City Councilmember Lisa Herbold asks for investigation into whether landlord ‘loophole’ all but emptied a Highland Park building

(WSB photos)

When older apartment buildings are put up for sale, the accompanying listing often assures prospective buyers that a little work can bring the rents up to market level. That might be good news for the buyers, but not necessarily for the renters. West Seattle/South Park City Councilmember Lisa Herbold says the city is investigating what happened after a building in her neighborhood, 900 SW Holden in Highland Park, changed hands. This is republished from her weekly newsletter, published on the city website today:

Last Wednesday, while I was walking from my house to the Highland Park Action Council (HPAC) meeting I noticed one of the large apartment buildings in my neighborhood was boarded up. I didn’t know why that had happened, and because I work hard to keep up on what is going on in my District, and especially my neighborhood, I was feeling disappointed in myself for not being aware that a new major development was apparently occurring just two blocks away from my home. But then, during the meeting with HPAC, one of the attendees mentioned that the very building I had noticed on my walk to the meeting had been recently cleared by the landlord of all its tenants and some of them had become homeless as a result.

This immediately alarmed me because the City of Seattle has, since the 1980s, had a Tenant Relocation Assistance Ordinance (TRAO) that gives renters at least 90 days’ notice and financial moving assistance whenever a building is going to be renovated, demolished, or if there’s a change of use. It was immediately apparent to me that there was no way that the legal process for the Tenant Relocation Assistance Ordinance could have occurred so quickly and I became worried that people had been improperly displaced. On my way home that evening, I walked around the perimeter of the building and indeed, it was apparent that all but a couple of the units were vacant.

When I got home that evening, I looked up the address on the Seattle Department of Construction and Inspections (SDCI) website to see what development activity was planned at the site. But there were no planned development activities associated with TRAO or a demolition, renovation, or change of use associated with the address. This further confirmed my suspicion that renters in the building had been improperly forced to move. The next morning, I contacted SDCI and asked them to send an inspector out to the property.

I am saddened to report that I learned yesterday that SDCI has found that the tenants in the building recently had received a 100% rent increase and that this increase led to 20 of the 23 households being displaced from the building. Again, I’ve been told by my neighbors that several of these households are now homeless. This is, I believe, a shameful result and an abuse of a landlord’s right to increase rent free from any regulation.

The TRAO says that it is unlawful for landlords to use excessive rent increases to circumvent the requirements for 90 days’ notice and access to moving expenses assistance. But, there is no limit to how much a landlord can raise the rent. You see, the TRAO entitles low income renters who must move because of renovations to money to help them pay their moving costs ($3188). But if a tenant moves because of a big rent increase, they won’t get the assistance.

Not only do rent increases in Seattle lead the nation, but some rent increases are actually used to circumvent other tenant protections such as the TRAO. In 2014, Councilmember Nick Licata brought attention to the fact that “each year more and more tenants find out they were deprived of critical relocation assistance following a massive rent hike due to loop holes created by state law” and that some property owners do this as a regular business practice. You may remember the story of the Lockhaven Apartments and the Prince of Wales. In 2014 and again in 2015, State Senators David Frockt (46th District) and then State Senator Jeanne Kohl-Welles (36th District) introduced legislation to disincentive for the practice of using rent increases to circumvent TRAO.

A number of landlords and their lobbyist testified against the bill, and it did not pass the State Legislature, so in response, Councilmember Licata worked to amend Seattle’s Tenant Relocation Assistance Ordinance (TRAO) to help tenants deprived of relocation assistance and 90 days’ notice to move that they would have otherwise received if their landlord followed TRAO instead of displacing them with a large rent increase. Specifically, the law prohibited rent increases for the purpose of avoiding the required Tenant Relocation Assistance process. If a landlord increases rent by 20 percent or more, which results in a tenant vacating a unit within 90 days, then applies for a permit to substantially rehabilitate the unit within 6 months, the owner can have their building permit denied until the owner pays the penalties. Penalties are $1,000 per day for each day from the date the violation began. The change Councilmember Licata made to the law has helped a lot of people, see this article from March, where under the new TRAO law, SDCI was able to require a landlord to pay $168,268 in relocation payments to 46 households that were living at 104 Pine St.

But somehow, and sadly, people who want to avoid their obligations seem to manage to find new loopholes as soon as you close one set of loopholes. The owner of this property that has displaced 20 Highland Park household with a 100% rent increase found yet another loophole in TRAO. From SDCI’s investigation we have learned that the property was purchased in January 2018 and the new owners, after the rent increase of nearly 100%, and after 20 tenant households vacated as a result of the rent increases, is now doing a rehabilitation that includes painting the exterior, painting interior units, tearing out carpeting and replacing some appliances. None of this work requires that the owner obtain a permit and it does not meet the definition of substantial rehabilitation (which requires work of $6000 or more per unit).

I am thankful that SDCI is continuing to investigate and will be requesting the owner sign a certification that the rent increase was not for the purpose of avoiding application of TRAO. If people are in touch with the displaced renters, please encourage them to contact me so that I can put them in touch with SDCI for purposes of this ongoing investigation.

lisa.herbold@seattle.gov is her e-mail address. Records show the 51-year-old complex was sold for $4.2 million in January to a Renton-based LLC led by a real-estate investor who also leads the corporation that holds an Everett building that the Daily Herald reported was the subject of discrimination accusations in 2015. The listing flyer for 900 SW Holden, meantime, noted that its rents were 30 to 40 percent below market level, and that more than 80 percent of its tenants were month-to-month.

50 Replies to "City Councilmember Lisa Herbold asks for investigation into whether landlord 'loophole' all but emptied a Highland Park building"

  • Kalo May 4, 2018 (8:38 pm)

    Unbelievable! Thank you Lisa for being such a great advocate for those that don’t have a voice.

    • S May 5, 2018 (10:12 pm)

      Having Herbold spend time on this is ridiculous and a waste of taxpayer dollars. Herbold is saying that the owners raised rent to get around a law that requires payments to tenants displaced for major renovations. But then says that after the tenants left, no major renovations were done! So how could the owner be trying to get around this law if they aren’t doing any major renovations? Painting and tearing out carpet and replacing some appliances is routine maintenance….I know because I am a landlord. Would Herbold rather that the owners leave the place with old peeling paint and old appliances that don’t work? What appears to have happened is the new owners brought rents up to market rate and is doing routine maintenance that the previous owner probably neglected. Can Herbold clarify what the problem is? Her letter makes no sense. 

      • former landlord May 6, 2018 (9:17 am)

        S-

        Exactly!  Routine Maintenance!  I think it’s clear that the landlord of the building is following the law – but Herbold doesn’t like it so she will likely (surprise!) propose new laws.  As a fellow landlord I can tell you what new laws will do.. they will drive out more smaller landlords and march us further into the corporate landlord only world.  Guess what happens if the amount rent can be raised is limited to a certain percentage per year?  Landlords who might normally NOT raise the rent each year will have to, in part just to keep up with the skyrocketing taxes in this city. 

        She keeps saying the rent was raised 100% – I think it’s important to find out what it was and what it ended up to be.  Likely still below market.  So instead of having renters get a great deal for years and years and then feel upset when they lose that deal… there will be no deal, because landlords will be forced to raise the rent 5-10% each year like clockwork…no possible rent increase will be skipped.  Thanks Herbold!  Next time, consider talking to actual landlords (aka, stakeholders) before you jump to legislation.

        • S May 6, 2018 (5:17 pm)

          I totally agree on your rent control argument. I own three units and have never raised rent on a tenant. If there is rent control then I definitely would raise every year so that I don’t get legally bound to a way below market rate. 

  • Sue Luke May 4, 2018 (9:32 pm)

    Lisa Herbold is my hero. Thank you so much for all your hard work, Lisa.

    • S May 6, 2018 (5:45 pm)

      I believe Herbold’s heart is in the right place but her knowledge and execution are so inadequate that her results end up being the opposite of what she is trying to achieve. 

  • John Smith May 4, 2018 (9:38 pm)

    I sympathize with the renters who had their rent raised past what they could afford.  The owner/landlord apparently followed the rules, though, so what happened is apparently not because of a loophole.  The rulers ruled, and the rules were apparently followed.  “An omission or ambiguity in the wording” is the definition of a loophole.  A theoretical example: if a “blue widget” is specified and provided, but the buyer meant the contract to read “greenish blue widget,” that would be a loophole. 

    • WSB May 4, 2018 (10:36 pm)

      I meant the word as a quote – whether it is accurate or not, it’s the word she used – so I should at least put quote marks around it in the headline. Thanks.

    • chemist May 5, 2018 (7:44 am)

      She worked in Licata’s office and would probably be very familiar with what the legislative intent was vs what actually has happened.  From her perspective, I’d support calling it a “loophole.”

      Similar to how our current council had intended to ban add-on pet rent recently, but landlords quickly found a work-around to the newly passed legislation.

    • Coffeedude May 5, 2018 (11:25 am)

      The new landlord might have found a loophole but it shows how his or her ethics are non existent and he or she is basically a slum lord.  karma will pay that landlord back….

      • Katie May 7, 2018 (9:08 pm)

        Surely the opposite of a slum lord?  A slum lord has low rent and makes money by operating very subpar property. The tenants don’t complain because they have nowhere else to go for rent. 

  • TBone May 4, 2018 (10:47 pm)

    https://www.gq.com/story/san-francisco-is-burning

    It is a sad situation.  An odd irony of having a booming economy and rising values of property; rent prices increase in stride too.  Not sure I’d want to see the unintended consequences of rent control though…

  • Trickycoolj May 5, 2018 (1:54 am)

    Drive by this building daily to and from work and it’s been painfully obvious what’s going on there for the last month. Furniture with free signs on the curb for several days straight. Curtains open to empty units and dated appliances sitting on the balconies now the painters this week. It’s nice that Herbold finally noticed but this crap goes on constantly all over the city. Friends in Greenlake experienced the same 100% increase after a developer bought their duplex. They swallowed the increase but the other unit has been a revolving door of groups of 4 trying to split the unbelievable 2bd rent for a non updated not up to code with a massively leaky roof 1960 duplex. 

  • James L Thomas May 5, 2018 (5:08 am)

    The answer to end all of this overwhelming out of control high priced renting is ” Rent Control “.

  • Seattlegov May 5, 2018 (5:41 am)

    You’re reprinting what Herbold says instead of fact checking. 

    • Not Seattle Times May 5, 2018 (9:27 am)

      Yeah this is a blog, pal, not an extension of the government.

  • M May 5, 2018 (6:08 am)

    Glad to see some work done to that eye sore. 

  • just wondering May 5, 2018 (6:11 am)

    So where are the evicted tenants?

  • Mmarie May 5, 2018 (7:45 am)

    What is wrong with people? Such greed and inhumanity. I know the LLC bought the building and they have the right to make money, but they could of at least treated folks like human beings and complied with the spirit of the law. 

    Karma. 

  • Getitright May 5, 2018 (8:14 am)

    Know for a fact no one was evicted and no one who left is homeless.  Glad to see our neighborhood improving with new homes and buildings being updated.  Good for all of us 

    • former landlord May 5, 2018 (9:31 am)

      This is where fact checking is important.

      I’m guessing this building rented the units at below market for many years.  Then something happened (taxes increasing by 60%, perhaps?) that pushed the owner to sell.  Now the new owner wants to improve it, and they don’t want to , or can’t, rent at well below market.  The article talks about a 100% increase – where did the rent start and where did it end up?  Did it go from 700 to 1400 per month?  If that’s the case, then the existing tenants got quite a deal for a long time.  If they are on month to month agreements, there is no guarantee for how long that will last.  I’m curious as to why Herbold thinks that everyone should be willing to subsidize other people.  Does she work for half her salary?  Or does she collect the full salary?  Income is income – these new owners just want to fix the place up and make it nice for Highland Park. And they want to collect market rate rents.  That’s the same as someone who is, say, a teacher, wanting to collect a salary similar to other teachers in the area.  No one screams ‘Karma’ at them.

      • CandrewB May 5, 2018 (9:53 am)

        But it feels sooo much better to just assume the landlord’s EVIL.

    • former landlord May 5, 2018 (9:47 am)

      In response to my comment above, i looked up the building on hotpads.  The last listing was in the fall of 2017 and it was $1080 for a two bedroom apartment.  So a longer term tenant may very well have been renting a two bedroom in the 700 dollar range.

      This is exactly what happens with all the regulations that Herbold has led the Council to enact.  A smaller landlord can’t make it in Seattle, so they sell, and this is a direct result.  Herbold has forced landlords, with legislation and threats of exorbitant fines, to take the first “qualified” applicant that shows up, no matter what.  And don’t forget you can’t check criminal records.  Have a building full of single moms?  Have an applicant with an extensive record of DV  and abuse?  Forget it!!  Throw him in the mix!  He has a right to live there!

      Throw a 60% increase in taxes onto that, with a greenbelt behind your building that is full of vagrants and discarded needles and a Council that wants to defend that activity, and you’ve got a quick turnover/elimination of what used to be affordable housing.  

      If you want to know how this happened, Lisa, please go find a mirror in your house and look into it for a long, long time.  Invite your fellow Council members to join you.  I say this as a landlord with one property already sold and another for sale very soon..

  • candrewb May 5, 2018 (8:17 am)

    Well, the according to the King County site, that location’s property tax bill went from $15K to $25K in the last three years. Perhaps this was motivation to sell in the first place? Tax increases have real world consequences Lisa. Keep fighting!

  • WriteNow! May 5, 2018 (9:43 am)

    Even in a market like San Francisco landlords cannot raise the rent 100%. I hope this is the push Seattle needs to enact rent control. How many more people in Seattle have to become homeless before city officials get serious about the homeless crisis? We cannot keep pumping money into a failed system expecting better results. It’s time for a complete overhaul with new leadership, and a multi-city strategy that addresses the problem at its core: housing, mental health care, addiction resources and  corporations that pay their fair share of taxes. Seattle is in crisis and if you think you and your comfortable middle class life will be spared, just look at the demographics of San Francisco residents. The new Seattle doesn’t need you. Get involved. Voice your opinion. Start with outreach to the city council and Jenny Durkan. And attend hearings related to this issue:  Email: council@seattle.gov &  Jenny.durkan@seattle.gov   While I applaud Herbold for bringing this to our attention, her recent KUOW interview shows that she is wholly unprepared to lead us out of this mess. If you really care about this city, know that you are in over your head. Put ego aside and let’s look at real leadership. 

  • Cynical girl May 5, 2018 (10:58 am)

    I rented a house through dwellings mgt company because the owners if the house live in South africa. They wanted to remodel the house so that they could significantly raise the rent but didn’t want to wait until I moved out, so they lied to the owners of the house and told them I was moving out, and then lied to me and told me the owners were selling the house and I had to be out in 2 months. I had to go to the dept of construction to get dwellings to stop. Dwellings was never fined. Dwellings doesn’t care, Seattle doesn’t care.

  • Taxpayer May 5, 2018 (11:09 am)

    We should always get the other side of the story before deciding on what happened and not just take Herbold’s word for it.  Her support of the head-tax is painfully wrong.

  • Bradley May 5, 2018 (12:00 pm)

    This is a result of the sheer over-regulation of property owners who rent to tenants in Seattle. The rapidly increasing rents, desperate and once-stable long-term landlords having to sell to greedy new owners to keep from losing their lifetime investments, and frightened tenants. My wife and I are selling our rental properties (which we’ve kept below market rate for years) because we simply cannot afford the new taxes and cumbersome regulations at our age.

    • Concerned May 5, 2018 (1:24 pm)

      Bradley, no one wants to hear that because it doesn’t fit the narrative /agenda

  • Michael Waldo May 5, 2018 (12:56 pm)

    So, the city spends millions every year on homeless issues. Why doesn’t someone check real estate listings (Lisa H.)  and buy these apartments.  4 million out of a 100 million homeless budget sounds very doable. Same with the apartment building at 104 Pine St.   It sold for 14 million. Still doable with a 100 million dollar budget. I have read these sad stories of the poor residents having to move out when a developer buys their building.  And yet nothing is being done about it. Why isn’t the city being the developer of last resort? Same with the apartments near the Ballard locks. Big articles in the paper about all the retired folk having to move out. Hang wringing and demands for rent control. How about apartments being sold control instead. The city has regulations that developers have to have affordable housing in their buildings or pay for it to be built someone else. Anyone else notice all the buildings being built in our city? Where are the affordable apartments?  Where is that pot of money developers have to pay into? How much is there?  Where are these units being built? Why is our city government so unaccountable with our and the developers dollars?

    • get involved May 5, 2018 (1:56 pm)

      Michael Waldo:

      You ask a lot of questions, many seemingly not rhetorical.  By my count you asked seven relatively specific questions about homelessness, building homes, and government spending.  

      I have just one question for you: Do you really think this is the best place to get answers to your questions?

      It’s clearly not.  If you want your questions answered you need to attend one of the MANY forums on homelessness–forums that this blog regularly posts about.  Forums that are designed just to answer the questions you have.  So please, if you sincerely want answers…  Just get involved!  Go to a meeting!  Ask your questions face-to-face, talk with people involved in these decisions…  

      What’s stopping you?

    • getitright May 5, 2018 (4:09 pm)

      finally a voice of reason Michael.  Only problem, the city would not want to become landlords and have to follow the rules that they have set up for rentals in Seattle.

      • get involved May 5, 2018 (5:22 pm)

        GETITRIGHT:

        Just so we’re clear here, you are arguing for the city of Seattle to buy buildings in order to house the homeless.

  • Plf May 5, 2018 (2:18 pm)

    If taxes increase like they have (16.9) for my Modest home who do you think landlords are going to pass the expense on to

    wish i could pass it on to someone else, believe me I would, I can’t afford the tax burden on my social security. But Lisa and the rest of the CC keep expecting us to pay through the nose and throw money at every problem without  visible results , most recent the crazy head tax, anyone who doesn’t think there is a trickle down effect is not living in reality,  millions spent on homelessness with what results and where is personal responsibility, and the expectation folks accept help to get off the street. More often than not transitional help us refused and the camper moves down the road and leaves their jars of urine, feces   Syringes in the neighborhood and when  folks complain deaf ears at city hall, 

    i want to provide help but folks have to accept help and take some responsibility , money is not always the answer especial when Lisa and her cohort can’t show us outcomes for the money they have already taken and a history of over budgets in almost every area i.e. Light rail, street cars etc

    leadership is being creative, accountable,  transparent. None of which Lisa demonstrates. I voted for her but will do everything I can next time around to fire her, are you listening lisa?  There is a backlash and it is gaing momentum, Ballard meeting, workers outside of amazon etc,  time for you to listen or get replaced

  • steve May 5, 2018 (2:27 pm)

    Its because of the policies of Lisa Herbold that my rent has doubled.  Lisa Herbold wants only one thing, votes.

  • Swede. May 5, 2018 (2:40 pm)

    I can’t even count how many restaurants and bars I’ve seen disappear from exactly this same thing the last 5-6 years. It’s also been a well known fact for a long time now that rent explosions like this made a lot of people homeless or having to leave their neighborhood or even the city. 

    It happend at the apartment building I lived in right before I moved less than a year ago (newer place right by Trader Joe’s…) where they double rent when your lease was due if you choose to go month-to-month!  

  • TJ May 5, 2018 (2:50 pm)

    Rent control is a feel good measure that has no place in a capitalist society, and has proven to not work. While I feel for the tenants there, nobody has a right to tell private property owners what to do in this city that dumps on property owners (66% tax incrase on that building in a few years). What people can do is to demand that no property owner, particurlaly developers, LLC’s, landlords, or banks, get any bailouts or no chance for bankruptcy protection in a market turndown. The crash of 2008/2009 didn’t let us hit the bottom because of bailouts of banks and bankruptcy filings, and many large developers who filed bankruptcy cleverly changed hands internally and now run under a different holding. On these large new developments, all apartments I might add putting people in these rents, developers are charging these ridiculous rents, pocketing equity since dwellers don’t own, and invest in more projects. See how they would proceed with the warning from government and banks that they have no future protection and we would see less building and aggressive rents

  • fedup May 5, 2018 (4:46 pm)

    If King County raises property taxes 22%….how does the building owner recover that value if they can only raise rents 20%?  What percentage does the city-mandated  3 months of assistance to pay for a move add to the real cost of a potential rent increase?  Does that policy bring the total actual increase to 30% or 40% to stay profitable?   What would motivate a building owner to improve their properties if they can’t get it back in rent?  Does this help improve neighborhoods?  The city can’t complain about rents when their policies increase the cost of doing business.  

    The landlords I know use hard earned income to provide long term housing values and solid buildings for their tenants because it is their business and supports their family. King County and Seattle City Council policies create this issue.  What did King County do to receive 22% more?  Who is being greedy….the local government or the small business owner forced into leaving their business due to escalating taxes and social blackmail?   Vote for change….enough of this.

  • T Rex May 5, 2018 (5:08 pm)

    Great timing council woman! Like someone else said, this had been going for quite awhile. Not buying that you were just walking by.

    With all the crap that happened this week with your “head tax” revolt , this revelation you just discovered is nothing but BS to me and you saying without saying it “see, we need to fund our non efforts to help the homeless” 

    I’m insulted. 

  • JanS May 5, 2018 (5:18 pm)

    I am sitting here reading these posts, and yes, things are more expensive, Seattle is a developers dream, and if truth be told, a landlords dream, as it seems the sky is the limit for rent. Does it make me happy? No. I’m 71, I’m disabled, and if my rent increases again, I will not be able to afford it, and there is no alternative. I maybe should buy me a nice tent now, in preparation. 

    And then..I read this. And I thought about all the People basically saying TFB. I’m betting most of you are 45 and under.:  I don’t engage on here much anymore because I simply don’t like the attitude of money over people, and it’s what I see. It just makes me sad.

    https://johnpavlovitz.com/2018/01/20/life-short-people-hurting-dont-ahole/

    • S May 5, 2018 (8:00 pm)

      There are options between living in West Seattle and being homeless.

  • JanS May 5, 2018 (5:20 pm)

    oh, and for all you folks ragging on Lisa Herbold…all she did was ask for an investigation, as she should. If it proves there is no wrongdoing, fine. It’s an investigation that needs to take place, IMHO.

    • CandrewB May 5, 2018 (6:47 pm)

      Why would your landlord raise your rent? Do you rent from a mom & pop or corporation?

  • bolo May 5, 2018 (10:08 pm)

    Can someone tell me what part of the (increased– someone above stated 60% tax increase) tax increase was simply due to the increasing value of the building itself, and how much was due to a higher taxing rate?

  • kayK May 6, 2018 (8:51 am)

    Agree that this is a manifestation of situations happening all over the city. Please be careful of generalizations about tax rates – our big bump this year came from state government actions.

    I actually think that commenter above who suggested that the City purchase some of this more affordable, older housing stock and keep it affordable is a good idea. Cheaper for us than trying to build new affordable units and quicker to see results. Partnerships with LIHI or others to maintain and manage? 

    A big help for those experiencing homelessness is housing. 

    • CandrewB May 6, 2018 (9:23 am)

      The city should not buy and operated public housing. That is what SHA is for and  they operate quite a bit. I wouldn’t be against the City sending funds their way to build more, but if I’m not mistaken, SHA operates under federal and state rules so I’m not sure how that would work. It would be a far better use of funds than what they are doing now or plan on doing.

  • Highland Park Neighbor May 8, 2018 (11:58 am)

    is Lisa serious?? This is a joke!!  People living there were obviously getting away with below-market rents for years!! Where was the Seattle City Council when they were paying less than the neighbors?? Why didn’t they have to pay what we pay?? It’s no wonder the building needs the maintenance, it probably had not been updated for years. 

    This is what our city needs. If it wasn’t for these landlords painting and saving this building it would probably be torn down for new million dollar townhomes like they are building across the street!

    I drive that street every day and have seen that building for years. This is the best it’s ever looked and I’m glad someone is finally putting the TLC into it that it deserves.

    AND MOST IMPORTANTLY – how about that it sold for over $4million dollars! What about the people that let it get so run down all these years and then just ran away with all that money!?! maybe they should have been the ones to pay! They are the reason that people are now homeless… But I’m sure the people that sold it don’t care when they go home at night to count all the money the made. 

  • RB May 9, 2018 (9:28 pm)

    Hold on, isn’t Lisa the same councilmember advocating unabated  new head taxes on companies who already fund 60% of the city’s general fund (including  wasted funding for a homeless program that the city’s own consultants have told the city is completely flawed).  So if I’m reading this right, she’s fighting the rights of a private property owner to raise rents to keep up with unabated city taxes  but then is championing the city’s right to keep sticking it to private home owners/landlords, individuals and corporations.   Love the irony there.  When is her term up?   Let’s vote her out – her time has come!!!!

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