Somerville’s largest condo grab in history yields relative tenant win in tense market
Greg Santos moved into Somerville’s Millbrook Lofts apartment complex with his girlfriend in August 2017, looking forward to using its dedicated art space.
Married couple Luciano Betoldi and Maria d’Orey, both from Portugal, immigrated to the US in January and started renting one of the lofts on Millbrook’s newly built eighth floor.
Nicole Burton, a clinical lab assistant with a son in college, signed a lease for one of the building’s city-mandated affordable units nearly two years ago when the building first opened.
Last November, the owners of their building told them all—plus all the other tenants—that they were about to be evicted from their homes, as the firm Berkeley Investments attempted the largest condominium conversion in Somerville history.
As first announced, Santos, Betoldi, d’Orey, and the rest of the 100-unit building’s market-rate occupants would have to be out by the same day this November. Burton and the 14 other inclusive unit tenants had an extra year, until November 2019, to find new housing.
The complex, located in Somerville’s Inner Belt by East Cambridge, originally stood as a cold storage warehouse for about a century. Berkeley Investments acquired the property in 2014 and began thawing it out. After renovating the facility, modernizing it, and building a new eighth floor, Berkeley opened Millbrook as a 100-unit apartment building in June 2016.
These days, tenants face the Twin City Plaza across the road. Across the train track is a Prime Storage warehouse, and the office of 3D printing startup—standing icons of the building’s industrial past and its yuppified future as well.
“We were noticing a trend that as people’s leases were coming up, we were actually seeing some of our residents leaving. … to purchase a home,” Berkeley Investments Vice President Dan McGrath explained. “If you see the statistics about the for-sale housing market [in Somerville], there is not a lot of supply, particularly at price ranges that are achievable for a larger pool of people.”
McGrath continues: “We saw an opportunity where it seemed to make sense for us to consider whether there was a for-sale opportunity with this building, given the trends that were happening in the for-sale marketplace.”
McGrath characterized Millbrook as “home to people whose next step in life, certainly in a few cases, might be to purchase a home.” But according to Santos, who moved in for the art space, “[Berkeley] said, ‘Hey, we’d love to have you stay and buy these units,’ and a lot of people were very shocked. It just seemed like nobody really knew what questions to ask or what their rights were.”
Although the owners do not appear to have acted unlawfully, Santos and others charge that the sudden threat of displacement from a building that was only 18 months old is particularly harmful to low-income tenants.
“They’d be facing a really tough rental housing market on their own, or they’d have to deal with the city again,” Santos said. “It’s tough to get into a new building like this as a low-income tenant, and people were effectively being asked to leave just a few years after they moved in so they’d be reincurring all those costs again.”
“I’m not going to be able to pay market rent on my salary,” Burton said about the possibility of displacement. “I have a child that’s now in college so my financials kind of changed, and it took a lot for me to get into that apartment because I have to do a lot of certification through the city.”
Somerville alderman JT Scott, elected in November with the support of progressive groups including Democratic Socialists of America and Our Revolution, suggested to Santos that he organize the tenants and assert their rights.
“It sounded like a better idea than to move and get kind of steamrolled through this process and have to move out without contesting,” Santos said.
The task ahead of him, Santos spent nights knocking on the doors of all 100 units across eight floors, inviting his neighbors to join the fledgling Millbrook Tenants’ Association (MTA), which he organized alongside residents Michael Devlin and Reilly Bertasi. Some of the approximately 85 tenants he spoke to explained that they had only just signed their leases in October and November of 2017.
“Berkeley Investments knew they were going to move forward with this condo conversion, but they were still having folks sign leases into November, right before this happened,” Santos recalled.
Although Betoldi and d’Orey had nearly signed a lease with a new apartment, when they returned from a holiday in Lisbon, they were quickly convinced to sign on with the tenants’ association.
“Greg happened to come in and explain things to us from the point of view of what our rights are versus the point of view of [the management company] Princeton Properties or Berkeley Investments,” Betoldi said. “That’s what made us realize that we had rights.”
Burton was similarly inspired to work with the MTA to protect her right to the affordable unit she felt she had been guaranteed by the city.
“I felt because I got my unit through the city that somebody needed to step up and help, because the city does state that Berkeley does have to have a certain amount of low-income housing in the building,” Burton said. “I wanted to fight for that.”
The MTA quickly assembled, and Santos and about 25 neighbors appeared at the Dec 18 Somerville Condominium Review Board meeting. Faced with the complaints voiced by Millbrook’s outraged tenants, the board tabled the decision until the two parties could come to a substantive agreement.
“In addition to financial burdens, there’s a time cost, there’s an opportunity cost to moving,” Santos said. “Some folks in the building don’t want to move because they just moved in, and some were still unpacking boxes when they got noticed. Some folks have families and they don’t want to move their children.”
Construction, including renovations on common spaces such as the downstairs lobby and hallways, would also prove to place a burden on tenants.
When the board chose to delay the decision, Santos invited Berkeley to come to the table and negotiate a more agreeable set of terms. Following the holidays, Berkeley President Young Park and McGrath sat down with some of their tenants; a few days later, on Jan 22, Berkeley sent its first proposal.
Somerville’s condominium conversion ordinance law, which was last revised in 1985, offers a level of protection for tenants through mandatory rules that the converting owner must follow upon receiving a removal permit. According to the Condominium Review Board’s site, all tenants must be offered the right of first refusal, and market-rate tenants are offered a year to find a new living situation and vacate after being notified of the conversion, while low-to-moderate income, elderly, and disabled tenants are given two years to move out.
Of particular interest to critics of Somerville’s ordinance is the minimum lump sum relocation reimbursement required in Somerville, which amounts to $300 or a month’s rent, whichever is greater, for each inclusive unit. That amount is far lower than the minimum required by Boston’s ordinance, which demands $6,000 for market-rate units and $10,000 for inclusive ones.
Berkeley’s proposal upped the ante from the legal minimum: $1,000 in cash as a “goodwill concession,” a month of free rent for each unit occupied during any construction and a lump sum, covering moving expenses, that would start at $5,000 for each unit vacated in the first three months, then would decrease by $1,000 for each month the unit was still occupied. If the tenants were still in their unit after 180 days, that reimbursement would come back to $1,000, and if they stayed longer than 210 days, they would be offered nothing beyond the goodwill concession and month’s rent for construction.
The MTA, which at this point represented a supermajority of tenants, wrote up a counteroffer modeled after the Boston condo conversion ordinance. The letter, written by Santos, Devlin, and Bertasi, requested a lump reimbursement of $15,000 for direct out-of-pocket costs and $3,000 for disruptions to tenants’ lives—in total amounting to six months’ rent. Following the January Condominium Review Board meeting, at which Berkeley attempted to move forward again and the board once more sided with the tenants, the proposal was sent.
A few weeks later, on Feb 15, Mass. State Rep. Mike Connolly issued a letter to Park’s office, deriding the conversion proposal as “highly irresponsible and a matter of public significance.”
“One of the things that really shocked me was the lack of detail or lack of thinking at the time Berkeley announced that this is what they wanted to do,” Connolly explained to Dig.
Among his concerns was that affordable or inclusionary units, amenities which Berkeley was initially required to include as a condition of developing Millbrook, would be discarded during the conversion.
“There was very little in the way of detail or assurance regarding those affordable units that really get presented as subsidy-free, in-perpetuity affordable units,” Connolly said. “There were really a lot of concerns about what their future would be and how that public benefit would be protected and maintained.”
“If you simply say, ‘Let’s convert those affordable rentals to affordable home ownership units,’ the fact is that the city’s affordable ownership program is defined at an actual higher income level—still of a low-to-moderate income but higher than the rental targets,” Connolly continued. “And so, just by definition, it becomes very unclear that the affordable tenants would necessarily be well-positioned to purchase their unit.”
Shortly after Connolly began correspondence with Park, the online publication Cambridge Day and NBC 10 covered the controversy between the tenants and property owners, offering media attention to the MTA’s fight.
Then, on Feb 22, Berkeley announced that it would not appear at the Condominium Review Board to attempt any unit removals. The day after, a group of Millbrook’s tenants sat down with Somerville Mayor Joe Curtatone and his policy team to discuss the conversion. The next Monday, after Curtatone met with Park, Santos was informed that Park would “re-engage” with the MTA.
“They effectively went back to the drawing board and came back to us,” Santos said, characterizing the new discussions as being “in good faith” on the part of Park and McGrath.
The heavily revised proposal sent on March 2, while insisting that the initial offer’s financial incentives would have been “unprecedented in Somerville,” matched the reimbursements of the Boston ordinance with $6,000 ($10,000 for affordable units) that would not decline over time, as well as $6,000 to address the impact of construction regardless of whether or not the tenant remained or moved out.
“We can move forward financially with the benefits that we personally will get from the offer,” Betoldi said. “I feel that they’re fair, I think they’re kind of in line with the disruption that we’ve experienced and we’re going to experience with this construction that’s coming up.”
In what Santos and Connolly considered the most salient win for the tenant’s association, Berkeley also committed to safeguarding the affordable rental units, promising either to sell them to a third-party nonprofit who could preserve them with their existing tenants, such as the Somerville Community Corporation, or to continue owning the units if no buyer were located.
“I think that’s definitely the biggest win,” Santos said. “The market rate folks are going to have a much easier time securing other apartments and, certainly, Berkeley’s increased financial package helps. But the real victory here is being able to keep those 15 inclusionary units and keep the tenants that are in them for as long as they’d like to.”
Following a meeting between inclusionary tenants and Berkeley, Burton felt confident that the owners’ promises were in good faith, but he believed that was only the result of external pressure on the firm.
“I think Berkeley did step up, but I think that’s because of the tenants’ association, because of the media coverage they got, and because we saw the mayor,” Burton said.
“It felt like they assumed responsibility for the fact that this is going to mean the displacement of a lot of people,” d’Orey said.
Both parties’ hopes now are that the contracts for market-rate and inclusionary tenants will be finalized and signed before the March Condominium Review Board meeting, which had been postponed to April 2. The MTA will be aided in the process by Ellen Shachter, a housing attorney for Greater Boston Legal Services.
Regardless of the publicized controversy, Berkeley claims that it has not been having difficulty attracting potential buyers, including current tenants.
“We have had a healthy amount of interest from existing residents in purchasing units at the building,” McGrath said. “The pool of people who would be interested in renting there is very similar to the pool of people who might be interested in buying there,” noting the building’s proximity to Kendall Square, Union Square, and Lechmere Station, as well as the upcoming Green Line Extension.
Indeed, one resident DigBoston spoke with expressed a strong interest in purchasing their unit, but spoke under condition of anonymity.
Although pricing had not been shared as of writing out of sensitivity to ongoing negotiations, McGrath told DigBoston that smaller studio apartments would start at the $400,000 range, going up to $700,000 or $800,000 for penthouses. The goal would be between $700 and $800 per square foot.
“If you were to look in the market right now, some of the luxury product in Boston is selling for over $1,000 a foot,” McGrath added. “I think that what we’re trying to do is offer units that are achievable for a lot of couples and young professionals.”
As for Santos and many of the tenants in the MTA, moving out as a collective is being considered.
“Now that we have kind of a tightly knit tenants’ association, we’re looking at potentially moving as a group to another building that might have some spots for us,” Santos said. “We’re putting feelers out and trying to figure out if there’s another building you can move to as a whole.”
Speaking the weekend before negotiations were intended to be wrapped up, McGrath seemed to believe Berkeley had initially mishandled the conversion notification.
“I think we were a little surprised that the tenants organized into a group quite the way they did, but I guess in hindsight, maybe we shouldn’t have been. Converting the building to condos is something that impacts people’s lives.”
“I think we’ve had a productive dialogue with the tenants, with the political leadership,” McGrath continued. “There were times where there was some degree of tension between the residents and Berkeley, but I think we’ve seem to overcome those at all times. All parties have been working in good faith to come to an amicable resolution.”
Considering why negotiations were so fruitful for the MTA, Connolly believed that other tenants’ associations should look to the association’s emphasis on “explicit solidarity” with the affordable tenants.
“I think the big lesson here is some gratitude and appreciation for that stance,” he said, “because as I saw this happening, one of my fears was that a divide-and-conquer strategy could take hold where certain groups of tenants might make their own deal then vacate the building and the leverage with people who were named would be diminished.”
Meanwhile, Connolly intends to continue examining the effects of condo conversions on state housing, as well as protections on renting tenants.
“Ownership opportunities are good as well, but in the middle of what I’ve described as a housing emergency, when rental housing is unexpectedly removed from the market, particularly in wholesale numbers, that’s something that has to warrant the scrutiny of elected officials and of the community to really understand these transactions and what the implications are,” Connolly said.
“We have to recognize, you know, people enter the building renting because the circumstances mean that renting is what works for them,” Connolly added. “I think we have to have protections and safeguards to allow those individuals to continue getting the benefits they’re entitled to.”
Santos, now inspired by his own experience organizing the Millbrook Tenants’ Association, will also be lending his effort to fight for tenants’ rights on the municipal level.
“Mayor Curtatone’s office has asked us for input as to how they might be able to improve the Somerville Condo Ordinance, and we’re going to be providing them with what we think would strengthen that ordinance,” Santos said. He also plans to speak with Connolly about implementing more equitable condo conversion policy in the state ordinance.
“For me, this has also become kind of a personal mission, and it’s made me a little more willing to get involved in politics,” he added. “I’m evaluating my options there as well.”