The Olympia City Council has adopted a rental housing registry and inspection program aimed at supporting landlords and keeping tenants safe. But some local property owners fear the price of registering their units will force them to sell.
Nearly a dozen property owners and managers spoke last month during a City Council meeting, almost all opposed to the program and asking the council to delay their vote. However, the ordinance was approved unanimously on both first and second reading.
Registration is scheduled to go into effect March 1, and the inspection program will begin Jan. 1, 2025.
However, at Tuesday’s meeting, council member Jim Cooper made a referral to the Land Use and Environment Committee to continue looking at the proposed program and how it compares to programs in a handful of other Washington cities.
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Housing Program Specialist Christa Lenssen said the program went through a few phases and passed through a number of city committees before coming to the council. She said staff reviewed similar programs implemented in other Washington cities and incorporated some of their findings into their own approach. She said some cities around the country have had similar programs for several decades.
Staff came up with the Rental Housing Registry and Inspection Program, which, according to the city’s website, is intended to support “housing preservation, ensuring basic health and safety for tenants, supporting landlords by sharing information and resources, and gathering data about housing trends to target needs.”
The ordinance requires rental housing owners in Olympia to register their properties annually to obtain a business license and to undergo periodic inspections that monitor health, safety and energy efficiency standards.
The ordinance also adds protections to the current rental housing code regarding retaliation against tenants asserting their rights under OMC 5.82. Lenssen said it prohibits passing on charges to a tenant to comply with the program and prohibits rent increases if the unit is uninhabitable or fails inspection.
Registration requirements will go into effect March 1, 2024, and the inspection program requirements will begin Jan. 1, 2025.
There are some fees associated with registration and obtaining a business license.
Property owners will be required to pay an annual $35 per unit registration fee, which will be waived for affordable housing providers.
They will also need to pay an initial $50 business license application fee to the state Department of Revenue if they don’t already have a business license. It will then cost $5 annually to renew the license.
Businesses operating in Olympia must also obtain an Olympia endorsement on their business license, which costs $30 annually. The endorsement is waived for nonprofits.
Inspections will be required once every five years, and they’ll be conducted by a private third-party inspector certified by the city.
New construction won’t be subject to inspection requirements for the first 10 years of occupancy. And owner-occupied properties where owners rent a room in their home are entirely exempt from the program. Owner-occupied properties with one rental unit on site, such as an accessory dwelling unit or a duplex, are required to register, but not required to obtain a business license or complete inspections.
Opposition to the program
Carter Nelson spoke on behalf of the Washington Multi-Family Housing Association, which represents more than 328,000 units in the state and 4,300 in Olympia alone. She said while well intentioned, the organization doesn’t believe the program will do anything but increase costs for housing providers and, in turn, for residents in Olympia.
She said their organization felt left out of the process of creating the program, which has made their property managers in Olympia feel their ability to operate will be hindered.
“These operators are dedicated to keeping their residents housed and keeping their rent as low as feasible for the property’s overall costs,” Nelson said.
She said $35 a unit is the highest fee she has heard of in the state.
“The program is supposedly mirrored after neighboring cities with existing programs such as Lakewood, but yours would charge housing providers almost three times as much per door,” she said. “We understand that there are bad actors who violate restrictions. However, imposing a system that places the burden of cost on good actors providing housing in Olympia is not conducive to reaching our common goal of providing more housing to people in our region.”
She said although there’s an exemption for new housing, the cost of the proposal will push housing providers from Olympia when the council should be incentivizing growth. She asked that the council delay their vote on the measure.
Cindy Blyle, owner of Team Northwest Property Management, said the ordinance is encouraging homeowners to sell, which will lessen inventory and create displaced tenants, a lack of affordable housing owners, and investors. Blyle shared feedback from some of the property owners she manages properties for.
One of her property owners said they’ve been responsible with their two rentals and their rent is below market value, and the homes are well maintained. But if the ordinance is passed, they’ll be forced to sell the homes.
Another said they are legal immigrants in the U.S. and they don’t possess the eligibility to own a business license. They said the ordinance will force them to sell their future retirement home and no longer have the ability to rent it out, crushing their American Dream.
“In conclusion, if passed, this bill will create a wedge between landlord and tenants, a loss of inventory with owners letting us know they will be selling their homes, and higher rents for tenants for those owners that choose not to sell,” Blyle said.
The financial impact
Lenssen said nearly 95% of Olympia rental properties have four or fewer units. About 80% of all rental properties would pay about $150 or less per year, which includes fees and inspection costs that are averaged out over the five-year time period.
An example of the annual cost for a much larger apartment building was not mentioned.
“Less than 2% of rental properties have 50 or more units, but those units represent 51% of all rental units in the city of Olympia,” Lenssen said. “Several of the largest apartment complexes receive low income housing tax credits to provide affordable housing and could seek an exemption from those annual registration fees.”
Lenssen said that on top of building more housing for folks in Thurston County, they also need to ensure current housing is maintained.
“We know that the majority of low income individuals who are at risk of housing instability and homelessness are renters,” Lenssen said. “It’s imperative that we’re able to connect low-income renters with resources to help stabilize their housing situation.”
She said when looking at the city’s current housing stock, 48% of housing units were built before 1980, and 3,000 units were built before 1940.
Lenssen said nearly 60% of the county’s Fair Housing Survey respondents said high heating costs or insufficient heat is a concern in their current housing. She said 48% were concerned by mold in their housing, and 45% were concerned about air quality and pollution. And 20% of those respondents said they had experienced health impacts because of the conditions they live in.
“Housing is a social determinant of health,” she said. “Unsafe structural conditions can lead to falls and injuries, asthma and other respiratory conditions are exacerbated by leaks, mold growth and pests. Low income families experience higher rates of asthma with children having the highest rates of asthma.”
Lenssen said having proactive inspections through this program can help reduce disparities by ensuring that tenants with the greatest needs and the least resources are not disproportionately disadvantaged by poor housing quality, and that the benefits of safe, healthy and affordable housing are more equitably distributed among residents.
“Proactively addressing unit conditions before major repairs are needed will support housing preservation, which supports both stability and health outcomes for tenants,” Lenssen said. “Proactive property maintenance can improve tenant health and also save landlords money in the long run.”
Lenssen said a study of Seattle’s complaint-driven code enforcement system found that inspections in more than half of the properties identified code violations that tenants or neighbors had never reported. And in Asheville, North Carolina, she said residential fires decreased by 50% when they implemented a proactive inspection program. The number of fires rose again when the program was discontinued.
She said the city’s goal in implementing its own program isn’t to penalize property owners, but to bring all rental properties to a baseline standard through an agreement and relationship with property owners. She said property owners will be connected with funding information or other resources as needed.
Lenssen said the city is currently using Community Development Block Grant funds to offer rental housing rehabilitation, weatherization and energy efficiency upgrades for landlords renting to low-income tenants. And the housing department is seeking more funding opportunities to help property owners.
She said the council also discussed the need to provide tenant relocation assistance to help households transition in the event their current housing is in need of repairs. Implementing such a program requires a public hearing, she said, and that proposal will come to the council early next year.
