A woman forced to move four times chasing a rental payment she could afford. A 21 percent hike for a unit the size of a shoebox with little natural light. A family-owned building, once affordable, bought by a developer to be turned into luxury apartments.
Seattleites aggrieved by expensive rents have plenty of anecdotes to illustrate their point, and potential villains abound. Greedy landlords or foreign investment? Heartless developers or endless property taxes? The Amazonian invasion or years of shoddy public policy? Take your pick, the result is the same — people forced out of the city because they can’t keep up.
Seattle doesn’t have one Jimmy McMillan, it has a chorus that echoes the perennial political candidate’s catch phrase: “The rent is too damn high.” Rents have been rising for the better part of a decade, only seeing a meaningful downtick in December 2017 compared to the prior quarter, The Seattle Times reported. Even so, the price decrease does not erase years of rising rents. It provides little relief to longtime Seattleites burdened by housing costs.
Solutions to the problem fall along the usual political and economic lines. Supply-side economics enthusiasts believe that the solution is more housing, potentially with tax breaks to secure lower-cost units in the medium term. Government interventionists have been forced into the position of funneling public subsidies to private landlords and leveraging scarce public dollars to create insufficient subsidized housing. A tight budget and a 1980s-era law prohibiting local government from regulating rents limits leave them a few cards short of a winning hand.
Advocates are looking to change the rules of the game.
A bill in the Washington Legislature would have removed the ban on rent regulation, allowing communities to “start the conversation” about how government could best step in to protect residents from excessive rent costs and displacement. It stalled in committee, but a local landlord group believes it or another such measure could come back in future sessions.
Proponents say that rent regulations are an important option in the fight to keep communities whole and allow people to stay in the neighborhoods they love. Landlord groups believe they know where that ends, at least in Seattle — rent-control policies that force small landlords out of the market, reducing the supply of units and hiking rent costs in the end.
What is rent regulation?
Depending on whom you ask, rent regulation is either a reasonable policy that balances owners’ profit motives with tenants’ security, or the economic equivalent of a nuclear bomb that will have wildly distortionary effects on the Seattle housing market, ultimately hurting the majority to help a few.
So you could say it’s controversial.
Rent regulation is an umbrella term that contains a multiplicity of policies that aim to do roughly the same thing: prevent the rapid, displacing rise of rents in expensive urban housing markets. Designs vary by community.
New York City, which has the longest history of rent regulation in the country, uses a dual system: rent control, which protects tenants who have held their places since 1971, and rent stabilization, which can help newer tenants.
Santa Monica, California, regulates buildings built prior to April 10, 1979, by controlling the amount that can be charged and providing remedies if a landlord collects excess rent.
In Berlin, Germany, the government sets rates based on housing conditions and then prohibits rent increases above 10 percent over five years, with some exceptions.
This variety is part of the reason that Xochitl Maykovich, a spokesperson for Washington CAN!, says a bill like HB 2583, which would have allowed cities to impose regulations on rents, not be referred to as a “rent control bill.”
“Do we have a specific policy in mind? No. This bill doesn’t create policy,” Maykovich said. “If this ban is lifted, policies would look different based on the part of the state.”
The Rental Housing Association of Washington (RHAWA) is concerned that the outcome in Seattle, at least, would be predetermined if such a bill passed. The City Council voted in 2015 to approve a resolution asking state lawmakers to repeal the ban on rent regulation, and Councilmember Kshama Sawant has a detailed proposal on her website linking housing costs to inflation while guaranteeing that rents would still provide landlords a profit and money for building maintenance.
The case against rent control
The chatter about rent control in Seattle makes Sean Martin, spokesperson for RHAWA, confident Seattle will move fast to pass a rent-control law should the ban on rent regulation be lifted.
“What it would look like, I don’t know,” Martin said. “We don’t see that as being a net positive in the market for people based on all of the data that you look at in cities that have it.”
If the City Council votes to impose rent control, Martin predicts that the city will see an exodus of small landlords and their older, less expensive units along with them.
“With those folks, a rent-control ordinance on top of some of the other ordinances passed already, the feeling that we get is that people are very nervous about increased and continued regulation of the industry,” Martin said. “At what point does it make more sense to sell that property and get out of the industry?”
It is a question raised almost every time the city imposes more renter protections on landlords, but here there be evidence. Studies on rent control, including one published by the National Bureau of Economic Research in January, suggest that the policy does have distortionary effects on the market, including causing some landlords to pick up sticks and go.
The most recent study looked at the impact of a 1994 voter-approved rent-control measure in San Francisco that extended a cap on annual nominal rent increases to smaller multi-family units that had been exempted under the original rent-control law passed in 1979. Rent control applied only to buildings built before 1980.
Researchers found that while rent control benefited those who enjoyed its protections, it led to a 5.1 percent increase in rents citywide, in part by decreasing the supply of units as landlords sold them off as condominiums or knocked them down to build new buildings. It was, in effect, a transfer of wealth from those renting market-rate apartments to those in rent-controlled units, the researchers concluded.
James Young, the research director at the Runstad Center for Real Estate Studies at the University of Washington, wasn’t surprised.
“Nothing good comes from rent control,” Young said.
Young has been making the rounds of the Seattle media scene preaching the gospel of inaction. His position: Sure, take a hard look at investing big in affordable housing (“That’s fine, but you have to be willing to spend the tax money and revenue to do that”), but question tax credits that keep units in new construction affordable (“That’s almost as naïve as rent control”) and under no circumstances bend to the temptation of regulating rents.
“It’s a political solution to an economic problem,” Young said.
Young believes that the “do nothing” philosophy will work out best in the end by giving developers certainty that the rules will not change on them without warning. And it’s one of the only things that Seattle’s policymakers haven’t tried.
Given concerns in the landlord community that the City Council will move to impose rent controls if given the opportunity to do so, Young was given a hypothetical: If he had a metaphorical gun to his head, and he had to come up with a rent-control policy that he felt would rein in rents and be minimally disruptive to the market, how would he respond?
Young did not hesitate: “Pull the trigger.”
Coincidentally, that was the same response that Roger Valdez gave.
Unlike Young, Valdez, director of Seattle for Growth, a developer advocacy group, does not fall into Young’s “do nothing” camp, but he does embrace the free market as a big part of any solution to Seattle’s housing crisis.
“If a price is going up for something it tells you a story, and that’s a story about scarcity,” Valdez said.
Policies like rent control don’t fix the underlying problem behind rapidly rising rents, but building more units will, Valdez argues. He likes market-based solutions such as microapartments, tiny units often occupied by students or other short-term tenants with a shared kitchen and other facilities that cost less than a traditional apartment. Formerly of the nonprofit housing world, Valdez also supports government-funded housing with wrap-around services for people in the most need.
If government intervention in the private markets is necessary, Valdez is all about the carrot of tax incentives rather than the stick of price regulation. He supports expanding a multi-family tax exemption, a program in which owners agree to keep some units at a lower rent in exchange for a break on their property taxes.
James Young called this technique “naïve,” and there’s a question over how much even an expanded program would lower rents, given that property taxes remain one of the few revenue sources for local government and the deal reached by the Legislature to fund basic education is expected to significantly increase property taxes in King County.
Valdez is willing to go as far as to give a direct subsidy to low-income renters. Just not rent control.
“Some people don’t like that because it’s not revolutionary enough,” Valdez said. “It’s not socking it to the man.”
The case for rent control
Aimee Inglis has heard it all before.
Inglis is associate director of Tenants Together, a California group that advocates for renters’ rights. She lives in San Francisco, one of the few cities more notorious for rents than Seattle. The average two-bedroom apartment in San Francisco clocked in at $4,373 in 2017, according to the rental site Adobo. Seattle was priced at roughly half that rate.
But Inglis isn’t just an advocate. She’s also a client.
Inglis lives in a rent-controlled apartment in the Castro, the heart of the LGBTQ community in San Francisco. She moved there in 2011 when the housing market experienced a slight dip.
“There wasn’t as many long lines for open houses as there is now, and the landlord didn’t know how to post things on Craigslist. His pictures were terrible,” Inglis said.
California allows for rent control, but a 1995 law known as Costa Hawkins curbs municipalities’ attempts to expand it and bans the use of rent control on single-family homes and condominiums. Tenants Together wants to repeal Costa Hawkins, allowing California cities to make moves to protect their renters.
Inglis doesn’t see rent control as the answer to California’s dire housing situation, but as a necessary intervention while other, longer-term solutions come online.
“We need this now and this is about basic fairness,” Inglis said. “In the longer term, we need to build more affordable housing, more land trusts, whatever people want.”
She knows the arguments against rent control: that it’s distortionary and that it benefits renters in controlled apartments at the expense of others. But, Inglis said, Tenants Together is just asking for something like what property owners already have: Proposition 13.
Proposition 13 is the boogeyman of California’s government coffers: an initiative that capped property tax increases at a low level. The initiative passed in 1978 amid high property taxes on the argument that capping property taxes would protect grandmothers from being priced out of their homes. It was also a deal to stop rent strikes being waged in Santa Monica and Berkeley, Inglis said.
If you give us Prop. 13, we won’t raise your rents, landlords said.
“So people voted in Prop. 13 but rents kept rising,” Inglis said. “People were pretty mad about that.”
Homeowners get to plan around their rising property taxes, knowing that they will go up only so much. Rent control simply allows renters to do the same.
As for the study on the impact of San Francisco’s rent-control policies, Inglis believes it proves less that rent-control policies don’t work and more that they’re too weak to accomplish their goals. The history of rent control is the history of landlords getting around rent control by converting their units into uncontrolled condominiums or knocking down old buildings and creating new, expensive housing.
“You can’t put aside the assumption that business people want to make as much money as possible and they’re going to behave the way they behave and it’s up to communities to have effective regulations,” Inglis said.
Maykovich, the spokesperson for Washington CAN!, put it differently.
“At what point are people making enough money? Seriously?” she asked. She was driving north after another visit to Olympia, lobbying lawmakers. “I am so sick of seeing so many people without housing. It makes my stomach turn.”
Unaffordable rents may make people sick. A recent study published in the journal Pediatrics found that stress caused by unstable housing and concerns over rent payments may negatively impact health. Rent burdens were associated with depression in adults and developmental delays among children.
Researchers spoke to caregivers of children aged 4 or younger in medical centers in five urban areas. Of the 22,324 families contacted, 34 percent had been behind on rent, made multiple moves or had been homeless.
Caregivers of young children who were behind on rent were more likely to report depressive symptoms, and almost twice as likely to report fair or poor health. The children did not fare well either — they were 20 percent more likely to go to the hospital, and 40 percent more likely to report fair or poor health.
The study provided analysis for families behind on rent, who had undergone multiple moves and who were experiencing homelessness. Families behind on rent showed similar results as families without a home at all.
Such health care costs are unlikely to be included in most economic analyses of rent control. Nor is the intangible nature of long-term community ties. A consistent knock on renters is that they are a transient population, less likely to be involved in the community than a homeowner who has invested for the long haul. In a city where rents are high and trending up, people who have hit their rent ceiling can’t afford to stay, and through no fault of their own.
Santa Monica’s Rent Control Board — the group that adjudicates rent increases and complaints from tenants and landlords — noted in its 2016 annual report that tenants under rent control have almost no choice but to be stable members of the community because the rents are, in the words of McMillan, “too damn high.”
“Except for people in high-income categories, vacating a unit they’ve lived in a long time would likely mean leaving Santa Monica altogether,” the board wrote.
There are other knock-on effects when people can stay in their neighborhoods, Maykovich noted. Children have better scholastic performance when they’re able to stay in the same school rather than switching. That means they’re more likely to graduate, get a job and escape poverty. Sick people are able to continue to see their doctors and access services available in urban areas.
“I do think that people have the right to stay in their community,” Maykovich said.
Time will tell if legislators and the city of Seattle ultimately agree.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Twitter @AshleyA_RC
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