And Just Like That, An Elegant Affordable Housing Plan Fizzles

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None dare call it rent control. But this legislative finesse does the job. Or it could have.

House Bill 1035 has died in committee for the second year despite offering a thoughtful, most likely effective plan to increase the supply of housing available to low-income renters. Those are the very folks most likely to drop into homelessness with loss of a job, sudden medical bills, or a wrecked older car that insurance won’t pay enough to replace.

The idea, developed by King County Assessor John Wilson and others, is pretty simple. Give landlords of qualified properties a real estate tax exemption in exchange for freezing rents at current levels for six years, renewable for six more years. (And who knows? If HB 1035 were law and successful there probably would be pressure to continue it.)

The result is, in effect, rent control – but not by fiat (which is contrary to state law). Rather, the general public pays to maintain lower rents at participating properties by spreading the cost of the tax exemptions across all real estate taxpayers, each seeing a small increase. Wilson estimates a $10 per year impact on other taxpayers, assuming there is extensive use of the 1035 exemption.

Importantly, 1035 would have applied only to rental housing buildings – along with duplexes and triplexes – at least 25 years old and currently renting below the market rate for similar-sized units. Apartments would need to be affordable for low-income individuals and families. At least a quarter of the units in a building would need to be affordable for people of very low-income.

Rep. Shelley Kloba (D-Kirkland), the bill’s prime sponsor, told a House Finance Committee hearing Feb. 8 that it was the loss of low-income housing, a trailer park nearby that made the issue real for her: the mobile homes were moved or razed for new development, the residents uprooted. HB 1035 would “relieve some pressure for redevelopment, Kloba urged. “Let’s create a tool that preserves what we already have.”

Because real estate tax is based on “the highest and best use” of property, increasing taxes can push owners to sell, particularly those with smaller, older buildings. Had HB 1035 become law the exemption of some properties from tax would have eased the development pressure
on older rental buildings and kept those apartments relatively affordable. Participation in the program required maintenance up to the standards applied to all rental buildings so apartment quality and neighborhoods would not suffer. The proposal was supported by the Rental Housing Association of Washington, a 5,000-member trade group serving landlords.

Wilson estimates there are “25,000 apartment units in King County, housing close to a quarter million renters” whose landlords could take advantage of the program proposed in HB 1035. “We think the time for this is now,” he told representatives at a hearing before the bill died short of enough votes to pass out of the House Finance Committee.

“HB 1035 could have a significant impact in saving older apartments and promoting development of affordable ADUs [accessory dwelling units, aka ‘mother-in-law’ apartments] or DADUs [detached accessory dwelling units such as backyard cottages],” Wilson wrote in an email. “I’m afraid if this doesn’t pass, we’ll see a lot of these older apartments sold, tenants ousted, and the buildings torn down for shiny, new, more expensive multi-family housing.”

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Dick Lilly is a former Seattle Times reporter who covered local government from the neighborhoods to City Hall and Seattle Public Schools. He later served as a public information officer and planner for Seattle Public Utilities, with a stint in the mayor’s office as press secretary for Mayor Paul Schell. He has written on politics for Crosscut.com and the Seattle Times as well as Post Alley.

12 COMMENTS

  1. I fear that the “homeless industrial complex” is so entrenched and entitled that promising new ideas such as this one run into an Olympia guillotine, at least for the first few years.

    • I’m innocent of any knowledge about this, but if there’s a homeless industrial complex, I wouldn’t guess that’s who went up against this one. What this bill has (not) going for it, is preservation. Older, affordable apartments. Everyone knows they’re getting torn down, no one really wants to how it affects affordability. I don’t know what’s become of the Seattle Displacement Coalition, but not remarkable at all if he became discouraged and finally gave it up. The director of Seattle’s permitting department when Pedersen asked during reappointment hearing whether he’d consider collecting data that would shed more light on that; he stoutly refused, and no council member said a word. Preservation of affordable housing doesn’t fit the narrative, i.e., real estate development industry deregulation.

      • I think you’re on to something here. The real problem with housing in Seattle is something that’s never spoken about…. greed. If you bought a house in Seattle 30 years ago for 100k, it’s worth maybe a million now. Any real effort to lower housing prices would hurt your property value, so it’s not likely that you really support any sort of market reform that would result in driving real estate prices down. Those zoning changes to allow 4 plexs in Seattle residential neighborhoods? Not going to happen. Homeowner/voters will make sure of that.

        The second part of the greed problem is local government is addicted to higher and higher property tax revenues. That’s why a preservation tax break isn’t going to work. The politicians have already spent the money. Rent control, however, lets the pols support “affordable housing” without giving up one dime in property taxes. I can actually see that getting pushed though ….

        • On the contrary, those zoning changes are very likely to happen. The bills are sponsored by 2 out of 3 of my representatives in the legislature. That’s exactly the kind of developer deregulation that’s now big in Olympia. HB 1035 on the other hand doesn’t contemplate any zoning changes, it looks to preserve the only kind of market rate affordability there is – the housing that’s already here – and that’s why it went nowhere. Who’s going to lobby for that? Who’s going to fund “urbanist” policy studies to show what we already know, that tearing down the old housing just makes housing costs go up? Certainly not homeowners, who in general have lost every time when we went up against developer interests.

          Right off hand I don’t see the connection to property tax revenue. Property taxes are set by the county to add up to the levied revenue. I’m not sure there’s any way for a municipality to get more revenue by increasing property values.

          • The big problem West Coast Liberals face is popular ideas that get traction with public end up getting cut down a local level. Because zoning is an ultra-local issue, I have little faith any State law passed is going to have any impact. Everybody is pro-growth, just not in their neighborhood. The State government can’t force density on the neighborhood of Queen Anne. The new Red Lining is channeling growth into poorer, high minority neighborhoods because they don’t have the political fire power to fight back. You’ll see this come into play in both Washington and California after pro density state laws are opposed at the local level my all the richer, or politically connected neighborhoods.

            I also think that any sort of tax break/rent control/preservation idea, (like HB 1035) will be apposed because local governments actually want older buildings tore down and new fancy ones built to increase tax revenue.

  2. good article but unfortunate it didn’t get more attention while the bill was pending or popular support could have been generated

  3. We can thank Representative Noel Frame, who is Chair of the House Finance Committee, for not drumming up support for this bill.

    Rep. Frame represents the legislative district with the most expensive real estate in Seattle (36th LD includes Magnolia, Queen Anne, and Ballard). Her constituents ought to consider that when she runs for the Senate seat being vacated by Reuven Carlyle later this year.

  4. Almost none of the previous solutions have worked, which makes it even more frustrating that this one isn’t given a chance. Meanwhile, the kvetching about homelessness being a blight on the city continues. Thanks for writing about this.

  5. Somehow people who think of themselves as progressives have adopted the libertarian notion that government regulation (zoning) is the only think blocking affordability, that dramatic increases in wealth here isn’t powering demand for luxury and space, and that selfish people who have families and want to live in houses are behind it all. (By the way, anyone who thinks land use decisions should be made locally with citizen input is a NIMBY!) These faux-progressives got all the oxygen during session, so only the anti-zoning bill got anyone’s attention. I’m sorry to say this is the first time I heard of this bill – after it’s already dead. This was a better idea, but it’s hard to argue with people when they’ve got religion.

    • The problem with West Coast progressives is they can’t win elections. Housing, policing, education…. the Left has a platform with not nearly enough elected officials to execute it.

      HB 1035 (the tax breaks for rent control on older units) was the sort of compromise Puget sound needs on housing. But the first rule of all Lefties seems to be “No compromises!”.

      *sigh* And Seattle needs some sort of realistic police reform.

      • I don’t think the anti-zoning anti local-input developer-tied so-called progressives who work for the gentrification industry can hardly be classified as lefties. They might have left cultural values, but they’re rooting for the other side on regulation and the economy.

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