflict taken organized or political form -- from struggles to extend the franchise, to land seizures and protests over evictions, to campaigns for code enforcement and rent controls.
Modern tenant consciousness and activism began in the late 1800s with the rise of the industrial city and the emergence of tenants as a majority of the population in central cities.[13] Tenant consciousness and activism reached peaks at the turn of the 20th century, after World War One and during the Depression -- all periods of economic crisis and housing shortages.

From the 1870s through the 1960s, tenant activism was found primarily among the poor and working class crowded into tenements and slums in the large industrial cities. Most tenant groups dealt with immediate crises in their own buildings -- evictions, lack of heat, rent increases, dilapidation -- with the landlords as targets of protest. In l908, New York City tenants organized a citywide rent strike, but it was short-lived because judges quickly evicted the participants. At times, these groups developed the stability and coherence to join together and direct tenant protest toward local government to force it to enact and enforce building codes and other reforms. Only in New York City, however, were tenants able to win rent control, which was initiated in 1920. There, citywide tenant groups aligned themselves with trade unions, radical political groups, and elected city officials who addressed working class problems.

Beginning at the turn of the century, tenant groups were also aided by middle-class reformers who worked on behalf of tenement dwellers. These reformers were not directly part of grassroots tenants groups, but their efforts -- conducting studies of slum conditions and lobbying for the establishment of city departments to inspect buildings and enforce codes -- helped to publicize tenants' grievances and legitimize their protests.[14]

In the Depression, tenant groups were organized in most major cities by radicals as part of their efforts to mobilize and politicize industrial workers and the unemployed. One of their favorite tactics was to block evictions by bringing large crowds to confront landlords or the police at the doorstep, making it impossible to remove the tenants and their possessions. One of the largest rent strikes in the nation's history occurred in New York City in l932.

During and immediately after World War 2, tenant activism slowed down. During the war, labor unions and other protest groups united behind the war effort and tempered their protests. Because of the wartime housing emergency, Congress enacted nationwide rent controls which lasted until 1947. When President Truman lifted rent controls, tenants in New York City fought to have the local government enact a rent control program of its own. For the next 20 years, it was the only city with rent control. Even there, tenants had to organize to keep the city from abandoning the program. In the rest of the country, however, there was a lull in tenant activism until the l960s. Housing conditions for most Americans improved dramatically. The percentage of tenants in the population dropped from 56% in 1940, to 45% in 1950, to 38% in 1960. During this period of rising affluence, American homes got bigger and bigger, with more and more appliances, more patios and porches, more garden and lawn space. This upsurge in homeownership created a strong belief that all except the very poor would soon realize the dream. As a result, working class and middle class tenants had little stake in their roles as tenants. For the most part, they saw themselves as soon-to-be homeowners, so there was little incentive to organize around rent hikes or building problems. The tenants left behind in the cities during the postwar boom were disproportionately the poor and the minorities, but the nation showed little concern for the plight of these groups.

The 1960s saw another wave of tenant consciousness and activism. This period differed from previous ones in that it was not a period of economic crisis or of a severe housing shortage. It was a spillover from the civil rights and poor people's movements, all of which developed in the context of "rising expectations." It was also a spillover of the student movement. Tenant organizations and rent strikes emerged in such college towns as Berkeley, Madison, Ann Arbor, and Cambridge, and in nearby cities (such as Boston and San Francisco) where student activists mixed with a low-income population. It was not until 1964 that the civil rights movement turned north and began to address problems like housing discrimination and slum conditions. It was no accident that the revitalized tenant movement began with the Harlem rent strikes of l964-1965. According to some accounts, the strikes involved more than 500 buildings and 15,000 tenants, led by charismatic Jesse Grey.[15] They received nationwide attention and helped inspire tenant activism in other cities, primarily among low-income blacks. Out of these efforts developed the first nationwide group, the National Tenants' Organization (NTO). Formed in l969, it had within two years affiliates in most large and medium-size cities. The NTO was concerned primarily with problems in public housing, but also with private slum housing. The NTO's heyday lasted only until the early 1970s, when internal conflict, declining foundation funding, and the waning of the civil rights movement undermined the organization's strength.

The activism of the 1960s focused on a number of issues: opposition to bulldozer style urban renewal; code enforcement; and expanding tenants' rights law, such as state "warrant of habitability" law and protection against arbitrary evictions. Tenants in both private and government-subsidized housing mobilized to defend and expand their rights.

The 1968 report of the Kerner Commission found that housing problems among low-income tenants was the primary grievance behind the mid-1960s ghetto rebellions. Riots in most major cities led Washington to enact an anti-poverty program that included funds for organizers and legal services lawyers, housing rehabilitation and rent subsidies. These funds provided significant resources for tenant groups and helped fuel tenant activism. But the tenant activism of the 1960s failed to build on its successes. It developed few stable tenant organizations with active members. Concentrated among the poor, the tenants movement had inherent limitations. They moved a lot (often because of eviction for non-payment of rent), they voted infrequently, they lived from crisis to crisis, and they lacked the disposable income to pay steady dues to tenants' organizations. Resources from government and liberal foundations lasted only as long as tenants protested and disrupted business as usual.

The 1960s wave of tenant activism indicates some of the strengths and weaknesses of the tenants' movement. It also shows some of the ways that well-organized tenants can influence government. The tenants' movement then was primarily a protest movement among the poor, especially African-Americans. As in early periods, they were aided by middle-class reformers, primarily students and radical lawyers. Suspicious of direct involvement in electoral politics (such as running candidates and registering voters) the movement primarily engaged in public protest demonstrations and rent strikes. Despite this aversion to electoral politics, tenants played a role in the emergence of a growing number of black local officials, including mayors, during the late l960s and early l970s. To win office, they had to appeal to the problems facing the black poor, which included housing conditions.

The l960s wave of tenant activism produced some important legacies. It improved housing and living conditions for many low-income tenants. Tenant-landlord law was reformed. These reforms represented the first significant change in tenant-landlord law since the turn of the century.[16] Also, issues such as housing segregation, welfare rights, voting rights, rent subsidies, and tenant involvement in public housing management were placed on the political agenda and reforms were introduced, even if all the problems were not solved. Finally, this wave of activism developed a large nucleus of trained tenant organizers and advocate planners (such as Urban Planning Aid in Boston) who were ready and waiting when conditions would make another wave of activism possible.

Rent control was a key part of the tenant movement's agenda. By the l970s and early 1980s, about 200 cities -- in New York State (including New York City), Massachusetts (including Boston), California (including Los Angeles and San Francisco), New Jersey (about 100 communities), Maryland, and Washington, D.C. -- had adopted some form of rent control. By the early 1980s, about 10 percent of the nation's renters were covered by rent regulations, but they were concentrated in a few locations. New York City alone had 39% of all rent controlled units; Los Angeles had another 17%.

During those years, tenant activists and real estate groups fought brushfire battles at the local level. Landlords and their allies poured millions of dollars to pass referenda, or enact legislation, to stem the tide of municipally-sanctioned rent limits, but the battle ended in a stalemate. During the l980s, tenant activists were unable to add many new cities to the localities that had already adopted rent control, but real estate groups couldn't beat back any of the existing laws either. In some big cities, progressive candidates like Ray Flynn in Boston, Art Agnos in San Francisco, and Anthony Cucci in Jersey City vaulted into the mayor's office as champions of tenants' rights and rent control. In smaller cities, such as Santa Monica, Berkeley, and Cambridge, pro-rent control electoral forces won majorities in city government and shaped the direction of broad public policy.

Tenant activism developed steadily, although unevenly, during the 1970s and 1980s. By the end of the 1970s, building-level tenant groups existed in every city and many suburbs. Citywide tenant organizations could be found in most localities with a significant renter population. In 1975, tenant leaders founded Shelterforce magazine, to report on and encourage tenant activism and to give the movement a sense of identity and coordination. By the early 1980s, statewide tenant organizations existed in New York, New Jersey, Massachusetts, Michigan, Illinois, and California.

In 1979, more than 100 tenant leaders from 50 cities and 17 states met in Newark. The initial impetus for the meeting was to prepare a response to the possibility of President Jimmy Carter imposing wage and price control to address the nation's skyrocketing inflation. Tenant leaders wanted to be ready with a package of rent and eviction regulations to incorporate into any federal legislation. Although the Carter administration backed down from price controls, the Newark meeting set the stage for a national network of tenant activists. A year later, at a conference in Cleveland, tenant activists formed the National Tenants Union (NTU), which was based at the Shelterforce office in New Jersey. For several years, the NTU helped coordinate tenant movement activities, primarily to fight Reagan Administration and Congressional attempts to pre-empt local and state rent control laws. NTU never developed a stable funding base or a cohesive coordinating strategy and collapsed by the mid-l980s.

In addition to neighborhood, citywide, statewide, and national groups devoted exclusively to tenant concerns, many of the grassroots community organizations that mushroomed in the 1970s and early 1980s in low-income and working-class neighborhoods embraced tenant organizing as part of their multi-issue agendas. Many of these local groups were linked to national organizing networks such as ACORN, Citizen Action, National People's Action, and the Industrial Areas Foundation, which provided training for organizers and leaders. These local multi-issue groups did not focus exclusively on tenants' issues, but their concern with the problems of older urban neighborhoods necessitated some interest in tenant issues. The l970s and l980s also saw an increase in organizing among senior citizens. Many activist senior-citizen organizations (such as the Gray Panthers, Massachusetts Senior Action, and others) made tenant problems one of their priorities, reflecting the worsening housing situation among older Americans on fixed incomes.[17]

Tenant activism through the late l970s focused primarily on renters in privately owned apartment complexes. The issues primarily involved rent increases, condo conversion, and building conditions. During those years, many metropolitan areas had experienced some level of "condomania" -- the conversion of apartments to condominiums, leading to widespread displacement. Many tenants, unable to afford the price of condos, but with difficulty finding other housing in a tight rental market, mobilized to support laws to delay evictions by requiring a year or more notice, prohibit evictions or conversions altogether, or require tenant approval before conversions could proceed. By the early l980s, some form of tenant protection against condo conversion had been passed in 24 states and the District of Columbia.

During this period, landlords also developed greater cohesiveness and coordination to stem the tide (or the threat) of rent control and condominium conversion control laws around the country. Homebuilders, mortgage bankers and real estate agents have long been influential in local, state and national politics. But apartment developers and owners had been more fragmented. Not surprisingly, landlords have been particularly well organized in New York City (where rent control existed for decades) and have sought to weaken or abolish rent regulation. Where tenants have been most active, landlords have banded together, often under the aegis of the local Chamber of Commerce or Real Estate Board.

Increasingly, however, landlords developed their own networks and organizations. Real estate groups are among the largest contributors to both the national political campaigns. In 1978, the National Rental Housing Council was formed to provide local landlord groups with advice on media campaigns, legal tactics, and research and arguments against rent control and pro-tenant demands, as well as to lobby in Washington. In 1980, the NRHC changed its name to the National Multi-Housing Council (NMHC), reflecting the growing number of condominium developers and converters among the landlords' ranks. Although it has been the large apartment owners that have played the most important role, they have sought to broaden their appeal as defending property rights from government and tenant interference.

Unable to roll back rent control at the local level, landlords, led by the NMHC, tried to defeat rent control by looking to the federal and state governments for help. By l993, 28 states (none of which already had any rent control laws) had passed legislation pre-empting local governments from enacting rent control. In contrast, housing activists in California, New York, and Massachusetts had thwarted several referenda, initiatives, and legislative efforts, bankrolled by apartment owners and real estate groups, to pre-empt local rent control laws.

When President Reagan was elected in 1980, the real estate industry moved the battlefield to Washington. His transition team recommended that HUD prohibit the use of federal housing funds in cities with rent control. In l98l and l982, Senator Alphonse D'Amato (R-N.Y.) introduced such legislation. D'Amato's own New York City would have been effected. After a bruising battle that included intense lobbying by tenant groups and help from then-Speaker Tip O'Neill (whose home city, Cambridge, Massachusetts, had a strong tenants movement and a strong rent control program), the D'Amato bill, backed by the Reagan Administration, went down to defeat. Many Republicans, though opposed to rent control itself, viewed the measure as unwarranted federal involvement in local affairs.

At the urging of the NMHC, Republicans in Congress continued to file legislation to punish cities with local rent regulations, including withholding federal housing funds. Jack Kemp, President Bush's HUD Secretary, reiterated the call to penalize cities with rent control.
In May 1988, Sen. William Armstrong (R-Colorado) added a last-minute amendment to the bill reauthorizing funds for the homeless. Armstrong's measure required HUD to study how rent control laws might be causing homelessness and gave HUD until the following October to produce the report.[18] Kemp's HUD staff released the much-anticipated report in September 1991 (two years after the deadline). Much to Kemp's chagrin, the study concluded that there was no conclusive evidence that rent control causes homelessness, but urged that "further study should be undertaken."

In l989, when Congress proposed the first new major housing bill in 15 years, the National Affordable Housing Act, sponsored by Sen. Alan Cranston (D-Ca.) and Rep. Henry Gonzalez (D-Tex.), tenant activists were dismayed to find that the draft version included language to withhold federal funds to cities with rent control. Tenant activists were told that real estate lobbyists had persuaded Cranston, a former builder himself, to incorporate the anti-rent control provision. Tenant groups and the National Low-Income Housing Coalition pushed hard to get the offending language removed, but it was the intervention of California State Senate President David Roberti, who was close to Cranston, that made the difference. The NMHC-sponsored language was watered down. When the bill was finally passed in 1990, it included an oblique (but still potentially harmful) reference to rent control: In applying for federal housing funds under the new program, cities and states were required to explain whether the cost of housing or the incentives to build or repair housing are "affected by public policies," including "policies that affect the return on residential investment." No city has been denied funding because it failed to adequately address that question.

Rent Control in Massachusetts

The Massachusetts tenants' movement of the late l960s and early 1970s was a spillover of the student movement, the civil rights movements, and resistance to urban renewal. Community-based struggles to stop institutional expansion of hospitals and universities into residential neighborhoods, to stop a proposed federally-funded highway through residential areas, and to stop the urban renewal bulldozer had created an organizational infrastructure and a cadre of organizers and activists who took up the cause of tenants' rights and the empowerment of low-income and working class neighborhoods.[19] Tenant organizations emerged and tactics like rent strikes increased. In Boston as well as in other nearby cities such as Lynn, Somerville, Cambridge, and Brockton, activists built tenant organizations in private and FHA-subsidized housing and helped enact rent control in Boston, Cambridge, Lynn, and Somerville in the early 1970s. Tenant activists formed "tenant unions" in apartment buildings or among tenants in buildings owned by the same landlord. They formed neighborhood-based and citywide tenant organizations. They engaged in various forms of protest, mass rallies, and civil disobedience, including "eviction blocking." They pushed local government officials to strengthen building code enforcement. They negotiated with landlords over maintenance and other matters. They lobbied government officials, registered voters, and campaigned for pro-tenant candidates. Once rent control was passed, they provided legal and political support for tenants before rent control boards and housing courts.

Since the late 1960s, major political battlegrounds in Boston, Cambridge, and Brookline have been the regulation of rents, evictions and condo conversions. It has become the litmus test for identifying political candidates as "conservative" or "liberal." In all three cities, rent control ordinances regulated rents (by limiting rent increases to the cost of increased expenses), evictions (by requiring "good cause" and by requiring hearings before landlords could go to court), and removals of units from the rental stock (by requiring permits before units could be demolished or converted to condominiums). The condominium conversion issue emerged in the late l970s. By the time the three cities enacted laws to address this issue, and fought the legal battles in court to protect their authority do to so, a substantial portion of the rental inventory in these cities was lost, undermining some of the political base for tenants' rights and rent control.

In Massachusetts, cities do not have the authority, on their own, to enact rent control. Rather, they need to get the permission -- or enabling authority -- from the state government. In 1970, the state legislature enacted Chapter 842 of the Acts of 1970, enabling cities and towns with populations over 50,000 to control rents and evictions.[20] This law was the result of several years of political protest and agitation by tenant organizations and their allies in the state, primarily in the urban areas in the eastern part of the state. Once Chapter 842 was enacted, tenants quickly pressured city governments in a number of cities -- Boston, Cambridge, Brookline, Somerville, and Lynn, in particular -- to enact local rent regulations.[21] In these cities, tenants comprised two-thirds to three-quarters of the residents. In 1975, Chapter 842 expired and tenant organizations and their allies lobbied the state legislature to extend it. The real estate industry exercised greater influence, however, and the legislature only extended the enabling law until March 31, 1976. After that, localities would have to go through a two-step process to have rent control -- first, they would have to pass a local law, and second, get it approved (through the vehicle of a home rule petition) by the entire state legislature. Boston, Cambridge, Brookline, and Somerville did so.[22] Lynn had repealed its law in 1974. Somerville adopted rent control in 1970, adopted vacancy decontrol/recontrol in 1976, and completely repealed regulations in 1978, effective the following March. By l979, only three cities still had rent control: Boston, Cambridge, and Brookline. Initially, the regulations in these three cities covered all units except government subsidized developments, two- and three-unit owner-occupied buildings, and new construction.

Cambridge tenant groups initially tried to enact rent control through a citywide referendum. When that failed, they had more success enacting legislation through the City Council in 1970, the same route followed by the other cities. Cambridge's law did not allow for vacancy decontrol. Brookline adopted rent control at a Town Meeting in September 1970. It was amended in 1991 when vacancy decontrol was introduced, permanently removing units from regulations. In the late l970s both localities adopted additional protections from condominium conversions. By 1994, Brookline had 4,200 units subject to control, while in Cambridge about 14,500 to 16,000 units, half the city's rental stock, was under rent control.[23]

In Boston, Kevin White was elected mayor in l968 as a pro-rent control candidate. One of his slogans was: "When landlords raise rents, Kevin White raises hell." Boston adopted rent control in 1970. Within a few years, however, Mayor White began cultivating the support of the real estate industry and changed his views. Rent control became a convenient scapegoat for housing abandonment and high property taxes on homeowners -- problems more accurately linked to the city's overall economic problems, the busing controversy, and its fiscal crisis. In 1975, Mayor White and the City Council adopted vacancy decontrol, which permanently removed an apartment from regulation after a tenant left, as of January 1976. As a result, once-regulated apartments were gradually exempted from rent control, declining from over 100,000 units to under 25,000 units by 1983. Only those tenants who had lived in their apartments since l976 were protected by rent control.[24] During the l980s, the system was amended several times (particularly to deal with condominium conversions and to add a "rent grievance" system in the decontrolled units), but the city never reimposed full rent control.

In the late l970s a huge wave of condominium conversions fueled tenant protest.[25] In l979, Ray Flynn (then a City Councilor) proposed a ban on condo conversions, a policy that had little support among his colleagues. A compromise was reached that provided tenants with advance notice before they could be evicted for condo conversion, along with some relocation expenses. The Massachusetts Tenants Organization was formed in 1981 to help coordinate and expand these local efforts, primarily around rent increases and condominium conversions. In that fall's City Council elections, an MTO affiliate, the Boston Tenants Campaign Organization, composed of neighborhood tenant groups, sent questionnaires to and interviewed all candidates. BTCO endorsed a "Tenant Ticket," distributed flyers in apartment buildings, registered tenant voters, organized a get-out-the vote drive, and handed out "Tenant Ticket" poll cards on election day. Two of BTCO's candidates won, including incumbent Flynn, who -- thanks in part to the tenant vote -- topped the ticket. Two years later, MTO's endorsement and organizing efforts played a key role in electing Flynn as Boston's mayor.[26] A cornerstone of Flynn's platform was an overhaul of the tenant protection laws, a return to full rent control, and either a ban on evictions for condo conversion or a ban on conversion itself. During its ten years in office (l984-93), the Flynn administration brought tenant and housing activists into government, adopted stronger tenants' rights laws and provided funds to encourage tenant organizing.[27]

In October 1984 the City Council rejected Flynn's plan to restore full rent control. In its place, the Council substituted a rent grievance system in the decontrolled units,[28] banned condo evictions for low-income and elderly tenants, extended (up to three years) the notice period for other tenants facing condo conversion, and increased moving expenses (from $750 to $1000) for tenants displaced by conversion. The compromise measure accurately reflected the balance of political forces at the time, particularly the Greater Boston Real Estate Board's (GBREB) influence on the majority of Council members. Flynn continued to push for stronger tenant protections. In mid-l985 -- with the housing crisis worsening and condo conversions escalating (even outside the downtown neighborhoods) -- the City Council gave the rent board the authority to regulate condo conversions by requiring landlords to obtain a permit before a conversion could take place. The GBREB successfully challenged the policy in court but the city then got the state legislature to give it the authority to implement the law. By the mid-1990s, Boston had about 90,000 apartments under the jurisdiction of the Rent Equity Board, which regulated rents, evictions, and condominium conversions. Only about 20,000 units were under rent control; the rest were under the looser rent grievance system.

The Politics of Deregulation in Massachusetts

Massachusetts landlords organized a campaign for a statewide initiative (Question 9) to repeal rent control, by pre-empting localities' authority, that appeared on the ballot in November 1994. It passed with 51% of the vote. The three cities with rent control -- Boston, Cambridge, and Brookline -- voted "no." Implementation began January 1, 1995.

Landlords had been unhappy about rent control for the 25 years of its existence. They had succeeded in repealing it in Lynn and Somerville, and watering it down in Boston and Brookline. Cambridge, like Santa Monica and Berkeley on the West Coast, was viewed as having an "extreme" or "radical" form of rent control. Cambridge's system would prove to be the battering ram which landlords used to attack rent control at the state level.

Tenant organizing in Cambridge had atrophied by the mid-1980s.[29] A core of tenant activists continued to appear at City Council meetings and to advocate before the rent control board. This same core managed to regroup the fragile coalition of tenants, senior citizens and other constituencies at each election cycle. But the energy and organizational capacity of the tenant constituency had severely dwindled. This vacuum was filled by a new organization, the Small Property Owners Association (SPOA). SPOA was composed of homeowners and small landlords, but it quickly hitched its political wagon to more powerful real estate industry forces under the banner of the Massachusetts Homeowners Coalition (MHC). SPOA served, in effect, as the public face of the anti-rent control effort, while the money and strategies were controlled by the real estate industry trade associations and their hired campaign consultants.
SPOA's goal was the complete elimination of rent control. To the extent that its membership was composed of relatively small property owners -- homeowners and small scale apartment owners -- they linked their personal and their property interests much more intimately than large developers and landlords. According to Cantor, they believed that "rent control violated their fundamental personal rights."[30]

Moreover, SPOA engaged in somewhat militant tactics, more akin to groups like ACT-UP (gay rights) or Operation Rescue (anti-abortion) than to traditional real estate industry approaches. For example, they picketed and spoke out fervently at Cambridge City Council meetings. They projected an imagine of small property owners being abused by unresponsive government, the "People's Republic of Cambridge."[31] They told "horror stories" of condo owners who were forbidden by the rent control law (or board decisions) from living in their own units, or being unable to convert room housings into single family homes where they wanted to live, of being unable to evict tenants who failed to pay rent, and of long delays in getting rent increases. MHC members held up signs at university graduations. They wrote letters to the editors of local papers. They frequently appeared on radio talk shows and found reporters and columnists who wrote sympathetic stories about their "plight."[32] (Importantly, the radio shows and daily newspapers that covered Cambridge were part of the larger Boston media market, so this anti-rent control message extended beyond Cambridge). They argued that rent control forces landlords to subsidize tenants. "Providing affordable housing should be society's problem," MHC president Denise Jillson told the Boston Globe, "not the problem of the individual property owners." They compared the struggle of small property owners to overturn the "tyranny" of local rent control to the civil rights movement's efforts to get the federal government to overturn local segregation laws.[33]

SPOA was not only well-organized, but also politically savvy. It made a point of showcasing only "small" property owners, even though much of their financial support came from large real estate interests. It focused attention on minority, immigrant, and senior citizen members. It highlighted examples of affluent tenants paying below-market rents in buildings owned by purportedly financially-strapped landlords.[34] This reinforced the image they sought to project -- that rent control did not primarily help the poor. SPOA succeeded in persuading the Cambridge City Council to commission a study by a private consulting firm of who lived in rent controlled housing.[35]

SPOA lost its first major political battle during the 1989 local elections. Three long time rent control supporters on the City Council declined to run for re-election, making the City Council races a referendum on rent control. Also, landlords (primarily large property owners concerned about local restrictions on condo conversion) collected enough signatures to get "Proposition 1-2-3" on the local ballot and financed an expensive and sophisticated campaign to reach voters. It would have allowed landlords to convert apartments to condos if the tenants wanted to buy them, undermining the city's law which linked condo conversion to housing market indicators. If successful, Proposition 1-2-3 would have eliminated rental units and undermined the political base of support for rent control. However on election day, voters defeated the proposition by a two-to-one margin and elected an unprecedented 6-3 pro-rent control majority on the City Council.

Although angered by this defeat, SPOA viewed the l989 elections as one battle in a longer war. Equally important, although real estate forces lost the local elections, they had helped set in motion a changing political climate by chipping away at the image of rent control as a policy that protected the most vulnerable people. They had begun to set the stage for a full-scale attack on rent control several years later. Over the next few years, SPOA spearheaded a constant media attack on rent control.[36] It did a good job of identifying a few high-profile "undeserving tenants" -- primarily professionals with good incomes, including Cambridge's mayor and a state court judge -- who were used as the symbols of rent control's inequities.[37]

During the summer of 1993, SPOA began preparing for a statewide initiative campaign to ban rent control. A majority of residents in Boston, Cambridge, and Brookline were renters. Statewide, however, owner-occupied units outnumbered rental units by 1.35 million to 980,000.[38] Moreover, homeowners had higher levels of voter registration and turnout than tenants. Amidst much controversy, the state Attorney General in September 1993 ruled that the measure could appropriately be put before the state's voters, even though it only applied to a few localities. The Greater Boston Real Estate Board and its Rental Housing Association, which represented the big landlords, developers, and management firms, did not agree with this strategy. Its leaders were "frightened" of putting the issue before the voters. "What if the reverse happened and we lost?" They felt on safer ground working through city councils and the state legislature, where they had skilled lobbyists and political clout.[39] But the GBREB recognized that the SPOA was going to move forward anyway, so it soon joined forces with the small property owners to push Question 9.

Soon after the Attorney General approved the ballot measure, Ed Shanahan, director of GBREB's Rental Housing Association, "got a frantic phone call from Denise Jillson," the head of SPOA, asking for RHA's help. "We put together a coalition called the Massachusetts Homeowners Coalition (MHC)," Shanahan explained. The steering committee include Jillson (representing SPOA), Shanahan, Ed Zuker (a major Boston area landlord), Doug Thayer (a Cambridge landlord), and a representative of the Massachusetts Realtors Association. It was this group that spearheaded the Question 9 effort, although they sought to identify the public face of the campaign with small property owners like Jillson who was, "the perfect poster girl" for their cause.[40] The campaign for and against Question 9 began in the summer of 1994 until election day, November 8. Using local realtors and paid canvassers, MHC began soliciting signatures to place the measure on the ballot in November 1994.[41]

SPOA helped to chip away at support for rent control among people not directly affected by the policy -- third parties such as the media, homeowners, and others.[42] Media accounts about rent control were generally unsympathetic.[43] One Boston Globe reporter, writing about his experience selling his condominium, wrote about his "nightmare" dealing with the Cambridge Rent Control board.[44] Three out of four Globe columnists supported Question 9; two of the opponents wrote several columns on the topic during the campaign, repeating SPOA's views about rent control "horror stories." Columnist David Nyhan called rent control a "yuppie subsidy, a middle-class loophole hurting small-time property owners." Columnist Jeff Jacoby claimed that "like socialists the world over, the rent radicals of Boston, Brookline and Cambridge operate on the principle that whatever they win is permanent and whenever they lose it's negotiable." Columnist Bella English claimed the big losers if rent control was abolished would be the "politicians, professors, judges, doctors, lawyers, Harvard students and businessmen, who have enjoyed cheap digs for years."[45] The reporters, columnists and editorial writers at the Boston Herald, the region's other major daily paper, consistently supported Question 9.

The Massachusetts Tenants Organization led the charge against Question 9. It formed an umbrella organization, Save Our Communities Coalition (SOCC), composed primarily of tenant activists in Boston, Cambridge, and Brookline, the three communities that would be directly affected. SOCC focused its measure on the harmful impact Question 9 would have on the elderly. It showcased elderly renters who would be hurt if rents were deregulated.[46] In posters and bumper stickers, it advertised its slogan: "Bad for Elderly -- Bad for You." SOCC's rallies and protests, all in the Boston area, received minimal media attention. For example, no reporters showed up at a SOCC-sponsored October 12 rally on the steps of the State House. Various unions, the AARP, Boston Mayor Tom Menino, and a variety of community organizations and public interest groups endorsed the "No on 9" campaign. In contrast to much of its reporting and several of its columnists, the Boston Globe editorialized against Question 9 on the grounds that it interfered with the "home rule" authority of localities.[47] Indeed, throughout the Question 9 campaign and the subsequent legislative fight, rent control proponents emphasized the home rule principal as much, or even more, than the benefits of rent control.[48]
Rent control's supporters were clearly on the defensive. Even the director of the Massachusetts Tenants Organization acknowledged to the Boston Globe that "it's not a perfect system," arguing that only a handful of tenants in rent-controlled are rich.[49]

The SOCC-led effort was completely outmaneuvered by the pro-Question 9 campaign. This was a classic example of the impact of money on elections. The campaign used rent control as an example of the undue influence of big government. Its logo showed a house with the words "Get Gov't Out" across it. Its TV and radio ads focused on rent control's "unfairness," primarily using examples from Cambridge, which had the strongest law among the three cities and which, despite its large low-income and minority population, was known outside the Boston area primarily as the home of Harvard, MIT, and its student/intellectual culture. The real estate forces hired several consultants to conduct studies which, not surprisingly, alleged to show that rent control in Cambridge disproportionately helped the non-poor.[50]

During the campaign, the media reported tenants' fears of huge rent increases as well as landlords' promises that rent increases would be fair and reasonable. The Globe quoted one large property management company official's prediction that it would not make "an immediate hike that would force people out." Another landlord said that "It should take a year to find out the market, and at that point we'll negotiate a new rent. In most cases, even if the rent should be $1,200, we'll agree to less to have a tenant stay rather than have a vacancy."[51]

The pro-Question 9 forces outspent their opponents by at least a seven-to-one ratio -- $1.06 million vs. $158,248. The proponents used this financial advantage to hire professional consultants to manage the campaign, to do polling, and to buy TV and radio advertisements. Proponents spent over $200,000 on paid TV ads. The "Yes" campaign received most of its money in $500-or-more contributions, many of them from out-of-state. Nineteen real estate firms contributed $510,022, more than half (53.9%) of the "Yes" campaign's funds. The list of contributors reads like a "who's who" of the Boston area's major realtors, landlords, developers, and property management firms. The Greater Boston Real Estate Board alone contributed $168,878 to the "Yes" campaign, $118,878 in gifts and in-kind services plus a loan of $50,000. The next biggest source of funds for the "Yes" campaign came from the National Association of Realtors and the Institute of Real Estate Management, based in Chicago. They funneled their combined $75,000 contribution to BMC Strategies, a political consulting firm, to be used for TV ads. The "No" forces had one paid staff person. They had no money for TV ads. Only 11% of the $158,249 it raised came from $500+ contributions.[52]

A Globe poll a week before the election found 34% of likely voters supported Question 9, 37% opposed it, and 29% were undecided.[53] The Question 9 campaign's financial resources helped sway enough undecided voters to bring victory. Question 9 won by a narrow margin: 51.3% (1,034,594) to 48.7% (980,723).[54] An analysis of the vote reveals that voters in Boston, Cambridge, and Brookline -- where Question 9 would have direct impact -- voted substantially against the measure, although not by margins large enough to make a difference in the statewide outcome. In most cities and towns outside the Boston metropolitan area -- for example, in Springfield, Fall River, New Bedford, Lawrence, Holyoke, Fitchburg, on Cape Cod and in the Berkshires -- a majority of voters voted "no." Question 9's small margin of victory came from the Boston area suburbs, where the real estate industry's campaign concentrated its media efforts. One cannot also discount the sentiment toward rent control that had accumulated over the previous few years aided by articles in the Boston area media market. The Question 9 campaign simply reinforced these views.

After the November elections, tenant activists in Boston, Brookline, and Cambridge pushed their city governments to file home rule petitions in the state legislature to reinstate a version of rent control.[55] These local battles in each city were highly contentious, involving controversial public hearings and protests.[56] The Cambridge version called for phasing out rent control over five years. The Boston and Brookline versions called for weaker versions of their vacancy decontrol systems. They had to get a bill through the lame-duck legislature before the session ended on January 3, 1995, since Question 9 would go into effect on January 1 and many landlords had announced that they were planning substantial rent hikes. The tenants and sympathetic local public officials knew, however, that whatever bill they could get through the two houses, both with a majority of Democrats, would be vetoed by Republican Governor William Weld, a Cambridge resident who had just won an overwhelming re-election victory and was strongly opposed to rent control. They didn't have sufficient support to override Weld's veto. SPOA lobbied the legislators to reject any home rule petition that continued any form of rent control. Weld announced that he would only approve a petition that SPOA could live with. "If they are satisfied, I am satisfied," Weld said disingenuously, "I am almost a spectator here."[57]

At this point, the years-long drumbeat of criticism about rent control bore fruit. Even rent control advocates realized that their only hope for protecting any form of regulation would require some kind of means-test. Mayor Menino pushed a home rule petition through the Boston City Council that would protect elderly, disabled and low- and moderate-income renters.[58] But after lobbying legislators and Gov. Weld, Menino realized he'd have to water down the city's proposal.[59] Real estate interests were able to win the argument, among legislators and the media, that even elderly and disabled tenants should be subject to a means test. Rep. Thomas Finneran, a Democratic from Boston and chairman of the powerful Ways and Means Committee, argued in favor of the "narrowest version possible," including vacancy decontrol, and a means test limited to the elderly and disabled.[60] Weighing in on the subject, the Globe encouraged the legislature and Governor to approve home rule petitions that incorporate vacancy decontrol and a means test protecting only low-income renters, which it labeled a "decent compromise" and a "sensible compromise."[61]

In late November and early December, the House approved the three home rule petitions, but lacked the two-thirds majority necessary to override Weld's veto, while the Senate approved Cambridge's plan (ironically, the weakest of the three), amended Boston's (requiring it to be phased out in five years), and rejected Brookline's.[62] In late December, the House and Senate approved a weaker version that extended rent control for two years, but only for elderly, disabled, and low-income renters.[63] According to several sources, many Democratic legislators cast their vote in favor of the home rule petitions knowing that they lacked the votes to override a veto -- a safe way to tell voters they supported rent control without alienating the real estate industry.

The legislature defeated last-minute attempts by pro-rent control legislators to amend the law to provide blanket protection for all disabled and elderly tenants (regardless of income), and to include a local option provision, which would allow Boston, Cambridge, and Brookline to revert to their existing rent control systems.[64]

Weld said he would veto the bill unless it was changed to incorporate amendments drafted by the Massachusetts Association of Realtors, which would extend rent control for two years, but only for low-income renters already living in rent controlled apartments. Even elderly and handicapped renters should be subject to a low-income means test.[65] On January 3, Weld announced that he and the real estate industry had reached an agreement. With two minutes left in the session, on a voice vote, the legislature passed the bill on January 3, 1995; Weld signed it the next day.[66]

The new law, as one legislator put it, allowed rent control to "die with dignity."[67] The law immediately decontrolled all units which were not occupied by a tenant who met the new income eligibility guidelines. Eligible tenants were defined as those with incomes of 60% or less than the median income for the Boston SMSA (at that time, $21,500 for a single person). An exception was granted for elderly tenants (62 years or more) and disabled tenants; for them, the eligibility limit was set at 80% of median income ($27,950). The incomes of all residents of a unit (household income) was to be counted. Full-time students were not to be considered eligible for protection. Rent control for income-eligible tenants in buildings with up to 12 units would end on December 31, 1995, while those in larger buildings would no longer be protected after December 31, 1996. The law specified that for income-eligible tenants, landlords could raise rents in these rent controlled units by 5% a year, or up to 30% of the tenants income. Local rent control boards lost the authority to regulate evictions.[68]

Interestingly, media coverage of the rent control issue expanded dramatically after Question 9 has passed. Most of the reporting focused on the personalities and maneuverings engaged in the home rule legislative battle, on the political maneuverings of Governor Weld, legislative leaders, and Boston Mayor Tom Menino over whether the legislature and Governor would approve local home rule petitions and, in effect, override the Question 9 vote. Yet at no time during the legislative phase of this issue did the media analyze the influence of the real estate lobby, including its campaign contributions, in the legislature. It covered the home rule debate as a matter of ideology and political in-fighting. Immediately after the Question 9 vote, a few stories focused on the fears of tenants worried about dramatic rent increases and the delight of landlords freed from regulatory abuse.[69] These articles increased in 1995 and 1996 when the new law took effect, particularly as the phase in period was coming to an end.

Several news accounts noted that the small property owners, led by the SPOA, were angered by the compromise that allowed the two-year phase-out of rent control. As the inside game within the legislature played itself out, Gov. Weld and the legislatures negotiated with the Greater Boston Real Estate Board and the Massachusetts Association of Realtors, and shut the SPOA out of the negotiations.[70] They felt "sold out" by the big landlords.[71] SPOA had laid the groundwork, served as the media spokespersons, and framed the ideological debate, but were viewed as too uncompromising when it came time for the endgame. In doing so, they helped the major real estate lobby groups appear to be moderates rather than the "heavies." The political center of gravity had shifted so far in the industry's favor that the bill to entirely phase-out 25 years of rent control was called a "compromise."

Part II

Rent Control in California

In the 1970s, California seemed an unlikely place for a broad movement for tenants' rights. As Heskin notes, "Aspiring tenant organizers considered the California tenant to be too individualistic and too mobile to be organized" and "the densities of renters too low for mass collective action."[72] But a California tenants movement exploded in l978 following passage of Proposition 13, the tax-cutting amendment. California had an upsurge of tenant activism in the late l970s and early 1980s, and then -- with a few local exceptions -- experienced a lapse starting in the mid-l980s which continued into the 1990s.

During much of the l960s, apartment vacancy rates in the state's urban areas were high; some landlords even complained of an "apartment glut."[73] This began to change in the l970s, as rental apartment construction fell, vacancy rates fell, and rents increased faster than inflation. Moreover, skyrocketing housing prices shut out many middle-class households from homebuying. Except in Berkeley, however, there was little tenant activism in response to these changing market forces. In 1972, Berkeley voters passed a rent control charter amendment through the initiative process. The city began to implement the law, but landlords successfully challenged the amendment in court. In Birkenfeld v. Berkeley, the Alameda County Superior Court (in 1973) and the state Court of Appeal (in June 1995) held that the Berkeley law was unconstitutional on procedural grounds, but it found that cities had the right to adopt rent control without further state legislation.

In 1975, Senator David Roberti filed a rent control bill that died "quickly and quietly" in the Senate Judiciary Committee, a reflection of the weak political constituency at the time.[74] In the mid-1970s, even before the upsurge of tenant activism, California's real estate industry recognized the potential for a wave of tenant protest and demands for rent regulations, especially in light of Birkenfeld v Berkeley. In 1976, the California Housing Council, a new coalition of the state's major apartment developers, owners, and managers, along with their allies among realtors and smaller landlords, pushed a bill (AB 3788) through both houses of the state legislature pre-empting localities from adopting rent control. A fledgling California Renters Coalition was too weak to effectively oppose the bill in the legislature or the media. But on the advice of his liberal housing department director, Arnold Sternberg, and with the support of his liberal constituency, particularly Jack Henning, the head of the state AFL-CIO, Gov. Jerry Brown vetoed the bill, angering the real estate community.[75]

Sensing that a battle was brewing, a handful of tenant organizers and legal aid attorneys recognized that they needed to be better organized and in l977 250 activists met in Los Angeles to form the California Housing and Information Network (CHAIN) to serve as the umbrella coalition for tenants' rights.[76] A few local groups, such as the Coalition for Economic Survival (CES) in Los Angeles, began to organize tenants around rent increases, evictions, and maintenance issues. In 1977, CES and the Gray Panthers, a radical senior citizens group, began pushing the Los Angeles City Council to adopt rent control, initially promoting ordinances against "rent gouging." Simultaneously, tenants in Santa Monica launched an effort to place a rent control initiative on the June 1978 ballot. These groups were able to mobilize hundreds of tenants for public hearings and rallies. Smaller efforts were underway in Santa Barbara, Santa Cruz, Long Beach, and San Diego, while tenants continued to push for rent control in Berkeley.

Gov. Brown's veto of the CHC's pre-emption bill proved fateful, because demand for rent control exploded across the state in the aftermath of Proposition 13. Proposition 13 was spearheaded by ultra-conservative political forces. The leader of the tax revolt was Howard Jarvis, chief executive of the Apartment Association of Los Angeles County, who sent a mailing to landlords urging them to "convince your tenants that lower property taxes mean lower rents."[77] A month before election day, the California Apartment Association announced that landlords would pass property tax savings onto tenants if Proposition 13 passed. Recognizing the dangers of a tenant backlash if landlords failed to fulfill their promises, the CHC opposed Proposition 13.

On the same day that Proposition 13 won by a two-to-one margin statewide, rent control initiatives were defeated in Santa Monica (56-44%) and Santa Barbara (by roughly the same margin), even though tenants represented a majority in both communities. Real estate interests poured huge sums of money to defeat these referenda.[78] An analysis of voting results revealed that precincts that favored Proposition 13 voted against rent control, often by a similar margin. Throughout the state, in fact, voters who opposed rent control thought that property taxes were the cause of high rents. They expected Proposition 13 to hold down rents.

The California Housing Council was the only major real estate industry group to oppose Proposition 13.[79] After Prop 13 passed, the CHC sent a letter to its members across the state urging them to reduce rents.[80] But the anticipated windfall of rent rollbacks did not materialize. In fact, many of California's 3.5 million tenants received notices of rent increasesshortly after Proposition 13 passed. This set the stage for a significant tenant backlash. Throughout the state, tenants who had been hit by rent increases organized meetings to demand that landlords share their property tax savings. Newspapers were filled with stories of outraged renters, embarrassed landlords, and politicians jumping onto the bandwagon. For example, Los Angeles Mayor Tom Bradley, who had earlier lent his name to the anti-rent control campaign in nearby Santa Monica, called for a citywide rent freeze ordinance. As public clamor mounted, some landlords agreed to voluntarily reduce rents in order to avoid mandatory rollbacks and freezes.

Tenant pressure did not subside. Governor Brown established a renter "hotline" which, at one point, was receiving 12,000 phone calls a day to register complaints about rent hikes.[81] When heavy real estate industry lobbying defeated a statewide bill requiring landlords to pass on Proposition 13 savings to tenants, the battle shifted to the local level. Groups like CES, the Gray Panthers, CHAIN, and Tom Hayden's statewide Campaign for Economic Democracy (which grew out of his unsuccessful bid for U.S. Senate in 1976) organized tenants and kept the anger about post-Prop 13 rent hikes in the news. Tenant groups began to mobilize in communities across the state, demanding rent control. Experienced tenant leaders began to travel across the state, helping local groups. Newspapers reported an upsurge of rent strikes, even in the politically moderate San Fernando Valley section of Los Angeles.[82]

By 1981, more than 25 California communities, including Los Angeles and San Francisco, had passed some kind of rent control laws. By 1988, 78 communities in California had some form of rent control, although in 64 of these jurisdictions rent control was limited to mobile homes. In the 14 cities where rent regulations covered apartments, nearly one million units were covered.[83] Eleven of those 14 laws were enacted by ordinance. In Berkeley, Santa Monica, and Cotati, they were put into place by voters through the initiative process. In nine of these jurisdictions, the rent regulations not only covered rents, but included "just cause" eviction, limiting landlords' ability to evict a tenant without due process and cause. Los Angeles, Palm Springs and Thousand Oaks exempted so-called "luxury units" from rent regulations. Several cities exempted single-family homes; some exempted condominiums. Twelve of the 14 jurisdictions (except Los Gatos and Cotati) exempted new construction from rent regulations. Nine of the jurisdictions provide for vacancy decontrol, allowing landlords to set rents at market levels when a tenant voluntarily vacates an apartment; in six of these jurisdictions, the law requires that the unit be placed back under rent regulation after the new tenant moves in and the landlord has set the market rent. Berkeley, Santa Monica, West Hollywood, East Palo Alto, Cotati, and Palm Springs did not allow vacancy decontrol. Local rent boards set rent levels each year, no matter how many times the units turn over. Jurisdictions vary in the formulas they use to set rent increases.[84]

In response to tenant pressure, rent strikes, and steady news coverage about rent increases and angry tenants, especially seniors, the Los Angeles City Council passed a six month rent freeze in August 1978.[85] As the rent freeze was reaching its end, tenant forces and their allies pushed for a permanent and strict rent regulation law. The City Council adopted a somewhat watered-down version of regulation, including vacancy decontrol and an exemption for single-family homes, which went into effect May 1, 1979. This law was reviewed annually by the City Council, with minor changes. In 1981 the City Council made significant changes. The original law permitted a 7.6% rent increase annually. After 1981, this was reduced to a 5.6% annual rent increase. From the beginning, landlords were allowed to raise rents more freely when an apartment became vacant, but then adjusted further rent increases for the new tenant. The original law allowed new rents to be set to market levels. The new law limited rent increases to 10%. Both laws exempted new construction, hotels, single family dwellings and so-called "luxury units" (those with rents above a specific level. Both laws contained "sunset" provisions which would end rent control if the vacancy rate in Los Angeles rental housing rose above 5%.[86]

The Los Angeles law did not apply to the unincorporated areas of Los Angeles County, including West Hollywood, where renters composed 80% of the population. Renters organized rent strikes and rallies with as many as a thousand demonstrators and successfully pressured the county Board of Supervisors to pass a rent control law that applied to unincorporated areas. The law included a "sunset" provision and in 1985 the Board of Supervisors did not extend it. Fear of this threat led activists in West Hollywood to seek to incorporate a new city. Soon after West Hollywood became a separate city, the city council adopted rent control in June 1985. Rent control was also the driving force behind the efforts to incorporate a new city in East Palo Alto.[87] East Palo Alto, which had about 3,000 rental units and a large African-American community, was incorporated in 1983.[88] It adopted rent control a few months later. Landlords were unsuccessful at repealing it with several city ballot measures, sponsored by the California Apartment Owners Association.[89]

Rent control was the centerpiece of electoral activity in Berkeley and Santa Monica, where progressive coalitions won majority blocs on the City Council of each city. In the late l960s, Berkeley was a hotbed of "radical" political activity, not only on the campus but also in the community. The Berkeley Tenants Union was formed in 1969. It formed part of a coalition of progressive activists who mobilized to gain a foothold in city government with rent control one of their key platforms. After the courts reversed the 1972 pro-rent control ballot measure on procedural grounds, the coalition tried again. Rent control supporters put another initiative on the April 1977 ballot. It lost 63% to 37%. Following Proposition 13, Berkeley voters approved a temporary rent freeze on the November 1978 ballot by 58% to 42%. Voters adopted permanent full rent control in a June 1980 initiative. The pro-tenant governing regime remained in power for almost two decades until the pro-tenant majority on the rent control board was defeated by voters in 1993.[90] A court decision over the meaning of a "fair return" forced Berkeley to water-down its rent regulations in 1992, resulting in major rent increases.[91] The Berkeley law regulated 21,000 of the 24,500 rental units in the City.[92]

In Santa Monica, a coastal city of 90,000 adjacent to Los Angeles, the tenants movement formed the core of an ongoing governing coalition.[93] As noted above, voters had defeated a rent control ballot measure in June 1978 by a 55.5% to 45.5% margin, even though renters comprised 80% of the city's residents. In the wake of Prop 13, activists regrouped. They formed a political coalition, Santa Monicans for Renters' Rights (SMRR), which drew on a wide group of senior citizen, consumer, Democratic Party, and housing activists. SMRR put another rent control measure, Proposition A, on the ballot in April 1979.[94] Although SMRR was outspent $217,257 to $38,443, it effectively mobilized renters as campaign volunteers. Proposition A won by a 54.5% to 45.5%.[95] A few months later, a pro-tenant slate, organized by SMRR was elected to the rent control board. The next November, SMRR forces defeated Proposition Q, a real estate industry-sponsored ballot measure to weaken the rent control law by adopting vacancy decontrol. In 1981, SMRR's slate won a majority of seats on the City Council and elected a SMRR leader as mayor. The campaign mobilized over 6,000 people to get involved in phone calling, door-to-door canvassing, and other electoral activities. Since l981, SMRR has held a voting majority on the City Council, with the exception of l984 through 1988. All of SMRR's candidates supported rent control and tenants' rights, but they have included union leaders, a minister, a high school teacher, a cab driver, a disabled activist, a lesbian activist and others.

As a governing coalition, SMRR strengthened Santa Monica's rent control and condo conversion law -- key issues in an attractive beach city that was undergoing extremely strong development pressures. Indeed, Santa Monica's rent control law was perhaps the strongest in the country; for example, it did not automatically allow landlords to increase rents when they refinanced their properties. SMRR also elected a majority to the rent control board, guaranteeing that the law would be implemented effectively. Once in office, SMRR enacted a broad progressive agenda that went beyond tenant problems.[96] But a dent in the SMRR coalition involved a controversy over the city's tolerance of homeless people in public places. Even in "the People's Republic of Santa Monica," as opponents called the city, political support for rent control was weakened in the early l990s by two forces: a visible increase in homelessness, which landlords effectively linked to the city's rent control law, and the Northridge earthquake of January 1994. Complaints from businesses and other citizens led SMRR to toughen its policy by allowing police to remove homeless vagrants from public places and require them to move to a city-run shelter or day program.

Other cities joined the rent control list. The San Francisco Board of Supervisors passed rent control (with vacancy decontrol) in 1979 to head off a stronger initiative put on the ballot by community and tenant groups. San Jose's law went into effect in l979. It was called the Rental Dispute Mediation and Arbitration ordinance.[97]

Faced with all these local brushfire battles, and unable to get Gov. Brown to sign a local pre-emption bill, the real estate industry's strategy was to circumvent the liberal governor by putting the issue of pre-emption before the voters in a statewide initiative.[98] Seeking to stop the rent control momentum, the CHC, the umbrella lobby group of the state's largest landlords, spearheaded the campaign for Proposition 10, which appeared on the ballot on June 3, 1980. Voters overwhelmingly defeated Proposition 10 by a 65% to 35% margin, despite the fact that the CHC outspent the opposition by an 80-to-1 margin.[99] The landlord campaign used the usual arguments that rent control stymied new construction as well as maintenance and thus have a serious negative impact on the supply of rental housing. CHC polls showed that, as a group, "landlords" were not well-liked.[100] (At the same time, San Diego Mayor Pete Wilson successfully led the opposition to a rent control initiative in that city).[101]

During the l980s, the statewide momentum for rent control slowed down. No new cities enacted rent control laws, but neither did local politicians seek to weaken rent control where it already existed. The real estate industry recognized in 1987 that "rent control may no longer be the single hot issue that it once was." While it was difficult to roll back existing local laws, the industry saw that "rent control no longer draws the overriding community concern that it once did."[102] In 1987, for example, only one locality, Burlingame, sought to pass a rent control measure, and it was defeated.[103] In 1988, the CHC helped defeat a citywide ballot initiative for full rent control. In 1991, Mayor Art Agnos, who had been elected as a rent control supporter, got the Board of Supervisors to pass full rent control, but the real estate industry got the issue on the ballot and orchestrated an expensive and successful campaign to repeal the Board's vote.[104] Then in December 1991 the real estate industry helped police chief Frank Jordan, a foe of rent control, defeat Agnos for re election. The ballot victory and Jordan's election, in a liberal city with a big tenant majority, led real estate interests to conclude that "rent control is not what it used to be" as a political issue.[105]

The Politics of Deregulation in California

Beginning in 1983, Assemblyman Jim Costa (D-Fresno) annually introduced a bill on behalf of real estate industry (California Housing Council, California Association of Realtors, California Apartment Association, and California Building Industry Association) to weaken local rent regulation, or what they termed "radical rent control ordinances."[106] The Costa bills included a requirement for vacancy decontrol, an exemption for new construction, and an exemption for single-family homes. In 1983 and 1984, his bills included mobile homes, but subsequent bills exempted mobile homes.

Typically, the Costa bill would whiz thru the Assembly, whose leaders were closely connected to real estate lobbyists, but bog down in the Senate, largely at the behest of Senator David Roberti. Roberti was majority leader and then president pro tem of the Senate. He represented part of Los Angeles's San Fernando Valley, as well as parts of Hollywood, and was a major fundraiser for his Democratic colleagues.[107] Roberti would assign the Costa bill to the Senate Judiciary Committee, which had a strong liberal majority. Invariably, the committee would reject the Costa bill.[108]

In fact, only Roberti's influence kept the state legislature from bowing to landlord pressure to dismantle local rent laws. The real estate industry, especially the California Housing Council, identified Roberti as their chief obstacle to eliminating rent control. "As long as Roberti was there, we couldn't win. So we focused our attention on the local level, just trying to keep the lid on," explained the CHC's lobbyist.[109] By the early 1980s, tenant organizing in California had declined significantly. Only in Santa Monica, and to a lesser degree in West Hollywood, East Palo Alto, and Berkeley, did tenant organizations wield significant political influence. Roberti consistently warned tenant activists and cities with rent control not to get complacent, and encouraged them to organize, since he would not be in the legislature forever, but they did not heed his warnings. In the big cities like San Francisco, Los Angeles, and San Jose, tenant organizing was ineffective. But, according to CHC lobbyist Steve Carlson, "the rent control forces never had to assert themselves so long as Roberti was there. It was a slam dunk."[110]

Over the years, apartment owners and other real estate interests invested millions in campaign contributions to support anti-rent control legislation. A 1987 report by the California Association of Realtors claimed that the industry had spent over $14.2 million to fight rent control. About $5.6 million was spent on Proposition 10 in 1980. A more recent estimate claimed that in the past 12 years, the industry spent an estimated $50 million to fight rent control -- pouring money into local rent control ballot initiatives, city council, legislative, and gubernatorial races, and efforts to unseat Roberti. A real estate lobbyist explained, "it is a small investment when you consider a billion dollars or more in apartment real estate values are at stake."[111]

In some ways, rent control's fate was doomed in 1988, when California voters passed an initiative imposing term limits on state legislators. That meant that Roberti would have to leave the state Senate in l995. In 1994, the real estate industry and the National Rifle Association (angered by Roberti's support for strong gun control) tried to evict Roberti from the legislature a year early by sponsoring a recall campaign in his new Senate district. The recall effort by NRA failed with Roberti garnering help from housing activists from Santa Monica and other cities outside his new district.[112] Tenant activists from as far away as San Francisco came to the San Fernando Valley to campaign against the recall vo