NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Wednesday, July 22nd, 2015

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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