Title
Approval of an Ordinance Amending the Rental Housing Code, OMC Chapter 5.82
Recommended Action
Committee Recommendation:
Land Use & Environment Committee recommends adoption of the Ordinance amending the Rental Housing Code, OMC Chapter 5.82.
City Manager Recommendation:
Approve on second reading the Ordinance Amending the Rental Housing Code, OMC Chapter 5.82.
Report
Issue:
Whether to approve on second reading the Ordinance Amending the Rental Housing Code, OMC Chapter 5.82., related to move-in costs, fees, and deposits.
Staff Contact:
Christa Lenssen, Housing Program Specialist, City Manager’s Office, 360.570.3762
Presenter(s):
Christa Lenssen, Housing Program Specialist, City Manager’s Office
Background and Analysis:
Background and Analysis has changed from first to Second Reading.
The changes from first to second reading are as follows:
1. As voted by the City Council, the second reading has been updated language in Section 5.82.060 with the “optional” language attached to the staff report.
2. Section 5.82.040 is now broken out into subsections to address the different notice requirements depending on percentage of rental increase.
3. In Section 5, the Effective Date has been updated to reflect the staggered effective date of each subsection of 5.82.040.
In March of 2019, Tumwater City staff approached regional jurisdictions regarding potential policy actions to provide additional stability to renters. At the October 2019 Land Use & Environment Committee, Olympia staff presented policy options prioritized by Tumwater and policies recently adopted by peer cities.
In October 2019, renters and tenant advocates from Washington Community Action Network held a rally outside City Hall and presented a proposed ordinance to Olympia City Council. This ordinance proposed several policies, including:
• Limiting move-in costs, to include non-refundable fees and security deposits to one month’s rent.
• Allowing payment of move-in costs and last month’s rent in installments.
• Limiting pet deposits to 25% of first month’s rent and allowing payment over three monthly installments.
The City Council held a Work Session in November 2019 in response to community interest. Staff provided an overview of the ordinance proposed by tenant advocates, policy options greenlighted by City of Tumwater, as well as other recently adopted peer city policies.
A community meeting was held in March 2020 to listen to community members’ experiences and challenges related to rental housing. Around that time, tenant advocates proposed a Just Cause Eviction sample ordinance for consideration by Olympia City Council. A statewide eviction moratorium was enacted in late March 2020 in response to COVID-19. In May 2020, staff drafted a Just Cause eviction code language for review by the Land Use & Environment Committee.
In October 2020, the Olympia City Council enacted an emergency ordinance prohibiting evictions due to COVID-19 and requiring landlords to offer rent payment plans. Due to the changing landscape of legal protections under the moratorium and public health crisis, tenant protections conversations were put on hold temporarily.
The Washington State Legislature enacted several landlord-tenant provisions, which addressed some of the policies previously under consideration, to include:
• Allowing installment payments of move-in fees, security deposit, and last month’s rent (adopted 2020).
• Requiring just cause to terminate a tenancy (adopted 2021).
State law preempts local jurisdictions from enacting rent control or rent stabilization measures under RCW 35.21.830.
The City’s Housing Action Plan developed in 2021 identifies tenant protections as a key strategy to make it easier for households to access housing and stay housed.
Public Input Process
In May 2021, staff provided an update on statewide changes to landlord-tenant law to the Land Use & Environment Committee (LUEC). The LUEC approved an engagement plan to contract a consultant who would facilitate a robust community conversation about rental housing policies. Staff worked with consultant Jason Robertson to plan a community engagement effort to identify policy priorities, as well as better understand unintended consequences to policy adoption. Staff researched policy options adopted by other cities and counties, and interviewed several jurisdictions (Aberdeen, Auburn, Bellingham, Burien, Renton, Tacoma, and Seattle). Staff interviewed key stakeholders locally, including tenant advocates and property managers. In December 2021, staff provided a briefing to LUEC on policy options adopted in other cities and counties, research conducted, and preliminary feedback from stakeholders.
Staff and consultant Jason Robertson developed community surveys and a focus group structure to gather feedback on policy options and offer opportunity to brainstorm solutions not yet considered. In March 2022, three surveys (geared toward tenants, landlords, and interested third parties) were posted on the Engage Olympia webpage. Around 450 responses were submitted in three weeks (193 tenants, 107 landlords, and 131 third parties).
Survey respondents had an opportunity to express interest in focus group participation. Four community focus groups were held in March for tenants, tenant advocates, property managers/larger scale property owners, and smaller ‘mom and pop’ landlords.
A total of eleven landlords or property managers participated in the two focus group options. Seven tenants participated in the renter focus group and six renter advocates participated. LUEC Chair Dani Madrone attended all four focus groups. Staff presented findings of the survey and feedback from focus groups to LUEC in April 2022. Based on the priorities and considerations gathered, committee members directed staff to present options on the following policy areas at the May meeting:
• Caps on move-in fees, deposits and last month’s rent in other jurisdictions.
• Caps on pet deposits and fees in other jurisdictions.
• Longer notice periods required for rent increases.
Committee members also directed staff to continue work on other potential renter solutions, including a rental housing registry. Committee members also expressed interest in pursuing more information about tenant relocation assistance and methods for providing or requiring resource information to landlords and tenants. Staff was asked to continue tracking peer jurisdictions’ policies and litigation related to:
• Screening requirements (criminal history, credit history)
• Statewide Just Cause protection loopholes
Summary of Proposed Ordinance
At the May 2022 LUEC meeting, committee members voted to draft an ordinance that:
• Caps move-in costs (move-in fees, deposits and last month’s rent) at one month’s rent.
• Caps pet deposits at 25% of monthly rent and abolishes monthly pet rent.
• Requires 120 days’ notice for rent increases over 5% and 180 days’ notice for rent increases over 10%.
Committee Members directed staff to conduct further outreach with community service providers to determine whether the ordinance should include an exception to allow tenants who receive rental assistance from a nonprofit organization or governmental agency to offer a higher deposit or last month’s rent to a landlord.
In the focus groups, 2-3 nonprofit case managers provided feedback that they sometimes offer a double deposit and/or last month’s rent to incentivize landlords to accept tenants with higher barriers to entry into rental housing. Committee members did not want to prohibit social service providers from using this tool to help higher barrier tenants access rental housing.
Staff contacted several nonprofit case managers (mostly those who administer Rapid Rehousing funds). Case managers informed staff that recently landlords were not willing to rent to their clients without a guarantee of 12 months’ rent assistance (typically Rapid Rehousing funds cover 3-6 months of rent), even when an additional deposit is offered. Housing Authority of Thurston County has very limited ability to help with any move-in costs for program participants. One agency’s primary HUD funding source for rent assistance does not allow payment of nonrefundable fees. Rent assistance funds and move-in costs are not differentiated, so the more move-in costs the agency provides, the less funding is available for rent.
Some case managers felt that if the exception is normalized, landlords would expect a higher deposit from any tenants who are working with nonprofit agencies. There was some concern that this practice would conflict with source of income protections. There was general support for policies that positively impact all vulnerable renters (not just renters connected with a nonprofit agency), such as capping move-in costs and limiting barriers such as credit history requirements and high rent to income ratio requirements.
As recommended by staff, the proposed ordinance does not include an exception for tenants working with a nonprofit or governmental agency to offer a higher deposit or last month’s rent in addition to a security deposit.
In light of the feedback from case managers and other stakeholders, staff recommends adopting further prohibitions on non-refundable move-in fees, outlined in Option 1.
The proposed ordinance allows for installment payments of the pet deposit, as outlined in subsection C under section 5.82.050 (Pet Damage Deposits). Language drafted in the ordinance mirrors Seattle’s pet deposit provisions.
The proposed ordinance also excludes prohibitions on monthly pet rent due to state restrictions on rent control. State Landlord-Tenant law defines ‘rent’ as ‘recurring and periodic charges identified in the rental agreement for the use and occupancy of the premises.’
Neighborhood/Community Interests (if known):
The proposed amendments to Olympia’s Rental Housing Code (OMC 5.82) are a topic of significant interest to renters and rental housing owners/operators within the City and in Thurston County. Thurston Regional Planning Council estimates that 54% of Olympia residents are renters. Any work on this topic will draw a great deal of local and regional attention and public engagement.
Options:
1. Approve on first reading and forward to second reading the Ordinance Amending the Rental Housing Code, OMC Chapter 5.82.
2. Direct staff to modify the ordinance based on Council input and forward to second reading.
3. Do not adopt the ordinance and direct staff to take other action.
Financial Impact:
Implementation of an ordinance will require staff time to conduct education and outreach to renters and landlords. Development of any printed materials or mailers will require additional cost.
Attachments:
Ordinance - Second Reading
Ordinance - First Reading
Option 1 OMC 5.82.060 Alternative Language
Community Survey Findings