Enforcement of the Massachusetts Lead Law and Its Effects on Rental Prices and Abandonment

This article is an economic analysis of the consequences a more rigorous enforcement of the Massachusetts lead law would have on the availability of affordable housing - particularly on rent prices and building abandonment. The author explores the resistance to strict enforcement of the deleading requirements of the lead law since the continued occurrence of lead poisoning is largely attributable to the focus on secondary prevention - treatment after a child has elevated lead levels - rather than primary prevention - the removal of lead paint from homes. Although organized opposition from real estate interests to the enforcement of the Massachusetts lead law and limited funding for such efforts have inevitably contributed to the lack of primary prevention, there is a concern even by many tenant advocates that a vigorous enforcement of the lead law will lead to increases in rent and abandonment of residential property. This article argues that this fear is unsubstantiated. The author begins by providing the reader with a background of the history of lead poisoning prevention in Massachusetts, the first state to pass a comprehensive statute aimed at preventing lead poisoning. To set the stage for its economic analysis, the article also reviews the history, sources, and consequences of lead poisoning, as well as the populations disproportionately affected by this public health problem. It also explains the legal avenues available for enforcement of the lead law. Cognizant of the serious repercussions increased rents and abandonment would have on the availability of affordable housing, this article then demonstrates through a comprehensive economic analysis that higher rent and building abandonment will not, with the exception of a few instances, be the result of strict enforcement of the lead law. The housing market will not permit landlords to increase rents without offering an additional service. A lead free apartment may provide an additional service to a family with small children but it has no additional value to the majority of the housing market, therefore, the landlord will not be able to increase the rent due to competition with other owners. In fact, a partial enforcement strategy creates fewer deleaded apartments increasing the likelihood of a rent increase by keeping the supply of lead free apartments lower than the demand created by families with small children. Therefore, an intensive enforcement strategy, by increasing supply, is more likely to keep rent prices constant than a partial enforcement strategy and may even lower prices. Similarly, an increase in enforcement of the lead law can lead to abandonment of buildings only in a few select instances. No property will be abandoned so long as its rent can cover the cost of property taxes, insurance and maintenance. It is possible that a particular owner will lose interest in the building as the profits decrease, but if the building is still inherently profitable someone else will always be willing to rent it. Mortgage payments should not be included in the assessment of a building's profitability, since they are subjective to the particular owner. Even if the property is unprofitable to the present landlord, a new owner can buy the building at a lower price that will make it profitable again. The present owner thus is still better off selling the building for a loss than completely abandoning it. Therefore, if a building can make enough money to cover property taxes, insurance, and maintenance costs, plus a reasonable profit it will remain in the market. The threat of lead abatement is most likely to lead to abandonment only in cases of marginally profitable buildings in neighborhoods with declining market values. Under these circumstances, the cost of deleading can make a building inherently unprofitable. Often, in these instances, owners are already "milking" their properties, letting them deteriorate in order to obtain a short-term profit while planning their eventual abandonment. In these cases, the added cost of a lead abatement could accelerate the milking process and lead the owners to abandon the building earlier than planned. Such earlier abandonment, however, is usually a positive development for the housing market because these buildings will be abandoned in a better condition and therefore will require less of government resources or subsidies before they can be returned to use. The article concludes that only under few circumstances will the threat of lead abatement lead to an increase in building abandonment and in the cases where this does occur it is generally beneficial to the housing market. This article shows through a careful economic analysis that the concerns that increased enforcement of the Massachusetts lead law will lead to a reduction in affordable housing, while understandable, are unfounded. Although a loss in affordable housing would have a detrimental effect, it is not an economically likely result of increased enforcement of the lead law, while the problem of lead poisoning continues to be a serious public health problem. Therefore, the author concludes that tenant advocates should feel uninhibited in their efforts to enforce the lead law.