Welfare isn't answer to Hub's high rents

21 January 2005

Anguished over his vote against rent control - "I understand the plight of tenants" - City Councilor Robert Consalvo wants to find a way reduce Boston's high rents. His solution? Let the residents of Brockton pay.

Consalvo would object to this characterization, but it's accurate nevertheless. The well-meaning Hyde Park councilor caused a mini- sensation this week when he proposed a new rent subsidy program: Giving landlords a tax credit if they cut their rents below market. Knock off rents by $200 a month, for instance, and the landlord would get a $200 state tax credit (up to an annual $3,600 a unit).

Tenant advocates, of course, are delighted. Landlords aren't complaining either. From their point of view, the state makes them whole. They can feel good about reducing rents and still end up making exactly as much as they were before.

Even better, says Consalvo, "It's not a spending program, it's just a tax credit."

That's where he's wrong.

It doesn't take much thought to realize how complicated Consalvo's program would become. Those making 80 percent of median income or less (about $46,000 for an individual) would be eligible. College students would easily qualify even when being funded by their parents. And anyone making, say, $50,000 a year would likely take a few more vacation days to shed $4,000 and in turn get a $3,600 cut in rents.

Moreover, Consalvo defines "below market" rent as anything under 90 percent of the neighborhood median. Of course, averages like that include numbers both higher and lower than the median, meaning many landlords whose rents are already below average would instantly benefit - getting the same rents as before yet also receiving a tax credit.

Eventually, one suspects, managing these complexities would require tough eligibility requirements, financial scrutiny of tenants and landlords, and a wide-ranging enforcement mechanism. Consalvo's goal of minimizing bureaucracy would be upended. Like most welfare programs - and that's exactly what this is - it would require a large, new organization to administer it.

But suppose you could do all this. Is the program really a cost- free windfall?

Hardly. It simply shifts the burden to the other 350 cities and towns in Massachusetts.

Politicians love tax deductions and credits, thinking that they somehow aren't "spending." Yet revenues and spending are just two sides of the same coin. Consalvo figures the rent subsidy, once in full swing, would require annual tax credits of $28 million (an underestimate, I think). That's $28 million less the state is taking in, meaning that either other programs get cut or income taxes have to rise.

But state legislators would be hard-pressed to rationalize cutting programs in their towns or having their own constituents pay more in taxes just so Boston renters can have an easier time of it. A Boston-only program would end up becoming statewide. The potential cost is stunning - $1.8 billion annually if just half the state's renters took advantage of it.

Who knows? Maybe it's time for another spending spree. Still, it's worth noting that when it comes to housing, the trend has been in the other direction. For example, Section 8 tenant-based vouchers - intended for people vastly poorer than those Consalvo wants to help - have been cut severely. In Boston alone, the waiting list numbers in the thousands. Given that, it stretches credulity that we would start subsidizing the rents of those who are already capable of paying their way while the most desperate get nothing.

One can applaud the motives behind Consalvo's proposal, but politics, finance and even common sense militate against it. Councilors and the mayor may be enthused, but that's likely where it ends.