A big affordable housing developer wants to roll back tenant protections, and the council won’t say if it’s sympathetic.

by Hannah Krieg

The Seattle City Council is on a crusade to undo the previous council’s marginal progressive wins—from a promise to reinstate archaic anti-loitering laws to an attempt to gut the historic gig worker minimum wage. It appears the hard-fought eviction moratoriums could be next on the chopping block. Those protections keep kids and teachers housed during the school year and keep income-qualifying renters off the streets during the coldest months.  

In an email to Council Member Cathy Moore and to the members of her Housing and Human Services Committee, Low Income Housing Institute (LIHI) Executive Director Sharon Lee asked the council to “modify” the City’s winter and school-year eviction moratoriums to exclude “people with income who decide not to pay rent.” Lee told The Stranger that LIHI supports strong tenant protections and called the exclusion of renters with income a “narrow exception” to the moratoriums, not a repeal. 

Lee is not some random commenter the council could brush off. LIHI is a major affordable housing contractor with the City and by far the most prolific tiny shelter village developer in the region. I asked the Housing Development Consortium (HDC), an umbrella organization that represents more than 200 members including LIHI, about the popularity of Lee’s proposal among their members. HDC did not respond. 

LIHI’s Logic

In a follow-up email to The Stranger, Lee argued that when a “tenant with resources” refuses to pay rent, nonprofit affordable housing landlords suffer “enormous consequences” due to their dependency on private lenders.  

“Lenders are now citing the Seattle eviction moratoriums as the reason why they will not provide financing to preserve existing affordable housing in our communities facing displacement and gentrification,” Lee wrote in an email. “If there are no reliable means to ensure timely rent payments to make good on a loan, then the production of affordable housing will take a big hit.”

Lee gave Moore an example in her initial email to the council committee. LIHI wants to acquire and preserve 65 affordable housing units at Squire Park Plaza in the Central District. The nonprofit secured funding commitments with the Office of Housing (OH), the state Housing Trust Fund, and the Washington State Housing Finance Commission (WSHFC), but private lenders keep declining to finance the project. Lee sent the council a cropped, undated screenshot from an email allegedly from an unnamed “bank official.” The bank official wrote that Vanguard, PIMCO, Prudential, Alliance Berstein, Franklin Templeton, Align Capital, Belle Haven, Investco, Nuveen, Banner Bank, Washington Trust Bank, and Heritage Bank “passed on the deal — mainly due to the ongoing issue of the rent moratorium.”

Lee worried that this alleged behavior from private investors may have “ripple effects” for the Low Income Housing Tax Credit (LIHTC) program. As the Tax Policy Center explains, the federal government gives tax credits to state governments, which deal out the credits to developers such as LIHI. Then, developers sell the credits to private investors to get funding for their housing projects. So, Lee said that LIHTC, without which none of LIHI’s projects would pencil, relies completely on private investors playing ball. 

Moore did not respond to The Stranger’s request for comment, but should she and her committee pursue rollbacks to the moratoriums, they can expect a fight. 

Not So Narrow 

For one, “tenants with resources” is a pretty vague exemption to ask for. Lee told The Stranger that LIHI does not have a detailed proposal at this time, but excluding renters with income certainly creates more than a “narrow exemption.” 

Of the 3,716 households in King County who last year got counsel from the Housing Justice Project (HJP), an organization that defends low-income tenants in eviction court, 73% reported some income. The largest share of HJP’s 2023 clients–2,241, or about 40%—reported making more than zero dollars but less than 100% of that year’s federal poverty level of $14,580 in annual income. Another 23% of HJP clients last year reported income between $14,580 and $29,160, or 200% of the federal poverty level. The remaining clients made more money, but they still fell below the Area Median Income, according to HJP. 

Edmund Witter, managing attorney at HJP, said that exemptions for ability to pay don’t make a whole lot of sense: “I don’t know how you calculate that—people have unexpected obligations, and you are setting up uniform household budget expectations for low-income persons who don’t have savings.”

Who’s Afraid of a Little Ole Legal Defense? 

It is unclear if lenders are truly avoiding affordable housing projects because of the City’s moratoriums. The Stranger emailed all of these investors who allegedly declined LIHI’s deal. Only a few responded, but the two who did deny that LIHI approached them about Squire Park Plaza. 

Belle Haven Investments Director of Research Dora Lee told The Stranger “it’s not the renter protections” that make lenders pass on affordable housing projects. As the economy comes out of a period of low interest rates into higher interest rates and high inflation, “We’ve seen the industry tighten up its underwriting standards and require more margin and more profitability in the projects that they do underwrite, which is constricting the amount of available capital for affordable housing projects.”

If we take LIHI’s word for it and grant that all the other lenders think the moratoriums specifically ruin profitability for developers, then they should maybe take some deep breaths. The moratorium is not that common of a defense. 

Lee could not immediately provide data to show how many evictions the moratoriums have thwarted for LIHI, but as The Stranger reported last year, HJP used the winter eviction moratorium five or six times in its first three years of existence. Now, HJP does cite these laws as a last-resort defense when a household has no other option, but “not often enough such that a landlord the size of LIHI should be going under,” Witter said.  

Affordable housing developer Ben Maritz told The Stranger that while he could see room for fixes and clarification with the moratoriums, he said that “essentially no evictions are proceeding to the point of a contested hearing where the moratorium would apply” because of a backlog of eviction cases. Maritz said, “The top priority needs to be restoring the functioning of the courts so that whatever rules we agree on can actually be applied.” On that score, King County Council Member Reagan Dunn has offered a proposal. 

Oh, the Humanity!

Aside from lenders and other housing developers offering compelling arguments against Lee’s claims, tenant advocates point out how shitty it is for someone with the phrase “Housing is a human right!” in their email signature to advocate for a policy that could leave more people without housing. 

Be:Seattle Co-Executive Director Kate Rubin called LIHI’s request “disgraceful” and in direct contradiction with their mission. 

“How dare they claim that they ‘advocate for just housing policies’ and then advocate for removing renter protections in order for them to grow their portfolio,” Rubin said in a message to The Stranger. She asked if LIHI would have enough tiny shelters for all the low-income families they want to kick out. 

Unsurprisingly, Council Member Tammy Morales’s office clapped back in an email to Lee. 

“Many renters in Seattle with income have had issues with paying their rent,” wrote Morales Chief of Staff Andra Kranzler. “The request to amend the statutes to exclude people with earnings is contrary to best practice.”

As funny as it is that Morales’s office sent Lee a link to the City’s updated renters’ handbook, progressives should brace themselves to defend these tenant protections and whatever else the landlord lobby wants to claw back. 

The real estate industry bought the current council, putting big bucks behind Council Members Rob Saka, Maritza Rivera, Dan Strauss, Bob Kettle, and Tanya Woo in their 2023 elections. Real estate interests really liked Moore, putting at least $100,000 into an independent expenditure to support her campaign. And now she’s the chair of the Housing and Human Services Committee. 

Morales seems to be the city’s only clear tenant defender. And boy does she have shit to defend for the next three-and-a-half years. 

The Stranger