Bay State Apartment Owner 3Q 2015

THIRD QUARTER 2015

FINDING SOLUTIONS FOR HOMELESS VETERANS PEABODY PROPERTIES PRIORITIZES LONG-TERM HOUSING

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THIRD QUARTER 2015

FINDING SOLUTIONS FOR HOMELESS VETERANS PEABODY PROPERTIES PRIORITIZES LONG-TERM HOUSING

Bay State Apartment Owner is the official publication of the Rental Housing Association. ©2015 The Warren Group Inc. and the Rental Housing Association. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any manner without the express written consent of the publisher.

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One Center Plaza, Mezzanine Level Boston, MA 02108 Phone: 617-423-8700 Fax: 617-338-2600

RHA Officers President: President Elect: Vice-President: Secretary: Executive Director:

Published By

Gilbert Winn Sarah Mathewson Mark R. Epker Kathleen Franco John E. Lafferty

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CONTENTS

President’s Message

04

Executive Director’s Message

06

RHA Calendar

06

Photo Gallery

07

Plenty Done, Plenty to Come in 2015 Opportunities, Honors Abound at 2015 NAA Conference

FEATURES

Finding Solutions for Homeless Veterans

08

To Smoke or Not to Smoke

10

Chinese Economic Meltdown Unlikely to Crush Boston

12

President’s Message

BY GILBERT WINN

Plenty Done, Plenty to Come in 2015

I

t is hard to believe we have moved into the fourth quarter of 2015. It still does not seem that long ago we were watching our snow removal budgets wither … and then expand. And while winter seemed never to end, the summer, as happens every year, was far too brief.

This year has, however, been busy and productive for RHA. Members availed themselves of classroom training for NAA designation programs including NALP,

CAM and CAMT, along with four programs from RHA’s Professional Development series and the spring marketing event. We cheered on the Bruins, and NextGen hosted its New Year Kickoff along with the Mix and Mentor sessions which included tours of new downtown properties.

Summer brought us to the Dedham Country and Polo Club for our annual golf outing (see page 7 for photos). We enjoyed dinner and the Red Sox, took part in the NAA Education Conference & Exposition in Las Vegas, and enjoyed the hospitality of our affiliate members as they hosted the family cook

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out preceding a New England Revolution soccer match in August. We turned the corner from summer to fall with the 2015 RHA Fall Conference and Expo, which was held in September at the Hynes.

We met with our counterparts at MassHousing to discuss the agency’s prepayment policy and receive updates on a variety of items including the 13-A and SHARP programs.

Later in the year, we heard from Sheila Dillon, chief and director of the Department of Neighborhood Development for the city of Boston, as she discussed the city’s housing policies and plans. More recently, we met with the city and offered industry input on the mayor’s program to end homelessness among veterans.

Although it has been a busy year to date, there is still much ahead of us. Maintenance Mania for the 2015/2016 season will take place in October, the final program for the 2015 Professional Development series will be held, along with Landlord Tenant Law and Fair Housing. The year concludes as we gather to celebrate the recipients of the President’s Awards for Industry Excellence and Excellence in Public Service at the RHA president’s awards reception to be held on Dec. 1 at the Edward M. Kennedy Institute for the United States Senate.

I look forward at seeing you at these upcoming RHA events. n Gilbert Winn is chief executive officer of the WinnCompanies and 2015 president of the Rental Housing Association.

Executive Director’s Message

BY JOHN E. LAFFERTY

Opportunities, Honors Abound at 2015 NAA Conference

T

hose who were fortunate enough to travel to the National Apartment Association’s 2015 Education Conference and Exposition brought back a wealth of knowledge, many new contacts and insight into industry issues and trends, supporting the theory that not everything that happens in Vegas, stays in Vegas.

Without a doubt, Jay Leno’s keynote performance was outstanding. The opening party and networking events were superb. But it was the content of the programming and the interaction among the attendees that clearly created value.

Three keynote speakers, six worldclass “Game Changers” and more than 65 education sessions afforded unparalleled learning opportunities for the 9,200-plus industry members in attendance.

Over 448 exhibitors presented the

latest in goods and services benefitting the multifamily industry.

Coincidentally, during the conference, the Supreme Court issued a decision regarding Disparate Impact. NAA and local affiliate government affairs staff and interested members had real time conversations on the decision and left well informed on an important issue. Similarly, NAA government affairs staff brought to the forefront federal programs addressing homelessness among veterans, providing local members and affiliates with a plan of action to implement when they returned to their home communities.

In addition to the education and networking, the NAA Education Conference also afforded its members recognition with the presentation of the Paragon Awards. Winners included the WinnCompanies’ The Cooperatives of CharlesNewtown, in the Specialty/Affordable category and Peabody Properties’ 225 Centre in the New Property category. Lee

Brown from Chestnut Hill Realty was honored as NALP of the year.

NAA’s 2016 Education Conference will take place in San Francisco, June 15-18. It is not too early to begin your planning and include your participation in your budget. It is one of the best investments in your staff and yourself that you can make.

As long as you have your calendar out, be sure to pencil in the 2015 NAA Assembly of Delegates, which takes place Nov. 19-21, 2015 at the Grand Hyatt San Antonio. Registration is currently open and complimentary for all who register by Nov. 11. Thereafter the registration fee is $50. Upcoming 2016 events include the NAA Student Housing Conference and Exposition Feb. 6-7, 2016 in Chicago, and NAA’s Capitol Conference, March 5-9, 2016 in Washington, D.C. n John Lafferty is the executive director of the Rental Housing Association.

RENTAL HOUSING ASSOCIATION 2015/16 EDUCTATION AND EVENTS

October 15 RHA Professional Development Series ARS

October 29 NAA Maintenance Mania® The Lantana, Randolph November 19-21 NAA Assembly of Delegates.

San Antonio

Morning, October 23 RHA Massachusetts Landlord Tenant Law Bay Colony

December 1 RHA President’s Awards Reception E.M. Kennedy Institute

Afternoon, October 23 RHA Massachusetts Fair Housing Bay Colony

January 2016 RHA Bruins Outing TBA

January 2016 Certified Apartment Property Supervisor (CAPS) TBA March 2016 Certified Apartment Manager (CAM) TBA March 5-9, 2016 NAA Capitol Conference JW Marriott, Washington D.C.

April 2016 Certified Apartment Maintenance Technician (CAMT) TBA June 15-18, 2016 NAA Education Conference and Exposition San Francisco September 27, 2016 RHA Fall Conference & Expo Hynes Convention Center, Boston

For additional information, visit www.gbreb.com/rha 6

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RHA Spring Golf | June 15 | Dedham Country and Polo Club, Dedham

Third Quarter 2015 • BAY STATE APARTMENT OWNER

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FINDING SOLUTIONS FOR HOMELESS VETERANS PEABODY PROPERTIES PRIORITIZES LONG-TERM HOUSING

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PHOTOS COURTESY OF PEABODY PROPERTIES

BY JESS PITOCCO

P

eabody Properties has pioneered a new approach to solving veteran homelessness through permanent housing projects throughout Massachusetts and New Jersey.

Partnering with both the state and federal veterans institutions, Peabody Properties has made development of supportive housing for homeless veterans a priority.

There are 22.5 million veterans living on the streets this year, according to a study by Veterans Inc. Veterans of Iraq and Afghanistan are now twice as likely to be homeless, shown in Veterans Inc. statistics, with 70 percent of those homeless veterans having substance abuse problems.

Betsy Collins, project manager at Peabody Properties, said that both the private sector and veteran services locally in Massachusetts have made great strides to address homelessness, but have not addressed a long-term solution on a larger scale.

“The openness of both state and federal veterans services, and their willingness to partner with us (at Peabody Properties), has helped us reach the range of homeless veterans that are being affected,” Collins said. “At one of our sites the youngest veteran is 22 years old and the oldest is 94. But one size doesn’t fit all when it comes to helping people.”

Properties such as the Pleasant Street Apartments at 62 Pleasant Street in Beverly afford veterans a home and the ability support themselves; it also includes support services within the same building.

“A lot of veterans in our building (Pleasant Street Apartments) had siphoned in and out of transitional housing,” Collins said. “We give them the opportunity to get housing upfront, giving them a measured peace of mind to then address the other underlying problems they face after serving our country.”

This “housing first” mentality includes support from an in-house social worker who is also able to connect the residents with local community services. This, in combination with subsidies to help with rent and cost of living, gets homeless veterans who qualify on their feet and into civilian life more smoothly.

John McKee, regional director of operations at Peabody Properties, said that properties such as Pleasant Street Apartments and Valley Brook Village in Lyons, New Jersey – another veteran supportive housing project – are a natural extension of affordable housing. McKee said that these projects have had great synergy with the government, nonprofit and for-profit worlds that no other projects have accomplished.

“I think these projects are helping lessen veteran homelessness, but that doesn’t mean affordable housing for veterans has had 100 percent penetration,” Mckee said. “There’s still need for more housing for veterans in Massachusetts. There’s improvement, but still a great need.”

Jason Palitsch, public affairs specialist at Veterans Inc., agrees with McKee and said though veteran homelessness is on a slight downward trend, it is by no means letting up.

“People don’t realize the unaddressed consequences of deployment,” Palitsch said. “Because of their military separation, veterans don’t understand right away how their independence has lessened when they get home.

Their networks and previous jobs have all moved on, and veterans are left with nothing but family and the onset of post-traumaticstress disorder (PTSD) and more.”

The recent trend in unemployment makes transitioning to civilian life that much harder for veterans. For veterans ages 18 to 20, the unemployment rate is high at 18 percent.

“We (Veterans Inc.) try to be a one-stopshop for veterans seeking assistance,” Palitsch said. “But not every veteran can be seen. The real goal for all veterans is independence in a living situation for the long term, like Pleasant Street.”

Will Hatley, veteran peer specialist and former homeless veteran, said while addressing a group at the Edith Nourse Rogers Veterans Hospital at Bedford VA Medical Center in Bedford that he struggled with substance abuse, PTSD and depression, and that homelessness was an overwhelming additional obstacle.

“I was my own advocate,” Hatley said in his talk. “I continued with my PTSD support group, counseling and 12-step programs … and I was able to move into my first apartment in years. This was a great moment.”

Once Hatley completed his peer specialist certification, he felt he had fully reintegrated into the community and then became a peer vocational rehabilitation specialist. He went on to earn additional certifications and employment in veteran support, dedicated to helping end veteran homelessness.

“I had found my niche,” Hatley said. “It is an honor to work with veterans. I see them where they are, and I know that I have been there.

Where they are going, the sky is the limit.” n Jess Pitocco is a writer for The Warren Group, publisher of Bay State Apartment Owner.

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To Smoke or Not to Smoke Medical Marijuana in Apartments

BY KENNETH A. KREMS

Y

ou are proud that your building is completely smoke-free. Residents and their guests can’t smoke anywhere in the building – in their apartments, their balconies and patios, and in all the common areas. Your residents are happy that there is no smoking in the building. But yesterday a resident walked into the management office and showed you his card authorizing him to use medical marijuana. He proclaimed that he has a disability, he will be smoking marijuana in his apartment, and you can’t stop him. What do you do?

Issues regarding medical marijuana will soon be confronting landlords all over Massachusetts.

This is because in 2012, voters 10

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overwhelmingly approved a referendum allowing for the use of medical marijuana. Implementation of this has been very slow, but it is now picking up steam and dispensaries are beginning to open.

Residents in both smoke-free buildings and buildings which are not smoke-free often complain more about the odor of marijuana wafting into their apartments than they do about cigarette smoke coming into their units.

Smoke-free or not, your lease can provide that the illegal possession or use of marijuana is prohibited.

Since 2009, the possession of one ounce or less of marijuana has no longer been a criminal offense in Massachusetts, though possession of marijuana is still a

federal crime. In addition to the violation of federal law, marijuana smoke entering other units or being in the hallways interferes with the quiet enjoyment of other residents. If a resident continues to smoke marijuana in violation of the lease, you should give him several oral and written warnings, and if the behavior continues he can be evicted.

But what about medical marijuana? A resident who wants to use medical marijuana will need a medical marijuana card, and to get that she will need a doctor’s authorization that she has a qualifying disability. Since the resident will have a disability, do you have to allow her to smoke medical marijuana as a reasonable accommodation?

Under Massachusetts and federal law it is unlawful for a landlord to refuse to make a reasonable accommodation in rules, policies, practices or services when the accommodation is necessary to afford a disabled person an equal opportunity to use and enjoy the apartment.

The Massachusetts medical marijuana statute doesn’t cover the use of medical marijuana in housing, but it does provide that “nothing in this law requires the violation of federal law or purports to give immunity under federal law.”

A recent memorandum from the U.S. Department of Housing and Urban Development dealing with the use of marijuana in multifamily assisted properties provides that owners of federally assisted housing are required to deny admission to any household with a member who is using marijuana; that owners cannot have lease provisions that permit occupancy by a household member who is using marijuana; and that owners can terminate the tenancy of

households with a member who is using marijuana.

There are no Massachusetts cases on the issue of the use of medical marijuana in apartments or condos. However, in December 2014 a federal court in Michigan was faced with this question. In that case a tenant possessed a medical marijuana card and asked the landlord for a reasonable accommodation to allow him to smoke marijuana in his apartment.

The court stated that federal law making the use of marijuana a crime supersedes state medical marijuana laws allowing marijuana use, so to require a landlord to grant this accommodation would not be reasonable because it would require the landlord to violate federal law.

The court stated: “Such a requirement would fundamentally alter the nature of [the landlord’s] operation by thwarting Congress’s mission to provide drug-free federally assisted housing.” The court held that a landlord is not required to grant a rea-

sonable accommodation to allow a tenant to use medical marijuana.

So as of now, a landlord does not have to allow a tenant to use medical marijuana inside the building. If a tenant wants to smoke marijuana for medical purposes, he can go outside to a location off the property where the smoke won’t bother other residents. If the tenant is going to use medical marijuana inside the apartment, the tenant should have to ingest it in some other form, such as a pill or a brownie, or use a topical oil.

There is no question that in the next few years there will be cases in Massachusetts dealing with whether a landlord has to allow medical marijuana to be smoked in its building.

We’ll look forward to those decisions, but until a court rules otherwise, landlords don’t have to allow this. n Kenneth A. Krems is a partner in the Boston law firm of Shaevel & Krems, LLP, where he focuses on residential and commercial real estate management and other real estate issues.

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“I think we all need a reminder every now and then that trees don’t grow to the sky. Every now and then we need a dose of reality.”

— Frank Petz Head of JLL’s New England capital markets group

Chinese Economic Meltdown Unlikely to Crush Boston City Still ‘a Safe Haven’ for Investors

BY SCOTT VAN VOORHIS

G

reater Boston’s surging real estate market, from new skyscrapers to multimillion-dollar penthouse sales, seems likely to dodge the China bullet.

If nothing else, it is not 2008 all over again.

Yet the growing concern about a slowdown in China’s overheated economy and the global stock market turmoil it has triggered offers a timely reminder that no boom lasts forever.

It is a lesson that every developer and investor in the Boston area with ambitious plans should take to heart.

Sure, we’ll dodge this one, but we may not be so lucky next time. And if past history is any indication, next time is far more likely to be two or three years from now rather than a decade.

And it’s a reminder how quickly things can turn; when the boom finally goes bust, if your tower is not already halfway up, you may find yourself waiting for the next cycle.

“I think we all need a reminder every now and then that trees don’t grow to the sky,” said Frank Petz, head of JLL’s New England capital markets group. “Every now and then we need a dose of reality.”

So what’s the immediate fallout we can expect from the Chinese economic/stock market crisis?

Chinese buyers have been active in the luxury condo market downtown, but empty-nesters from some of the wealthier suburbs around Boston are driving the downtown condo boom far more than wealthy Chinese buyers.

And while Chinese investors have begun to poke around the commercial real estate market, they are still relatively minor players.

“Any ‘turmoil’ would have to be more sustained over a longer period of time to factor into any CRE downtown,” argued Mary Kelly, director of market strategy and research at Colliers International. “Boston is still well diversified and a ‘safe haven,’ so no need to sound the warning bells at this time.”

In fact, there is an argument that we may get more investment from the other side of the world as wealthy Chinese seek a safe haven for their money, noted David Begelfer, chief executive of NAIOP Massachusetts, which represents developers across the state.

“It’s probably great for the real estate market, as far as the foreign money that has been flooding into Boston,” he said.

My guess is that it will be a wash, with any new money coming in balanced by capital that will never make it over here because it was sucked into the vortex formally known as China’s stock market.

Of course, all bets are off if China’s economy goes

into slowdown mode and takes the rest of the world with it. We will get a better idea on that over the next few months, though the U.S. recovery, for now anyway, looks OK, if rather plodding.

Get Your Shovels Ready If we’re lucky, the China mess will turn out to be an unsettling crisis that falls short of a full-blown economic typhoon, like the freak 1987 stock crash or the 1998 Asian financial crisis. It’s worth noting that both those tempests came towards the end of economic expansions that wound up ending with a bang a couple years later.

In fact, we are probably fairly well along in our current economic expansion – as frustrating and bumpy as it has been for the most part, excepting real estate and a few other bright spots – given the length of past booms.

It’s been six years since the Great Recession officially ended. If this were the 2000s, that would put us in 2007, the start of the mild contraction that, by 2008, had morphed into the worst downturn since the 1930s.

The comparable ’90s year, 1997, is a little more uplifting. That would give us three or four more years before we have to pay the piper once again.

So we may not be looking at the return of bad times, at least not yet. But like the Chinese stock and economic crisis, whatever triggers the next downturn is likely to be upon us before we fully understand the implications.

One needs look no further than John Hynes’ disastrous attempt to build a tower next to the old Filene’s store in Downtown Crossing to see how even a veteran developer can wind up with a big mess on his hands when the cycle suddenly ends.

(For all of you with short memories, Hynes wound up demolishing part of the Filene’s complex and digging a giant hole in the ground before global financial markets went into meltdown mode in September 2008.)

And if we are truly in the final years of the current expansion, then it’s worth looking at what projects are real and what may turn out to be that long-time staple of Boston development – the multibillion-dollar pipedream.

The new Four Seasons and Millennium skyscrapers are looking pretty good, with work well underway. But then there are all the ambitious plans still slogging through the city approval process – Don Chiofaro’s proposal for a pair of harbor-front mega-towers comes to mind.

The best that can be said is that there is still time, but the clock is now ticking. n This article first appeared in the August 31 issue of Banker & Tradesman.

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Rental Housing Association’s President’s Awards Reception 6:00 PM – 8:30 PM december 1, 2015 Edward M. Kennedy Institute for the United States Senate Columbia Point, Boston, Massachusetts

For more information contact the rental housing association at 617.423.8700