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SEB Housing Affordable Housing Consultant Memo to BPDA, Part 3

3. Repercussions When BPDA Determines a Household is out of Compliance
A. Repercussions for the Tenant
We are not clear on what the appropriate repercussions are when the BPDA determines that a
household should not have been allowed to renew their lease. The documents and provisions
that lay out the framework for how this situation should be handled are as follows:
(A) Sections 6 and 7 and 12(v) of the BPDA recommended Lease Addendum which state:
6. Should Resident cease to qualify as an eligible household under BPDA guidelines at
any time during the term of the Lease, Resident may continue to occupy the Unit until the Lease
7. Resident hereby certifies his/her/their understanding that should the household
cease to qualify as an eligible household under BPDA guidelines at any time during the term of
the Lease, Resident and Landlord may not under any circumstances renew the Lease, and
Resident shall be required to vacate the Unit at the Lease expiration date.
12. “Any of the following provisions, if contained in the Lease, are hereby declared
invalid and unenforceable: Agreement by Resident that Landlord may evict Resident or
household members without instituting a civil court proceeding in which Resident has the
opportunity to present a defense, or before a court decision on the rights of the parties.”
(B) Sections 4(i) and 4(j) of the Affordable Rental Housing Agreement which state:
4(i) Should an Affordable Unit continue to be occupied by a Household which has ceased
to qualify as an Eligible Household (as provided in Section 4(h) above), such Household may
continue to occupy such dwelling unit subject to the terms of the lease at the applicable market
rent for the remainder of the term of the lease, but such Household shall not be entitled to
renew the lease and shall be required by the Residential Unit Owner to vacate the Affordable
Unit at the termination of the tenancy.
4(j) The Grantor may not terminate the tenancy or refuse to renew the lease of an
occupant of an Affordable Unit except . . . (iv) in the event that a Household ceases to qualify as
an Eligible Household (as set forth in Section 4(i) immediately above);
These documents contain inconsistencies that require reconciliation. For example, Section 4(i)
and the BPDA Lease Addendum indicate that households who cease to qualify as eligible may
continue to occupy the dwelling unit, however, Section 4(j) states that the Grantor may terminate
the tenancy of an occupant if the Household ceases to qualify as an Eligible Household. While it
may be that 4(j) was drafted with the intention that the appropriate remedy for a household that
ceases to qualify is for the Grantor to refuse to renew the lease, that is not how this Section is
actually written.
Furthermore, Section 4(i) indicates that if a household ceases to be eligible, they may continue to
occupy the unit at market rent, however, the market rent provision is contained nowhere in the
Lease Addendum, and in practice, we’re not aware that this is actually allowed. In any event, as
a household is not a party to the ARHA, it would seem that such an important provision, if
allowed, should be in the BPDA recommended lease addendum.
Adding to the confusion that is inherent in the documents themselves, is that the BPDA does not
provide clear guidelines on the appropriate repercussions when it determines a household was
allowed to renew a lease in error.
Currently, when the BPDA decides a household is ineligible at audit, they sometimes tell the
property that they must immediately notify the applicant that the applicant must vacate the unit.
This instruction does not make clear if the tenant must vacate within 30 days (it is often
suggested) or if the tenant is allowed to stay through the end of their current lease term To the
extent that this instruction means that the tenant must vacate in 30 days or prior to the natural
end date of their lease, I do not believe this is a legally tenable position (although I’m not a
lawyer), either under Massachusetts law, under Section 4(i) of the Affordable Rental Housing
Agreement, or under the provisions of the BPDA Lease Addendum, which all make clear that
such a tenant may continue to occupy the unit through the remainder of their lease.
Additionally, to the extent the BPDA is indicating ineligible tenants must vacate within 30 days,
it seems unnecessarily punitive to the tenants, many of who submitted all the documentation that
the BPDA Affidavit of Eligibility requires, are counting on living in the unit for a certain period of
time, and may not know where they will move to next. My concern over this is only exacerbated
when taking into account that the BPDA’s rationale behind finding many applicants ineligible at
audit is untethered to any clear written policy (in the case of households being found to be
ineligible because they have “guarantors”), and which appears to me to be disproportionately
impacting minorities. However, if the BPDA wants to require that the households vacate in 30
days, I recommend that the Lease Addendum you provide is updated to reflect that and vetted
by an attorney, as otherwise it would seemingly expose properties and the BPDA to lawsuits. At
minimum, it certainly causes a lot of unnecessary confusion.
B. Repercussions for the Property
It is similarly unclear to us what the appropriate repercussions are for the property when the
BPDA determines that a household was permitted to renew their lease in error. We believe that a
“one size fits all” approach to meting out repercussions to the property for any perceived
transgression of BPDA rules/agreements is inappropriate and disincentivizing, and that everyone
would benefit from a tiered approach that takes into account the level of the transgression.
For example, in a recent email, a BPDA employee stated because SEB Housing re-certified a
household who the BPDA did not believe should have been recertified, such “risks the property
being in breach of contract.” In a separate email, the same employee stated, “A new lease that’s
signed based on incomplete information puts the property out of compliance with the terms of
our legal agreement.” These statements could be read to indicate that the BPDA considers this
property to be in total violation of its legal agreement with the BPDA because it allowed ONE
tenant to renew who the BPDA did not believe should have been allowed to renew. This seems
like a draconian penalty not remotely commensurate with the alleged infraction, especially
considering that the property’s own compliance expert (SEB Housing) believed the households to
be program eligible, and especially when viewed in the context that there are myriad properties
in Boston with IDP units that make little/no effort to ensure that they are complying with BPDA
rules and procedures. We suggest a tiered approach, which may include something like the
(i) Compliant
This designation would be given to a property who is in compliance with all of its agreements
and obligations with respect to its BPDA units
(ii) Conditionally Compliant
This is a designation that would be given to properties that are in compliance with most of their
agreements and obligations with respect to the BPDA units, and might take into account factors
such as the property’s efforts to meet their obligations. For example, for properties that are
taking their compliance and re-certification responsibilities seriously, (such as by hiring third
party consultants like SEB Housing to do that work), but who may have a handful of tenants who
the BPDA believes were re-certified in error, such properties should not be threatened with
breach of contract and treated as if they have abdicated their responsibilities entirely. Instead,
why not simply tell that property that the ineligible tenants will not be allowed to renew, but that
the property will remain compliant so long as that tenant is issued a notice that they will not be
allowed to renew their lease? This would be consistent with the BPDA Lease Addendum, and
avoid punishing properties and tenants for relatively minor transgressions.
(iii) Non-Compliant
This is a designation that could be given to properties that are either allowing tenants to renew
leases absent any formal re-certification process, which are grossly negligent in their review of
tenant files presented for re-certification, or which demonstrate other serious and repeated
infractions of program rules. Indicating to such properties that they are in breach of contract may
be appropriate, and sanctions could include putting a halt on reviewing/approving Affidavits for
empty/vacated units (which is already done in certain situations), or not allowing the annual rent
increases while a property is out of compliance.
Whatever the case, it certainly seems counterproductive to the BPDA’s own goals to threaten
properties with insinuations of breach of contract when those properties are mostly compliant
with their obligations to and agreements with the BPDA.
So, in sum, we would appreciate clarification of your policy as to whether households must
vacate units in 30 days when found ineligible at audit, and what documentation supports that
policy. We would also welcome further conversation on creating a more tiered approach to the
statuses/penalties for properties with violations of BPDA rules/regulations.