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Seattle’s tenant protection laws may be put to the test by a lawsuit filed Tuesday in King County. The plaintiff, GRE Downtowner LLC, is demanding a jury trial.
The low-income apartment building operated by GRE as the Addison on Fourth is headed towards receivership, and the owner/operator is seeking damages from the City of Seattle. According to the complaint filed in King County Superior Court, the basis of the claim is a series of ordinances adopted by the Seattle City Council that “made it virtually impossible to operate low-income housing in Seattle.”
The complaint claims “the economic impact of the city's ordinances on the Addison have been so severe that GRE downtowner is unable to pay its mortgage and is in default as of November 2023.”
The plaintiff seeks compensation for the impact of six specific ordinances which it claims have decreased livability for tenants and increased operating costs. Then-Mayor Jenny Durkan refused to sign four of the six, including the Roommate Ordinance, Winter Eviction Ban, 180-Day Notice Requirement, and Economic Displacement Relocation Assistance. The COVID-19 Eviction Moratorium and the Fair Chance Housing Ordinance were passed by the council and also signed by the mayor.
The six ordinances went into effect between 2018 and 2022.
According to Sean Flynn, president of the Rental Housing Association of Washington, the lawsuit “does not pose an immediate threat to the stability of the current tenants,” but “the conditions the city has put forward through its ordinances threaten the stability of the tenants.”
Flynn went on to say, “It is frustrating to watch politicians implement policies that the industry tells them will have a negative effect, and then when the negative effect occurs the same politicians claim that they don’t know how it happened. We were there. We told them this will happen. These policies hurt real people.”
His organization is not a plaintiff in the complaint, but said the association stands by its members and “we support their takings claim.”
The Addison on Fourth is an affordable housing building that was renovated with the help of the 1986 federal Low-Income Housing Tax Credit program. The building was renovated in 2013 with the help of the LIHTC and the Historic Tax Credit, creating 254 affordable housing units.
The building's rents are targeted at renters making 60% of the area median income, about $63,000 in Seattle for a single person.
LIHTC projects operate on thin profit margins to keep housing affordable. The Addison on Fourth met the budget projections established at the beginning of the project until 2018.
GRE Downtowner claims in its filing that, given the massive losses driven by the city's current ordinances, “no rational housing developer will invest in low-income housing developments in Seattle – even with the tax advantages that LIHTC offers – as long as the city maintains its destructive ordinances.”
GRE Downtowner is an affiliate of Goodman Real Estate, a Seattle-based real estate development and management company that “has developed, renovated, managed, and invested in three countries, 24 states and many types of real estate … but predominantly apartment buildings both conventional and affordable” according to the complaint.