Affordable Housing Providers are Losing Money and Selling Buildings. But is Eliminating Eviction Protections the Answer?

Affordable housing providers say they need a range of solutions from the city, from funding for maintenance and operations to investments in new housing construction.

A studio apartment building owned by Community Roots Housing

By Erica C. Barnett

Chris Persons, the longtime director of the low-income housing provider Community Roots, recently recounted a frightening incident that took place at a building the group owns on Capitol Hill: A resident—someone Community Roots had been trying to evict for unpaid rent for more than a year—shot a gun into the sprinkler head in their living room, flooding every apartment under theirs, along with a ground-floor daycare center. It was the second time this person had shot a gun inside the building; the first time, they fired shots into the washers and dryers in the laundry room.

Community Roots moved the displaced residents into hotels and got the daycare up and running again as quickly as possible, but the incident and others like it have eaten into the organization's operations and maintenance budget.

"These kinds of problems are really prevalent in our sector right now," Persons said. "The behavior of a really small number of residents who have high-acuity needs, whether because of untreated mental illness or substance use disorder, has led to a lot of property damage [and] a lot of threatening and dangerous behavior."

Community Roots has sold off several buildings in the past few years, a move Persons said has more to do with the cost of maintaining older buildings than keeping the organization in the red. But, he added, Community Roots is spending more on security than at any time in its history, and the time to turn over units when someone moves out has increased dramatically.

"Some of the units have been so damaged that it's costing us tens of thousands of dollars to do the turn," Persons said, noting that this is a nationwide problem not unique to Seattle. At one building between Pike and Pine that serves single people making up to 50 percent of the area median income, Persons said, people have not only been "breaking in all the time," putting tenants in danger, but taking over vacant units between tenants, "totally destroying" those apartments and preventing new tenants from moving in.

In addition to repairs and maintenance, ,Community Roots is out of pocket for about $4 million in unpaid rent, with no remaining COVID emergency funds to address the shortfall. "The [emergency rent assistance] funding stopped, but the payment of rent has not ticked up to where it was prior to the pandemic," Persons said.

"Prior to the pandemic, we rarely evicted anybody," Persons continued. "Typically, they would talk to us and we'd put them on a payment plan or find another place for them. But over the last several years, that kind of process has broken down."

The Seattle City Council is preparing to consider legislation, sponsored by Councilmember Cathy Moore, to roll back parts of the city's landlord-tenant act passed by the previous, more progressive council, including a law allowing tenants to add new roommates without prior approval, laws barring school-year and winter evictions, and a law setting the maximum late fee for unpaid rent at $10. The legislation will reportedly also eliminate a complaint process for three-day eviction notices that landlords claim has made it harder to evict people for dangerous behavior.

In a written response to PubliCola's questions, Moore called her legislation—which she has not yet introduced—"a proposal that protects tenants while addressing the challenges facing our housing providers to ensure Seattle’s rental housing ecosystem remains viable and can meet the housing needs of all our residents.”

Moore's legislation would give landlords more leverage over tenants, removing eviction protections sponsored by former councilmember Kshama Sawant and passed by the previous, more progressive council. That's why they're opposed by tenants' rights advocates, who argue that removing renter protections will just result in more people living on the streets.

But many organizations that provide affordable housing or represent low-income housing providers, including Community Roots, the Low-Income Housing Institute, and the Housing Development Consortium, are supporting the proposal—along with other, more immediate actions they say the city could take now to help them shore up their operating budgets so they don't have to sell off some of the city's already inadequate affordable housing.

HDC, which includes all the major nonprofit housing developers in Seattle, worked with Moore's office to narrow an initial list of 18 changes down to the four in Moore's draft proposal, and the group has been a vocal advocate for repealing the eviction moratoriums and increasing late fees, among other elements of the bill Moore plans to sponsor.

"All of the [proposed] changes, quite frankly, are very intentional," HDC director Patience Malaba said. "They are informed by affordable housing providers who understand, from a mission perspective, the need to keep buildings operating while providing the right protection for tenants at the same time."

Alexis Mercedes Rinck, the council's most progressive member, told PubliCola she hasn't seen Moore's draft legislation yet, but "I struggle to see how compromising our tenant protections helps anyone. I have concerns about the operational sustainability of affordable housing and am actively talking to providers about their challenges and portfolio health. However, these are fundamental system issues that will not be solved by punishing people who can’t afford rent."

Sharon Lee, the director of the Low-Income Housing Institute, became the somewhat unsympathetic face of the movement to roll back Seattle's renter protection laws when she argued, along with GMD Development partner Emily Thompson, that the city should end the winter eviction moratorium.

Lee says the problem of rent nonpayment became acute when COVID-era rent assistance began drying up and hasn't improved much since. "We need to correct the situation of people who have the ability to pay their rent but are hiding behind the eviction moratoriums," she said. A $10 fee for late rent isn't enough to motivate people to talk to their building managers or get on a payment plan, Lee believes. "Sometimes, by the time you give tenants notice that they haven’t paid rent and you’ve sent it for legal action, [it's after] you've tried and tried to get them them to do a payment plan or talk with the manager and they ignore you."

Like Persons, Lee said LIHI has struggled to evict tenants who cause significant property damage. "We had a tenant who would just pile everything on the bed and light it on fire, and we couldn’t get them evicted," she said. "In some cases, when we tried to get someone evicted, the response we get is 'This person will become homeless, or this person has a mental health issue.' ...The problem is that they don’t consider other people in the building who are who are in harm's way in if we keep an arsonist in the building."

Affordable housing providers also say the cost of doing business has increased dramatically since the pandemic, in ways that wouldn't be fixed by eliminating laws designed to protect low-income tenants from eviction.

Some providers started construction in 2020 or 2021, when interest rates were low, then saw their expenses balloon as construction costs rose across the country. Others have had trouble converting their high-interest construction loans (which are more expensive because construction carries greater inherent risk) into permanent loans at lower interest rates. (The city has spent $137 million so far helping developers pay down their construction loans).

Some housing providers have become increasingly dependent on the developer fees they receive when they close on a new development, using the fees from these new housing projects to fund the operations of the organization. And many affordable housing developers built too many small studios and micro-apartments, which now cost about the same in market-rate buildings as they do in buildings dedicated to affordable housing. While demand for those units will likely rebound as the housing shortage worsens (this online dashboard shows the downward trend in residential permits), for now, the result is that units that would ordinarily be bringing in revenues are sitting vacant.

Lee and other affordable housing providers have argued that the city should provide stabilization funding so providers can replenish their operating budgets and not have to sell off buildings, as Community Roots has done. Last year, the city's Office of Housing did just that—providing $14 million in JumpStart payroll tax funding to 24 organizations for rent assistance, security expenses, repairs, and other costs through a process called a Notice of Funding Availability, or NOFA.

Lee said she believes OH should provide about double that amount through a NOFA this year, using a newly created JumpStart reserve fund as the funding source. That money, Lee said, "could help pay for the lost rent. It could pay for very high insurance costs. It could pay for very expensive damages that are caused by tenants."

Councilmember Rinck said helping housing providers pay their operating costs would be a better solution than making it easier for them to put tenants out on the street. "We must focus on solutions that meet the needs of the people, and fix our affordable housing financing model by increasing funding for operations," she said.

Thompson, whose firm owns several affordable housing buildings in Seattle, said three of GMD's buildings are currently operating at a loss, and one, located next to the Othello light rail station in the Rainier Valley, is "in the red zone" and may face foreclosure if the city doesn't intervene.

"Economic vacancy is just crippling our building," Thompson said. "Our [rent] collection rate averages around 85 percent." Even a NOFA without any funding attached would help the city better understand the extent of the problem and triage providers, Thompson said. "If you eon’t have a scope of what the issue is how do you know how much to fund they can

A spokeswoman for the Office of Housing, Nona Raybern, said OH "is engaging with housing providers, public funders, and stakeholders to fully understand the breadth of the challenges and to help inform longer-term stabilization strategies" but has not made any decisions about funding yet.

Thompson said the Office of Housing may be too focused on the need to get more housing projects in the pipeline, while ignoring immediate problems in housing that already exists. "Maybe you have to make hard business decisions," she said.

But Malaba, from HDC, said it's critical for the city to keep funding new affordable housing projects, both for the infusion of cash providers receive through developer fees and because Seattle still faces an acute shortage of affordable housing.

"We are asking for the city to fund a pipeline of new resources that can be used to support the future construction of housing," Malaba said. "If the city uses all of the existing resources for preservation when we already have [housing construction] numbers that have been down since 2022, the affordability crisis is going to be felt by the lowest-income people in the city."

Landlords have frequently complained about the longstanding backlog of eviction cases at King County Superior Court, arguing that it amounts to another, de facto eviction moratorium. Legislators took action to help address the backlog during the legislative session that just ended, passing a bill sponsored by State Rep. Nicole Macri (D-43) that allows counties to appoint special housing court commissioners to oversee eviction cases, increasing the number of people who can hear eviction cases.

Tenant advocates, Macri said, were "not enthused" by the proposal, which they said should be counterbalanced by more funding for defense attorneys for tenants, who have a legal right to counsel under state law. Macri got more funding for tenant attorneys in 2026 but says 2027 will be a separate fight.

Unsurprisingly, landlords have blamed the right-to-counsel law for the backlog, arguing that tenants with attorneys slow down the process because they're more likely to fight their evictions. But Macri argued that the real issue is that landlords haven't adapted to a legal environment where they no longer hold all the cards.

"For many years, landlords had grown accustomed to eviction cases being pretty fast," Macri said. "Because there was no due process for tenants, the no-show rate for tenants was extremely high—over 85 percent of tenants did not show up, pre-pandemic, to unlawful detainer cases," so landlords won by default. Now, the two sides are more balanced, and the courts need more resources to catch up.

"If a court is working in an appropriate way, and the right to counsel is functioning appropriately, then having it work in a normal fashion is better for everyone," Macri said. "We can't say that a dysfunctional slowdown of the courts is the protection for tenants.

Like many tenant advocates, Macri doesn't support rolling back laws designed to protect tenants in Seattle. "Creating more opportunities for poeple to become homeless does not solve the problem, it just shifts the problem someplace else," Macri said.

The underlying issue, Macri continued, is that more people with very high behavioral health care needs, including people with active fentanyl addiction, are moving into buildings that weren't designed for them. "We've seen a greater and greater number of people in these nonprofit low-income housing buildings who ... have fairly serious behavioral health conditions and there’s not adequate support."

The "long-term solution," Persons said, is "more treatment centers for people with mental health issues that aren’t being treated and drug addiction that isn't being treated— there’s very few places for the folks who are suffering the most to get the kind of treatment they need, because they don't have the capacity or the skill set to live even in permanent supportive housing. We need to make some deep changes to our housing system or these issues are going to persist."