Seattle Channel: Do We Need More Rules or More Housing?
The Seattle Channel remains the last bit of ground in the city where debate takes the old fashioned form: each side of an issue argues for itself with some kind of moderation. Most of the usual media features Mad Libs about press releases (for example, Crosscut regurgitating various “reports“) and others like The Stranger have become what Pravda was during the Cold War, a reliable source of propaganda for the Communist Party (oops, I’m sorry, “progressives”) in Seattle. As someone we know might say, “Sad!” So please enjoy the fireworks and the balance here. It’s also worth sharing with people on the fence. Where’s the balance between reasonable regulation and a takeover of private property?
It’s Time to Defend Yourself. Will you?
Two things amaze me about the Seattle City Council’s proposed ban on evictions; first, that it is happening at all, and second, the slack response from the real estate community. Now, for sure, I’ve had a spike in interest in what we can do to stop this. Can we fight it in court? How can I help? But there seems to be a kind of numbness out there and a general lack of urgency about what this means. I’ll talk about both briefly.
The Council is now functioning in what I’d call “Glitter Globe Mode;” it’s as if they live in their own little novelty version of the city sealed in plastic and from reality. Getting evicted is traumatic. People who are evicted are “victims.” It’s as if the Council was talking about car accidents, robbery, or lightening strikes. Eviction, in their mind, has absolutely nothing to do with lease violations or non-payment of rent. The view is that anyone who owns property beyond their own housing unit, has “extra” property. It simply is unfair, maybe even criminal to make other people pay to use that to live in.
Second, on LinkedIn, I saw a person from the real estate community, someone I respect, praising Representative Nicole Macri’s proposed legislation to make it easier to build backyard cottages. He seemed annoyed, put off, when I reminded him and people on the thread of his post, that that same legislator was in the midst of seriously complicating tenant-landlord law. I pointed out that even if what Macri was proposing suddenly enabled lots of people to build DADUs, the other legislation she is proposing, and the reckless legislation being proposed by the Seattle City Council, would make it impossible for these people to become landlords.
If you’re reading this and you make your living from real estate transactions, housing management, or building housing of any kind, your world is under attack. If you don’t think so, maybe we need to have a hear to heart talk. This isn’t something that is happening to someone else, it’s happening to you. I understand if you don’t own or operate rental housing. I get that you’re afraid of what’s going to happen to your permits. I know that you don’t want to be part of controversy. But if you don’t get involved in the effort to oppose these kinds of incremental infringements on the value exchange between people in the housing market, soon it will be your business that is being mandated to forgive debt, pay fees, fines, taxes, and requirements about who lives where, how much they pay (if anything), and how long they can stay there.
The goal of socialists is clear: the elimination of private property. In it’s simplest sense, that’s what socialism is. People must be willing to hand over their private property for the public benefit as defined by people who are in government. Is that what you want? Are you prepared for regulation that generally is based on making sure buildings are seismically sound, fire proof, and safe to inhabit expanding into determining how much money you make? Will investors continue to back your projects if you can’t promise them that you’ll get paid so they get paid back for lending you money?
Oh, and if you’re reading this and you’re worried about the “eviction epidemic,” don’t. There isn’t one. Yes, there are evictions happening during this period of cold weather. But if the City Council really cared about people getting evicted into homelessness they’d realize that it is a manageable problem. There were 558 removals during the whole of 2017 out of 174,000 rental units (a number used by Sawant in the hearing), or about .3 percent of rental households. There are millions of dollars set aside at the United Way to do just this work. Yes, evictions are traumatic but there are resources available to help avoid homelessness after eviction.
And if you’re not in Seattle, think again about believing this isn’t going to happen in your community. The City of Oakland just joined Minneapolis in banning credit checks for housing. Cincinnati just required deposit insurance rather than cash security deposits. Rent control is being talked about almost everywhere, and the false narrative of the “eviction epidemic” is fanning the fires of a wider effort to commandeer private property for public use.
We’ll keep doing what we can against this as long as we can. But we aren’t the juggernaut that other side says we are. Most large scale property owners, the “corporate landlords” believe they can absorb this onslaught; many of them will snap up what gets sold by smaller fish that can’t survive anymore, making the reality of “corporate housing” a reality, and thus a further rationale for more regulation and destructive infringements on people’s ability to make a living providing housing.
As I keep saying, there two things you can do. First, donate to keep us going. We were the only organization at the hearing last week on the eviction ban. We’re trying to expand our reach to help others across the state and country. It’s online, and it’s easy.
Second, you can send a message to the Seattle City Council by going to our petition page. We’ve made this easy too. Don’t regret, months or years from now when the next “compassionate” rule or regulation passes threatens your ability to provide for your family. The time is now, the day is today. Don’t regret this moment because you did nothing. The link is here: http://www.seattleforgrowth.org/eviction-ban-not-compassionate-not-needed-not-legal/
“Somewhere I read . . .”
I wrote this post a few years ago, but I still read it from time to time. It still resonates with me. Over the last year, I think I’ve seen a worsening of the use of race to divide people over housing policy. The discussion of single-family zoning has added to this polarization. I said, at Forbes, that housing policy didn’t cause racism and it won’t solve racism, or poverty. It’s worth reflecting on the spirit of Martin Luther King’s speech and the words, “Somewhere I read.” Do words matter any more? Do we believe in a system of value exchange, in price as a measure of supply and demand, and the need to end zoning and overregulation of housing? I’m not sure.
Martin Luther King was a man of words and action. I’m ambivalent about the official holiday celebrating his life and work. Is he worthy of the honor? Of course. But I worry that the dominant culture may have used the holiday to tame and commodify a radical legacy. King was not as radical or extreme (a matter of perspective) as some of his colleagues, but his message was a profoundly challenging one. In my years in the housing world I’ve seen a dangerous and detestable appropriation by the dominant culture of the suffering and struggle of poor people of color. Here’s what I wrote to a colleague a while back about this:
The rules for engagement on race in this town need a rewrite, although I know they’re unwritten. Absolutely race is a real factor, and racism is something that does actual damage to real people physically, socially, psychologically, and economically. But I see a sort of secondary damage being done when the real harm of racism is appropriated by enfranchised, privileged white people as a basis to protect themselves.
I mean when the white homeowner in Columbia City says, “all this new growth is hurting people of color by gentrifying the neighborhood. And our city is segregated!”
A nonsensical grab bag argument to protect their own asset, oddly, at the expense of the realities of racism. It’s as if all that racism is being cashed in by the homeowners to make the argument that nothing should change. Why shouldn’t we build more housing in Columbia City? Racism? Oh. Ok. The dominant culture commits acts of racism, then uses the suffering of racism to protect itself. Nice work. And the final straw that breaks my camel’s back? When Rebecca Saldana* is the one saying those things. The circle, as they’d say, is complete. Racism, then racism used by whites to protect themselves, then that protective use given an ethnic voice. Mean? Maybe. The truth. Unfortunately I think so.
So you, as a person of color, can make that distinction clear. Yes, there is racism. No, [fighting racism is] not about protecting [someone’s] million dollar home, it’s about doing what we can to undo the damage done and make sure we limit it in the future. Hard to do in a campaign context, but it’s what we should strive to do to keep us sane.
There is nothing more outrageous that seeing suffering turned into a talking point, and scarcity of an essential, like housing, twisted into the basis for an embargo. My favorite passage of King’s final speech I call, “somewhere I read.”
All we say to America is, “Be true to what you said on paper.” If I lived in China or even Russia, or any totalitarian country, maybe I could understand some of these illegal injunctions.
Maybe I could understand the denial of certain basic First Amendment privileges, because they hadn’t committed themselves to that over there.
But somewhere I read of the freedom of assembly.
Somewhere I read of the freedom of speech.
Somewhere I read of the freedom of press.
Somewhere I read that the greatness of America is the right to protest for right.
I can imagine an adaptation for Seattle.
All we say to Seattle is, “Be true to what you said on paper.” If I lived in Oklahoma or even Alabama, or any place that was full of climate deniers and racists, maybe I could understand some of these drastic measures taken against housing production.
Maybe I could understand the redlining of the Rainier Valley and Central District, and calling it a “low opportunity area,” in the name of protecting the people who live there from “displacement”
But somewhere I read about the Growth Management Act.
Somewhere I read that we’d grow both housing and opportunity in our cities.
Somewhere I read that Seattle is a Sanctuary City.
Somewhere I read that Seattle is “a welcoming city.”
I often hear his voice when I see an angry mob of mostly white single-family homeowners railing against new housing.
I hear him saying, “Somewhere I read. Somewhere I read.” Then I remember his call to strength in the face of that mob.
And so just as I say, we aren’t going to let dogs or water hoses turn us around, we aren’t going to let any injunction turn us around.
He calls us not to let the rules and regulations and taxes and fees and slurs “turn us around.” I hope we’ll heed that encouragement as we work to build more housing of all kinds, in all parts of the city, for people of all levels of income.
*A bit of background to my reference here to now Senator Rebecca Saldaña. Back in 2012, Saldaña was an organizer for something called Puget Sound SAGE, an organization that advocated for money from Sound Transit to offset impacts from “gentrification,” a term for neighborhood change that is impossible to measure or quantify.
I wrote a pretty sharp critique of a report produced in part by SAGE that said the the Rainer Valley where light rail travels through, should remain “majority minority;” in other words people of color should always be at least 50 plus one of the population. I think this is inherently racist, and I said so in a column in Crosscut, called Troubling: Report says neighborhoods along Sound Transit line should stay the same ethnically
No other organization or person called this out, not then and not now. Saldana was not happy with me and had the courage and decency to sit down with me face to face and talk about this. The result was inconclusive, but she followed with her own column in Crosscut titled, Getting transit-oriented development right in Rainier Valley
I found SAGE’s ongoing use of people of color like Saldana to make the argument made by mostly white single-family homeowners that no development should happen in the Rainier Valley disturbing. I still do. It isn’t that people of color didn’t then or now advocate against development in the Valley, but it’s single-family homeowners, mostly white, who gain the most from stasis and scarcity there. Interestingly, I’ll be a speaker tomorrow night at the Center for Latino Leadership’s annual gala along with Saldaña and others.
Warning From California: Regulation Ruining the Golden State
This guest post is from the Executive Director of the Apartment Association of Greater Los Angeles, Daniel Yukelson. This is an edited version of his original article. You can read the full article here.
Our state legislature and Governor Newsom like to refer to Assembly Bill 1482 as an “anti-price gouging” measure, which it is not. It is pure and simple price controls and regulation in the continuing war on rental property owners. It seems that renters in California along with our elected officials have no grasp on the economic impacts of price controls. Perhaps they should consult with the more than 90% of economists surveyed that have come out against rent control. As Swedish economist and Socialist, Assar Lindbeck, once said: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” The time has come to paint the color of our state brown rather than golden.
So, why would so many economists come out against rent control? Well, just look at the impacts of Federally mandated gasoline price controls during the 1970’s. They resulted in severe shortages at the pump – for those that can remember, we could only buy gasoline a few days each week, and we experienced long lines at the “pump.” The same has become true when it comes to rental housing. Rent control is just another form of price controls, and the result of 40-plus years of rent control and tenant protection regulation has been severe housing shortages, particularly shortages of affordable rental housing, skyrocketing rents, gentrification and rapidly growing homelessness populations. Price controls never work and won’t solve the severe housing shortages we find ourselves living under – they do not produce one unit of new housing.
Despite the voters’ loud rejection of the Proposition 10 ballot initiative for statewide rent control, our state legislature and governor pushed it through this year anyway. So now, we Californian’s are “stuck” with Assembly Bill 1482. As a result, here’s a short synopsis of what we can expect for high-demand, limited supply areas in California:
- Owners will scrutinize tenant applicants and be far more selective. Gone are the days of taking a chance on the lovely couple that seems to have potential – why take a chance of getting into a situation that might only result in a “just-cause” court battle?
- Owners will raise rents consistently every year and up to the maximum allowable amount. Gone are the days of forgone rent increases knowing that someday you can “catch-up.”
- Tenants will be reluctant to give-up their rent-controlled units, forgoing opportunities to buy property of their own, forgoing job opportunities, commuting long distances to work, or staying in place long after the children have gone and the 3-bedroom unit no longer suits their needs. As a result, there will be far fewer rental units available for the next individual or family that needs one.
- Over time, renters will be far less likely to want to own property of their own. Yet, property ownership in the U.S. has been one of the primary paths to financial security and to achieving the American Dream. Some of the many wealthy renters may choose to purchase property of their own, but never give up their rent controlled apartment near the ocean that is being kept as a “weekend pad,” and which then keeps rent controlled units off market and unavailable to the next family or individual in search of housing.
- Gentrification will continue at a rapid pace – study after study has proven that higher income earning renters are the ones that mostly benefit from rent regulation. Rent control is all about average income property owners subsidizing the lifestyles of their wealthier renters, and that’s completely unfair.
- Available rental units will be reduced as owners begin looking for the “exit ramp,” by converting their properties into condominiums or other non-rental uses.
- Owners will defer maintenance to make-up for lost revenues and to conserve their cash flow. A likely outcome in many neighborhoods could be blight.
- Rent regulations and price controls will surely end up discouraging investment in housing. As a result, any attempt to “make-up” the housing deficit to meet ongoing and growing demand for rental housing will be a “flat-out” failure.
- Assembly Bill 1482 is merely like a “gateway drug” that will encourage more and more local jurisdictions to adopt more restrictive forms of rent control and tenant protections in an effort to pander to a vocal and well-organized population of renters.
These expectations are not based on theory or guesswork – sadly, we have seen these scenarios playout over and over again during the past four decades or so that we Californians have suffered under rent regulations and price controls. Our elected officials just don’t get it. Like the definition of “insanity,” you just can’t keep trying the same thing over and over and expect a different result!
Bye, Bye to Uber and the Rest of the “Gig” Economy?
The passage this year of Assembly Bill 5 will eventually kill what is known as the “gig” economy by eliminating most, if not all, independent contractors. This new law will drastically change the way that freelancers and people in the so-called “gig economy” are paid moving forward. The law reclassifies what constitutes an “independent contractor” as a way to increase benefits for employees – which means higher costs for employers and more payroll taxes for California. The law will negatively affect truck drivers, freelance journalists and contributors, and ride share drivers among many others.
Companies such as Uber and Lyft for ride sharing, Rover and Wag for dog walking and babysitting, and Grub Hub for food delivery will ultimately cost us Californians far more for these services. Of course, there’s always a chance these services won’t continue servicing us here in California and may eventually become a thing of the past. That’s sad.
Some of these “gig” economy companies, such as Uber, are very new and do not yet make money. So, if they cannot make it on their current business model, the additional expense of adding thousands of employees will certainly not help their ability to survive. How many of the thousands of Uber and Lyft drivers will eventually be out of work because Sacramento has made a land-grab for more payroll taxes. In the apparent attempt at “fairness” to treat “gig” economy independent contractors as employees giving them all the benefits of employment (e.g., healthcare, retirement, etc.), this whole scenario really seems a far cry from fair. Who in their right mind thinks we Californians are better off without Uber or Lyft? Watch out, this might only be the beginning.
The legality of the new law is under question as freelance journalists have filed suit to try and block the law from taking effect after it was announced by a national online news service that they would not renew contracts with freelancers from California because the state requires them to be paid minimum wage as well as be given benefits and perks typically reserved for employees. Gig economy company Uber has threatened to refuse implementation of the law’s changes. Let’s just keep our fingers crossed!
Our Once Great “Gold Rush” is Quickly Becoming a “Gold Exodus.”
With nearly 400,000 restrictions written into our laws and our ever-increasing tax burden, the fuel that has driven our economic engine may soon be flaming out. The California of today has too few available affordable housing units to meet demand and has no prospect of ever meeting that demand given the cost and regulatory burdens of doing business here.
The California of today is losing thousands of its citizens, many of whom are the State’s millionaires, to other more financially attractive and business friendly states, and in their place, California is gaining thousands of new immigrants many of whom are in need of costly services while they gain their footing in a new country. The California of today is a large and growing bastion of homeless populations with no real, workable solutions coming out of Sacramento or from our local elected politicians – they’ve merely chosen to pick on the one group that is actually providing housing, we rental property owners, as the blame for all the homelessness and mental illness we see on our streets today.
Dear Legislator, be careful what you wish for and watch out for the unintended consequences of your regulations. This is not the California I grew up in and certainly not the California my family came to decades ago. While the weather is still great virtually all year round in spite of the seemingly endless wildfires, a cold strong wind has begun blowing down upon us from Sacramento and very soon the skies will turn cloudy and gray. The dark shadow of California political ineptitude will soon be thrust upon all of us. Stay tuned or take the next exit!
Daniel Yukelson is currently the Executive Director of The Apartment Association of Greater Los Angeles (AAGLA). As Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm, and had served in senior financial roles principally as Chief Financial Officer for various public, private and start-up companies. Prior to joining AAGLA, Yukelson served for 12 years as Chief Financial Officer for both Premiere Radio Networks, now a subsidiary of I-Heart Media, and 3 years for Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills where he was involved with the development and construction of the Waldorf.
Maybe It’s About Time for a Tax on Amazon
As we head into another legislative session and a new Seattle City Council arrives at work today, I am coming around to the idea that we probably should consider taxing Amazon for housing. Remember, I have always opposed the idea of a tax on jobs; you don’t tax things you want, but things you don’t want. Why stop job creation? I think that the notion, offered in the past, of taxing companies based on the number of employees they have, is a seriously bad idea since it discourages job creation. So the tax on Amazon I’m thinking of would be just that, a tax on the “tech giant” for housing, not based on employees and hopefully limited only to that company. Here’s my thinking.
First, Amazon knows how to run its business but it apparently knows nothing about electoral politics. They famously threw a bunch of money at last year’s city council election only to face an entirely predictable backlash from late voting younger voters. Keep in mind that many of the people driving a knife into Amazon’s favored candidate, Egan Orion, probably mailed their ballot just before picking up a bunch of junk they ordered on Amazon. There is no doubt that the vote was a repudiation of Amazon’s clumsy effort to shoehorn a lefty, gay, white, man riding a scooter into the office held by an adherent of Leon Trotsky, Kshama Sawant. If Amazon had any sense at all, they would have spent time trying to recruit a candidate that was both charismatic and not the socialist-lite, Orion. And they would have stayed out of the campaign to avoid making the election a referendum on them — and the “head tax.“
Second, since they didn’t bother to pay any attention to who they were supporting (had Orion won, he’d almost certainly have supported a tax on Amazon in the end), and they functionally did make the election about them, we’re stuck with both an emboldened Sawant and new Council President, Lorena Gonzalez. As I’ve said, Sawant is more of a performance artist than an actual policy maker. Gonzalez, however, knows what she’s doing, and she’s not happy. She’s aiming to stunt the ability of businesses of any kind to support candidates in the future and, likely, will reintroduce some kind of “head tax” this year. Add to this all the local bluster about banning evictions in the “winter months” and rent control, and we’ve got a real serious problem, much of it attributable to bumbling by Amazon.
Third, the monster that has been unleashed and empowered by Amazon, a Seattle City Council full of resentment and a sense of mandate to punish business, has as its target the real estate and housing community. Remember we have a housing “crisis” and an eviction “epidemic!” Of course, we have neither. You can’t measure a “crisis” and the Council hasn’t even bothered to try. High prices for housing are caused by lack of supply in the face of rising demand. The Council could fix that by allowing more housing. Of course they’ve done the opposite. As for evictions, I don’t think 585 removals a year is an epidemic and we have no established endemic rate of eviction; how many should their be? The answer for advocates, of course, is none. “Let’s start with winter,” the Council will say, and “see what happens.”
Fourth, Amazon’s gross incompetence in politics is only matched by its treachery in efforts to preserve itself and its image. During last year’s legislative session, David Zapolsky, Amazon’s lawyer, orchestrated an effort to imply that Seattle’s “tech giants” supported really bad legislation about eviction. While I’m positive that Mr. Zapolsky learned a great many things at Columbia and Berkeley, apartment management and operations was not among them. He know’s nothing about what it takes to build, manage, and operate housing in Seattle or anywhere. If he does, he did a prodigious job hiding that knowledge in the letter he got the Seattle Mariners, Microsoft, and others to sign urging the passage of legislation that has done little to stop eviction but has created more confusion and frustration for tenants and building owners and operators. The 14 day notice requirement to “pay or vacate” that passed, for example, is just that, a required notice. But it’s as if the author of the bill expected that it was an incantation that once written down on paper would just end evictions. It is a requirement, not an effort to intimidate tenants and it is letting them know they have two weeks to pay!
Here’s what the Zapolsky letter said about housing:
“Our communities are more robust when everybody has a stable home. We want families to be able to live in Washington without fear of losing their homes because of one medical emergency, temporary unemployment, or other hardship. Yet our state’s housing crisis has hit low-income families the hardest, driving out families who have lived in their homes for years.”
So let’s put Amazon’s money where their lawyer’s mouth is. To be clear, Amazon’s lobbyist in Olympia said the company disavowed the letter, saying it was Zapolsky’s own initiative. Amazon should maybe run a bus company; buses are handy to push people in front of.
This is the 999th post on this blog, and perhaps it may be the last given all of Amazon’s power and money. But when I consider all of this, it makes sense to me that the real estate community would pal up with the socialists and lefties and the Mariners and whatever assortment of resentful and craven groups are out there and demand that Amazon pay for the impact they’ve had on housing. What would this accomplish? Well maybe if we all grabbed Amazon by the ankles and shook as hard as we could, enough money would fall out of their pockets so non-profits and others clamoring for rent control, eviction bans, and other bad ideas might just be satiated and go away. Is there a bottom to the quest for cash by the activists and non-profits? Well, we could use Amazon’s money to find out. They can certainly afford it, right?
Oh, wait, I hear someone wondering, “Won’t it hurt their business?” Hmmm? There is a great line in the 1993 remake of The Fugitive uttered by the US Marshall played by Tommy Lee Jones: “I don’t care!” Amazon’s Zapolsky didn’t really seem to care either about the impact of eviction legislation on the business of managing rental housing or about how messed up things would get when they dropped a cash bomb on the election. Will the real estate community join the effort to push Amazon in front of a big tax for housing? Probably not. But at least maybe we’ll sit back and stream the whole thing on Amazon Prime and eat some popcorn. It should be quite a series.
