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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.

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