Monday, November 2, 2009

Rental Licensing "Я" Not Us - Landlords Speak

Rental licensing is likely coming to Bellingham. Over the past several years, the Zonemaven has collected a list of objections to licensing, mainly from rental owners but also from members of the public and our city officials. Here they are in all their glory, followed by my comments.

Rental owners are losing money. Were I a landlord, I would not admit to this for reasons that ought to be obvious. Nevertheless, according to landlords, rental housing is a dreadful business and those who engage it in condemn themselves to operating on a shoestring. Perhaps that is the reason for which we have a housing market in Bellingham in which ONLY over 50% of single family homes are rentals, so eager are homeowner-investor/landlords to throw themselves onto the pyre of landlord-ism. Perhaps the landlords might do us all a favor and sell their homes to cut their losses and allow families and young wage earners buy them for permanent residences. The landlords stop losing money and get their capital gains while the new homebuyers begin to accrue equity. A true win-win.

The Bellingham Municipal Code definition of Family discriminates against couples and gays. This is a red herring argument, trotted out repeatedly by landlords and some politicos, which has no basis in fact. It sounds good to an audience that does not take the time to examine the code’s wording and the exceptions provided. (Click here to read from the source document)

"Family: One or more persons related by blood, marriage, or adoption, or not more than 3 unrelated persons, living together within a single dwelling unit. For purposes of this definition children with familial status within the meaning of Title 42 United States Code, Section 3602(k) and individuals with disabilities within the meaning of Title 42 United States Code, Section 3602(h) will not be counted as unrelated persons. "Adult family homes," as defined by RCW 70.128.175, are included within the definition of "family." Facilities housing individuals who are incarcerated as the result of a conviction or other court order shall not be included within this definition."

If referendum measure 71 passes (click here for info), a simple amendment to the municipal code to accommodate domestic partners will suffice. This is the right thing to do and the Zonemaven supports it.

Rental ordinance proposed in Seattle defeated as too costly for rental owners. Bellingham is not Seattle. Its demographics are not remotely similar. Only 16% of rental housing units in Seattle are single family homes. The cost for rental owners for the licensing program in Seattle would have been on the order of $28 per year, hardly a burden by any stretch of the imagination. (Click here for a study on the City of Seattle) I would imagine that a rental owner of a badly maintained unit might consider the licensing program costly since such a landlord might
, for the first time, have to clean up a very large mess.

Only 3-10% of units are at issue and that it would be a monumental task to inspect. This contention repeats findings that cite averages nationwide for rentals that are found to have serious violations. The assumption is that the averages apply to Bellingham, however, the Zonemaven has found no data to back up that argument. Given the high rate of rentals as a percentage of single family homes (above 50%) in Bellingham and the fact that no inspections have ever been effected in any of these homes, unless related to work authorized by permit within the house, a statement one way or the other cannot be reliably made. The sure test is that of inspection, which the city of Pasco seems to do easily. Even with modest licensing fees, enough money can be raised through the program to hire a sufficient number of inspectors.

Cost of licensing will be passed on to renters. Given claims by landlords that they are on the razor’s edge of profitability, I am not surprised by this statement. The reality is that we are likely looking at a very modest fee for licensing rental homes, on the order of $30-$50 per year. (Read about the study by the City Council’s Legislative Policy Analyst here.)That translates into less than a dollar a week which is also less than the minimum dues for becoming a member of the Northwest Rental Owners Association ($60 per year for 1-2 units. Is that expense passed on to the tenant also?). Forgoing one latte hebdomadally on the part of the landlord is sufficient to absorb the cost of either dues or licensing. Now, if the idea is for landlords to pass on to the renters the cost of years of neglect in bringing their homes up to code, then there is a serious problem for the landlords in question. It is time to sell that shack as a fixer-upper and retire.

It is a bargain to rent. (I am not sure the reason for which this was brought up by a landlord but I feel obligated to mention it.) It sure is a bargain for those who do not mind sharing a single family home with 5, 6 or 7 others to reduce the per capita cost of the rental while mindfully violating city codes. Unfortunately, this shuts out many families of modest means who cannot afford elevated rents created by this artifice. Case in point is a 4 bedroom home directly across the street from me which was occupied by a single family paying rent of approximately $1,800 per month – not cheap to begin with. The landlord raised the rent to more than $2,200 and the family had to relocate to the county to find an affordable rental. Five unrelated students moved in a month later, oblivious to the fact that the prior renters, the family, had been run out by price gouging. Landlords do the math. Do not kid yourself.

Current codes suffice. Were everything hunky-dory, the Zonemaven would be writing about pruning trees, crossword puzzles or canoeing on Lake Gitchigoomie . Landlords game the system, however, the extent to which that is being done remains somewhat opaque since enforcement of codes in Bellingham is problematic. For example, abuse of the Accessory Dwelling Unit (ADU) in the rental market (Click here to read about that), abuse of exemptions to the municipal code (click here and here to read about this problem), connivance of management companies on rentals to groups of unrelated persons (click here to read an example of these shenanigans - last half of blog entry). Consider also this from a study (See para E of Executive Summary) on the city of Seattle:

"The analysis of one year’s housing code complaints raises questions about the limits of a system

that relies exclusively upon residents to lodge complaints about their housing. Prior research by

the City during the pilot inspection program in the late 1980s showed that most of the poor

quality housing discovered through that program had had no prior complaints. It is likely that the

same would hold true today. The City is highly unlikely to learn of all substandard units through

complaints by residents."

There is a tenant law already. There surely is one for the state of Washington, however, it is not sufficient and does not have a mechanism to create inspection programs for municipalities. If the state law were the cure-all, then cities like Pasco would not have gone through all the trouble to ensure that their statute be upheld by the courts. And then there is this gibberish taken directly from the Revised Code of Washington, 59.18.415:

“Applicability to certain single family dwelling leases:
The provisions of this chapter shall not apply to any lease of a single family dwelling for a period of a year or more or to any lease of a single family dwelling containing a bona fide option to purchase by the tenant: PROVIDED, That an attorney for the tenant must approve on the face of the agreement any lease exempted from the provisions of this chapter as provided for in this section.”

Can someone tell me the purpose of writing this gobbledygook as an aid to landlords or renters?

What is needed is education and communication. This is known as the Kumbaya defense. Its promoters suggest that all we have to do is sit down and talk about the problem and it will be solved by the mutual goodwill thus created. Never mind that the landlords themselves have proffered (see above) that a mere 3-10% of their group are problem landlords. In Bellingham, that translates into 300 to 900 problem rentals , based on city figures that there are approximately 18,000 single family homes, half or more of which are rented. (Click here to for a document with single family home figures as of 2006) Will these problem landlords suddenly see the light and rush to join hands and to sing songs around the campfire? Is the rental owners’ association doing anything at the moment to bring these black sheep fellow landlords into the fold? Check the Northwest Rental Owners Association website at It has been 5 years since the City Council organized the open meeting on rental licensing at the Cruise Terminal (read about that here) and there is not one shred of news on the association’s site indicating any sort of action on their part to clean up the bad rentals in Bellingham. The only time the landlords take any action is the moment rental licensing is proposed and then the howling begins.

So what is the landlords’ plan to fix the problem? To date that plan has been “Just Say No” to anything proposed. You can tell our city officials that now is the time to license landlords and provide a safer, more secure rental market, not only for thousands of students but also for families and young wage earners. Write to:

Mayor Pike:
City Council:


Anonymous said...

I think rental housing licensing would be a great thing. A program could easily pay for itself due to the high number of rental units in B'ham, it could offer dispute resolution between owners and renters which is non-existent in this town now and it would bring a sense of legitimacy to the is after all a business. A modest $25 per year per unit would provide upwards of $400,000 for the program......M. McAuley

Anonymous said...

Re Landlord Licencing

If Rental Businesses are allowed exemption from licencing why are ALL other city businesses required to be regulated.

Such DISCRIMINATION against small businesses is unfair. Ample grounds to sue the city and refuse licence charges

Rentals are businesses for profit Therefore they have no legitimate claim to exemption

Terry said...

Rental owners may well have been losing money for the past two or three years.

In my area, there was a flurry of newbie buying activity about five years ago. Rents peaked here in 2007, and a lot of those newbies might be both currently losing money and underwater on their mortgages.

There are some very good times ahead for landlords, as the approaching supply crunch arrives in the next few years. Smart (and solvent) landlords are taking their current losses, anticipating the windfall which awaits them.

Terry said...

Re: Cost of licensing will be passed to renters:

It's usually easy to raise rents a little every year, as there is expense and hassle in moving, and most renters will put up with an incremental rent hike to avoid the greater costs of moving.