Wednesday, October 20, 2021
Oct. 20, 2021

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Washington creates permanent rental assistance program

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OLYMPIA— The idea of rental assistance — the government stepping in to pay people’s rent to prevent them from losing their home — is not new, but it has taken on a new prominence and urgency in the pandemic, as billions of federal dollars have helped pull tenants out from under mounting debt.

Now, Washington state is making that policy permanent.

Legislators passed a bill on the penultimate day of the session that creates a dedicated funding source for ongoing rental assistance through a $100 surcharge on recorded documents.

The bill passed out of the Senate by a 26-23 vote largely along party lines, although three Democrats — Mark Mullet, Steve Hobbs, and Tim Sheldon (who caucuses with Republicans) — voted against it. Later that day, the House concurred with the Senate version and the bill was delivered to Gov. Jay Inslee, who is expected to sign it.

According to Rep. Nicole Macri, D-Seattle, the COVID-19 crisis helped spur a recognition that even in normal times, many people are one missed rent payment away from falling into homelessness.

“With the pandemic, the conditions were just so obvious,” Macri said. “People were so many months behind on rent and the only thing preventing them from becoming homeless was the eviction moratorium. And so I think that awakened policymakers.”

Along with the statewide moratorium on evictions, the massive federal bailout has kept roofs over the heads of more than 160,000 Washingtonians who are behind on rent, according to the U.S. Census Bureau, although 400,000 more have reported taking on credit card debt or loans to pay rent.

The ongoing rental assistance program will be on a much smaller scale than those efforts. Lawmakers budgeted $88 million over the next two years to support the program.

The new document recording fee is expected to bring in $146 million annually, according to a fiscal note attached to the bill, with the other funds going towards permanent supportive housing and project-based vouchers.

A document recording fee of $10 to fund housing programs was originally authorized in 2005, in a bill sponsored by Rep. Timm Ormsby, D-Spokane, who also sponsored this bill. The fee has subsequently increased over the years, and now county auditors collect an $83 surcharge on documents that funds various homeless housing programs.

The majority of those recorded documents are real estate transactions, according to Thurston County Auditor Mary Hall. Examples of documents homeowners might encounter include deeds of sale, mortgage documents, plat maps, or boundary line adjustments. Over the course of owning a home, it may be necessary to record multiple documents, Hall said.

The bill exempts documents recording births, deaths, marriages, and divorces from the surcharge. Two bipartisan amendments added exemptions for wage, water, and sewer liens.

Document recording fees vary by type of document, but the standard fee is $103.50, so with the new surcharge, that fee will rise to $203.50.

If that sounds steep, said Sen. June Robinson, D-Everett, who sponsored a companion bill in the Senate, consider it in relation to the overall endeavor of owning a home.

“One hundred dollars amortized over a 30-year mortgage is pennies a month,” Robinson said during debate on the bill.

While the original bill introduced by Ormsby would have focused entirely on rental assistance, the infusion of federal money from the American Rescue Plan led lawmakers to redirect some funding to individuals on the lowest end of the economic spectrum who have experienced chronic homelessness.

Twenty percent of the money will go into a fund for maintenance and operating costs of permanent supportive housing. While the capital budget funds the construction of permanent supportive housing through the Housing Trust Fund, which is a competitive grant process, that money is limited to construction rather than ongoing operations.

“We’ve had to scramble in the last few years to try and find money in the general fund to try to support the ongoing operations,” Robinson said. “Now this will dedicate a funding stream for that purpose.”

The bulk of the revenue will go into an account called the Home Security Fund, which will be split between funding the new rental assistance program (40%) and funding project-based vouchers (60%) that are tied to specific units and essentially subsidize rents at housing operated by nonprofits.

There’s never been state funding for project-based vouchers before, Macri said. Funding for rental vouchers such as section 8, which are managed by local housing authorities, comes from the federal department of Housing and Urban Development, but only serves 25% of people who are eligible.

These new project-based vouchers will help counties and housing authorities serve people with the lowest incomes who often languish on waiting lists for years.

“We since the 1980s saw this reduction in federal investment in housing,” Macri said. “When the federal source has been inadequate, it means that many communities that don’t have a local resource can’t sustain these buildings long-term.”

It also means that existing affordable housing can serve even lower-income tenants, because a building with rents targeting tenants who make up to 60% of Area Median Income — such as Merritt Manor in Olympia, for example — could be further subsidized using those project-based vouchers.

“Having a large source of project-based vouchers for the first time ever is going to help us have a more straightforward approach to ensuring affordability for the lowest-income Washingtonians,” Macri said.

Although the new funds will be administered by the state Department of Commerce, the bill contains language that requires funds be allocated proportionately based on the county they are collected in, unless the county refuses them or fails to respond within a specific timeframe.

Finally, a small chunk (4%) goes into the Landlord Mitigation Program, which reimburses landlords for damages caused by tenants receiving rental assistance or upgrades that may be required by state policies.

An amendment by Robinson requires the Department of Commerce to create a performance metric that counties must meet to keep receiving voucher funding, although it only applies to 15% of the funds.

Senate Republicans had asked for more stringent metrics so that funding would be conditioned on a reduction in the number of homeless people. One failed amendment from Sen. Chris Gildon, R-Puyallup, went further, attempting to deny funding to counties that “allow” homeless encampments on school district property — a direct reference to a recent situation involving a school district in Seattle.

During the debate, Senate Republicans argued that there’s already enough money to address homelessness, and that more money won’t help the problem, or that more money will actually make the problem worse.

“I’m not sure we know how to fix this,” said Sen. Lynda Wilson, R-Vancouver.

A series of Republican amendments attempted to lower the surcharge, starting at $17, and going up in $10 increments to $67, all of which failed to pass.

Sen. Sharon Brown, R-Kennewick, said she believes the one-time infusion of federal money from the American Rescue Plan will “eradicate” homelessness, and so “funding in perpetuity” is not necessary.

Two Republican Senators, Doug Ericksen of Bellingham and Ann Rivers of Vancouver, repeatedly used the term “homeless-industrial complex” to describe what they believe is excessive funding for housing programs.

“It’s an incentive to keep people homeless — because the more people who are homeless, the more money gets distributed into the system,” Rivers said.

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