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Spokane, Washington  Est. May 19, 1883

‘Rent-to-own’ programs will be audited after WA lawmakers raise concerns

By Daniel Beekman Seattle Times

SEATTLE – The Washington state Auditor’s Office will audit certain rent-to-own housing programs supervised by the Washington State Housing Finance Commission in response to a request last month by lawmakers who said the commission was failing to follow up on promises to low-income tenants.

State Auditor Pat McCarthy’s office is developing the audit and expects to carry it out next year, a spokesperson said Thursday.

Reps. Gerry Pollet, D-Seattle, and Chris Stearns, D-Auburn, asked McCarthy to probe the housing finance commission’s oversight of tax-credit programs that are supposed to guarantee homeownership after 15 years and that have been used to develop low-income housing by a number of Native American tribes.

More than 200 homes that should have been transferred to tenants by now have not been, and hundreds of other tenants could be at risk, Pollet and Stearns said in their audit request. The commission disputed aspects of the request, saying the number of homes with past-due transfers is lower.

McCarthy’s office plans to review how the rent-to-own programs have affected eligible tenants, what the commission could do to improve outcomes for such tenants and whether the commission has followed applicable laws and requirements while overseeing the programs, a spokesperson said.

Last month, the commission said it had “already remedied our compliance oversight and worked diligently over the past two years to help the tribal housing authorities develop and implement” the ownership programs.

“We can show (the auditor’s office) that we’re taking every step in our power to ensure the best possible outcome for the tribes and tenants,” commission spokesperson Margret Graham said in an email Friday.

Pollet and Stearns were alerted to the issue by Gabe Galanda, a Seattle Indigenous rights attorney who’s spent years fighting attempts by the Nooksack Indian Tribe to expel certain families from the tribe and evict them from their homes, including homes developed with federal tax credits.

One of the housing finance commission’s main roles is to allocate federal tax credits to developers of affordable housing projects, which it does through a competitive process, awarding application “points” based on various criteria, like whether a project has an “eventual tenant ownership” program.

Over the years, the commission allocated tax credits to at least 16 projects that received ownership-based points, mostly involving tribes.

More than 500 homes were scheduled to be transferred to tenants after 15 years as rentals. But some projects have passed their 15-year marks in recent years without transferring any homes. The commission was supposed to check every five years to make sure the transfers were on track.

The affected tenants include people facing eviction from homes developed by the Nooksack Tribe. The tribe says the tenants can no longer use the homes because their Nooksack memberships were revoked years ago, but the residents say they should by this point be the owners of the homes.

In June, the commission announced it was suspending its use of ownership-based application points, pending an update of policies and procedures.

“The housing finance commission’s rent-to-own option is intended to increase homeownership, an important and timely issue,” McCarthy said in a written statement Thursday. “A core part of our performance audit work has been determining the effectiveness of this type of state-level program, and I believe a targeted review … will offer valuable insights.”

In an interview, Pollet said he appreciated McCarthy moving quickly and said he was pleased to see an appropriate emphasis placed “on the tenants, the people the programs are supposed to serve … what’s happening to the tenants who paid rent for years and are just totally screwed right now.”

Also in an interview, Galanda hailed the audit as a helpful way to “restart” the programs and get them “back on track” toward homeownership.