Howard H. Gilbert, Jr. v. City of Cambridge

932 F.2d 51, 1991 U.S. App. LEXIS 8255, 1991 WL 68963
CourtCourt of Appeals for the First Circuit
DecidedMay 3, 1991
Docket90-1907
StatusPublished
Cited by179 cases

This text of 932 F.2d 51 (Howard H. Gilbert, Jr. v. City of Cambridge) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Howard H. Gilbert, Jr. v. City of Cambridge, 932 F.2d 51, 1991 U.S. App. LEXIS 8255, 1991 WL 68963 (1st Cir. 1991).

Opinion

SELYA, Circuit Judge.

Attempting by heroic efforts to sail through straits left windless by recent Supreme Court precedent, 1 certain property owners asked the United States District Court for the District of Massachusetts to overturn, on constitutional grounds, a rent control ordinance adopted in 1979 by the City of Cambridge (the Ordinance). 2 The district court did not allow the voyage to proceed. Gilbert v. Cambridge, 745 F.Supp. 42 (D.Mass.1990). The property owners appeal. We affirm.

I. BACKGROUND

In reviewing a dismissal under Fed.R. Civ.P. 12(b)(6), we treat all well-pleaded factual averments as true and draw all reasonable inferences therefrom in the appellants’ favor. See Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989); Ochoa Realty Corp. v. Faria, 815 F.2d 812, 813 (1st Cir.1987). Thus, our focus is on what was alleged in, or could be proved in connection with, the complaint as framed.

A. The Ordinance.

Although Cambridge has experienced some form of rent control for over two decades, there have been changes and revisions in the particulars of the system. The City’s present scheme was enacted in 1976, pursuant to powers granted under Chapter 36 of the Massachusetts Acts of 1976 (the Act). About three years later, the city council passed the Ordinance, thereby enlarging the 1976 law. Aware that a trend toward condominium conversion had been depleting scarce housing stock and exacerbating an already existing shortage of rental housing, the council opted to restrict the ready removal of residential units from the rental market. As stated in the Ordinance’s preface:

A serious public emergency continues to exist in the City with respect to the housing of a substantial number of its citizens .... The emergency has worsened since 1976 because of the removal of a substantial number of rental units from the market, by condominium conversion, demolition, and other causes. As a result, more than two thousand or over ten percent of the controlled rental units in *54 the city have been removed from the housing market since 1970, and the vacancy rate has fallen below one percent. In order to carry out the purposes of the Act, and to continue to provide a sufficient supply of decent, affordable rental housing accommodations especially for families of low and moderate income and for elderly people on fixed incomes, it is necessary ... to regulate the removal of controlled rental units from the market.

Cambridge City Code § 8.44.010.

The Ordinance applies to all housing units offered for rent prior to August 13, 1979. It prohibits an owner from “removing” any such unit from the rental market without first obtaining a permit from the Rent Control Board (the Board). As defined by the Ordinance, “removal from the market” includes, inter alia, the conversion of a “controlled rental unit” into a cooperative or a condominium. Cambridge City Code § 8.44.020(D). 3 The Ordinance establishes three overlapping criteria which the Board is to consider in deciding whether or not to grant a removal permit: (1) the effect of withdrawal in terms of the benefits to persons within the class which the rent control scheme sought to protect; (2) the hardships imposed on tenants of the affected units (and any mitigating provisions stipulated by the permit-seeker); and (3) any aggravation of the rental housing shortage (especially for the elderly, families of low-to-moderate income, and people on fixed incomes) that might result from the proposed change of use. Id. at § 8.44.050. The Ordinance imposes fines for withdrawing controlled rental units from the rental market in derogation of the permit process and, if violations become flagrant, authorizes the City to take the offending unit by eminent domain. Id. at § 8.44.090.

Applicable state law also contains criminal penalties for the willful withdrawal of a housing unit from the rental market without a removal permit, Act § 12(c); see generally Commonwealth v. Kapsalis, 26 Mass.App.Ct. 448, 450, 529 N.E.2d 148, rev. denied, 403 Mass. 1105, 531 N.E.2d 1274 (1988), and provides for judicial review of decisions to grant or deny removal permits. Act § 10. Withal, landlords retain a statutory entitlement to derive a “fair net operating income” from their controlled rental units. Act § 7(a).

B. The Plaintiffs.

There are, in essence, two groups of appellants: the Southview plaintiffs and the Blevins plaintiffs.

1. The Southview Plaintiffs. This group comprises Southview Cooperative Housing Corporation (SCHC), the record owner of a residential building consisting of about 100 rental units, and eleven SCHC shareholders. In 1979, shortly before the Ordinance was adopted, the Southview plaintiffs took preliminary steps toward converting their building to a condominium. The Ordinance became effective before any sales were consummated, thereby subjecting the units to the permit process. In January 1980, Southview residents applied for forty-three removal permits. After holding a hearing, the Board denied the applications in April of that year.

Eschewing judicial review of the Board’s decision, the owners proceeded to form SCHC and to convert the building into a cooperative. They intended to market the individual residences not as rental units, but as cooperative apartments, on the theory that the Ordinance did not subject cooperatives to the permit requirements. This plan was soon stymied when the Board adopted an interpretive regulation declaring cooperative conversions to be covered by the Ordinance. An attempt to have the state courts rule that the Ordinance did not apply to cooperatives was unsuccessful. Southview Co-operative Housing Corp. v. Rent Control Board, 16 Mass.App.Ct. 1102 (1983). The City subsequently amended the Ordinance to prohibit in, haec verba, the conversion of rental units to coopera *55 tive ownership without first obtaining removal permits.

In November 1980, the Southview plaintiffs again applied for permits, this time seeking to withdraw forty-seven rental units from the housing market. After a hearing, the Board again demurred. The plaintiffs did not pursue judicial review of the Board's action.

2. The Blevins Plaintiffs. This group comprises two trusts which together own four apartments buildings in Cambridge, aggregating more than 170 rental units. 4 In 1981, Charles Blevins formed a pair of condominium associations, intending to convert two of the properties into condominium aggregates and market the units. The Ordinance required that Blevins obtain permits to implement this plan. He never tried to do so-the trustees allege that such an attempt would have been futile- and the conversion plan was shelved. 5

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Bluebook (online)
932 F.2d 51, 1991 U.S. App. LEXIS 8255, 1991 WL 68963, Counsel Stack Legal Research, https://law.counselstack.com/opinion/howard-h-gilbert-jr-v-city-of-cambridge-ca1-1991.