Harvard Real Estate to Appeal Cuts By Cambridge Rent Control Board
Harvard Real Estate (HRE) has filed with the Cambridge Rent Control Board to raise the rents on 169 apartments in Harvard Square one year after the board cut those rents deeply in a city-wide assessment of landlords' costs.
HRE president Sally H. Zeckhauser claimed that the rent cuts were done by a formula which did not take into account the real operating costs of the three buildings, which house all 169 units. "We are hoping to recoup all of that, plus some," said Zeckhauser.
Last year's general assessment cut rents at 9-13A Ware St. and 472-474 Broadway by 15 percent and cut rents at 18-20 Ware St. by four percent. HRE has already filed for rent increases at the three buildings. In addition to the increases to cover day-to-day operating costs, HRE has filed for a 15 percent raise in rents on 472-474 Broadway to cover long-term capital costs.
Director of the rent control board Margaret Drury said that the formula was based entirely on the costs of heating and property taxes, both of which have declined sharply in the past two years. But Zeckhauser said that the emphasis on these costs ignored costs which have continued to rise, such as labor and insurance.
Soon after the assessment, several local landlords took the rent control board to court in an attempt to force the board to alter the formula. The Cambridge District Court upheld the formula, which does not affect the right of landlords to seek increases based on each property's real operating cost. HRE, which did not participate in the lawsuit, is expected to win its rent increases if it proves that the three buildings' real operating costs are greater than the assessed costs.
In the past, HRE has gotten the rent control board to approve rent raises by investing large amounts of capital in its properties, rather than claiming increased operating costs to justify higher rents. Capital improvement costs can be passed on to tenants under the terms of the original rent control law of 1967.
Before HRE was formed in 1978, the two companies which managed Harvard's properties did not keep sufficient records to accurately document operating costs, Zeckhauser said.
According to a source at the rent control board, HRE intends to file for increases on many or all of its rent controlled properties as soon as it is able to complete the paperwork. Zeckhauser said the application for a rent increase requires 2,000 pages of documentation per building.
HRE will probably file for more increases to cover higher operating costs at other buildings, Zeckhauser said.
"With Reg. 76, the rents are still high. It's been a slow process of getting [HRE's] act together and, unfortunately, I think they've discovered Reg. 72," said city councilor David A. Sullivan.
Regulation 76 is the relvant legislation for rent increases due to increased capital costs, while Regulation 72 justifies rent increases for increased operating costs.
The hearing for the rent increase for 9-13A Ware St. is scheduled for May 21. The hearings for the other properties have not yet been scheduled.