Landlords are under attack in Tacoma — and beyond. Rent-control by any name is toxic | Opinion

This year Bellingham activist groups, including representatives from Whatcom Democratic Socialists of America and the Bellingham Tenants Union, are proposing Initiative 2, a measure that varies only slightly from a proposal that voters rejected in 2021.

The Initiative would effectively impose rent control by requiring landlords raising rent more than 8% to pay their tenants a “relocation assistance” fee equal to three months of rent, a penalty even harsher than the similar measure imposed in Portland which this initiative copies almost exactly.

The Bellingham initiative is not alone. In fact, it’s generally in alignment with an initiative on the ballot in Tacoma this year.

Tacoma’s Initiative 1 reaches more broadly, including other requirements plus restrictions on move-in fees, late fees, and pet fees, but the heart of the Tacoma initiative is also extreme relocation assistance fees if landlords raise rents above a threshold amount. The Tacoma initiative differs slightly from the Bellingham proposal by setting that threshold at 5%, setting fees on a sliding scale, and it has some exemptions for smaller landlords

In Seattle, what’s known as the Economic Displacement Relocation Assistance ordinance passed in July 2022, imposing similar fees. But it differs significantly in that the approach it takes is means-tested.

At least with means-testing, Seattle’s approach attempts to avoid the giveaway to wealthier renters that would exist under the Bellingham and Tacoma measures. But as in Portland, Seattle’s ordinance will serve to hurt housing affordability and increase homelessness.

Theory and real-world results show unequivocally that laws that artificially disincentivize housing providers from creating and retaining housing supply push low-income renters to the brink and even into the ranks of the homeless.

It’s no surprise, then, that reports from earlier this year suggested that Seattle’s relocation assistance ordinance was not delivering the impact sought by sponsors.

Bellingham, like Portland, suffers from housing unaffordability and the resulting high homelessness rate because of housing shortages caused by growth management, zoning, and other harmful regulations and restrictions coupled with high population growth.

Initiative 02 would not solve Bellingham’s housing shortage but would severely exacerbate the situation.

In the period when the relocation fee measure in Portland had full effect, the number of single-family detached rental units in the city declined from 27,656 units to 23,669, a loss of 3,987 units or 14%, as a report from ECONorthwest shows.

As a result, the very Portland measure this initiative copies caused the vacancy rate to plummet, yet — bizarrely — proponents of this Initiative cite the low vacancy rate in Bellingham as a cause of housing unaffordability.

Bellingham’s Initiative sponsors unsuccessfully claim their initiative is not rent control in an attempt to sidestep the fact that rent control in Washington is illegal. The harmful impact would fall most heavily on marginalized groups in the same way as explicit rent control. Real-world proof in other cities shows that such attempts to regulate rental rates hurt low-income renters. The negative outcomes include:

• Decreased affordability as new housing construction is inhibited.
• Quality of housing deteriorates, especially for lower profit margin, low-income housing, as landlords forego needed maintenance and improvements when they are unable to use rents to recoup their investments.
• Gentrification increases and accelerates. Rent restrictions discourage landlords and builders from taking risks with marginal renters. Further, landlords and developers are driven to convert to and build condos, driving low-income renters out of neighborhoods in favor of high-income condo buyers.
• Homelessness expands as marginal renters are forced out of the market. Initiative sponsors cite similar laws passed in Portland and Seattle but homelessness this year is up 20 percent in Portland and homelessness in Seattle is exceeded only in New York City and Los Angeles.

To solve the problem of low housing affordability, politicians need to cut down on the web of state, county, and municipal taxes, growth management regulations, zoning, and other restrictions imposed on building housing and adding rentals.

Research shows the approaches used in Initiative 2 are among the worst short-term because they undermine a long-term solution by disincentivizing developers and landlords, as a report from the Brookings Institute shows.

Less onerous would be a temporary program with a set end date that provided low-income renter aid sourced from general tax funds. Landlords would not be disincentivized with such a solution. The long-term solution must be pursued, though, because even this short-term program would exacerbate the supply/demand skew by creating more demand without directly addressing the factors limiting supply. More dollars would chase the same supply, which would lead to ever-higher rent increases.

Trying to emulate Portland policies will inevitably create harmful Portland-style results.

Witnessing the conditions along Interstate 5 when driving through the formerly livable City of Roses should confirm that trying the same tactics in Bellingham will further disincentivize new housing supply and have predictably similar negative results for the poor and homeless.

This story was originally published October 12, 2023 at 5:00 AM with the headline "Landlords are under attack in Tacoma — and beyond. Rent-control by any name is toxic | Opinion."