(The Center Square) – Spokane is considering whether to expand its residential rent protections to commercial properties, which could result in legal challenges, while also fining vacant property owners.
The city council passed a pair of rental protection measures over the past few months, first expanding the notice period when increasing rates, then codifying a tenant’s right to air conditioning. Now, one councilmember wants to define and regulate commercial properties.
Councilmember Zack Zappone sent two draft ordinances to several stakeholders yesterday, asking for feedback on the measures. The first is similar to the prior measure, expanding the notice period before raising rent, except this time, it applies to commercial properties.
“[It] defines commercial tenancy by square footage, monthly base rent, located within neighborhood retail zones (such as Garland, Monroe, South Perry), or combined monthly base rent and monthly additional rent,” Zappone wrote in the email. “... The goal here is to exclude large businesses.”
The draft notes that Spokane is home to around 10,000 businesses with an average of ten or fewer employees and that sudden rent increases amid low vacancies cause many to go under.
Similar to the recent residential ordinance, this draft sets a minimum notice period of 120 days when increasing rent by 3% or less, expanding to 180 days when increased over 3%.
Gordon Hester, president and chief executive officer of Kiemle Hagood, a local property management company, wrote in an email that Landlord/Tenant Law is different from Commercial Contract Law and that this ordinance “would directly violate the contract law we have in place in lease agreements negotiated in good faith between two business entities.”
“It’s a hell of a lot more risky for me to enter into a lease agreement with a tenant under this type of cap,” Hester told The Center Square in a phone call, “and when you have more risk, you have more cost, so it’s going to inflate rent up front.”
Hester called it another example of the city disincentivizing business and development in Spokane. The cost of construction, day-to-day operations, security, taxes and other associated costs have almost all skyrocketed in recent years, only increasing the burden on property owners, he said.
“I guess I would say 'go back to the city and cap everything that goes on in the city, including fire and all utilities, cap all your expenses a 3%,'” Hester said. “You want to cap my increases back to my tenants; have the same guts. You control the city’s expenses more than you control mine.”
Shae Blackwell, the legislative assistant to Councilmember Michael Cathcart, provided this clarification.
“It’s in the early stages of still being drafted and legal has yet to complete a review, which Cathcart will be calling for,” Blackwell wrote in a message to The Center Square. “The item has not yet been circulated to Council, but a working draft was circulated to community groups – including [the Downtown Spokane Partnership], of which Cathcart is on the board and policy committee.”
Zappone’s other draft ordinance would establish a Foreclosure and Vacant Commercial Property Registration Program, charging owners $350 annually for each vacant location.
The ordinance goes on to note that “the Enforcement Officer may also initiate the registration process. The cost of the registration borne by the City of may be charged against the property and shall be lienable."
The new program includes a section on enforcement, holding owners accountable for signing up annually, paying the fine for each property each year, and maintaining their sites regularly.
“[The ordinance adds] minimum property maintenance requirements that keep the property free of weeds, dead vegetation, trash, junk, graffiti, and tagging,” Zappone wrote in his email. “It also requires water features to be secured, and the property to be secured from unauthorized persons.”
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