HB 2014 increases the tenant notice period to 120 days, increases the relocation fee to three times the monthly rent, and perhaps worst of all, bars construction on the project (except for a demonstration unit and sales unit) until all of the tenants have left the project. Anyone who has done a number of these projects will tell you that it usually takes the full 90 days until the last tenant leaves. Therefore construction and renovation of the less intrusive kind is usually commenced as quickly as possible after a large portion of the tenants have moved out.
Practically speaking, this new legislation means that developers will have to eat the carrying cost of holding a building (or buildings) for 120 days before commencing work. During that time, as a result of most of the tenants moving out, they will have a very limited cash flow and will be losing money. In addition to these losses, they will have to pay three times the rent in relocation costs to any tenants under the mean salary.
A line from HB 2014 I found particularly humorous was this addition to RCW 64.34.440(6)(g): "The work performed under this subsection (6)(g) must not violate the tenant's or subtenant's rights of quiet enjoyment during the one hundred twenty day notice period." The reason this is so humorous is that it restates over four centuries of common law. A tenant's right to quiet enjoyment could not be any clearer in terms of case law, and our legislature felt the need to add this line. Its laughable, but also pathetic.
The whole of 64.34.440 could have been replaced with one sentence: "Owners of apartment buildings and duplexes (or anything multifamily), you are no longer allowed to utilize your property in the manner you see fit. We hereby impose a tax on you for developing your property to its highest and best use."
In more simple terms, by enacting this legislation the Washington Legislature has affected a taking upon apartment owners. The results will be less affordable housing for sale, and more discrepant old apartment buildings needing repair. Also, perfectly timed for our recession, there will be a dramatic downturn in the number of conversion projects, meaning less workers employed, and less construction materials purchased. All of this equates to less tax dollars for the citizens of Washington (both in terms of excise tax on resale, and on all of the labor and materials during construction).
If you have read this far and you are not sick to your stomach with dread for what comes next in our socialist state, I implore you to read Orwell's 1984 again. Ok, that is admittedly a bit harsh. The point is that when we extend protections to the point that we stagnate growth where market factors would (and have) taken care of things, we run the risk of causing much much more harm than we are attempting to prevent.
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