Rent control in Seattle: Licata & Sawant make case at Town Hall debate

Edi­tor’s Note: The team at NPI is very pleased to wel­come Dominic Bar­rera to our staff. This is his first post for the Cas­ca­dia Advo­cate, con­cern­ing Mon­day’s forum on rent con­trol at Town Hall Seattle. 

Fol­low­ing the release of Seattle’s con­tentious HALA (Hous­ing Afford­abil­i­ty and Liv­abil­i­ty Advi­so­ry Com­mit­tee) report, a debate on poten­tial rent con­trol leg­is­la­tion for the city was held Mon­day at Town Hall Seat­tle. First-term city coun­cil­woman Kshama Sawant, who holds a Ph.D. in eco­nom­ics, joined pro­gres­sive cham­pi­on and out­go­ing city coun­cil­man Nick Lica­ta argu­ing in favor of explor­ing options to sta­bi­lize rent hikes in the city. Speak­ing in oppo­si­tion were real estate lob­by­ist Roger Valdez and Matt Man­weller, a Repub­li­can Wash­ing­ton State Rep­re­sen­ta­tive and polit­i­cal sci­ence pro­fes­sor from Ellens­burg. The debate was mod­er­at­ed by for­mer city coun­cil­man Peter Steinbrueck.

A diverse crowd that includ­ed land­lords, stu­dents, work­ers, and elect­ed offi­cials filled the First Hill audi­to­ri­um to capac­i­ty. The spat­ter­ing of red cam­paign t‑shirts made it appar­ent that Sawant’s fiery sup­port­ers were out in force as well. Rau­cous cheers erupt­ed fol­low­ing her every state­ment, and were some­times par­al­leled by inter­jec­tions or hiss­ing aimed at Man­weller or Valdez, both of whom too often ignored the nuanced debate at hand, choos­ing instead to lean on tired and over­gen­er­al­ized clichés of mar­ket-suf­fo­cat­ing gov­ern­ment intervention.

Nick Lica­ta opened by address­ing the inevitable lais­sez-faire argu­ment that the mar­ket­place pro­duces afford­able options when it is allowed to work freely. “Is it work­ing?” he asked. In a time when a major­i­ty of renters are pay­ing more than a third of their income on rent, the obvi­ous answer from either side of the argu­ment would be a resound­ing “no.” Through build­ing codes that pro­tect neigh­bor­hoods and tax codes that pro­mote devel­op­ment, Lica­ta rea­soned that the hous­ing mar­ket is already sup­port­ed by gov­ern­ment inter­ven­tions that work. As it stands, though, we have no way of address­ing sky­rock­et­ing rents as a result of spec­u­la­tive price goug­ing. Hous­ing con­struc­tion in the city has been boom­ing, yet prices have risen high­er in Seat­tle than any oth­er major Amer­i­can city since 2010, accord­ing to US Cen­sus data.

Despite the inflam­ma­to­ry rhetoric sur­round­ing the issue, Kshama Sawant clar­i­fied that her pro­pos­al is just a part of a larg­er plan to sta­bi­lize the rental mar­ket by link­ing rent increas­es to infla­tion, rather than the out­dat­ed mod­el of set­ting a price ceil­ing. Tai­lored pol­i­cy approach­es have been suc­cess­ful­ly imple­ment­ed in major cities across the world in recent years. Still, some loop­holes, such as those in San Fran­cis­co cre­at­ed by the Cos­ta-Hawkins act, which exempts sin­gle fam­i­ly homes and con­do­mini­ums from reg­u­la­tion even if they are being leased out, skew num­bers in cer­tain neigh­bor­hoods. While the ideas being dis­cussed for Seat­tle would hard­ly result in the kind of state choke-hold on the mar­ket that some oppo­nents claim, Sawant not­ed that even the slight­est attempt to address rent increas­es of 30–100+% (that gen­er­al­ly equate to eco­nom­ic evic­tions) will “bring down the entire might of the real estate lob­by,” because even though devel­op­ers and prop­er­ty own­ers would remain prof­itable, they would not be allowed to make the dras­ti­cal­ly inflat­ed prof­its they enjoy today.

Roger Valdez argued that rent con­trol dis­cour­ages com­mer­cial devel­op­ment and does noth­ing for new fam­i­lies mov­ing to the city. With a some­what brow-fur­row­ing metaphor, he sim­plis­ti­cal­ly likened the afford­able hous­ing cri­sis to a bread short­age, say­ing in such a case “we would pro­duce more, not impose price lim­its on the loaves we have.” The entire argu­ment, he claims, is also “a waste of time,” as rent con­trols are not cur­rent­ly legal due to a statewide ban imple­ment­ed by the leg­is­la­ture in 1981 fol­low­ing an ear­li­er Seat­tle rent con­trol move­ment. “We need solu­tions now,” he said, though the only spe­cif­ic he offered was a plan (also sup­port­ed by Coun­cil mem­ber Sawant) to sell unused pub­licly-owned land to hous­ing developers.

After a lec­ture about ban­ish­ing ide­ol­o­gy in favor of hard facts, Matt Man­weller (who has nev­er lived in Seat­tle) placed the blame for the short­age of afford­able hous­ing entire­ly on the City Coun­cil. He argued that land use and zon­ing reg­u­la­tions make real estate projects so cost­ly that prop­er­ty own­ers have no choice but to charge such high prices. He cit­ed the HALA report as sup­port­ing this point, say­ing the only way for Seat­tle to com­bat such dra­mat­ic price increas­es would be up-zon­ing and giv­ing greater free­dom to devel­op­ers. Man­weller also sees the city’s crack­down on micro-apart­ments as sti­fling inno­va­tion, argu­ing that the tiny dorm-style units brought afford­able options to the market.

A quick com­par­i­son of micro-apart­ments against oth­er rental units in the neigh­bor­hood shows that these “afford­able” options often rent for more than four times the price per square foot. Res­i­dents are also faced with greater restric­tions includ­ing being lim­it­ed to only one per­son per unit and three month lease terms that may allow for more fre­quent rent hikes. Valdez him­self lives in one such micro unit and spoke in sup­port of them. He failed to acknowl­edge, how­ev­er, that tiny does not equal afford­able. Valdez’s 220 square foot unit rents for $1,350/month, accord­ing to a Jan­u­ary 2015 report by The Stranger’s Hei­di Groover.

Ulti­mate­ly, Valdez and Manweller’s argu­ments against rent sta­bi­liza­tion leaned entire­ly on the premise that new hous­ing devel­op­ment is the only way to bring prices down.
Lica­ta not­ed, and the oppo­si­tion con­ced­ed, that new devel­op­ments are always built to be rent­ed for the high­est pos­si­ble rates. Devel­op­ers espouse a trick­le-down real estate the­o­ry, with prices eas­ing on old­er units as the new ones become avail­able. But with such rapid­ly inflat­ing prices for the new units increas­ing mar­ket rates across the board, new devel­op­ment alone will nev­er sat­is­fy the city’s need for afford­able hous­ing. Sawant agreed that ris­ing rents are nor­mal. Con­stant­ly sky­rock­et­ing rents, on the oth­er hand, are not a result of sim­ple sup­ply and demand. Instead, she says, we are wit­ness­ing delib­er­ate price goug­ing by devel­op­ers with the upper hand, hold­ing ran­som assets nec­es­sary to life and a thriv­ing city.

The opposition’s nar­row focus on com­mer­cial devel­op­ment inter­ests ignored legit­i­mate con­cerns about rent con­trol that would have been much more like­ly to res­onate with mid­dle-class Seat­tleites. Month­ly pro­ceeds from a rental home or two remain a nec­es­sary piece of total house­hold income for some work­ing fam­i­lies, and a pol­i­cy writ­ten to cur­tail cor­po­rate greed may have unin­tend­ed con­se­quences on this less sta­ble minor­i­ty of the mar­ket share. This is a key piece of the debate that should not be ignored, and an exam­ple of the inef­fec­tive­ness of giv­ing a lob­by­ist and an ide­o­logue the most pub­lic crit­i­cal voic­es on such intri­cate pol­i­cy pro­pos­als. Exemp­tions for such cas­es (say, any indi­vid­ual not tied to a larg­er real estate hold­ing com­pa­ny that oper­ates three or few­er units) could, of course, be writ­ten into any even­tu­al leg­is­la­tion. Still, uncom­mon sense would sug­gest that rent increas­es for these homes would track the larg­er local mar­ket trend, regard­less of their inclu­sion in the law.

The pro-rent con­trol side also failed to men­tion a key issue in the larg­er hous­ing cri­sis wors­ened by an unfet­tered rental mar­ket. Of the thou­sands of fore­closed homes in the Seat­tle-area cur­rent­ly sit­ting off-mar­ket, many of those most cen­tral­ly locat­ed are being held by spec­u­la­tive devel­op­ers for years, wait­ing for the right time to tear down, build up, and cash in.

They also did not speak to prop­er­ties being tak­en off the mar­ket and held as invest­ments by for­eign or out of state inter­ests, decreas­ing the sup­ply and dri­ving up prices for both renters and own­er-occu­pant pur­chas­es. The poten­tial of a sta­bi­liz­ing effect on rent increas­es in sur­round­ing sub­urbs that are not sub­ject to city pol­i­cy was anoth­er intrigu­ing aspect that should be tak­en into account as a way of improv­ing what is tru­ly a region­al crisis.

Lica­ta and Sawant did make very clear that, as it stands now, we are pay­ing incal­cu­la­ble pub­lic costs. Just as we as a nation can­not solve our health­care cri­sis with tax­pay­er sub­si­dies alone while allow­ing insur­ers and phar­ma­ceu­ti­cal com­pa­nies to run wild, Seat­tle can­not con­tin­ue to make sac­ri­fices as a soci­ety to sub­si­dize run­away cor­po­rate real estate profits.

This is only the begin­ning of what must be an in-depth, region­al con­ver­sa­tion with care­ful­ly draft­ed pol­i­cy that includes rent sta­bi­liza­tion and ten­ants’ rights. Rep­re­sen­ta­tive Man­weller him­self states on his leg­isla­tive web­site that “deci­sions on land use… should be made by local elect­ed lead­ers, not in Olympia.”

The state leg­is­la­ture must lift its Cold War-era ban on munic­i­pal rent con­trols so that Seat­tle can study, dis­cuss, and draft a com­pre­hen­sive hous­ing afford­abil­i­ty plan that pre­vents price gaug­ing by polit­i­cal­ly and eco­nom­i­cal­ly pow­er­ful real estate corporations.