Mayoral veto of rent-reporting legislation tied to data privacy concerns, says real estate researcher

Jun 14, 2022, 2:46 PM
(Rex Sorgatz via Flickr)
(Rex Sorgatz via Flickr)

The City of Seattle was poised to require landlords to report how much they are charging for rent; that was until Bruce Harrell, mayor of Seattle, struck the legislation down after its narrow 5-4 passage out of the Seattle City Council.

‘We’re so far behind on this’: Seattle council looks to catch up on affordable housing data

That legislation was intended to help the city identify where its below-market rental properties are located before Seattle begins crafting its 2024’s Comprehensive Plan for housing policy and growth management into the next decade. Councilmember Alex Pedersen, the legislation’s primary sponsor, admitted in March before the bill’s passage that the city primarily uses Census tract information “that is too high level and too infrequent.”

“The amendments made to our legislation already addressed concerns about timing, budget, and implementation. Rejecting this law seems to be a victory for landlords unwilling to share data and a loss for those seeking data to make informed decisions on preserving and expanding affordable housing in our city,” Pedersen said Friday, in reference to Harrell’s veto.

In a letter addressing his decision to veto, Harrell spoke to “the reliability of the data’s accuracy.” That letter borrows from the policy analysis of James Young, director of the Washington Center for Real Estate Research (WCRER), a policy group with a board consisting of real estate developers including Windermere, Re/Max, and John L. Scott.

Young makes two points in his critique of the legislation: that reported information on rents must be voluntary to ensure accuracy, and that “owners are concerned about disclosure of commercially sensitive information that could adversely affect their businesses.”

“I’m a data geek, and I love this stuff. But the biggest problem I have is, if it’s not a voluntary system, how can you ensure that the data is going to be accurate at all?” Young told MyNorthwest

“Everybody who works with rental data wants accurate data … [but] everybody keeps shooting themselves in the foot because landlords ultimately have to trust who they’re giving the data to, to make sure that those confidential arrangements are met. And they get something out of it in terms of accurate data. Because the landlords also benefit from getting accurate data, in terms of what the pricing is, and where they fit competitively in the marketplace.”

As written, the data collection bill would have contracted with a public university to facilitate the collection and analysis, with the council informally referencing in committee meetings the University of Washington as a likely primary candidate. Critics of the veto have made the point that landlords are disinterested in having rental information subject to public disclosure requests.

“You can sign confidentiality agreements that cover that, just like you do with a medical school if you’re UW Medicine [for example] … individual data is not going to be disclosed in such a way where it’s identifiable. And that takes on various forms in the rental market … The university engages in research all the time where individual records are kept confidential … Were we aggregating data in a certain way, which would expose someone in terms of their business interests, or whatever. The university collects that data all the time, so it wouldn’t necessarily be subject to public disclosure.”

Proponents of the bill among the council are at a loss to reckon with concerns about rental data transparency, pointing to similar legislative pushes in New York and California.

“The fact is that several forward-thinking cities across the nation already require this rental information from New York to California so, if this common-sense policy is increasingly common elsewhere, why would Seattle want to lack transparency and remain behind the times?” Pedersen wrote to MyNorthwest.

“A competitive Request for Proposals would have identified numerous research universities that already have the knowledge, objectivity, and technological capability to do this at a low cost.”

The councilmember also pointed to the fact that landlords are already required to register and submit information to the city: this latest ordinance would have added to those requirements.

Seattle loses nearly 3,000 rental properties in less than a year

“Regardless of that proposal to provide rental rate information, landlords already need to comply with the existing Rental Housing Inspection Ordinance (RRIO) and, per their recent report, the Seattle Department of Construction & Inspections (SDCI) is staffing back up to ramp up their enforcement to ensure compliance,” Pedersen continued.

SDCI does not know exactly why the number of units registered decreased recently — it’s probably a combination of demolitions for redevelopment, pandemic-related slow-downs, rentals converting to homeownership, and non-compliance from some landlords. Solving this mystery could warrant a City audit if SDCI needs assistance getting to the bottom of this important data on this long-standing program.”

Seattle landlords will soon be required to report rents, but will they comply?

Young offered up the Washington Center for Real Estate Research as an alternative candidate to field the housing data that the city needs to understand where to construct subsequent affordable housing under the Comprehensive Plan.

“The WCRER must work closely with the private sector to gather adequate data resources and to continue its activities … the WCRER is also in a unique position with experience to critically assess research and data reliability issues in a broader context.”

“Based upon the experience of WCRER, informal discussions with city officials, and interested parties, there are several research and reliability issues likely to arise when collecting rent and vacancy data through a mandatory system,” Young’s memo to the council’s housing and finance committee reads.

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Mayoral veto of rent-reporting legislation tied to data privacy concerns, says real estate researcher