Southview Co-op. Housing Corp. v. Rent Control Bd. of Cambridge

• Decision Date: 17 December 1985
• Docket Number: CO-OPERATIVE
• Citation: 486 N.E.2d 700,396 Mass. 395
• Parties: SOUTHVIEWHOUSING CORPORATION et al. 1 v. RENT CONTROL BOARD OF CAMBRIDGE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 700

486 N.E.2d 700

396 Mass. 395

SOUTHVIEW CO-OPERATIVE HOUSING CORPORATION et al. ¹ v. RENT CONTROL BOARD OF CAMBRIDGE.

Supreme Judicial Court of Massachusetts,

Middlesex.

Argued May 8, 1985.

Decided Dec. 17, 1985.

Stephen B. Deutsch, Boston, for defendant.

David G. Hanrahan (Robert S. Sinsheimer, Boston, with him) for plaintiffs.

Before HENNESSEY, C.J., and WILKINS, LIACOS and O'CONNOR, JJ.

O'CONNOR, Justice.

The plaintiffs, owners of property subject to rent control in the city of Cambridge, brought this action in the Cambridge Division of the District Court, seeking a declaration that (1) certain charges assessed against them by the Rent Control Board of Cambridge (board) in connection with petitions for individual rent adjustments were unlawful, and (2) the plaintiffs are entitled to reimbursement of the sums they paid. ² A judge of that court determined that the board was not authorized to assess the charges, and the board appealed to the Superior Court, pursuant to G.L. c. 231, § 97 (1984 ed.). After a trial de novo, as provided by that statute, a judge in the Superior Court also held that the charges were not authorized. He ruled that no charges of any kind were authorized by St.1976, c. 36. He also concluded that, even if the statute be construed as authorizing the board to impose fees for filing individual rent adjustment petitions, the charges here were not constitutionally permissible "fees" but instead were impermissible taxes. The board appealed to the Appeals Court and we transferred the case here on our own motion. We reverse.

Statute 1976, c. 36, entitled, "An Act enabling the city of Cambridge to continue to control rents and evictions," establishes a rent control board with authority to regulate residential rents in Cambridge. Section 6 of the act establishes maximum rents for all controlled units in the city. Section 7 requires the board to make periodic adjustments to the maximum rent to ensure that each rental unit yields a "fair net operating income." In addition, § 9 authorizes the board to issue eviction certificates. Section 5(c ) directs the board to "promulgate such policies, rules and regulations as will further the provisions of this act," and § 5(e ) provides that "the board shall have the power to issue orders and promulgate regulations to effectuate the purposes of this act."

The primary mechanism that the board uses to adjust maximum rents is the "general adjustment," a percentage increase or decrease in the maximum rent that applies to all or to a large class of controlled units in the city. See St.1976, c. 36, § 8(b ). In addition, a landlord who is dissatisfied with the maximum rent established for a particular unit or group of units may petition the board for an individual adjustment to the maximum rent. St.1976, c. 36, § 8(a ). A petition for an individual adjustment based on an increase in operating expenses is governed by the board's regulation series 72. A petition for an individual adjustment based on capital improvements is governed by regulation series 75 and 76.

Before the 1981-1982 fiscal year, the board's operations were entirely financed by appropriation by the city council. No charges were imposed for filing rent adjustment petitions. Following the enactment of St.1980, c. 580, commonly known as Proposition 2 1/2, the city manager informed the board that city funds would not be available at previous levels and that the board's budget should reflect a reduction in city funds to approximately seventy-five per cent of the prior level. The board submitted a budget for 1981-1982 with a financing plan in which approximately seventy per cent of the budget would be supported by intergovernmental revenues and approximately thirty per cent would be supported by charges for services. The city council approved the budget with the proposed financing plan.

On June 18, 1981, the board adopted regulation 30.01, which established a schedule of filing charges. The regulation required the payment of one and one-half per cent of the total annual maximum rents but not less than $50 for filing a petition for an individual rent adjustment based on regulation series 72. It imposed a charge of one per cent of the total cost of capital improvements but not less than twenty dollars for filing a petition for an individual rent adjustment based on regulation series 75 or 76. The board's policy was to permit the landlord to pass the filing charges on to the tenants as part of the rent over a three-year period, without interest. Each of the plaintiffs is a landlord who filed a petition for an individual rent adjustment and paid the required charges in accordance with regulation 30.01. The charges paid by the plaintiffs are set forth in the margin. ³

The plaintiffs correctly do not contend that a statute purporting to authorize the board to establish filing fees for individual rent adjustment petitions commensurate with the cost to the board occasioned by the petitions would be unconstitutional. Their contention is simply that St.1976, c. 36, does not manifest a legislative intent to grant the board that authority. They also contend that, even if that authority was granted, the charges actually imposed by the board pursuant to the fee schedule adopted on June 18, 1981, are unrelated to the cost of the services occasioned by the petitions, and therefore the charges constitute taxes and, for that reason, are unlawful. The defendant board agrees that the Legislature could not constitutionally authorize the board to impose taxes, but they contend, contrary to the plaintiffs' assertions, that St.1976, c. 36, authorizes them to impose filing fees--fees commensurate with the cost of the services occasioned by the filing, and they contend that the regulation in question operates to impose only fees--not taxes. There are two questions for us to answer, therefore: (1) By enacting St.1976, c. 36, did the Legislature intend to authorize the board to charge fees to meet the board's costs occasioned by the rent adjustment petitions; and (2) If that was the Legislature's intention, were the charges that were actually imposed reasonably related to the costs incurred.

Statute 1976, c. 36, § 5(c ) & (e ), authorize and direct the board to promulgate regulations in furtherance of the purposes of that act. Reasoning that the board's authority under c. 36 is limited to "substantive regulation ... necessary to effectuate the purposes of the [act]," and that the regulation requiring the payment of filing fees according to a prescribed schedule was not such a regulation, the trial judge concluded that the act did not confer authority on the board to establish filing fees. He also concluded that the rule that "a properly promulgated regulation is accorded 'all rational presumptions in favor of [its] validity ...,' Altschuler [v. Boston Rent Bd., 12 Mass.App. 452, 467, 425 N.E.2d 781 (1981) ], quoting Levy v. Board of Registration & Discipline in Medicine, 378 Mass. 519, 525, 392 N.E.2d 1036 (1979), applies only to regulations which involve an agency's substantive area of expertise" and therefore does not apply to the fee-setting regulations. We disagree with the trial judge.

The principal indication of legislative intent is the language of the statute. Simon v. State Examiners of Electricians, 395 Mass. 238, 242, 479 N.E.2d 649 (1985). The act contains no language limiting the board's authority to the promulgation of "substantive" regulations. The board's regulatory authority conferred by § 5(c ) & (e ) of the act is expressly limited only by the requirement that the board's regulations advance the purposes of the act. Therefore, a construction of § 5(c ) & (e ) as authorizing any constitutionally permissible regulation which promotes the goal of rent control accords with the ordinary usage of the statutory language. Moreover, this construction of the statute comports with the established principle that "where an administrative agency is vested with broad authority to effectuate the purposes of an act the validity of a regulation promulgated thereunder will be sustained so long as it is reasonably related to the purposes of the enabling legislation." Levy v. Board of Registration & Discipline in Medicine, supra 378 Mass. at 524, 392 N.E.2d 1036, quoting Consolidated Cigar Corp. v. Department of Pub. Health, 372 Mass. 844, 855, 364 N.E.2d 1202 (1977). Accepting the plaintiffs' assertion, and the trial judge's finding, that the filing fee regulation was the board's method of making up for its budgetary shortfall due to Proposition 2 1/2, it cannot reasonably be contended that the regulation does not promote the purposes of the act. Surely, it cannot properly be said that there was no rational basis for that conclusion. See Borden, Inc. v. Commissioner of Pub. Health, 388 Mass. 707, 720-724, 448 N.E.2d 367, cert. denied sub nom. Formaldehyde Inst., Inc. v. Commissioner of Pub. Health, 464 U.S. 936, 104 S.Ct. 345, 78 L.Ed.2d 312 (1983).

In Commonwealth v. Plaisted, 148 Mass. 375, 382, 19 N.E. 224 (1889), we held that an express statutory grant to a municipality or agency of authority to regulate includes authorization to require licenses and licensing fees "to cover reasonable expenses incident to the enforcement of the rules." See Opinion of the Justices, 250 Mass. 591, 602, 148 N.E. 889 (1924) ("A license fee may be exacted as a part of or incidental to regulations established in the exercise of the police power"); Commonwealth v. Clay, 224 Mass. 271, 274, 112 N.E. 867 (1916) ("the power to regulate may include the requirement of taking out a license and the payment of a license fee"). The plaintiffs argue that the above cases have no bearing on the present case because those cases, unlike this one, involved fees incident to the issuance of a license. The rationale of those cases is not so limited however. Licensing is simply a means of regulating. If the authority to regulate...