Legislative Update: Fair Tenant Screening Act

This is the first of a series of legislative updates highlighting some of the issues presented before the Washington State Legislature in the 2014 session, focusing on some of the most important bills impacting housing and other issues that directly affect the communities Solid Ground serves. Several bills and other topics will be explained to simplify the complicated legislative process, and emphasize the importance of preparing to advocate for these critical issues in the 2015 legislative session.

SB 6291: Fair Tenant Screening Act (Part III) – An important bill that died in the 2014 session and what this means for Washington renters:

capitol building, capitol building in olympia

Capitol building in Olympia, WA

Arguably one of the most underrated bills to be considered by the Washington State Legislature, the Fair Tenant Screening Act addresses some of the most critical needs for housing accessibility in our state. This bill makes the difference between a family being able to move into safe and affordable housing, or having to remain living in substandard and potentially unhealthy housing. In conjunction with rent increases and lack of affordable housing, application fees and screening criteria are some of the main reasons homelessness continues to be a reality for so many individuals and families across Washington State.

SB 6291, also known as Part III of the Fair Tenant Screening Act, would address rental application screening costs for thousands of tenants. Unfortunately, this bill did not pass in the 2014 session. However, both Part I and II of the Fair Tenant Screening Act, which address access to housing for domestic violence survivors and require the screening criteria in writing, passed in the 2012 and 2013 sessions, respectively. Information on both bills can be accessed in previous Solid Ground Blog posts about the Fair Tenant Screening Act (see Tenant Tip: New law prevents housing discrimination against survivors of domestic violence and Tenant Tip: Fair Tenant Screening Act passed!).

What this bill would have changed:

This bill would have made the housing search fair and affordable. It would have continued to improve housing accessibility by adding a third component to the two mentioned above, thus strengthening the Fair Tenant Screening Act and making affordability a reality for renters seeking housing in our state.

Specifically, SB 6291 would have amended the repeated screening fees that tenants have to pay each time they apply to a new rental by requiring that the tenant pay one fee for a 30-day period. During this 30-day period, any landlord to whom a prospective tenant is applying for housing can access the tenant’s comprehensive report (which can include a credit and criminal background check, eviction and other civil records, rental references, etc.) without passing additional charges to the tenant. A landlord can choose to accept the report provided by the tenant or choose to pay for another report at their own cost, without passing the cost on to the tenant.

Why this bill is important:

Currently a prospective tenant in Washington looking for a new place to rent spends between $30-$375 in application fees, depending on the number of times they are denied by a landlord. Each rental application can cost between $30-$75 (and up) per person, and regardless of whether the information accessed for a background check is the same, the tenant is asked to pay for each application filled out. This bill would save hundreds of thousands of dollars which could then be spent on other housing costs. Currently, rental screening companies in Washington collect millions of dollars from this business practice, while the average renter spends more than half of their income – often three quarters of it – on rent.

3 steps you can take before the next legislative session to address this issue:

  1. Contact your legislator and schedule a 15-minute appointment or coffee with them during interim. They will have more time to sit down and talk with you in the summer and fall. Don’t wait until session.
  2. Bring this bill and other concerns you have. Tell them about how this issue impacts you.
  3. Join an advocacy group, such as the Washington Low Income Housing Alliance, to stay up to date on advocacy efforts and learn more about issues that might impact your community.

For more information on this particular bill, this 1/23/14 Senate Financial Institutions, Housing & Insurance Committee meeting video (104:58) provides testimony from housing advocates explaining why this bill is important.

Help save affordable housing

This post was submitted by Theresa Curry, Program Supervisor of Solid Ground’s Lifelong Housing Safety Net.

Phyllis Gutierrez Kenney Place was built with Low-Income Housing Tax Credit financing.

Phyllis Gutierrez Kenney Place was built with Low-Income Housing Tax Credit financing.

While the movement for a higher minimum wage grows, there are many other avenues to making our community more equitable for all.

One of the largest challenges that those in poverty face is finding affordable housing. Luckily, there is one program that has a proven track record of producing and preserving affordable rental housing throughout the country: the Low-Income Housing Tax Credit.

The Housing Credit, signed into law by President Reagan in 1986, provides an incentive to the private sector to invest in building affordable housing. To date, the credit has financed the construction and preservation of over 2.6 million units of affordable rental housing. Nearly 57,000 of those apartments are in Washington State, including some of the buildings Solid Ground owns and operates as permanent supportive housing. The Housing Credit also creates jobs, approximately 95,000 nationwide each year, and state and local tax revenue.

Unfortunately the credit is facing pressure in Washington D.C.

Please join Solid Ground in advocating to maintain and strengthen the Housing Credit program. We are supporting a campaign, led by Affordable Rental Housing ACTION, to get massive public support for this critical funding mechanism.

You can pledge your support and sign up to receive email updates at Affordable Rental Housing ACTION’s Join the Campaign webpage. Check out their Advocacy Tool Kit with tips on writing letters to your members of Congress or to your local newspapers. Follow the campaign on Facebook and Twitter, and encourage your friends to do the same.

Here’s how the tax credit works: Developers are awarded with Housing Credits by each state in a highly competitive process. They use the credit to raise equity capital from investors (nearly $100 billion nationwide to date), thereby reducing the debt that would otherwise be required to finance the building of the property. In return, they commit to charging lower rents. Without this tax incentive, building affordable housing is fundamentally uneconomical. The demand from investors for Housing Credits is  strong, so the program is very cost effective.

Properties receiving Housing Credits must target at least 20-40% of apartments to low-income residents (though most properties are actually 100% low-income) in order to reduce their federal income taxes for 10 years. States monitor the properties for at least 15 years, and if one is ever not complying with tenant income and rent policies, the credits are subject to recapture by the IRS, meaning the property has to pay back the government for the taxes they were given credit for. States enforce other affordability requirements for an additional 15 years or more using deed restrictions.

So since the program is so effective at producing affordable housing, a win/win for developers and communities, why are we talking about it? What is the problem?

With many in Congress pushing for deficit reduction, tax reform discussions could target tax expenditure programs, including the Housing Credit. Legislators need to know that while tax reform, including reducing or eliminating unnecessary credits or loopholes, is critically important to our national budget and economy, the Housing Tax Credit needs to be maintained, as there would be very little development of affordable rental housing without it.

Also, the IRS calculates the credits based on medium and long-term interest rates, and these variable rates create uncertainty and make the finances more complex. In 2008, the Housing and Economic Recovery Act set a fixed floor rate of 9% for new construction and sustainably rehabilitated properties that were up and running by the end of 2013. In 2012, the American Taxpayer Relief Act extended this provision for projects that were allocated by the end of 2013. Making the 9% fixed floor permanent and creating a minimum 4% rate for purchasing existing properties will ensure that development of affordable rental housing is economically feasible.

Affordable housing is the foundation of stability for families and individuals, and the Housing Credit is the most effective tool we have for building that foundation. Let’s make sure we always have it available in our toolbox.

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