July 31, 2008 marked the end of the biennial formal legislative sessions until January 2009.  Legislators will still meet over the next several months; however the issues typically dealt with are non-controversial.  While the Legislature has largely completed its work for the year, local governments are still active.

GBREB’s advocacy has been extremely aggressive this year with involvement in a host of issues affecting finance, brokerage, and development.  Each Session GBREB tracks and monitors hundreds of bills.  Here are the positions that GBREB has taken on pressing issues at the State level, as well as issues that are relevant and before the Boston City Council.

Expiring Use
The Legislative session expired before a bill establishing a right of first refusal process for the purchase of federally subsidized affordable rental housing was taken up in the House of Representatives.  Many of these properties have affordability restrictions that will terminate in the next several years, and are eligible to become market rate units.  Under the proposed bill, the Department of Housing and Community Development or its designee is given 90 days to purchase an expiring use property and a 30 day right of first refusal to match any purchase contract for the sale of the property.  Properties that preserve affordability are exempt from this provision.  GBREB has opposed this bill because its full impact on current owners has not yet been quantified, although there are some owners who are intrigued by it and after further study could embrace the concept.  GBREB remains committed to working with the legislature to professionally and fairly manage the expiration of use restrictions on affordable housing.  Efforts to explore consensus within the real estate industry regarding this issue will be ongoing.

Housing Bond Bill
GBREB was a key supporter of the $1.275 billion Housing Bond Bill, and successfully restored $10 million to support the Low Income Housing Tax Credit (LIHTC) program.  Under the program, investors in multi-family rental projects that meet strict affordability requirements are awarded tax credits.  The LIHTC allows developers to reduce the level of debt financing, thereby helping to keep rents low.  A Senate amendment that would have added an estimated 30-40% in labor costs to the cost of construction by requiring the payment of prevailing wage was also defeated through GBREB’s efforts. 

Foreclosed and Abandon Properties
The slow economy and the sub prime crisis led to a flood of legislation being filed to deal with foreclosed and abandoned properties. GBREB opposed the vast majority of them, and in particular several bills which called for a new “Just Cause Eviction” process in the Commonwealth that would give tenants unfettered rights to remain in foreclosed buildings for many years at capped rents.  In many respects it is similar to rent control, and currently it languishes within the legislative process.

GBREB supported the passage of a Boston ordinance designed to help the City identify and safely secure abandoned buildings in the process of foreclosure.  GBREB worked to ensure that the ordinance addressed many of the long term public health and safety issues created by foreclosed properties without unduly burdening property owners. Several amendments were successfully adopted including a clarification of the foreclosure process for unpaid assessments owed to a condominium association.

GBREB also supported efforts to prevent fires in abandoned and foreclosed buildings through participation in a special statewide public safety taskforce convened by the State Fire Marshal.

Room Occupancy Tax
GBREB scored a decisive victory for all members who broker, develop and own rental housing. GBREB defeated a proposal to capture short term apartment rentals under the Commonwealths room occupancy tax.  GBREB successfully argued that unlike hotels, corporate apartments are rented months at a time through the execution of a lease establishing a classic landlord tenant relationship, and are therefore different than hotels and should not be subject to the same taxation.  

Battling Increased Energy Costs
GBREB has been very active on Energy issues over the past year as all of our members are dealing with spiraling utility costs both professionally and personally.  GBREB intervened in a regulatory rule making proceeding before the Massachusetts Department of Telecommunications and Energy, hiring an expert from Washington, D.C. to provide testimony.  Under the policy known as “Revenue Decoupling,” utility companies would be protected against a reduction in revenue resulting from consumers using less energy.  This savings, instead of coming to the consumer who used less, would be diverted to the utility as a benefit to them for supporting conservation efforts in general.  This approach guarantees revenue to the utility indefinitely based on past usage, even if the current demand is reduced.  GBREB opposed the measure; however despite our concerns as well as those of many other businesses in the Commonwealth, the D.P.U. will try to implement a system like this in Massachusetts over the next several years.

Transfer Tax
GBREB and the Massachusetts Association of REALTORS® were once again successful in preventing the passage of a proposal to tax homes on Martha’s Vineyard and Nantucket.  Under the proposed legislation, homes priced over $750,000 on the Vineyard and $2 million on Nantucket would be assessed a 1% transfer tax. 

Home Energy Scoring
GBREB collaborated with the Massachusetts Association of REALTORS® to oppose a provision in a comprehensive energy reform bill mandating home sellers to conduct an energy audit at the time of sale.  Consumers currently pay a monthly surcharge on their utility bill for energy conservation programs that already include free energy audits.  Under a compromise agreement, the Board of Registration of Home Inspectors will be charged with developing information for consumers regarding energy audits at the time of closing.

Fire Safety
State Fire officials are attempting to change the technology used in smoke detectors in the Commonwealth of Massachusetts.  Currently Ionization type smoke detectors use radiation to detect smoke by sensing the particles created by combustion, and are the most common type of units for sale at most retailers.  Photoelectric type smoke detectors use a light source to detect smoke by sensing the visible particles of smoke that are able to scatter light. Some experts believe that this technology is more effective in detecting smoldering fires.  There have been a number of changes proposed to the current regulations which have concerned GBREB.  There is still dialogue ongoing on this issue with fire officials; however we do know that the technology used in detectors used in close proximity to kitchens and bathrooms will likely be changing, the responsibility for inspection of smoke detectors upon sale, transfer or maintenance of the property will likely not change, and the time for implementation of any new requirements probably will occur in 2010.  More definitive details will follow in the weeks ahead as these regulations are still being drafted.

Maintenance Contracts in Commercial Buildings
Currently commercial building owners award contracts to maintenance providers who govern and control the terms and conditions of employment of their employees.  They make all of the hiring and termination decisions, and control collective bargaining negotiations.  Commercial building owners are not employers, and are not directly involved.  Legislation was proposed that inappropriately injected commercial building owners into the collective bargaining process between service companies and their employees.  GBREB opposed the measure.  This Bill was sent to a study where it will likely expire.

40B
GBREB took a lead role in stopping efforts to weaken or repeal MGL 40B.  Also known as the Comprehensive Permit Law, Chapter 40B is designed to reduce barriers to housing production created by local zoning and land use restrictions.  GBREB strongly supports Chapter 40B as an effective regulatory tool that has been critical to the production of affordable housing and the expansion in the supply of market rate housing across the Commonwealth. 

Move & Store
New legislation filed at the request of GBREB to reduce confusion surrounding the relocation of a tenant’s property during eviction proceedings advanced during this legislative session.  The GBREB proposal creates clear guidelines regarding property storage and brings fairness and equity back into the eviction process.

Lead Paint
GBREB strongly opposed legislation to dramatically increase the burden on owners and sellers of property to test and remediate lead-not only in lead paint but in soil and tap water as well.  Under current state law, property owners who are selling or leasing a property built prior to 1978 must provide prospective buyers or tenants with information regarding lead paint.  The law allows perspective homebuyers to conduct a lead inspection if they wish and all landlords are required to provide a lead safe environment for children under six.  The failure to comply with the law results in strict liability for the owner.  The proposed bill would have required landlords to recertify a unit for lead compliance every two years or at the commencement of a new lease-regardless of whether or not a child under six resides in the apartment.  It also required a lead inspection on all property sales.  The bill remains in the legislative process and will likely expire.

Landlord Tenant Issues
GBREB responded to a series of threats to the multifamily industry from mandated recycling to a prohibition of post-foreclosure evictions.  GBREB opposed efforts by the City of Boston to limit the ability of landlords to rent to students above and beyond existing law as “practically unenforceable,” and inconsistent with the clear guidelines set forth in the Commonwealth’s sanitary code.  The ordinance was passed, and the matter has been taken to the courts in the form of a lawsuit filed by aggrieved owners.  The case is still pending. 

GBREB also successfully opposed an expansion of the Boston Inspectional Services Divisions powers to include property liens for housing, sanitary and building code violations.  GBREB supports full compliance with the state sanitary code without eroding procedural constitutional protections currently afforded property owners.

Broker Disclosure
GBREB successfully blocked a proposal to add the burden of disclosing wetlands ecosystems to the sale of commercial and residential property to the broker.  Under the proposal, brokers would be required to perform due diligence and report to buyers on various wetland restrictions, overlay maps and provisions affecting the land.  In addition brokers would be required to research each property at the registry of deeds to see if it is subject to restrictions established by local or state environmental permits.  This victory was achieved jointly with the Massachusetts Association of REALTORS®.

93A
GBREB opposed several bills aimed at increasing the burden on real estate brokers and property owners to disclose material defects on property.  One such proposal would have required property owners to review the databases of nearly a dozen different governmental agencies including gathering information of off-site conditions located within a half mile radius. A similar bill required all residential and commercial tenants to be notified immediately of any oil and hazardous material waste release regardless of whether or not it posed a risk to the health and safety of the tenants.  Under current law real estate licensees are responsible for any failure to disclose material defects or any misrepresentations made about a property.  MGL Ch.93A presently imposes liability and potential treble damages on real estate brokers for failure to disclose known material defects about a property. 

Roof Decks
In early 2008 a new law regulating access to roof decks on residential buildings was put into place by the City of Boston. The Greater Boston Real Estate Board was the only real estate organization to participate at the public hearing and successfully amended the ordinance to insure that landlords who have taken steps to prevent unauthorized access to flat roofs would not be unfairly penalized.  GBREB later worked with regulators to insure implementation of the law was clear for property owners, giving them adequate compliance time.

The Greater Boston Real Estate Board Political Action Committee is vital to allowing your voice to be heard by elected officials on major legislative issues affecting the Real Estate Industry.  Please click here to find out more about GBREB PAC, and help support this vital effort.