What the proposed landlord-tenant ordinance does (and doesn’t) do

Clarifying three common misconceptions about Spokane’s proposed ordinance.

Clarifying three common misconceptions about Spokane’s proposed ordinance.

This ordinance has been updated since this story published, read about it here.

“I’m not putting up with this bullshit,” said Spokane landlord Howard Haisley at a town hall last Tuesday night. That “bullshit” is a landlord-tenant ordinance the city has been mulling over different versions of for nearly five years. The city had invited landlords, tenants and tenant advocates to a January 10 town hall to hear everyone’s perspectives. Haisley joined a chorus of landlords claiming they’ll stop renting and instead sell their properties if the ordinance passes. Two closed-door sessions, one for landlords and one for renters, preceded last week’s town hall.

Spokane is in desperate need of more housing and rental options. At the same time, the city is trying to balance protections for its more housing insecure citizens — renters — by creating additional laws that guide the rental market in the city.

As RANGE has previously reported, the housing crisis is not cooling down for renters, and as rhetoric heats up, it’s imperative to understand what the proposed landlord tenant ordinance does and doesn’t include.

In November, the Spokane City Council introduced the most recent draft of an ordinance that would establish a local program to “implement common-sense, baseline standards for the rental of residential real property in Spokane, and to streamline and make more affordable the process of obtaining rental housing by establishing universal background checks, tenant relocation, and landlord mitigation programs.”

While many landlords generally believe the ordinance — and any attempts at regulation — are too much, renters and tenant rights advocates are generally asking that the ordinance go further to protect tenants. Which side the final legislation lands on, or if it can strike a delicate balance between the competing interests, will largely depend on whose needs and desires are being prioritized: landlords or tenants.

This was obvious at the town hall. At one point a man asked the room how many people knew about Washington’s Landlord Tenant Act that was updated last year. About a dozen people raised their hands. When he asked if they think it favors landlords or tenants, cries of “landlords!” and “tenants!” rose up simultaneously.

With so much riding on the details and passage of this ordinance, for renters and property owners alike, RANGE decided to add context and clarity to three common, repeated misconceptions about the ordinance.

Misconception #1: Landlords will need to raise rents because costs and uncertainty will increase

One representative of a property management company said at the town hall that they were going to start raising lease renewal costs if this ordinance passes because they don’t know how much it will end up costing them.

It’s not uncommon for businesses to take proactive measures to offset new costs and protect their investments. It’s common financial sense. But, the costs this ordinance adds aren’t mysterious. They’re in the legislation. So, let’s break that down.

For property managers with less than four units, so-called “mom and pop landlords,” here’s what the costs and requirements from the ordinance:

  • Obtain a business license at a cost of $127 per year. This is already required by the state of Washington, it’s just not enforced in Spokane.
  • Take a free online training of less than 1 hour the first time they get the business license.
  • Register each unit annually and certify that they comply with minimum habitable living conditions outlined in city code. This registration is free for people who own fewer than 4 units.
  • Use the approved universal background check systems that prospective tenants pay for, or use a different system and pay for it as the landlord.
  • Provide tenants a link to a notice of tenant rights, a voter registration form and a change of address form.

Property managers who have more than four units would be required to do the above and pay an additional $10 per unit per year.

The ordinance also provides some protection for landlords by creating a fund that would provide for repairs of damage in excess of the deposit by tenants that are under a housing assistance program. The fund will be paid for from the business license and unit registration fees. It also requires periodic and cause-based inspections from the city at no cost to tenants or landlords. The frequency of those inspections is to be determined, and all inspections need the consent of the tenants or a court order.

If a landlord is liable for providing a unit that is below the standards of habitability, they will have to reimburse the city for relocation costs of their tenant. This section of the law could create major costs for landlords who are renting uninhabitable housing to tenants.

So, assuming you’re not renting housing that violates city and state codes, a “mom and pop” landlord managing three units who opts in to the universal background check program, would have the additional hard costs of the business license, at $127 per year — which again, is already required by state law. If you wanted to pass those costs to your three tenants, you would need to raise each of their rents by about $3.52 per month.

The larger unknown — which would vary from property to property — is the theoretical cost of repairs that might be required as a result of an inspection by the city. Which, if a landlord is wanting to take good care of their properties and provide safe housing for their tenants, they would have to do no matter what.

Another important thing to note is that a common complaint from both landlords and tenants is that the city doesn’t enforce building code laws now, so additional laws won’t make a difference. But code enforcement costs the city money and resources. So, unlike other city fees that end up in the general fund, the landlord business license fees will go directly to inspections, the landlord mitigation fund and the tenant legal fund.

Misconception #2: The city will be conducting universal background checks

A concern voiced at the town hall was that a city department would be responsible for the background checks, which would open the process to bureaucratic ineptitude. This is the easiest misconception to correct because the ordinance, as it is currently written, states that the city will be contracting with a private company to do universal background checks. Here’s the exact phrasing from page 4:

“No later than one hundred twenty (120) days from the effective date of this section, the City of Spokane’s department of neighborhood services and code enforcement shall publish a request for qualifications (“RFQ”) from organizations that have the capability to provide certified universal background and credit checks.”

An RFQ is the process the city uses to find vendors for services, which means private companies will be selected to manage the background checks. This is similar to how the city contracts with ParkMobile to administer the digital payment system for downtown parking meters. Council President Breean Beggs said that it shouldn’t cost the city anything to contract because the RFQs will basically generate a list of approved companies that prospective tenants can use that will be accepted by all landlords. Additionally, landlords are still free to use their own service if they want to, they just can’t charge prospective tenants for it.

“Notwithstanding the remainder of this section, landlords may use a background and credit screening service other than the universal background and credit check service established by this section, but shall not impose any fee on a prospective tenant for doing so.”

Misconception #3: Seattle lost (insert large, fluctuating number) of rental units when they passed any landlord regulations.

This was the scariest assertion of the evening. We understand why it would freak people out. Spokane can’t afford to lose a single unit of housing, let alone thousands. Also, there’s nothing Spokanites of all stripes hate more than thinking we might become more like Seattle.

But it’s also the hardest assertion to validate. The underlying facts aren’t easy to pin down and, even if they were, it’s unclear how comparable Seattle and Spokane are in this regard.

Each person who spoke about Seattle phrased it differently, but they all had the same core argument: Seattle lost a large amount of rental housing because of costly, draconian renter protections, and Spokane will too.

There are three discrete pieces of that single short argument that need clarifying:

  • Is Spokane passing similar renter protections to Seattle?
  • Did Seattle actually lose units?
  • If, so what caused that loss?

First, Spokane is not implementing nearly the same level of renter protections that Seattle has been implementing for the last 40 years. Seattle’s first renter protection ordinance was its Just Cause Eviction Ordinance passed in 1980 (Washington lawmakers passed a bill in 2021 to limit reasons for evictions statewide).

A more controversial ordinance was adopted in Seattle in 2016 called the First-In-Time ordinance that requires landlords to offer units to the first qualified renter that applies in order to reduce discrimination. Spokane is not considering any similar measures.

The most recent protections Seattle passed in 2021 require landlords to give 180-day notice of rent increases and provide financial relocation assistance to tenants who have to leave because their rent went up. Spokane’s notice requirement currently sits at 60 days, along with the rest of the state, and the new ordinance doesn’t change that.

In short, nothing proposed in Spokane comes close to the protections offered by Seattle’s tenant-landlord ordinances.

Lots of numbers were thrown around at the town hall about the impact Seattle’s tenant ordinances had on the rental market. Andrew Rowles, representing the Downtown Spokane Partnership (DSP), said that when Seattle passed regulations on landlords in 2021, landlords sold off their properties and 9,000 rental units went off the market from June 2021 to June 2022. Others said that these properties left the market completely — meaning they weren’t sold to other landlords and presumably became owner-occupied homes or short-term rentals.

Darin Watkins, governmental affairs director for the Spokane Association of Realtors claimed at the town hall that Spokane would lose “6,000 to 8,000 units” if the ordinance passes. He did not specify if he was talking about rental or housing units. We reached out to Watkins for clarification and he said he got those figures from Rowles, a vice president at DSP. We reached out to Rowles and haven’t heard back. We will update if we find out where that figure came from.

As for Seattle, the most recent official data analysis we have is the latest Rental Registration and Inspection Ordinance (RRIO) reports from the Seattle Department of Construction and Inspections for the year 2021 and 2020. According to the report, the city had 156,172 rental units registered by the end of 2020 and 149,099 rental units registered by the end of 2021, meaning the total registrations decreased by 6.2% from January 2020 to 2021.

The report notes that new properties and units coming onto the market offset the percentage lost.

The report does not specify whether or how much of the decrease is due to properties being sold to be owner-occupied, landlords deliberately failing to re-register their units or because enforcement of renewal and registration was down at this time because of the pandemic.

There are unofficial data analyses that are more recent, but they’re paid for by landlords, so they come with significant asterisks. This report from Rental Housing Association of WA (RHAWA), a landlord advocacy group, found that between May 2021 and January 2022, Seattle lost a whopping 9,759 rental units.

Another report from RHAWA’s partner organization, Washington Multi-Family Housing Association (WMFHA), declares “Seattle’s Exodus of Rental Properties Continues” with “a net loss of 313 properties and added 240 units” between January 2022 to June 2022. To be clear, during that time — according to their report — the number of units went up from 149,125 to 149,365, despite the supposed “exodus of rental properties.”

It’s important to note that neither of the reports explain the methodology on how the data was processed or analyzed, only that it came from Seattle’s RRIO database.

The losses between May 2021 and January 2022 were still significant, especially when it comes to the number of single-unit properties (i.e. single family homes) lost. Here, context is important. In 2021, home prices were surging and people were willing to pay crazy sums for homes. The median home in King County sold for $828,111, up 14.2% from 2020, according to The Seattle Times. By the winter, the housing market in Seattle started cooling, which follows what the WMFHA report said when only 313 units were lost after that.

While we don’t have any hard data from landlords on why they sold their units, we can see that the sales mirrored housing market trends. The sell off of rentals in Seattle can just as soon be attributed to landlords cashing out in a hot market as it can be tied to any tenant protections.

Recently, Spokane’s torrid real estate market has also incentivized landlords to cash out. Both in Seattle and in Spokane, there’s little proof that tenant protections, and not historical convergences (think low supply, pandemic and good interest rates) that have driven the housing market through the roof and caused the sell-off of rental properties. In short: we could not find definitive evidence that passing regulations directly causes rental units to disappear, it’s not clear that Seattle definitively lost units during the time in question, and if they did lose units, it’s unclear how renter protections factored into that loss.

Read the DRAFT ordinance yourself here.

The city council is scheduled to vote on the ordinance on January 23.

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