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Observations On Recent Seattle Rental Legislation

Madeson Management is very pleased with the ruling overturning the First in Time Ordinance. It provided prospective tenants with a mechanism to tie up multiple properties without a hold deposit and increase vacancy time/cost. We will continue to process applications in the order we receive them in the spirit of general fairness, we’ve always done this, but we are glad to be free of the bureaucracy that stymied the process.

There is another piece of local legislation that just took effect on 2/19/18 – the Fair Chance Ordinance.  This legislation prohibits landlords from running or considering criminal background checks in their screening process.  The thought behind it is, minorities are disproportionately represented in the criminal system due to inherent bias, which then translates to bias in housing when criminal checks are used.  The exception to this rule is sex offender registry status. Landlords can still check for this and if they can prove a sex offender’s presence in a building would negatively impact business (for example, in an apartment building where other tenants would move out if a sex offender moved in), then they can decline the applicant. It will be interesting to see if this ordinance is also overturned, citing the basis for the recent decision with the First in Time ordinance.

This wave of recent tenant-friendly housing legislation is causing fallout in the housing industry. We at Madeson Management are seeing it first-hand, with many applicants saying their landlords are forcing them out to bulldoze their rentals and build row houses or townhouses for sale, or existing landlords coming to us for management assistance or selling because Seattle Landlord-Tenant law is too complex for the average independent landlord to navigate now. Our typical lease agreement is around 50 pages in length, due to Seattle-required disclosures, and the verbiage used in listing ads and appointments is very carefully crafted to comply with fair housing and other rules. To be sure, some fair housing rules are necessary – we still hear anecdotes from tenants of landlords illegally denying housing to people with children, unmarried couples, immigrants – but it’s clear the pendulum has swung far enough towards tenants that the city is now losing rental inventory as landlords sour on the process.

Madeson Management Listing Named “Most Beautiful Airbnb” in Washington State by Architectural Digest

Photo: Kathryn Stevens / Atlas Photo Co.

 

We’re honored to share that a client’s Capitol Hill property was just named “The Most Beautiful Airbnb” in Washington State by Architectural Digest! This stunning townhouse features city and Lake Union views, modern steel and glass architecture, and a well-curated art collection. Madeson Management is so excited for the home to be recognized by such a prestigious publication.

Here is the Architectural Digest article: https://www.architecturaldigest.com/gallery/most-beautiful-airbnb-in-every-state

Madeson Management offers full-service Airbnb management in most central and north Seattle neighborhoods.

Amendments to Seattle’s Proposed Short Term Rental Legislation

 

The Seattle City Council’s Affordable Housing, Neighborhoods, and Finance Committee met again on July 20th to discuss Short-Term Rental Regulations. I think there were two key takeaways from the meeting:

TAKEAWAY #1

The committee has proposed some exceptions to the original legislation! The first committee discussion revealed a couple of concerns:

  • “The City may not be able to rely on rental platforms to cooperate with the proposed structure.
  • Individuals have expressed concerns about the treatment of existing short term rentals in secondary residences, given current law is not explicitly prohibitive.”

The committee has offered the following limited exceptions to the proposed legislation:

  • “Within a defined window, individual households may register and license one dwelling unit apart from primary residence if:
    • They had a business license prior to June 1, 2016 for that unit
    • They have proof that they have paid applicable taxes for that unit
  • Year-round short-term rental uses will be allowed to continue operation at these properties for a period of 10 years or when the property changes ownership, whichever is shorter”

For more detailed information on the Modified Policy Approach, click here: http://seattle.legistar.com/View.ashx?M=F&ID=4572446&GUID=373BF3D4-1825-4727-B017-7EC484093CA0

 

TAKEAWAY #2

The opposition to the Short-Term Rental Regulation in Seattle is more than a mash up of different people concerned with the potential law changes. The opposition is organized. The opposition is vocal. And the opposition is awash in neon green!

The Seattle Short-Term Rental Alliance (SSTRA) was a noticeable presence at the committee meeting in their neon green shirts emblazoned with the phrase “Save Seattle Short-Term Rentals.” Many members spoke in support of short-term rentals in the public comment period, which unlike in the last committee meeting, was held to a hard thirty-minute period. Those who spoke expressed concern about the economic hardships, the loss of employment, and the destruction of small businesses if the proposed legislation was made law.

The SSTRA codified their response to the Council’s proposed legislation in handouts they were passing out at the exit:

“Short-term rentals in Seattle positively impact the local economy by creating jobs and supporting small businesses. There is neither evidence-based research nor academic studies demonstrating that shot-term rentals negatively impact affordable housing in Seattle. Proposed regulations phasing out short-term rentals in secondary residences will result in unexpected consequences – negatively impacting the local economy, eliminating jobs, putting small business owners out of business, and harming the ability of private citizens to earn a living from income property.”

The SSTRA also made some recommendations to the Council, which can be found on their website here: http://sstra.org/seattle-short-term-rental-alliance-statement-brief/

An Update on Short Term Rental Regulation in Seattle

 

The Seattle City Council’s Affordable Housing, Neighborhoods, and Finance Committee met on June 15, 2016 to discuss their proposals for regulating short term rentals. The meeting started with Public Comment, scheduled for twenty minutes on the agenda, that ran for over an hour. Over 50 attendees stepped up to the microphone to share their impassioned testimony in front of the Council Chamber’s standing room only audience, the Committee, and multiple local news cameras.

It was obvious from the comments, and loud audience support, that the majority were there to defend their short term rental related business from additional regulation.

There were several comments from short term rental operators about how this was a tool that allowed them to augment income to pay bills including their mortgage. Some were able to afford retirement by renting a room in their house, for some it was the centerpiece of their retirement plan. A few owners of businesses that manage short term rentals, a cleaning company, and employees of related businesses, all shared that they would be put out of business or a job if the proposed regulations were made law.

Many shared that they utilize a short term rental to house friends and family when they are in town, along with their neighbor’s friends and family who do not have extra space. Some were able to offer housing in areas where there are no hotels, or where hotels are incredibly expensive. Short term rentals offer a place to stay for visitors in town for medical treatment, those moving to town for work and looking for a long term residence or even a place for contractors or interns to stay who are temporarily in Seattle with one of the large tech firms. Some people commented that they are proud to act as a “cultural ambassador” for the city of Seattle with their short term rental.

Several commenters proposed the solution is to tax short term operators and use that money to provide more affordable housing. The audience was very supportive of the suggestion. One commenter suggested that the nice, high end units that are being utilized as short term rentals, once regulated out of the short term rental market, will still be unaffordable to the very people the Council is trying to provide housing for. Many said because of the structure of the regulation they would not be adding their units back into the long term pool at all.

There were one or two comments from those that were or are homeless, supporting the need for more housing. Some condo owners commented that a significant percentage of their building had been converted to short term rentals. Some short term rental owners thought the regulations as proposed were appropriate in their current form and supported the Council.

A commenter posed the following question, which was cheered by the audience: The tech industry has been a major factor in the housing shortage in Seattle, are they going to be made to participate in the solution to create more affordable housing?

 

After the Public Comment period the Committee discussed the proposal for regulation. Points of note from that discussion include the following:

  • The committee acknowledged the public’s interest in additional taxation as a solution. Member Rob Johnson proposed further discussion on this topic in the next committee meeting.
  •  A committee member asked why the short term rental proposal was for only 90 days. A member of the group that crafted the proposal stated that they determined that was the breakeven point, by their estimation, at which it made more sense to covert a unit from a short term rental to a long term rental. The audience expressed a lot of dissatisfaction with this suggestion.
  • The proposed timeline they shared includes another committee meeting on July 20th. A full council vote in August or September 2016 and implementation in 2017.

 

Here is a link to the Seattle City Council’s webpage relating to the regulation of short term rentals: http://www.seattle.gov/council/issues/regulating-short-term-rentals