Unintended Consequences of Seattle City Council’s Proposed Changes to “Notice of Intent to Sell” Ordinance.
The Seattle City Council continues to propose new legislation and amend existing landlord-tenant laws under the premise of addressing housing affordability. At face value, the stated motivation by the City Council is noble; increasing the available supply of affordable housing is badly needed and generally a popular objective among residents of Seattle. However, much of the recent housing-related legislation serves to do just the opposite; instead, it reduces the available supply of affordable housing.
The Seattle City Council’s proposed amendments to the “Notice of Intent to Sell” ordinance is a perfect example of legislation that will do the opposite of the Council’s stated goal. The “Notice of Intent to Sell” ordinance, as it stands today, provides 60-day advanced notice of the owner’s intent to sell a property that has 5 units or more, with at least one unit that is deemed affordable to a household earning at or below 80% median income. The notice is to be submitted to the Seattle Office of Housing (OH) and Seattle Housing Authority (SHA) so that the City agencies have sufficient time to prepare an offer to purchase the property and maintain the unit(s) affordability. It should be noted that in 2017 (the last year Dupree + Scott provided comprehensive multi-family rental data) approximately 87 building sales qualified for the ordinance. Yet, since the implementation of the ordinance, neither Seattle OH nor SHA have provided an offer to purchase one of the buildings containing affordable units.
The proposed changes to the ordinance, via Council Bill 119537, are as follows:
- Lower the threshold for the number of units within the building from 5 to 2.
- Increase the advanced notice period from 60 days to 90 days.
- Require the owner to not only notify Seattle OH and SHA, but to also post a notice within the property, clearly visible to all tenants, that the owner intends to sell the property.
- Requires owners to submit to Seattle OH a signed declaration under penalty of perjury affirming they have complied with the ordinance.
- Requires the owner to post a notice to tenants informing them of any unsolicited offers received for the property within two days of receiving the offer and prohibits the owner from accepting any unsolicited offers for at least 90 days following the posting of the notice.
- Increased penalties for non-compliance with the ordinance from $500 to $2,000.
The adverse impacts to tenants of the properties covered by the ordinance are clear. Posting a public notice of the intent to sell will create undue unrest for the tenants, motivating them to reconsider their current housing situation due to the perceived uncertainty surrounding the upcoming potential sale. Many tenants will unnecessarily choose to “proactively” move from their current housing, operating under the false assumption that a sale inevitably means a rent increase.
Alternatively, owners who are unwilling to be subject to the ordinance may opt not to renew leases that meet the affordability criteria as they prepare to sell the property – preferring a vacant unit that can be leased up by the next owner as opposed adhering to the onerous ordinance. Lastly, other owners may opt not to sell their property due to the ordinance, property that may have zoning that supports additional units through redevelopment – thus artificially suppressing the available housing supply.
All said, while the proposed amendments to the “Notice of Intent to Sell” claim to address affordability, in actuality it will do the opposite. As voters and residents of Seattle who are motivated to address our City’s affordability issue, we must demand our City Council think through all the consequences of any proposed legislation. Either the impacts of this proposal have not been thoroughly considered or our Council is not as motivated to address affordability as they claim. If you feel so inclined, reach out to the City Council ( https://www.seattle.gov/cityclerk/agendas-and-legislative-resources/city-council-agendas/contact-the-city-council ) and share your thoughts on this important issue.
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