City Council

City of Salem, Massachusetts “Know Your Rights Under the Open Meeting Law, M.G.L. c. 30A ss. 18-25 and City Ordinance Sections 2-2028 through 2-2033.” The City Council Committee on Ordinances Licenses and Legal Affairs co-posted Committee of the Whole_____________________________________________________________________________ met in the Council Chamber on _Thursday May 1, 2025 _____________ at ______6:00_______P.M. for the purpose of discussing the matters(s) listed below. Notice of this meeting was posted on __April 18, 2025__ at ___ 9:36 A.M._ (This meeting is being recorded) ATTENDANCE Attendance: OLLA – Hapworth (chair), Cohen, Jerzylo, Morsillo, Varela. COW – Merkl and Prosniewski. Lisa Peterson, Mayor’s Chief of Staff, Lori Stewart, Housing Stability Coordinator, Amanda Chiancola, Deputy Director, Planning & Community Development, and Beth Rennard, City Solicitor. ABSENT WERE: COW – Stott, Harvey, Davis, Watson-Felt SUBJECT(S) #102 Ordinance to Amend an Ordinance relative to Condo Conversions. Presentation: Stewart – Tonight will be discussing the Condo Conversion Ordinance. We will cover the background, current challenges, why we need this ordinance, displacement, the framework of the ordinance along with questions and comments. In 1983, Massachusetts adopted a condo conversion law in response to a surge in conversions. The law prevents displacement by providing certain basic protections for tenants and allowed communities to adopt some protections. The 1983 law exempts buildings fewer than 4 units. In 2024, the Affordable Homes Act, extended protections to building with 3 or less units. Also, in 2024, the State legislature authorized the city to regulate conversions with 2 or more units. The 2 biggest challenges are that the State’s law does not provide regulations by which the municipalities should implement the law and enforcement is impossible without devoting local staff and resources. Why now? The State’s law is not being enforced in Salem and therefore is not effective in preventing displacement and/or relocation of tenants. The condo conversions in Salem have steadily increase over the past 6 years while housing costs continue to rise. Another reason is declining housing diversity and displacement due to conversion disportionately impacts people of color since 1 in 4 renter households in Salem identify as non-white. Between 2016 and 2024, 534 units have been converted in Salem with 527 of those units previously being residential rentals. More than ½ of the homes in Salem were built before 1940 and the older homes are more vulnerable to conversion which reduces the city’s rental options. Displacement becomes a big problem with condo conversion. People are put out of their homes, sometimes by increased rent, harassment, etc. Displacement disrupts the social, educational and community connections for these families. It causes significant costs and health impact which can lead to stress, depression and health problems which contributes to a cycle of poverty and hardship. The purpose of the ordinance is to decelerate the conversion rate, minimize residential displacement by strengthening tenants’ rights, preserve the supply of housing and diversity of housing options in response to demographic changes and provide a permitting pathway for conversions. As far as administration, the state ordinance is silent on permitting but we are proposing an administrative permit that would be granted by the Housing Stability Coordinator (HSC). There would be a 2-year notice requirement for occupied units. There would be a two-stage process to permitting, a conditional permit and a final conversion permit. If either the tenant or the owner believes that the other has not complied with their obligations, they can request a hearing. The state requires a 1 year waiting period and 2 years for protected classes (older, disabled, or low income) with an additional 2 years for the protected if they are unable to find housing in the same city. We are proposing a 2-year waiting periods for all occupied units and up to an additional 2 years for protected class if unable to find housing in Salem. Notice to the tenant must be translated into to tenant’s primary language. The state requires a relocation fee of $750 per tenant and $1,000 per tenant that is in the protected class. We proposed $6,000 per unit and $8,000 per unit for protected class which is to be paid within 10 days of vacating the unit. Notice must be given to the tenant providing all the pertinent information and contacts. The notice also requires that the tenant is allowed to buy the unit. No changes may be made to the rental agreement except a rent increase of not more than the Consumer Price Index (CPI) or 10%, whichever is less. For vacant units, the owner must give a 1-year notice to the HSC, but the waiting period will not apply if the unit was owner occupied for the 12 months immediately preceding the unit becoming vacant or where the owner is selling to a family member. Permits will be granted when all the required documentation has been submitted, and notice has been provided. The permit can be denied if all the required documentation is not submitted, or if the owner is trying to circumvent the state or local ordinance. A permit can be revoked if any document is false. The tenant will have the right of first refusal – 120 days or 180 days for protected classes. The owner must offer the same or better deal than they would to arm’s length buyer. Discussion – Morsillo – When were the reimbursement rate for the state set? Stewart – Those are the current rates, but I am not sure what they were originally set at in 1983. Hapworth – Does the proposed ordinance allow for an increase in the reimbursement rates? Stewart – It is set to changed based on the CPI. Morsillo – What is the process for an owner-occupied property when there is no notice requirement? Stewart – For a property with 2 or 3 units that had no tenants, they would have to apply with the application fee because the 12 months’ notice requirement would not apply. Morsillo – What is the application fee? And what does that cover? Stewart - $600. It would cover my time to process the application and monitor the waiting period, the municipal hearing officer for any applicable appeals, etc. Morsillo – So for a situation with a no tenants, aside from the 30-minute application review, there isn’t really any other work, so the cost is still $600? Stewart – Although your example appears to be clear cut and easy, my experience says that it isn’t always that way when you dig into the situation. Jerzylo – If the apartment is vacant, why is there a 1-year notice requirement. The owner has a mortgage, but the apartment is vacant, and they aren’t making any income, but they must wait a year to do a conversion? Chiancola – We discussed this with our peers in Somervile that have a very similar ordinance. They originally did not have a notice requirement, but they were finding that the owner was evicting the tenant and then saying that the unit was empty to avoid the waiting period. Once Somerville changed the ordinance, the number of vacant units drastically decreased. Jerzylo – Why can’t you just go out and inspect the next day to see if there is anyone living there? It is hard to expect an owner to go a year without income. Stewart – What Somerville found was that the people weren’t necessarily telling the truth. They are claiming that no one has been living there but they were, and the landlord evicted them. What I see lot is a soft eviction. The owner raises the rent so much that the tenant just can’t pay so they move out, so the landlord does have a waiting period. I know that not all landlords are bad but some of them are. The primary goal is not only to decelerate the conversions but protect the tenants. Displacement is not only costly but very stressful. Renting real estate is a business and it isn’t always profitable. I look at it as we are providing consumer protection to the renters. It may inconvenience the owner, but the homeowner will make a profit once the conversion is complete. The real estate market in Salem is very strong. I am not in favor of the owner making a profit while skirting the tenant protections. Jerzylo – How did you come up with the $6,000 relocation fee? Stewart – When the tenant moves, the tenant will have to pay 1st and last month’s rent along with a security deposit and moving expenses. Jerzylo – The tenant is going to have to pay the 1st month’s rent whether they are staying the apartment or move so you can’t count that in the cost of moving. And I have friends that don’t ask for the last month or a security deposit. Cohen – Waving the waiting period for a vacant building allows people to circumvent the ordinance. It used to be in Massachusetts that you only charge 2 of 3 – 1st, last, security – but at some point, that changed. And most renters don’t have a block of money to go out a rent a new place which will likely have a higher rent. A lot of the people that are displaced in Salem are relocating outside of the city, which isn’t good. I look at the $6,000 as the average price that a person gets when they sell a one-bedroom condo. It could be a lot more than that. Most of the condo conversions in my neighborhood are selling for about $350,000 and $6,000 is 1.7% of that. I look at it as what is the burden on the property owner and if it is less than 2% that isn’t a big deal. My biggest concern is that we have a housing crisis, and the biggest burden is on the renters. I have an owner-occupied house with 3 tenants, and I am on a fixed income, but I don’t have the housing insecurity that my tenants would have if they had to find a new place to live. Merkl – I do a lot of work in this space, and I am comfortable with the $6,000 relocation fee. Most people that are displaced will be paying a higher rent and I don’t know too many places that are only $2,100. My question is for clarification. In Somerville, they found that the number of vacant applications went down because before there was the waiting period, landlord was pushing renters out? Chiancola – in 2008, 92% of their applicants for conversion said they were vacant and after they changed the waiting period requirement, in 2021, the application for vacant were less than 2%. We are trying to avoid the incentive for landlords to push people out because they don’t have a waiting period. Hapworth – If you put a one-bedroom apartment on the market, what is the likelihood that it would remain on the market for weeks or months? Chiancola – The rental market is so tight that depending on what they list it for it probably wouldn’t be vacant for long. Jerzylo – Has the city examined the impact of short-term rental in Salem, like Airbnb’s? Stewart – I can’t comment on that at this time. I can tell you of the shrinkage of rental units due to condo conversions. Rennard – I made some changes. The first is to add a little more definition about the purpose of the section about the special act that was adopted by the State Legislature for the city of Salem. I put the definitions in alphabetical order. In the definition of housing accommodations, I removed the exemption and added refer to exemption in the state law so that it can incorporate any future changes to the exemptions. I used the definition for housing information to reflect the terms that were used in the special act. I added a definition of what it means to convert that I took from Boston’s ordinance. Stott – Is there a plan to communicate these changes to property owners? Stewart – Yes. The outreach plan is to incorporate this into many facets of the process. We will develop a flyer in English and Spanish which will go into new resident packets, renter packages. We plan to reach out to realtors and attorneys. I can also email it to all the landlords from the landlord fair. There will also be a press release. Cohen – We don’t want to rely on just getting it to the landlords at the landlord fair. There are other resources like the North Shore Association of Realtors, etc. I think that once we get the word out the information will spread. I looked at the 9 bullet points and they all seem to be things that a property owner would do if they were planning a conversion. I think it is best that we educate the property owners as best we can. Stewart – We have asked if we can start doing some education for the people at the Registry of Deeds. I have been hearing from people already that know that we are making changes, so the word is already getting out there. Rennard – In the procedures, I added that the HSC would be empowered to create forms and guidelines. I added that the fee would be non-refundable unless the applicant withdrew the application before any processing happens. As far as the initial application review, it ends when the notice period ends, I added that once all the requirements have been met. I added a line that they can ask for an extension to the permit if they still need time to get all the requirements of the ordinance satisfied. In the condo co-op evictions, I added a phrase that when they send notices to the tenant(s), they would also send notice to the city, and I added what happens if you don’t displace the tenant. In the relocation fees section, I struck the trial date for eviction process. And finally, there’s info on what happens if someone buys a converted condo, and the tenant has not been displaced. Discussion – Cohen – If a someone buys a converted condo and there is a tenant in there and the tenant has already received notice and the tenant has a lease, does the new owner have to give notice again? You can only evict for cause at that point. Rennard – I struggle with this too because, for example, you convert the condo and decide to keep the tenant in the unit then sometime later you decide to evict them, then the owner has relieved themselves from the $6,000 relocation fee. That part of the ordinance could use some work. Varela – Motion to accept the amendments (redlined changes to ordinance) on the document. Seconded by Cohen. Vote is 3- 2. Hapworth – Further discussions on the redlines? Morsillo – I am still hung up on the extended 2-year notice. That was brought to you by the Boston attorney? How often was this happening? Rennard – They said that the tenant was purposely not displaced until after the final permit was issued. They were keeping the property as an investment property and kept the tenant in there for a short period of time after the conversion was complete and then displaced them without paying them the relocation fee. Stewart – Here is an example. I have a 3 unit property that I am converting, and I give the tenants notice that I am converting the property into a condo, but I tell the tenants that I am not going to displace them. I after I finish the conversion and I decide I want the tenants out, then what rights do the tenants have? They will not receive the relocation fee. Morsillo – I understand that we are trying to close a loophole but having to give more notice after the tenant has already received notice is messy and it needs to work better. Rennard – Agreed. Cohen – Since we are discussing the redline changes, can C. Varela withdraw his motion? Hapworth – No, we already voted on it. Merkl – In my experience, when a tenant is told that a condo conversion is happening, but they will be able to remain living in the unit, that is as far as it goes. They aren’t going to look for another place to live. Many of these people are vulnerable and don’t have access to someone with legal experience. I understand the intent of this layer of protection. Hapworth – Since we are struggling with the displacement language, we can leave it in committee so we can continue to discuss this. Jerzylo – If the city solicitor is having problems with this language, then I think we need to leave this in committee so that we can explore options. Cohen – I understand that there are some landlords that might take advantage of a vulnerable tenant and there are some good landlords and some bad, the owner has already given the tenants’ notice and at some point, it must end. There should be more education, and people should know that they have a right to seek legal assistance. I agree with the ordinance and all the redline changes except requiring the landlord to give another 2 years notice to tenants’ once the conversion is complete if they haven’t already displaced the tenants. Morsillo – Amanda and Lori – Can you list the communities that have an ordinance like this already? We know Somerville and Boston. Stewart – Newton, Newburyport, Marlborough all have an ordinance, but Somerville and Boston are the only ones that really have teeth in it because they have dedicated staff and resources to enforce it. Morsillo – How has the ordinance affect the rate of conversion in Somerville? Stewart – They were high before the ordinance, and they have slowed down a lot since and our goal is to decelerate the rate of condo conversions. Hapworth – Bring the info for the change in the rate of condo conversion in Somerville to the next meeting, please. Morsillo – If you can also add Boston to that too. Hapworth – We agree that we are trying to slow down the amount of condo conversion, so having that data on how the ordinance may affect that would be helpful. Morsillo – We need to really be careful about making sure that the tenants have rights during condo conversions. A lot of these tenants are getting price out of Salem because there are so many of these conversions. Cohen – I am in favor of this ordinance, but I am concerned about tenant protections. I would like Salem to be a place where a young family can buy a multi-family house and make the rent off the other units to help pay their mortgage because it is hard to afford to buy a single-family house in Salem. Hapworth – We have a motion by C. Jerzylo to keep this in committee and if there aren’t any more questions from the council, I would like to take public comment. I think we all are in favor of this ordinance, but we have some disagreement over the displacement language that we need to work on. Morsillo – Can we get data on what the conversion rates have been in Salem and other communities? Stewart – Yes. Public comment – You need to look at the rate of conversions in other communities, because getting the number of conversions, is not accurately showing how things have changed from year to year. If you only must give 2 years notice to those that aren’t vulnerable and 2 to 4 years, to those in a protected class, then you are incentivizing landlords to only rent to those that aren’t in a protected class. If you are going to require a landlord to give a tenant $6,000, they are just going to raise the rent by $200 to recover the fee. You will also see landlord not getting a lease and just make the tenant a tenant at will with only 30 days’ notice required. I think you should work with the realtors and landlords to create this ordinance and not work in a silo. The Affordable Housing Trust Fund has been working with Amanda (Chiancola) for 4 years to write this ordinance. They spoke with landlords and tenants to get their feedback along the way. There was a lot of research done to get data from other communities that have condo conversions. Most of the towns don’t have the number of 2 family houses as we do in Salem. We started the research in 2021, and a home rule petition was submitted to the state to allow us to put an ordinance in place. The $6,000 relocation fee came from the research that has been done. We are in a housing crisis, and we need this ordinance. When people are displaced, they are paying more for rent at a new place. Hypothetical on the displacement of tenants. If a landlord gives the tenant notice of a conversion but says I am not going to displace you, can a tenant say no, I am going to move and I want the $6,000 relocation fee? I just want to make sure that the tenant has options because otherwise it is a giant loophole. Morsillo – I know that we have been working on this for 4 years, but we need the research data to move forward with this because we are going to get questions from constituents. We need that information to make the best decision on the ordinance and to answer questions. It would be best to get it into one spot that we have access to, and the public can see too. I am seconding the motion to keep it in committee. Stott – Can the redlined version of the ordinance be added to the shared drive along with any new data that we receive so the public can access it as well as the council? Hapworth – We have a motion by C. Jerzylo to keep it in committee and seconded by C. Morsillo. Motion carries 5-0. On the motion of C. Morsillo meeting adjourned at 7:33P.M. ________________________________________________________ (Chairperson)