Addressing homelessness; Step One- Use private dwellings whenever possible

Local builders have tried to keep pace with market demand for rentals.  Cosmos Development’s 2nd and Main project offers large units and nice amenities in the heart of Renton’s downtown.

In a previous blog entry I shared that the King County Homelessness Authority has put forward a $25 Billion five-year plan to create temporary housing to reduce homelessness.  I mentioned that our own Renton Housing Authority has been a very efficient government housing provider, and I promised to revisit this topic of homelessness with additional practical ideas in the future.  This is my first follow up on this topic, covering what private providers can do.

The debate about solving homelessness often deteriorates into over-simplified disagreements, like “is homelessness a housing problem, or a drug problem?” I promise not to take such a simplistic approach. The issue is much more complicated than that.

As a disclosure, my wife and I have owned rental homes in our area for over 30 years, and we have taken pride in providing affordable, fair, desirable housing for families and individuals in our community.

Step 1: Maximize the capability of the private housing market by working with landlords and builders

Our region’s private housing market plays the most essential role of all in preventing homelessness, by successfully housing 90%-95% of all of our region’s residents while generating significant tax revenue.  About 61% of these residents live in homes which their family owns, and the other 39 percent are in homes or apartments they are renting under a private lease with the owner.  It’s in all of our benefit to keep this market thriving, as this private market drives new home construction with typically no subsidies from taxpayers. This new construction helps reduce housing shortages.

With regard to rentals, the more aggressive cities like Seattle have enacted policies intended to ensure more of their residents have easy access to this market. They’ve taken actions such as restricting criminal background checks, limited the size of security deposits, and prevented evictions in many cases.  Unfortunately, these policies increase risk for landlords, especially smaller ones, and have led to a 3000 unit reduction in available homes for rent in Seattle.  These homes were sold into the owner-occupant inventory, reducing the demand on builders for new homes; so the net effect of Seattle rental policies was avoidance of building 3000 new homes in our area.  In addition, the former residents of Seattle’s reduced inventory of rental homes, an estimated 5000-8000 people, have either contributed to Seattle’s estimated 11,0000 living on the streets or in shelters, or moved to suburbs like Renton exacerbating suburban housing shortages.

The Seattle council was trying to do the right thing by getting more people into the private housing market, but they did it wrong.  They needed to work with private landlords instead of against them.  While some multinational corporate landlords may appear to lack a heartbeat, there are many large local builders/suppliers and thousands of Mom-and-Pop housing providers that care as much or more about housing people than the average Seattle City Council member does.

The Mom-and-Pop housing suppliers, who typically own from 1 to 10 units, have been taught repeatedly by training and the school-of-hard-knocks to rigorously screen their tenants.  It’s easy for  them to lose tens of thousands of dollars, or in some cases completely lose their rental property, a number of different ways if they don’t have a good idea of who they are renting to.

Experienced landlords will historically check potential tenants for income, credit history, job stability, rental history, criminal history and drug violations, past evictions, past bankruptcies, and number of pets.  (Some of these checks are now subject to restrictions, so Seattle landlords should check with their city before screening.)  Each one of these screening criteria solves one or more specific real risks for landlords, so it’s hard to do away with the screening criteria without losing housing inventory.

There are unfortunately a large number of ways that tenants can not meet the criteria of private landlords, and if no work-arounds are available the tenants must obtain government sponsored housing, move in with friends, leave the area, or become homeless.

As I said above, most Mom-and-Pop’s offer compassion and some flexibility, and they have a whole culture of sharing ideas about how to help tenants qualify that otherwise may not.  Some frequent solutions are allowing a co-signer to underwrite a tenant with bad credit or no credit;  asking for a larger deposit from a tenant with fluctuating income or a past eviction; asking for a large pet deposit from a tenant that otherwise qualifies, but has a pet; or putting a tenant on a month-to-month lease if they have recently turned a corner on criminal behavior, but the landlord has concerns about relapse.  Unfortunately, many of these work-arounds are themselves under fire, as City Councils and the legislature increasingly seek to designate the specific rental terms of private rentals.  In effect, landlords are being prohibited from being flexible in getting these barely-qualifying tenants into the private housing market.

Policy makers should work with landlords, not against them, in getting more people into the private housing market.   A few quick brainstormed ideas are:

(1) Develop preferred guidelines with appropriate flexibility regarding when landlords might ask for larger deposits, pet deposits, and month-to-month lease terms, to facilitate getting tenants into private rentals who otherwise may not qualify.

(2) Create a government fund that can co-sign on leases for certain tenants that have been disadvantaged, the way a financially-secure relative might co-sign for a tenant.  This could help counter generation wealth disparities.  This fund would not be expected to subsidize rents, but could be drawn-on if a tenant falls behind in rent (like a co-signer).

(3) Create a classroom education and certification for tenants with problem rental histories that demonstrates these tenants have learned the basics about maintaining their end of a lease agreement. Potentially accompany the diploma with a government undersigning of the next lease.

(4) Develop an intervention program, with counselors and neutral third parties, that a landlord can turn to if a tenant becomes violent or begins harassing other tenants.  The same agency should be available for a tenant that has an unreasonable/unstable landlord.

(5) Create a properly-funded region-wide grant program that temporarily helps tenants cover missed rent payments if they’ve been the victims of a crime that has affected their livelihood, or if they’ve suffered other unforeseeable extraordinary setbacks, to reduce the number of evictions and/or keep landlords in the rental business.

Renton has implemented an emergency grant process for tenants experiencing temporary financial distress, but the need exceeds the funds available (see last line). This high-leverage program should get regional sponsorship to help keep people out of homelessness.

If real dialogue and problem-solving began between landlords and policy makers, better ideas than these could be developed.

The goal should be getting as many people into private rentals as possible, and keeping them there, while making the arrangement positive and successful for both landlords and tenants.  This will ensure that new housing continues to be built by the private sector, minimizing shortages. And this will also minimize the number of resident that fall into the position of needing government housing or supportive facilities, which I’ll cover in future blog entries.

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Note: At Monday’s council meeting (Feb 27), the City Council referred the topic of new  limitations on private landlords to the Mayor’s administration for review and recommendation