Tacoma renters’ rights initiative deemed ‘punitive’ by some landlords and developers
A controversial renters’ rights initiative deemed “punitive” by some Tacoma landlords and developers will be on the ballot this November after a legal fight with the city came to a head in August.
As previously reported by The News Tribune, Tacoma for All advocates say their proposed amendments to the city’s rental housing code are much-needed to support renters facing unprecedented rent hikes and economic uncertainty.
But some small landlords and developers in Tacoma say the initiative will harm their livelihoods and make the housing market more unstable, resulting in more corporate ownership and higher rents.
The debate comes as Pierce County faces a housing shortage, with an acute need for moderate, low, very low and extremely low income housing. About a third of all households in Pierce County (over 100,000 people) are cost-burdened, meaning they spend over 30% of their income on housing. Around 44% of Tacoma households are renters.
Among the changes Tacoma for All is pushing with Initiative 2023-01 are requiring landlords to offer relocation assistance if a tenant cannot pay a rent increase of 5% or more, prohibiting certain evictions during the school year and winter from November-April and adopting a Landlord Fairness Code, which requires landlords to comply with tenant-protection laws before raising rent.
Tacoma for All and United Food and Commercial Workers Local 376 sued the City of Tacoma in August after the City Council voted to put a more moderate, competing renters’ rights measure on the ballot in opposition to Tacoma for All’s grassroots initiative, despite passing that measure into law that same night.
A couple weeks later, a Pierce County Superior Court judge ruled in favor of Tacoma for All and UFCW 376, striking the city’s competing initiative from the ballot as it was “not a true alternative” to the citizen’s initiative and could be “misleading and confusing” to voters, according to the ruling.
Would initiative force small landlords out?
Local landlord Debby Herbert rents out three units in two duplexes in University Place and Poulsbo, intentionally keeping monthly rent below market rate out of courtesy to her tenants. Herbert said she has raised the rent once about $150 in five years.
Herbert’s friend Donna Walters also owns and manages three rental homes in Tacoma. Walters said all three of her tenants are older and retired on fixed incomes. As someone who grew up poor, Walters said she tries to keep her rent well under market rate. One of her tenants has been living there for 17 years and another has lived there for 14 years.
Herbert and Walter said they understand the financial strain tenants are under, but say Tacoma for All’s initiative isn’t going to solve the affordable housing crisis in Tacoma. In fact, they say it will make it worse.
“A lot of the small timers like us, all we want is our tenants to just pay rent on time and take reasonable good care of the property. We’re not after the sky-high rates,” Herbert said. “I look at [my tenants] as my partners, and it’s hopefully a long-term relationship. I don’t want them feeling resentful towards me … it’s just not good business.”
Under Tacoma for All’s initiative, landlords must pay tenants at least two months rent if they decide to relocate after receiving a notice of their rent increasing 5 percent or more. Herbert said a rule like that punishes landlords who already offer housing below market rate, because then she could never raise rent enough to recoup her losses or even reach market rate without having to pay thousands out.
The cost of maintaining their rental properties has increased dramatically since before the pandemic, as have utility costs and property taxes, Herbert said. Both women have their retirement savings vested in their properties and said they fear another eviction moratorium could make it harder to evict a problematic tenant and result in tens of thousands of dollars in legal costs.
Herbert said it feels like landlords are “just an easy scapegoat” for the ills of the economy and high rent costs.
Many smaller housing providers likely won’t want to take the risk to continue operating under financial conditions imposed by the initiative, which would have negative implications for the market as a whole, she said.
“[Small landlords will] be hit the hardest,” Herbert said. “And we’ll be the ones selling or turning into Airbnbs, short-term housing.”
A tighter housing market here might cause smaller and corporate landlords to leave Tacoma to invest in other regions with fewer regulations, Herbert said.
It would also likely raise rents, which could contribute to the homelessness crisis as well, Walters said.
This landlord supports the initiative
Anne-Marie Cavanaugh is a small landlord who strongly supports Tacoma for All’s initiative and is a long-time union staffer at UFCW 367. Cavanaugh was once a low-income single parent who says she received Section 8 housing vouchers but now owns and rents out two houses in Tacoma and Seattle. She also is a renter in Seattle.
“I think that the fears and fear mongering is really overblown,” Cavanaugh said of the impact of Tacoma for All’s initiative if it passes. “Most of these regulations have been in effect in Seattle and other places and the sky has not fallen.”
Cavanaugh said she’s been able to make a decent profit as a landlord despite undertaking significant home repairs, offering affordable rent and not raising rent for five years in Seattle.
“For me, [it’s] similar to when businesses were faced with the initiative to raise the minimum wage, or ordinances that require businesses to give some sick leave to workers, or even paid family leave,” Cavanaugh said. “There are going to be businesses or small landlords or nonprofits that say, ‘The sky is falling, this is going to screw up everything for everybody.’ And many years later, minimum wage, sick leave and paid family leave are the law of the land in our state, and it’s all worked out just fine, and it’s protected the working people and the middle class.”
Cavanaugh said she sees housing as a human right that needs a community solution and says, “the whole market-driven housing policy is problematic” pushing more and more Tacomans out of town. As part of her job with the grocery workers union, Cavanaugh said she encounters many people who work yet are homeless because of rent increases.
“Renting housing is super profitable for many people, and I think it’s causing tremendous harm,” she said. “These regulations, I actually don’t think they’re enough, but I think they will help.”
Potential impact on affordable housing development
Affordable housing is hard to finance in general, and the Tacoma for All initiative threatens to make that process more costly and less attractive to developers down the line, said Ben Maritz, founder of private affordable housing development company Great Expectations LLC, which operates in Tacoma, Seattle and Portland.
Currently Great Expectations LLC is building 200 apartments in Tacoma, with plans to build 300 more and rehabilitate another 100 apartments in the city.
If the initiative passes, Maritz said, Tacoma will have some of the most “extreme” housing regulations in the Pacific Northwest, even stricter than Seattle or Portland.
Developers are facing increased costs in general, and inflation and high interest rates have been a barrier for new construction, especially in the affordable housing realm, he said. Measures that cap late fees, require multiple notices for rent increases and ban winter and school-year evictions would result in costs that would ultimately get passed on to tenants in the form of rent increases, Maritz said.
Measures in Tacoma for All’s initiative also would “chase away private capital” needed to offset the costs of building low- and middle-income housing, he said, “and the very people who this initiative is intended to help are going to be the ones that feel the brunt of it.”
“Forcing landlords to limit rent increases to rent percentages that are less than inflation is punitive,” Maritz said. “The result is, this wave of investment that we’ve seen gone into Tacoma is going to dry up. Tacoma will be seen as a city that is very risky to invest capital in.”
Maritz said the city of Portland has a number of tenant protections that “do a nicer job of walking the line,” including a recent rent control ordinance that limited rent increases to inflation plus 7 percent and regulations that showed if a tenant has applied for rental assistance they can’t be evicted for back payment of rent while the application is pending.
Many of those who are missing monthly rent payments are usually behind by a couple hundred or thousand dollars, Maritz said. Instead of measures like Tacoma for All is proposing, Maritz said he’d support the formation of a progressive rental assistance fund that helps tenants and landlords continue operating in the private market.
“If you believe that housing should be a business where you pay for what you consume, then this is, I think, an appropriate approach,” he said. “What I think we should be worried about is the next group, right? If we screw the people that invested in Tacoma in the last few years, where’s the next wave of investment going to come from?”
This story was originally published October 2, 2023 at 5:30 AM.
