2023 Legislative Priorities
As Legislative session in Olympia nears the policy committee cutoff on February 17 the priorities for both caucuses start to become clearer, and we have a better idea of what we are facing. With six rent control bills already introduced in Olympia (HB 1388, HB 1389/SB 5435, HB 1625/SB 5615, & SB 5697), the Rental Housing Association has been working double-time to educate lawmakers about the dangers of rent control. WA state is short nearly 800,000 housing units already and will be short more than a million units by 2044 according to the Department of Commerce. This is why the Rental Housing Association of Washington, and our partners are supporting a host of bills that will lead to more housing creation.
Thank you for Coming to Olympia
Your Amazing Turnout Is Making the Difference
Thank you to everyone who has come to Olympia this legislative session, you have made a huge difference with your presence and your hard work educating lawmakers about our issues. This past week we had the RHAC Legislative Olympia Day and many of our wonderful members journeyed to Olympia to have their voices heard and we made a difference with lawmakers.
We are also very grateful to our many housing providers that came to the Rent Control hearings in Olympia on Tuesday, January 24 to fight the two rent control bills, House Bills 1388 and 1389. Your presence enabled us to have an incredible hearing and connect with lawmakers Opposing Rent Control. We had an amazing hearing, and it is YOUR time and participation that is making the critical difference for us in this year's battle against rent control!
We had well over 125 people join us on January 24 and we filled the hearing room and needed two additional overflow rooms for our housing providers! The tenant advocates were visibly surprised and not pleased! It was also great to see and hear the number of other industry association representatives, who came to speak against rent control, such as Commercial Real Estate Development (NAIOP), Community Bankers of WA, the WA Realtors, WA Business Properties Association, and Assoc of WA Businesses. That of course was in addition to all of our Rental Housing Association Coalition members including RHAWA, MHCW, WMFHA, WLA, NARPM, and the YVLA brought members from Eastern WA!
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The only problem with having so many wonderful housing providers join us in Olympia was that there wasn’t enough time for everyone’s voice to be heard in the hearing, but that is okay because the Chair and Committee could not ignore the number of us in attendance and in Opposition. Great job coming to Olympia and changing the narrative.
Included in our group photo are our lawmakers from the House Housing Committee who also oppose rent control including newly elected Rep. Spencer Hutchins (District 26, Gig Harbor, and peninsula); Rep. Andrew Barkis (District 2, Pierce County and Yelm), Rep. April Connors (District 8, Tri-Cities area), and Ranking member Mark Klicker (Distict16, Southeast WA) was the icing on Tuesday’s victory cake!
Update on Rent Control Bills
HB 1388 – Rent Control
HB 1388 applies to both residential housing and manufactured home communities, the bill prohibits a landlord from increasing rent more than the rate of inflation (CPI-U) or 3%, whichever is greater, up to a maximum or 7% above existing rent if the rent increase: (1) Is not justified by costs necessary to maintain the dwelling unit; (2) Is substantially likely to lead to the displacement of the tenant; or (3) Is used to avoid other tenant protections. The bill’s rent increase provisions do not apply to: (1) Dwelling units that are less than 10 years old; or (2) Tenancies for which the landlord is required to reduce rent to 30% or less of the tenant's income because of a federal, state, or local program or subsidy. The bill requires Commerce to calculate and publish the maximum annual rent increase percentage on September 30, 2023, and on each following September 30.
The bill creates a private cause of action for a tenant to recover actual damages, punitive damages equal to 3 months' rent and fees, and reasonable attorneys' fees and costs and provides that a violation of the RLTA or MHLTA is a violation of the Consumer Protection Act. The bill also prohibits charging a higher rent or including terms of payment or other material conditions in a rental agreement that are more burdensome to a tenant for a month-to-month rental agreement than for a longer-term rental agreement.
Additionally, the bill authorizes the Attorney General (AG) to investigate practices that violate this section. The AG may issue a cease-and-desist letter to prevent predatory practices that violate this section. If the recipient does not comply within five calendar days, the AG may file an action in court with a civil penalty up to $10,000 per occurrence and may imposes a civil penalty of no more than $25,000 per violation. When investigating, the AG may consider, in addition to any other relevant information: (1) The condition of the dwelling unit, including outstanding repair issues, maintenance costs other than for upgrades, property taxes, etc.; (2) Whether a rent increase was issued to evade protections afforded to tenants; and (3) Whether a rent increase will result in the displacement of the tenant or household.
HB 1389/SB 5435 – Rent Control
HB 1389, like HB 1388, applies to both residential housing and manufactured home communities. The bill prohibits a landlord from increasing the rent more than the CPI-U or 3%, whichever is greater, up to a maximum or 7%. Commerce is required to calculate and publish the maximum annual rent increase percentage. Further, the bill prohibits a landlord from increasing the rent in the first 12 months of a tenancy and defines "Rent increase" to include any new charges added to a rental agreement that were not identified in the initial rental agreement. For example, new parking, utility, or other charges. The bill requires a landlord that increases rent above the limit to include facts supporting the exemption in the written notice of the rent increase. The bill also contains a VERY complicated "banking" process to carry forward the ability to give an increase later if not given in that year. Finally, the bill creates a private cause of action for a tenant to recover actual damages, punitive damages equal to 3 months' rent, and reasonable attorneys' fees and costs.
HB 1625/SB 5615 – Local Rent Control
HB 1625 removes the State Preemption on Rent Control (RCW 35.21.830) allowing local governments to enact local rent control. The bill would allow every Local Government to create a different local rent control policy; that could mean more than 400 different local rent control policies across WA State. There is no floor in the bill to what a city could impose under local rent control including denying any increase whatsoever to housing providers. Allowing local jurisdictions to enact their own local version of rent control would be disastrous for many housing providers. The desperate need for “Middle Housing” solutions shows that cities have not found solutions for housing, why should we trust them with local rent control?
SB 5697 – Mobile Home Park Rent Control
SB 5697 only applies to Manufactured Housing, and it has added the UTC as the governing "rent control board" instead of the "Department of Commerce." The bill purports to authorize the utilities and transportation commission (UTC) to regulate the rates and services of all persons engaging in the business of acting as a landlord for a manufactured home community/mobile home park. The bill caps annual rent increases as follows: No increase during first 12 months of tenancy; At any time after the first year, increase may not exceed an amount greater than the rate of inflation as measured by the consumer price index.
Additionally, the bill contains vacancy control in limited situations where the tenancy is terminated by the landlord [landlord terminating a tenancy may not set rent for the next tenancy in an amount greater than the consumer price index]. The legislation expressly removes current law that describes leases having a term of 2 years or more; the intent must be to impair all such existing leases and prohibit new ones that do not conform to this bill.
This bill is essentially HB 1389, except WORSE. It applies only to Manufactured Housing Communities (MHC) and it has added the UTC as the governing "rent control board" instead of the "department of commerce." HB 1389 also contains the banked capacity idea and full control on sites where an eviction has occurred. HB 1389 actually required the department to calculate the annual increase percentage. The utilities and transportation commission (UTC) does not appear to have that function under SB 5697. Further, HB 1389 provided some illusory rights to recoup capital invested in the property over the preceding 12-month period, but SB 5697 does not allow any such recovery (or pretend to allow it as in HB 1389). We are strongly opposing this bill.
HB 1817/ SB TBD – Housing Gap Vouchers
We have been working on Housing Gap Vouchers for most of this legislative session and just this week we introduced that bill in the House and Senate (Senate version awaiting bill number now). The House bill HB 1817 is scheduled for a hearing in the House Housing Committee on February 14 at 4pm and we will be out in force and need YOU to show our support for this important bill.
Our Housing Gap Vouchers would create rental assistance vouchers in partnership with the public housing authorities for residents to bridge the gap between their income and their rent, especially helping with rent increases. The bill makes available rental assistance for seniors, low-income families, and members of marginalized communities living in manufactured housing or rental housing in Washington. These vouchers are targeted to 80% AMI and below, adjusted by family size and area and the voucher is good for up to 12 months and allows residents in need to reapply. The voucher amounts are enough to bridge the gap but not paying all of the resident’s monthly rent.
This is a critical priority for us as we need to help lawmakers understand that rents have increased because of many factors and that rent control is not the answer; the answer is providing targeted assistance to those low-income families and seniors who need the assistance.
HB 1628 – Highest State REET Tax in America on Properties Over $5 Million
HB 1628 would create a new tier in the state graduated REET Tax that would be the highest REET Tax in America on sales over $5 million. The REET Tax would be 4% of the selling price that is greater than $5 million, beginning January 1, 2025. The REET Tax shall be split as follows: (1) 30% to the Washington housing trust fund created in RCW 43.185.030; (2) 30% to the apple health and homes account created in RCW 43.330.184; (3) 15% to the developmental disabilities trust account created in the bill; and (4) 24% to the affordable housing for all account created in RCW 43.185C.190 for operations, maintenance, and service cost for permanent supportive housing as defined in RCW 17 36.70A.030.
Unfortunately, WA is becoming less desirable and less competitive for real estate investment. There are 15 states that do not charge real estate excise or transfer taxes at all. In addition, WA is one of 23 states that also allow a local option real estate excise or transfer tax on top of that. The higher our WA fees, the more likely to drive investment to other states. Multifamily housing and Commercial real estate have taken a lot of financial hits during the pandemic and are still working to recover, the idea of enacting the nation’s highest REET tax would not allow that recovery. With many companies still not back to work in the office, adding this extreme REET tax to commercial properties will only exacerbate that problem. We know that higher taxes and increased administrative burden have proven to consistently drive real estate investment out of the market and likely increase rental prices. Additionally, increased REET Taxes will discourage housing investment and development in Washington State, increasing rents, and worsening our housing crisis. Costs are already increasing for small housing providers; this will create even more burden on these small businesses and will lead to less housing in WA State. We are part of a coalition adamantly opposing this legislation.
Priority Bills in the Legislature in 2023
(C) = Commercial; (R) = Residential; (M) = Manufactured Housing; (A) = All
OPPOSED
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HB 1388 – Rent Control (R)HB 1389/SB 5435 – Rent Control (R)
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HB 1625/SB 5615 – Local Rent Control (R)
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SB 5335 – Capital Gains (A)
SUPPORT
- HB 1817 – Housing Gap Vouchers (R & M)
Housing Creation Bills
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HB 1611 – Permit Reform (R)
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HB 1404/SB 5117 – Reforms to Building Code Council (A)
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HB 1252 – Impact Fees (R)
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HB 1296/SB 5290 – Permit Streamlining (A)
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HB 1026 – Design Review (R)
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HB 1298/SB 5258 – Condo Reform (R)
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HB 1110/SB 5190 – Missing Middle (R)
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HB 1245/ SB 5364 – Lot Splitting (R)
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HB 1042 – Existing Building (A)
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HB 1351/ SB 5456 – Parking Requirements (A)
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HB 1517/ SB 5466 – Transit Oriented Development (A)