Blue Wave Sweeps Washington State in the Primary

By: Mark Gjurasic, MHCW Lobbyist

The Primary Election of Tuesday, August 7 clearly favors Democrats in the Washington State legislature, as well as, at the local government level. Democrats continue to create a larger majority in the Washington State House of Representatives and the Senate and clearly issues such as residential and commercial rent control will again be considered. Other issues, such as, a state Capital Gains tax of 6% to 7%, Real-Estate Excise Tax (REET) increases, and a possible raise in the state B&O Tax on Services.

Well over 20 races in the state legislature are below 50% in the primary as Democrats have done a great job of generating “base supporters” to get out the vote in certain key legislative districts. Revenues in Washington State are again above the forecasted rate of what has been anticipated. For example, the state collected $33 million dollars or a 2% increase more than was expected last month. All together the state generated $75 million more dollars than was forecasted by economic experts in Olympia. Unemployment in Washington State is at 4.6%, the rate for Seattle is at 3.6% and the United States is at 3.9%. An additional 12,000 jobs were added in July, which gives a boost to renters to be able to pay their rents.

Just as an update on rent control, we saw in the 2018 session, legislation that would take away the state pre-emption and allow local jurisdictions to determine for themselves on residential rent control, whether it be an apartment or a single-family home in a mobile home park community.

For example, the City of Tacoma Community Vitality and Safety Committee is considering rent control by not allowing property owners to raise their rent over 10%. Additionally, City of Tacoma is considering the following for tenant protections to include:

1. 60-day notice requirements for termination of tenancy

2. 60-day notice requirement for rent increases

3. Move-In Fee Installment Payments

4. Relocation assistance ordinance which requires owners to host in-person meetings with

tenants

5. Requirement that owners provide an “information for tenants” packet to renters

6. Requirement that owners inform tenants of any code violations at the property within

the past 12 months – even if caused by the tenant

The City of Seattle is also considering rent control by limiting rent increases for landlords receiving affordable housing tax rates. Rent increases under the Multi-Family Tax Exemption (MFTE) will likely be limited this year. Last years rents jumped 6.7% and this year it’s at about 7.7%. As a result, the City of Seattle froze rents and will likely allow a 4.4% increase for 2018. The housing industry opposed the limit on rent increase under the MFTE program as it was not commissary or in line with the residential housing market activities. In fact, some believe that the Cities decision is illegal.

The bases of the program allow for a 12-year property tax break for restricting or limiting rents on at least 20% of the units for qualifying households.

The apartment industry has further said that there will be less participation in the MFTE program which has been a successful incentive for creating below market housing, that is desperately needed in Seattle, when taken into consideration that statewide there is a backlog of at least 250,000 units that need to fill the need for affordable housing.

On the state level, we saw rent control legislation introduced in the House and the Senate that would allow local jurisdictions to invoke rent control. The House bill had 13 sponsors out of the 98 members in the House of Representatives and will likely have more sponsors as it is expected to be introduced in the 2019 session.

It’s important to note, that legislative issues in Seattle and Tacoma will likely be introduced in Washington state Legislature in 2019 as these issues impact manufactured housing, apartment owners, and single-family housing. In fact, it’s fair to say that the 6 issues outlined above will be introduced in 2019, as well as, changes to the Manufactured Housing Landlord & Tenant Act