Sue Lani Madsen: Rent recovery barriers hurt everyone

Landlords must be able to evict tenants when they don’t pay the rent.

But broadly defined pandemic relief for tenants combined with tight limits on eviction are endangering landlords, and not just individual landlords but institutions. The impact has been hardest on nonprofit housing providers, a key resource in moving people from homeless to housed.

According to local attorney Eric Steven, Spokane’s municipal code for pandemic rental assistance “constructively prohibits landlords from issuing pay or vacate” notices for failing to pay rent. SMC 18.08 was tied to state legislation that had an expiration date. Unfortunately, the local ordinance was adopted without a coordinating sunset clause and is overdue for correction. Landlords are left with a requirement to refer tenants to a state process that no longer exists before they can attempt rent recovery by notice of eviction.

A vote correcting the ordinance has been delayed several times this summer. Steven said he first brought it to the city’s attention in May with plenty of time to take action before the underlying state program ended. With the council on summer vacation, the earliest a vote can be taken is Aug. 21. Meanwhile, landlords are stuck with operating costs rising and rent recovery stalled.

Some tenants on fixed pensions or entitlements took advantage of the rent deferral during the pandemic.

“My subsidized housing clients had tenants whose income was not affected by the pandemic who just didn’t pay,” Steven said. He cited cases of tenants who haven’t paid rent in a couple of years, now in arrears for more than $15,000. He used to be able to work with tenants on repayment plans, but “when the amount is that large, it’s insurmountable.”

One of the private landlords under pressure is Volunteers of America.

“We’ve had all kinds of challenges,” said Fawn Schott, CEO. “The worst thing is we just can’t collect rent, we just get appeals and appeals and appeals. We run on subsidized housing and when people haven’t paid their 30% for three or four years … that money would go back into case management services, so then we don’t have the funding to provide the services.”

Steven points to progressive tenant protection measures pushed during the pandemic contributing to the coming crisis.

“There’s a lot of misplaced blame on the downtown subsidized housing providers,” he said. “When they can’t collect rent, they can’t provide services.”

Wrap-around services are essential for the most-difficult-to-house tenants to be successful. Schott described a situation with a tenant making threats to staff and neighbors in the building. “We give second, third fourth chances,” Schott said, “but if they won’t engage in services or mental health care, they make it unsafe for everyone in the community.” She often struggles with tenant advocates who object to any eviction. “If I have one person threatening 49 others in a building, how do I keep the 49 safe?”

Tenants under threat of eviction have access to pro bono legal services from tenant advocacy groups like the Northwest Justice Project. The obvious question is who advocates for the 49?

“That’s what I ask, that’s not right either,” Schott said. “We need to find a solution for that one person and not let everyone live in fear. It inhibits our ability to do the work. The amount of resources diverted to one person for legal fees is money we should be spending on stabilizing more people on housing and providing mental health care and services in the shelters.”

It’s an uneven legal playing field when landlords must pay attorney fees out of collected rents.

A neighbor who owns and manages a small apartment building in Spokane was quoted approximately $20,000 in legal fees to go to court against the tenant’s free legal services from NWJP. She gave the tenant a second chance, but he relapsed and stiffed them for $9,936.18 in back rent plus the cost of meth cleanup. The attorney sympathetically advised her to give in to the demand to return the damage deposit, and call it a hard lesson.

She learned. She and her husband are tightening tenant selection and lease terms, and will be selling the building within the next three years.

VOA is still committed to its mission. “We take people with intense records and lots of history,” Schott said, but she still needs to collect rent to provide services, and eviction is a necessary tool for tenant safety and financial stability.

And now a cohort of renters has been trained that if it delays long enough, someone else will pick up the tab.

Steven is worried about the future. “We are creating a situation that will cause even more harm down the road. We’re going to see the crisis in five or 10 years when we’ve run off all the small mom-and-pop private landlords and now we’re in the process of running off all the private nonprofit landlords.”

Contact Sue Lani Madsen at rulingpen@gmail.com.