This post originally appeared at the South Seattle Emerald.
Later this year, City Councilmember Kshama Sawant plans to introduce legislation that would require landlords who raise their rent more than 10 percent to pay lower-income tenants the equivalent of three months’ rent should they move out because of the resulting increase. The proposal, based on a similar law in Portland, is aimed at addressing “economic eviction,” when tenants are forced to move by rising rents.
The city already has a tenant relocation law on the books, although you may not have heard about it, because it only applies to certain renters in a limited number of situations. In anticipation of Sawant’s proposal, which her office says she plans to introduce later this spring, here’s a primer on the current law and what to expect from the proposal to expand it.
What is tenant relocation assistance and who currently qualifies?
Back in 1990, the Seattle City Council adopted a tenant relocation assistance ordinance (TRAO) to help low-income renters who have to move because of housing demolition, major renovations, or land use changes (for example, if an apartment building is converted into condos or a hotel). Tenants must make less than 50 percent of area median income (currently $33,600 for one person, or $48,000 for a family of four) to qualify for assistance; those who do receive a payment of $3,658 to help them move to a new location. Half that amount is paid by the city, and half is paid directly by landlords.
Property owners who are demolishing or converting a building have to get a tenant relocation license from the city, and are required to give tenants 90 days’ notice before demolishing a building or making other major changes.
The legislation has been amended periodically over the years—most recently in 2015, when the city council added a provision barring landlords from raising rent more than 10 percent in an effort to get tenants to move out so they can avoid paying relocation assistance before demolishing or renovating their building. The 2015 amendments also prohibit landlords from evicting tenants, except for good cause, after filing for a tenant relocation license.
How often does the city pay out rental relocation assistance, and how much does it cost the city?
Since 2004, the earliest year for which payout records are available, the city has paid more than $5.5 million to 1,881 tenants. In 2017, according to records from the Department of Construction and Inspections, the city provided relocation assistance to 235 households, for a total of $380,000 (landlords paid the other half).
What would Sawant’s proposal do?
Council member Sawant’s proposal would require landlords to pay three months’ rent to tenants who make less than 80 percent of the area median income ($48,500 for a single person or $72,000 for a family of four) and have to move as a result of a rent increase of more than 10 percent. Unlike the existing relocation ordinance, Sawant’s proposal would make landlords pay the full amount of assistance; Sawant’s aide Ted Virdone argues that the higher obligation is more than fair, given that it would only apply in cases where “the landlord has raised the rent substantially without having even the expense of a remodel or reconstruction.”
Couldn’t landlords just get around the law by raising rent by 9.9 percent?
Yes, although Virdone says the intent of the proposal is to address landlords who raise rents by an unreasonable amount, and 10 percent seemed like a reasonable floor. “People who have lived the majority of their lives here in Seattle should have a choice to stay,” Virdone says. “If we don’t put in place ordinances like this, there will be even more people moving out of the city.” Reliable information about individual rent increases in Seattle isn’t readily available, although rents went up 7.2 percent, on average, in 2016.
What do advocates for landlords say about the proposal?
Not surprisingly, groups like the Rental Housing Association, which represents about 5,500 landlords in Seattle, oppose the legislation, calling it another burdensome rule that will cause small “mom and pop” landlords to sell their properties to larger apartment management companies. “The biggest concern we should all have is that the more burden you put on landlords, the more risk you throw on them, the more likely they are to sell, and that property’s not going to be on the affordable end any longer,” says Sean Martin, external affairs director for the RHA. “We’re already seeing an uptick in folks that are selling.”
Isn’t imposing a penalty for rent increases over 10 percent a form of rent control, which is banned under state law?
Sawant’s office says no—“This is just about what the tenant needs; it isn’t about trying to impact landlord behavior,” Virdone says—and the RHA, unsurprisingly, says yes. “If you’re making it economically unfeasible to raise the rent by whatever percentage is appropriate, that’s a restriction on rent,” Martin says. In either case, if it passes, the bill is certain to be challenged in court. In Portland, where rent control is also illegal, two local landlords sued the city over its almost identical. Although a federal judge upheld the ordinance, the landlords have appealed, and the case is currently working its way through the federal courts.
My condo is a low-end building — well kept but not remotely fancy. We don’t have a rental cap, and it’s the kind of place people could rent affordably. But it looks like our HOA board might change the rules & regs to allow Airbnb, because the city rules on small (ie, one-unit) landlords are getting so ridiculous. This is an unintended, yet easily foreseen consequence. Nice work, city council.
Last person out, Please turn out the lights!
So what has Portland’s experience with this policy been? Does it seem to have been beneficial?
It’s been reported by Portland legal services that the law may have spurred some landlords to increase rents by 9.9 percent a year. https://www.portlandmercury.com/blogtown/2017/10/12/19386004/chloe-eudalys-landlord-admits-limiting-her-rent-increase-because-of-her-relocation-law
With the federal government pushing inflationary policies (such as a tax cut / deficit increase during an economic boom), inflation is a real possibility — commodity prices are increasing, with oil already back over $70 a barrel recently (up from about $40 – $50 a barrel most of 2016) If a landlord is looking at a rent cap not inflation adjusted, it’s a strong incentive to raise rents every year, no matter if the landlord were otherwise planning a rent increase.
Also, in all cities there are a considerable number of units that are currently below market rent, because of anything from absentee landlords who don’t pay attention to landlord generosity toward long term tenants. Yes I know people usually don’t think of landlords as generous, and many are quite the opposite, but there are still quite a few landlords who might own an apartment building bought long ago at a low price, and who share their good fortune with tenants because the landlord can make reasonable profits at below market rents. This law, and all rent control, would discourage such behavior, because it would penalize these landlords when, for example, taxes and city fees go up, unless the landlord raises the rent every year, for example. Or if there’s some extraordinary expense — the law does not provide for sharing of costs, even if the landlord has been sharing benefits.
Hopefully if the law passes, it will be modified adjust the increase for tax and mandatory fee increases and inflation, and to accommodate units that are currently below market rentals.
Good points–I lived in an apartment from 2012-2016 with my landlord not increasing the price a dime. I suspect he would have considering used a different strategy if this rule was in effect. On the other hand, 9.9% increase per year would be less jarring than it all coming at once in one big increase.
Tenant relocation assistance. My outlook is more risk will return higher rents, increased credit screening criteria, less affordable housing. If only the city council would work with independent landlords instead of against us.