Big Rent Increases Are Coming For Some Affordable Housing Residents

Bellwether Housing's Anchor Flats building in South Lake Union
Bellwether Housing, whose properties include the Anchor Flats apartment building in South Lake Union, is limiting rent increases this year. Image via Bellwether Housing

By Katie Wilson

It’s no secret that rents are rising. Landlords are making up for lost time after pandemic-era rent freezes, and passing inflation-driven cost increases on to tenants. After a brief exodus from urban areas, many renters who left have now returned. Climbing interest rates are forcing potential homebuyers to wait, crowding the rental market.

With all these pressures driving up market-rate rents, it must feel great to live in an affordable, rent-restricted apartment right now. Right?

Maybe not. A quiet wave of large rent hikes is coming. For some, it’s already here. Earlier this month, seniors at a building operated by Mercy Housing in Bellingham hit the streets to protest a 9 percent rent increase that left some residents owing more than 60 percent of their monthly income to their nonprofit landlord—twice as much as the US Department of Housing and Urban Development (HUD)’s definition of “affordable” housing.

Every April, HUD releases income and rent limits for certain types of affordable housing, based on area median income. Once upon a time, these limits might rise in King County by 1 or 2 percent a year, but starting in 2017, the annual increase jumped as high as 7 percent. The pandemic briefly slowed this ascent, but the increase announced this April is truly startling: In HUD’s calculation, King County’s median family income rose by 16.3 percent from 2021 to 2022. That means rents at properties governed by HUD’s formulas may also rise by 16.3 percent this year—or even more, if a unit wasn’t already priced at its upper limit.

Of course, the fact that King County’s median household is now pulling in $134,600 instead of $115,700 doesn’t mean that lower-income households suddenly have more money to spend on rent. Seniors and people with disabilities living on fixed incomes, working families earning near the minimum wage—they’re not getting raises like that. Therein lies the problem.

Although many types of affordable housing are protected from large rent increases, many buildings financed with federal low income housing tax credits (LIHTC) and tax-exempt bonds are not. The same is true for most units whose rents are restricted through state and local multifamily tax exemptions (MFTE) and programs like incentive zoning and Seattle’s Mandatory Housing Affordability program.

When the HUD limits began rising sharply several years ago, the city of Seattle changed the rules for new MFTE units so that maximum rents wouldn’t go up more than 4.5 percent a year. That change has kept rent hikes within reason for more than 200 units so far, but tenants living in older MFTE units—about 5,600—are subject to the escalating HUD limits.

That’s how Fatima ended up with a rent increase of over $600 a month. (We’ve changed the names of renters to protect their privacy).

More than a year ago, Fatima moved into an MFTE unit in North Seattle thanks to a rapid rehousing program run by a domestic violence organization. (Rapid rehousing is a form of temporary rent subsidy that helps low-income renters pay for housing). The rent was $1,500 for a 2-bedroom—significantly less than the going rent for the area, possibly because there weren’t many takers during the pandemic slump

Fatima’s housing advocate said the building’s owners assured her the rent wouldn’t go up by much—$100, or maybe $300. When they got the final lease papers, they were shocked: The new rent was more than $2,100 a month, an increase of more than 40 percent.

Fatima said her landlord assured her that the rent wouldn’t go up drastically. After the rapid rehousing support ended, she was selected for an emergency housing voucher, a federal COVID relief program similar to Section 8 (now known as Housing Choice) that pays for a portion of a tenant’s rent.

Fatima’s housing advocate said the building’s owners assured her the rent wouldn’t go up by much—$100, or maybe $300. When they got the final lease papers, they were shocked: The new rent was more than $2,100 a month, an increase of more than 40 percent.

“We said, hold on, you told us it wouldn’t be that much. They said, you know, it’s based on the market,” said the housing advocate. “That put it over the [rent] limit for her voucher.” 

This week, Fatima’s landlord agreed to lower her rent to fit her voucher limit, allowing her to stay in her home. But not every renter is able to negotiate that kind of agreement.

Seniors on fixed incomes are an especially vulnerable group. King County’s area median income has been rising faster than social security payments for some time now. When the rent rises beyond seniors’ means, “we simply have nowhere else to go,” said Sarah, who lives in a senior housing complex in Seattle.

Sarah’s building was financed through the federal LIHTC program, and up until four years ago, it was run by a nonprofit. “Rent increases were minimal, and management was responsive to tenants’ needs,” she said. Then a national for-profit company bought the building. By that time, many tenants were also voucher holders, seeking out lower-cost units as market-rate rents rose beyond what their vouchers would cover. The corporation quickly showed itself to be all business.

“A tenant association begun under previous ownership was not allowed to use common rooms for meetings,” said Sarah, and a manager threatened to evict a tenant who started a Facebook group for residents. The corporation also tried to require electronic rent payments, until residents pointed out that this is illegal in Seattle.

Now some tenants are facing rent increases of $175 a month, surpassing some residents’ voucher limits. “Because some voucher holders have disabilities involving psychological difficulties, this situation caused much anguish,” said Sarah. “All tenants, including those with vouchers, know that buildings like ours are their only answer—they are shut out of market-rate housing and waiting lists for low-income apartments are years long.”

Not every resident of affordable housing is in trouble. Programs that receive federal operating funds typically limit the amount of rent tenants must pay to 30 percent of the person’s income; this includes many buildings owned and managed by the King County Housing Authority and the Seattle Housing Authority. Housing Choice voucher holders are similarly protected—as long as they live in units with rent low enough that a voucher will pay for them. Many nonprofit housing providers also receive operating funds from other sources that come with limits on rent hikes.

“The city of Seattle is a funder in most of our buildings,” said Michelle House, director of compliance at Community Roots Housing. “This year, Seattle restricted [rent increases] to 4.2 percent. We did follow that guideline for most of our apartments.”

Susan Boyd, CEO of Bellwether Housing, says that rent increases at their properties depend “on the building and which entities regulate the building, if any.” But Bellwether made a decision this year to limit rent hikes to an average of 3 percent.

“Notwithstanding ever-increasing rents in the market and significant inflation in operation costs, this will be the first year since 2019 that we have raised rents at all. We are very careful to ensure that our residents do not get overwhelmed by steep rent increases, regardless of what is happening with the HUD rent levels,” she said.

Renters in some other King County cities may be in an even more precarious position. Seattle, at least, has passed some protections designed to mitigate the harm caused by large rent increases. Landlords must now give 6 months’ notice of any rent increase and, as of July 1, renters making up to 80 percent of area median income (around $76,000 for a household of two) can get relocation assistance if they move after a rent increase of 10 percent or more. Most other jurisdictions in King County require no more than the statewide standard of 60 days notice, and none mandate relocation assistance.

Shoreline currently has 473 MFTE units that are bound only by the HUD limits. For-profit developers have built a number of LIHTC properties in South King County. And according to Lindsay Masters, executive director of A Regional Coalition for Housing (ARCH), the eastside could be in trouble, too. ARCH is a partnership of King County and East King County cities that oversees the cities’ covenants with property owners that have rent-restricted units.

“ARCH currently monitors roughly 2,000 affordable rental units located in privately owned properties throughout East King County,” said Masters. ARCH uses the HUD benchmark to calculate maximum rents for these units, which it released earlier this month. The coalition also oversees about 3,500 units controlled by nonprofit and public entities, which, Masters said, “are more likely to have rent policies that try to balance the needs of tenants with the financial needs of maintaining the properties.”

Spurred by concerns over upcoming rent increases in those privately owned units, ARCH took an unusual step. In April, ARCH wrote a letter to its member cities encouraging them to pass several renter protections to mitigate the impacts of large rent increases, not just for residents of rent-restricted units but for all renters: 120 days’ notice for rent increases greater than 3 percent and 180 days for rent increases greater than 10 percent; a cap on late fees at 1.5 percent of monthly rent; and a cap on move-in fees equivalent to one month’s rent, with the right to pay in installments.

Washington could follow the lead of Oregon and California, and pass a rent stabilization law limiting rent increases across the board. It could also repeal our state’s ban on rent control and let local jurisdictions try things out.

These three renter protections are part of a larger set being recommended to cities around King County by Stay Housed Stay Healthy, a coalition I’m involved in through my work with the Transit Riders Union. The city of Kenmore already passed all three (along with other protections) back in March, and more this week; in July of last year, the King County Council passed a similar package of renter protections for unincorporated areas of the county like Skyway and White Center.

There are encouraging signs that eastside cities are hearing the call. On July 19, the Redmond City Council passed the ARCH-recommended protections, plus a couple more. The Kirkland City Council is expected to take up similar legislation on August 3.

Beyond stronger renter protections, what can be done? Masters said ARCH is getting input from stakeholders about new policies that could help keep housing affordable, with the goal of “ensuring that future developments will operate in a way that better preserves affordability and promotes housing stability for tenants, while still promoting feasible development projects.” For example, cities with MFTE programs could follow Seattle’s lead and impose a more stringent cap on rent increases for new units.

There’s much more the state legislature could do, too. Washington could follow the lead of Oregon and California, and pass a rent stabilization law limiting rent increases across the board. It could also repeal our state’s ban on rent control and let local jurisdictions try things out.

But there are also politically easier steps the state could take, focusing only on rent-restricted units. In Oregon, for example, if LIHTC properties (and many others that benefit from state funds) want to raise rents more than 5 percent a year, they must apply for approval from a state agency.

Alternatively, state and local governments could focus public resources on housing models that aren’t so subject to market forces. For 43rd LD representative Frank Chopp, this wave of large rent increases in supposedly affordable units “shows flaws in the MFTE program and similar types of programs.”

“The MFTE program definitely siphons money out of the public coffers and into the private landlords’ pockets,” he said. “This is one of the main reasons why we need to do more social housing, like Initiative I-135,” which could be on Seattle voters’ ballots next February. “If you have the same amount of money that’s flowing into these for-profit units and put that into social housing, you get a far better return on investment for the people,” Chopp said.

7 thoughts on “Big Rent Increases Are Coming For Some Affordable Housing Residents”

  1. I think rent increases for fixed income folks are only the tip of the iceberg. Seattle (and Washington State) are funded by sales taxes, Property taxes and a raft of other regressive taxes. Without a State income tax, lower income folks in Washington are really going to feel the pain. And the Liberal and Democratic public office holders need to own this…. they set the tax structure so rich tech workers pay a lower percentage of income to State taxes than hotel maids do.

    1. Looking forward to how we phase out these regressive taxes in exchange for income tax! If they are distructive, repeal!

  2. What about Yakima. I live in a subsidized apartment. My rent has been raised already twice this year.

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