SB 6400: The State Senate’s Version of Rent Control

This morning I’ll be testifying against Senate Bill 6400, the Senate version of the House’s bill, 2583. The bills do the same thing, repeal the state level preemption of rent control policies by local governments. I’ll mention much of what I said on the Dori Monson show last week: rent control doesn’t work to lower prices by destroying housing finance which reduces supply.

What rent control does is it kills off supply because you destroy financial inventive to be able to invest in making more housing,” he told Dori Monson, who believes lifting the ban on rent control would be disastrous. “If you believe in supply and demand, and high prices are an indication of scarcity, then rent control just accelerates lack of supply.

I’ll also talk about rising costs that with rent control will outpace rent revenues. Rent control doesn’t include cost control, ensuring lack of maintenance and the sales of many smaller affordable units. Here’s the Seattle Times recently on big property tax increases:

Property-tax bills due to be mailed next month across King County will be higher than last year’s by an average of nearly 17 percent, Assessor John Wilson says.

The increase in Seattle will be 16.9 percent, and the only way to pay for those increases is with rent revenue. When added together with utility costs putting a cap on rents would mean many smaller operators would have to sell their townhouses or single-family homes they currently rent to people who want to own and live in them.

The good news is that the Chair of the House committee charged with considering HB 2583 has pulled it off the calendar, and with cutoff for passage out of committee in a few days it is looking like these bills won’t make it any further. The bad news? That might just give the Seattle City Council the rationale they need to pass rent control anyway. They’ve passed illegal measures already, like an income tax, and dared opponents to sue. We won’t know until Friday what the final score is on these two bills.

 

Comments at the Roanoke Conference

This past weekend I was a panelist at the Roanoke Conference at Ocean Shores, a largely Republican event that includes legislators, other elected officials, legislative staff, and others interested in policy and the legislative process. I was on the panel with Alan Durning of Sightline, Senator Mark Miloscia, Mike Kingsella of the Holland Group. I’ve come to the conclusion that Democrats in our state and locally have lost the high ground on housing. I’ve gone into more detail about this in a post a Forbes. Increasingly, our options to make better and good housing policy are at the state level. Our City Council has failed to lead on housing, making prices worse with restrictive land use policy. And at the state level, it is Republicans that have the principles that would support policies that would lead to more housing supply. I urged them to do so. Here are my comments I made to open the panel. 

Seattle For Growth is a pro-housing advocacy organization and we are for more housing of all kinds, everywhere, and for people of all levels of income.

Seattle’s New Bike Parking Requirements Show How Regulation Kills Housing

I’m often greeted with some skepticism when I make the point that regulation is making housing prices worse. Some people just don’t believe it, instead blaming greed or Amazon. Others dismiss what I’m saying as libertarianism; we shouldn’t have any rules! But David Neiman, an architect and an expert at explaining how bad rules and regulations distort design and drive up costs, sent a letter to the Council that makes my point better than I ever could. This absurd overreach by the City Council is emblematic of why housing is expensive in Seattle.

Subject: CB 119173 – Concerns about changes to bicycle parking requirements

Dear Councilmembers,

As an architect who specializes in the design of small, dense, affordable housing, I want to voice my concerns about the changes to bicycle parking requirements proposed in CB 119173. The proposal increases the requirement for bicycle parking almost five times from what is required today, creates rigid prescriptive requirements for how parking must be provided that does not reflect the wide variety of valid solutions in common use, and creates technical enforcement issues where the land use code would require accessible features beyond what is required by the building code, the Americans with Disabilities Act, and the Fair Housing Act.

This is a radical Increase in bicycle parking requirements

Prior to 2014, multi-family projects required 1 bicycle parking space for every 4 units of housing. In 2014, Councilmember O’Brien crafted micro housing legislation that doubled these requirements for small units (to 2:4). When that micro-housing legislation came under consideration by the PLUS committee, councilmember Nick Licata inserted an amendment to raise the requirement by another 50% (to 3:4).  The 2014 changes were not based on an empirical study of the parking needs for residents of micro housing. They were based on hand-waving and hunches. The new legislation will increase the requirement for all housing types to 1.2 bike parking spaces for every dwelling unit. This is another 60% increase in parking requirements for micro-housing. For conventional housing (not micro-housing) this is a 480% increase above today’s baseline. Based on my own experience, I’d guess that the demand for bike parking in our projects is around 1 bike per 4 units. It’s nowhere near the 3:4 ratio currently required in micro-housing. The 1.2 spaces per unit requirement proposed is simply ludicrous.

 Prescriptive requirements are not appropriate for emerging issues

There is some need for bicycle parking in multifamily buildings, but exactly how much and the best way to provide it is something that is emerging and evolving. Some building owners provide bike parking in enclosed secure rooms. Some owners provide parking in open racks in the lobby where it is most convenient and visible. Some provide parking right by the front door for convenience, some by the alley entrance to keep the lobby clean and tidy. Some put the bike parking down in the basement so that they can save the prime locations for other more essential functions. Some provide a bike rack in the units themselves. Some provide a bunch of parking because they suspect their target demographic may need it, some provide very little parking based on their experience owning and operating buildings. All of these approaches are potentially valid for a given location, building type, and demographic. There is no consensus as to what an appropriate amount of bicycle parking should be. Locking down all projects to a single prescriptive requirement would be deeply counterproductive & will lead to poor design outcomes.

The burden of these new requirements fall most heavily on small projects with generous common spaces

The successful design of micro-housing requires efficient, thoughtful planning. There is no free lunch. Every square foot that is wasted on a useless feature is one that is not available for other needs. To help illustrate this point, I have applied the new bicycle parking standards to one of our current projects. 8311 15^th Avenue NW is a 78 unit micro-housing project currently proposed for the Crown Hill Urban Village. The main floor of the project provides a mix of accessible housing units, a generous residential commons, small incubator retail spaces, and a courtyard shared by the residential and commercial spaces. The accessible housing is required. The commercial space is required. The trash room is required. The only element left at the main floor that is optional are the common spaces.  With the application of CB 119173. Almost all of the common area would be consumed by bike parking. This drawing shows the bike parking provided exactly as it is prescribed: All of it fully enclosed, on the main floor, accessible, one for every resident. The outcome is an abomination. The project loses its common kitchen, dining area, and living room. In its place residents get to enjoy a bunch of (mostly empty) bike storage rooms.

 

Accessibility requirements should not be in the land use code

Lastly, the proposed legislation contains a requirement for all bicycle parking to be accessible. Accessibility is a term of art in the regulation of buildings. The building code exhaustively scopes when accessible features are required, the Fair Housing Act and ANSI 117.1 provide technical standards for how accessible features must be designed. As it stands today, the building code does not require all bike parking to be accessible, and neither the Fair Housing Act nor ANSI 117.1 contain design standards for what constitutes accessible bike parking. The new legislation quite literally goes beyond anything required by today’s codes, mandating the building owners provide an accessible feature that no building official can enforce because no one knows what that actually means.

The bicycle parking provisions in CB 119173 are ill conceived, poorly vetted, and deeply counterproductive. I suspect they have been crafted by reading and transcribing standards from a planning textbook, without meaningful input from the design profession, and without research into current bicycle parking usage in Seattle multi-family housing.  I implore you to remove these standards from this legislation. If you have any questions, please feel free to contact me directly.

David Neiman

Principal, Neiman Taber Architects, PLLC

Long Day in Olympia: Hearing But Not Heard

We spent the day in Olympia trying to get the point across that support for House Bill 2583 is support for rent control. It was a long day. I’m posting this video because it is so incredibly biased. Really? Community leaders? What community leaders? I have a lot of respect for reporters who have to cram a complicated issue into two minutes, but in this case it seems like rent control is the obvious medicine for the disease of housing scarcity. It isn’t. We know the solution for that.

And I’m posting it because this report has me saying the key message:

If you want to affect price the best thing to do is not more regulation, more rules, more limits and restrictions, but more housing, more housing, more housing.

And we had dozens of small time landlords (one had his car break down and had to have it towed) ready to testify, but the chair of the committee, Representative Laurie Jenkins didn’t let any of them talk.

Somehow the chair of this committee decided that real landlords shouldn’t have the stage even in 30 second increments. The hearing yesterday wasn’t much of a hearing.

Rent control doesn’t work.  Rent control is bad policy. But rent control is good politics. We won’t stop making this case even if we don’t get a fair hearing.

From a Builder: Rent Control Will Kill 39 Unit Project

This morning at 10:00 in Olympia House Bill 2583 will have a hearing in front of the House Judiciary Committee. The legislation would repeal what amounts to a ban on local governments enacting rent control, a widely discredited and failed policy of price controlling housing. That we are even arguing about rent control is a sign that the political process is failing. But worse than that, the actual policy itself would make housing scarcity worse. Here’s a letter that a local builder sent to his legislators explaining what rent control would do to one of his projects. The loss of 39 units might seem insignificant, but this story will be repeated dozens and dozens of times adding to housing scarcity. Take a minute or two and go to the Legislature’s website to send a message to your legislator. The link has a search feature, and just click on “Email” and there is a form you can fill out. 

Hello,

This email is being sent regarding the state of Washington and rent controls. I am a Seattle builder of single family and town homes for the last 20 years. I am now in permit to build a 35-unit apartment in West Seattle. These units will be called SEDUs (small efficiency dwelling units) these are low rent affordable units to the public. I am planning to build own and operate this building as a supplement to a retirement plan. These units will become available in 2019 at current market rate rentals.

This is what will happen if you elect to bring in rent controls into the city of Seattle (my city of 62 years). I will not be able to gain financing to build this project. My banks (3) that I am talking with will stop lending to apartment builders leaving me and many other builders without financing. This simple fix called rent control will leave 35 people or couples and or others without these homes available to live in. This decision will leave many apartment projects to look for other means of completion or other uses like leave in the scrap heap.

My retirement plans will change. We the builders will no longer look to the city of Seattle to build apartments. We don’t just build and get rich as people think we do. We build to meet a market need taking on great amounts of risk and much stress in the process hoping to make a profit or just get paid for our time. One of the risks of building is artificial rent controls as it artificially causes us to go bankrupt as we soon may not be able to cover the raising of taxes and interest rates and other expenses of ownership.

I also own a 4-unit mixed use building in Seattle. This building has 4 apartments and 2 commercial spaces I maintain and rent. The apartments will be converted to commercial spaces and the renters will end up dispersed with 4 less apartments to live in. These spaces converted to commercial will bring about the same as apartments do today but without the artificial rent controls to deal with.

I am only one small guy here and already your vote will immediately serve to eliminate 39 apartments if rent controls are placed into law. How many more will be converted to other uses or never brought to reality due the lenders walking out and the builders unwilling to take the risk? You will see rents far higher than they are today with rent controls as the new needed unit stop being built. If you vote to enact rent controls, you are ultimately agreeing to vote to eliminate housing for a growing population of this state. I hope you choose well to serve the real needs of the people of this state.

 

Kind regards,