A proposal for commercial rent control is back! Bad ideas seem to thrive in Seattle. Or I should say, old ideas. Don’t like the price of something? Freeze it in place. Don’t try to understand or address the underlying issues about why prices are going up or even ask, “Are they going up that fast?” And don’t bother to have a measure of what ‘affordability’ even is; just pick an arbitrary percentage of gross income and set a ratio to the price of rent. How about 30 percent! Done!

As I have already pointed out, the reason why smaller, incubator spaces for artists and small business are scarce is because we’re not incentivizing them or even allowing them in low-rise zones. We also have a code that mandates certain kinds of commercial spaces in new development. If you don’t like the new Walgreens on the corner and would rather have a warren of smaller performance spaces, look at the land use code, not for a regime of price controls that will certainly wipe out smaller spaces by disincentiving their creation and maintenance.

I won’t go over all the reasons rent control is an idea that should remain mothballed. But I did send a letter to the City official who is running the process around the Mayor’s Commercial Affordability Advisory Committee. I suggest that the City revisit rules and regulation that promote larger spaces and limit the value of creating smaller spaces. They can start with reversing their decision to disallow ground floor commercial spaces in some low-rise zones.

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April 15, 2016

Dear Mr. Surratt,

We are concerned that the Mayor’s Commercial Affordability Advisory Committee will be considering some form of rent control on commercial spaces. We are unequivically opposed to rent and price control in all its forms; rent control reduces supply, disincentivizes new investment and is, overall, an inflationary policy and thus antithecital to the Mayor’s goals.

Here are some important things to consider.

First, rent control is not legal in Washington State, and while there is some reason to believe that the law is less clear on commercial spaces, we think it makes no sense to launch a policy intervention that will certainly face legal challenges. Why not look at what is already available to the City to address concerns.

Second, it appears the City has no data on commercial real estate prices and how to develop a normative standard for what is “affordable.” Remember, affordability is a qualitative measure. Everything is affordable to somebody, somewhere. The question is how can the City avoid the mistakes of its housing work and find data that is current and reflects the realities of doing business in a variety of settings in a complex business economy.

Third, I sat on the Mayor McGinn’s Regulatory Reform Committee that recommended allowing commercial space in the Low Rise Zones. Please put this on the table for reconsideration. The Council rejected this on a close vote and at the behest of residential neighbors. What causes higher prices and larger spaces is scarcity of space and not enough space in smaller buildings, like the ones that proliferate in neighborhoods like Ballard and Capitol Hill and West Seattle.

Lastly, and most importantly, people renting space in Seattle are mostly small and medium sized family businesses. Slapping curbs on rents will add one more disincentive to their business, discourage expansion and development of new spaces for artists, innovators, and small businesses.

Rent control is not the answer. Instead, dig deep to find smart approaches to gathering data, look at innovative approaches to lowering regulatory barriers, and allow more flexibility in the land use code.

Thank you for your consideration.

Sincerely,

 

Roger Valdez

Director