(The Center Square) – A lawsuit filed against the City of Seattle that claims the city’s rental regulations have been financially ruinous is being allowed to move forward.
The Division One Court of Appeals this week reversed a lower court ruling that had dismissed the case in favor of the city.
The lawsuit claims the Addison on Fourth apartments in Seattle’s International District are no longer profitable under the city’s rental regulations.
According to legal filings, after purchasing the building in 2012, GRE Downtowner invested $26.5 million to renovate Addison on Fourth. The building has 254 affordable housing units.
The filing lists six different regulations passed by the city that made profitability nearly impossible.
Landlords across the city have been impacted by the ordinances.
“We’re not saying you can’t pass policy we disagree with. We’re not arguing these individual ordinances on their face were unconstitutional,” said Sean Flynn, Executive Director of Rental Housing Association of Washington in a Thursday interview with The Center Square.
Flynn spoke to The Center Square on behalf of GRE Downtowner following the appellate court’s ruling; GRE is a member of RHAWA.
“What we’re saying is when you pass enough ordinances that make it impossible for me to run my business, you’ve effectively taken property away from me,” Flynn said.
According to the lawsuit, GRE Downtowner lost more than $7 million from 2019 to 2023 due to the city’s various policies.
Among the city ordinances impacting landlords is the Fair Chance Housing Ordinance, which prevents landlords from considering an applicant’s criminal background.
The ordinance “bans (subject to exceptions) requiring a tenant or applicant to disclose their criminal history or taking an adverse action based on that history.”
Another is the Roommate Ordinance, which allows the tenant to move in roommates who are family members, with the landlord unable to screen them out for any reason. Non-family roommates are also allowed to move in, as well as their family members, so long as capacity restrictions are adhered to.
Other city ordinances named in the legal filings include the Winter Eviction Ban, where tenants can’t be kicked out during cold months, the COVID-19 Eviction Moratorium, and the 180-day notice on rent increases.
“When the government takes private property and uses it for public purposes, things like housing homeless people or housing people who don’t have enough money, they have to pay for that,” said Flynn. “That’s a fundamental part of our society and our government structure.”
City leaders passed the regulations as high housing costs pushed out many renters living on the edge. Then during COVID, Seattle and other cities passed laws that allowed nonpaying tenants to stay in their units, and many property owners struggled to stay afloat.
RHAHA recapped some of the arguments from the appeals case on their website.
“At one point, Judge Lori Smith asked City of Seattle Assistant Attorney Roger Wynne: ‘Is there a point at which there could just be too many ordinances? Like here, we have six, lets say there’s 25, 50, 150; is there some point where that number matters?’, according to the post.
“To which Wynne responded: ‘Not to this case your honor. It might matter to the City Council and perhaps the city council will be looking and readjusting what it’s done with landlord-tenant regulations. But here, no."”
Landlords have repeatedly challenged these regulations in court over the years, losing more often than not.
“For years the courts have been able to waive off these sorts of what we call regulatory taking claims,” said Flynn. “They did this through what’s called a 12(b)(6) motion.”
The motion argues that even if every single fact the plaintiff wrote in their complaint is true, those facts do not add up to a legally recognized claim for which the court can grant relief.
“The government has come in and said regulatory taking in a landlord tenant context…you can’t even sue for that. They go into court and they say our powers to regulate the landlord tenant relationship are limitless and we’re just regulating the relationship between the housing provider and the tenant and no one can stop us,” said Flynn.
He said the lower court agreed with that argument, but the new ruling disagreed.
“They said there are indeed limits to government power when it comes to landlord tenant relationship.”
Flynn said the fact the Appeals Court chose to publish the opinion makes it official.
“It means that now this opinion that we have is the law in the state of Washington,” he said.
Flynn told The Center Square the Addison is now in receivership with no interested buyers.
The Seattle City Attorney’s office could appeal the decision to the state Supreme Court, but have not yet made a decision yet on whether they will or not, according to an email Friday from Chief of Staff Dan Nolte to The Center Square.
