The Gristle

Pass Through Costs

Wednesday, April 23, 2014

PASS THROUGH COSTS: Bellingham City Council this week took an important real step toward building a more socially equitable community as they considered an actual draft ordinance that might create a registration program for the city’s rental housing. The city estimates there are approximately 13,000 existing rental units that could be registered through this program.

Council has fretted for more than a decade—with numerous false starts—over the problem of substandard rental housing that fails to meet the minimum legal requirement of health and safety, a disservice for a small town that hosts a large university and therefore a large transitionary cohort in need of such housing. Through that decade, they’ve received yards of anecdotal commentary that substandard rentals are not a problem in Bellingham, that it is a problem confined to only the smallest sliver of property or property owners. Most of this commentary has been offered by the property owners themselves, or their representatives and real estate advocates, as rationale to stall action; however, no one honestly knows the scale or scope of rental housing quality because it has not been studied in a coherent or systematic way. Compounding the problem are the unknown numbers of accessory dwelling units (ADUs) that have been installed clandestinely in basements, attics and garages throughout neighborhoods near campus, numbers that perhaps equal the legal ADUs on the city’s books.

Council’s proposed ordinance puts years of talk into writing, establishing a minimum of standards for sanitation and the structural integrity of existing units, including wiring, plumbing and emergency egress.

As with most health and safety inspection programs operated by the city, the program is envisioned as being primarily complaint-driven, without the requirement of periodic inspections and landlords at liberty to do their own self-certification of properties they control. Allowing landlords to police themselves is the single most contentious issue in any rental registration program. Critics point out that this is essentially the condition that exists today, barely an improvement. But it is an improvement. Units registered through the program would receive a certificate, and that certificate would specify what tenants may expect in terms of minimum standards and provide them with instructions and recourse in the event of a dispute with the property owner. Presumably it will additionally imbue tenants with certain legal rights so their complaints may be addressed without fear of eviction. Under guidelines outlined by City Planning Director Jeff Thomas, landlords would be given multiple opportunities to address complaints about inadequacies found in their rental units.

Perhaps the most immediately useful feature of a rental registration program may be the proposed random audit of .5 percent of the city’s rental housing stock each year. That’s only about 65 units per year, based on city estimates—a number critics say is far too low to cycle through all of the city’s rental housing stock in less than a century—but the statistical data gleaned through even a small sampling through a random audit could yield actual scale and scope to an informed discussion of the quality of that housing stock, transforming anecdotal storytelling into actual data points. That data can help shape the program in future years.

Council discussed who should pay for those audits, whether the fee should be borne by the individual landlord or absorbed as one of the costs of the overall program.

The Gristle will observe that broad community goals are achieved by a more comprehensive understanding of the quality of the city’s rental housing stock; and that any random cost attached to a landlord will merely be passed through to the tenant, increasing the costs of rental housing.

“Pass through” describes an unintended consequence of the attempt to improve the safety and quality of rental units in Bellingham—that the tenant ultimately bears the cost, either in continued inferior housing stock or of the costs of a program intended to improve that housing.

“Pass through” also describes a young, ephemeral population of students who frequently have no deep roots here, little access to community resources that could assist them with their housing concerns, and virtually no political representation or influence. They live here in large numbers for a handful of years in whatever housing is available near campus. They are frequently not served by the sorts of programs designed to assist low-income households. Their landlords by contrast are well represented, legally and politically, and the proposed ordinance is deferential to them—to a fault.

It’s an ironic consequence of the way the city is laid out, the history and pattern of its development, that the largest portion of professionally managed apartments are far from campus. The ADUs near campus are—in many cases—owned by families as investment properties for a modest income stream, perhaps to lower a mortgage burden on their primary home. They city’s proposed ordinance offers little to improve the Mom-&-Pop ADUs near campus; in fact, properties where the owner is also present are exempt from the inspection program. And the proposed ordinance does nothing to ferret out the numbers of illegal ADUs that operate near campus. That, Thomas said, must be handled through a different program.

Despite its weaknesses, City Council’s proposed ordinance takes a real step toward goals policymakers have approached and retreated from for more than a decade.

As Council veteran Gene Knutson observed, “This is something we’ve talked about for years. We either need to do this or move on.”

The council’s Planning Committee will take up the ordinance again May 5.

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