The Olympia Land Use and Environment Committee weighed a series of policy proposals on Thursday, Nov. 21 aimed at further improving tenant protections and creating new pathways to homeownership.
The recommendations build on the city's existing rental protection program to address housing affordability and stability concerns. No action was taken at this meeting.
One of the proposals would adjust the income-to-rent ratio requirements for rental applications, making it difficult for low and moderate-income residents to qualify for rental housing in the city.
Olympia Housing Program specialist Christa Lenssen noted that a full-time minimum wage worker in Thurston County earns around $34,000 annually, qualifying them for rents below $950 per month.
Lenssen pointed out that the average one-bedroom rent in the county is $1,500. This means many renters may be unable to find new housing if forced to leave their current unit, potentially moving into more unstable housing situations.
"Due to the high cost of rent, more low- to moderate-income renters are having difficulty meeting the screening requirement. Many landlords require that each household member earn three times the rent to qualify for a rental unit," Lenssen said.
Looking at what other cities are doing, Lenssen provided information about how Tacoma and Portland address rental screening requirements.
In Tacoma, landlords are prohibited from requiring an applicant's income to be more than 2.5 times the rent if the unit is above HUD fair market rents, and three times the rent if it is below HUD's thresholds.
Portland uses a two times the rent ratio for higher-cost units and 2.5 times the rent for lower-cost units. Lenssen said these formulas are aimed at making rents more affordable for applicants.
Lenssen added that in Minneapolis, a landlord must allow applicants to demonstrate a history of successful rent payment if their income is less than three times the rent.
City staff present at the meeting recommended that the landlords be allowed to use either the income of a financially responsible applicant or the combined household income when screening for financial eligibility. The guideline would be no more than 2.5 times the monthly rent. Additionally, per state law, if a tenant is using a housing voucher, only the tenant's portion of the rent should be considered for screening purposes.
Committee chair Dani Madrone expressed support for the concepts, particularly the component allowing the use of combined household income rather than requiring each applicant to meet the income threshold.
She also appreciated the simplicity of the recommendation, setting a 2.5 times the monthly rent ratio rather than having different thresholds based on affordability.
Earlier, the city council directed staff to explore options for a potential exemption from the registry and inspection program for landlords who are willing to enter into a rent-to-own agreement with their tenants to encourage greater access to homeownership.
At the committee meeting, Lenssen provided an overview of the potential benefits and risks of rent-to-own arrangements for both tenants and landlords.
For tenants, rent-to-own agreements can help those who are unable to save for a significant down payment or have difficulty qualifying for a mortgage. Tenants can maintain stability by residing in the same home long-term and may be able to lock in a purchase price.
Lenssen noted that legal aid organizations have advised concerning "scams or predatory arrangements" in some cases, where tenants end up in a worse financial position. Tenants in rent-to-own agreements may pay upfront deposits or make home improvements but still be subject to standard landlord-tenant laws. This can lead to tenants losing their investment if the agreement is terminated. Tenants are also often responsible for repairs and maintenance without the full benefits of homeownership.
From the landlord's perspective, renting to a tenant who plans to purchase can provide additional security and assurance the tenant will maintain the property. However, landlords may lose potential revenue if the agreed-upon purchase price is below market value at the time of sale.
To mitigate these risks, Lenssen recommended that the city require a home inspection, appraisal, title search, and a written agreement if pursuing a rent-to-own pilot program. Providing funding support for legal assistance to draft contracts was also suggested. The staff estimated a cost of around $2,000 per transaction to implement these safeguards.
While expressing support for exploring a rent-to-own pilot program, Councilmember Robert Vanderpool emphasized the need to find ways to incentivize landlords to participate. He said simply offering the option may not be enough to generate significant interest.
Lenssen highlighted concerns and challenges residents of manufactured home communities face, particularly around steep increases in lot rents. She noted many of these residents are seniors and people with disabilities on fixed incomes.
Some emerging issues included residents' fears of displacement due to redevelopment, high utility costs, rule changes and violations, and lack of transparency around cost increases. She noted that residents recently reported being notified that their lot rents would double over the next five years.
To address these concerns, the city staff presented several policy options for the committee to consider:
Vanderpool raised concerns about zoning amendments to limit the redevelopment of manufactured home parks. He wanted to ensure that the city does not lock itself in with restrictive zoning that could be difficult to change in the future.
Instead, he suggested the city should explore ways to strengthen residents' first right of refusal and ability to collectively purchase their communities when they are put up for sale.
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JnNwmn
A New Rule Proposal for Renting.
If a landlord meets all the requirements to let anyone in their property and a tenant becomes overdue in
rent payments or stops paying rent then a new rule takes effect. The landlord will receive a credit for City of Olympia Utility costs and Utility Taxes and City Taxes to be applied to any city account of the landlords
choosing at a $1 to $1 rate.
Saturday, November 23 Report this
BillString
Climate migration is probably going to make things worse. I won't be surprised if the city attempts to force more and more onerous restrictions and taxes property owners and landlords. Or they'll start buying up the older homes in the cities neighborhoods and start filling them with condos, townhouses and tiny houses for the low income and homeless, further tanking property values.
Saturday, November 23 Report this
DeaneTR
This reads like someone who's having a heart attack trying to deal with it by taking a couple aspirin and taking a nap... Until there's a concerted effort to limit home value, as well as the number of homes that private equity investors can own, the market will keep gaming the system to drive prices as high as possible. Homes are supposed to shelter people, not the wealth of the 1%. You can't have it both ways!
Saturday, November 23 Report this
OlyKid88
DeaneTR - I agree with your point that this isn't a remedy, but I just want to point out that the government has very few options to decrease housing costs.
They have many ways to increase housing costs which we get to experience firsthand here in Olympia. Housing policy is asymmetric. Think of it like pushing on a string. Easy to make prices go up, but hard, maybe impossible, to make prices come down.
At least in Thurston County, private equity, even if you include corporate entities, doesn't make up a meaningful amount of the market and those transactions tend to occur outside of Olympia. It definitely isn't zero, but it is very small number relative to the overall local real estate market. Interestingly, two of the largest owners of single family housing in Thurston County are local. Rob Rice and Walter Cox.
Multifamily is a whole different animal.
The explanation for high home prices in Olympia isn't complicated and can't be blamed on nefarious corporate greedy interests cornering the market.
There is a supply and demand imbalance made worse by the bureaucracy and the costs involved to build homes here.
Thurston County has grown by roughly 50,000 people (20%) since 2010. Olympia is land constrained when it comes to building new SFH and the urban area is built out with few infill lots available. It is a desirable area. Throw in a healthy dose of inflation and you end up with housing prices up 25% since 2019.
There are certainly other factors at play, but they aren't related to institutional involvement in the local market. We just haven't built enough housing to keep up with the demand for housing here. I'm not sure about this year, but in 2022 and 2023 I think there were only 20-25 SFH permits granted each year.
There is a considerable amount of people, time, effort and money spent by the City and County governments on housing issues. At the end of the day, the private sector drives home building and the market determines the price of a house.
Builders can't build "affordable homes" as they pay market rates for money, materials, labor plus permit fees, impact fees, offsite improvements and our ~10% sales tax. The current building codes have additional requirements that add to the cost of building a new home. The permits and impact fees alone amount to roughly ~12%, maybe $50k, on average.
https://ci-olympia-wa.smartgovcommunity.com/Public/DocumentsView/Download/89691646-daa5-465a-8b10-a85e012c7f83
Saturday, November 23 Report this
PamelaJHanson
3x income to rent, 2.5 times income to rent, 2x income to rent? What type of rent increases is the industry attempting to build into their tenants' financial plan? Is their market rate and their inflationary stabilized profit margin happening side by side? This may be the, or a, price fixing scheme that Olympia has dipped their accounting toes in. The industry looks to be favoring non-minimum wage earners and paving the way for market rate increases directed at their tenants (during a massive state budget deficit). Gov. Gregoirre's unemployment rate reached over 10%. Are current unemployment benefits sufficient to pay rent? Probably not. So, WARNING! Both monetized and premeditated price increases is what may be happening. Congratulations Olympia for addressing the issue! Our government is an accounting based government.
Sunday, November 24 Report this
MrCommonSense
More regulations will cause the small landlord, especially landlords with single family homes, to sell them and they will be removed from the rental pool, leaving apartments, duplexes and ADUs as the choices for tenants. As for the lease to own model, very few S/F owners would be willing to sell as there are no benefits to the seller. A lease/option or lease/purchase simply removes the home from the market and the owner foregoes future potential increases in value if it is a fixed price. Of course this could change if market values were to remain stable for a long time or the economy changes causing prices to go down (not likely in Olympia and Western Washington as people are still moving here).
The Habitat for Humanity's newer model, maintaining ownership of the land and controlling the re-sale of the property AND the non-profit land trust model (e.g. www.thurstonhousinglandtrust.org) also controlling future affordability are good examples of what the City should be investing in for long term affordable housing.
It would also be helpful if the City considered drastically reducing or eliminating impact and permit fees when projects when affordable housing is built in areas where the major infrastructure (water, sewer, etc) is already in place.
Thanks for listening.
Sunday, November 24 Report this
Callie
The resource I'd advise for Manufactured Housing is to contact Northwest Cooperative Development Center. They help people BUY the manufactured home park, and give ten years of follow-up to help the ownership cooperative get organized and stable.
And yes, as another commenter suggested - other areas have done well with a Housing Land Trust model - a non-profit owns the land, a mortgage-worthy-lower-income-person can then afford the house. If you don't have offspring, consider putting Thurston Housing Land Trust in your will, so your house can stay a home.
Monday, November 25 Report this
Southsoundguy
Abolish zoning, end democratic control of land, and stop using real estate as a savings account. Buy bitcoin.
Tuesday, November 26 Report this
sonshi
Rent to own. . .Very few tenants can shoulder the burden of an unexpected pipe burst, septic failure, roof leak -- heck even a broken window can set you back over a grand. Rent to own arrangements often involve HIGHER rent than would be normal within a lease. Add maintenance costs to that and it's most often not remotely feasible. If you have the emergency funds set aside for a home repair, you're probably pretty close to a down payment. There are so many pitfalls and legal dangers involved, it is clear why they almost never work out to the satisfaction of both parties. The only time I've ever heard of them working was within a family, and there were tax reasons for doing it that way.
Wednesday, November 27 Report this