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Sawant’s new rent control idea, without the advice of city attorney

A business on Seattle's Capitol Hill announces its closure (2008). Credit: Jay Cox/Flickr

Councilmember Kshama Sawant has been looking for chinks in the armor of the statewide ban on rent control for most of the last year and now she believes she’s found one: The statewide ban, she says, only applies to residential units. On Tuesday, therefore, she announced a proposal that would stabilize rents for small business owners.

But when asked whether Councilmember Sawant’s office had sought legal counsel, either with the City Attorney’s Office or otherwise, the answers were mixed. Sawant aide Ted Virdone, who was responsible for researching Sawant’s new proposal, said, “I think I did. I’m pretty sure I did. … I’d have to go back and check my notes to find out what they said about this.”

City Attorney Pete Holmes, however, said he doesn’t remember seeing anything regarding rent control. Kimberly Mills, public information officer for Holmes, also said Tuesday’s press release from Councilmember Sawant was the first time she’d heard anything about her proposal.

This appears to be different from other, similarly experimental efforts from City Council. Recent pushes to let Uber drivers unionize or to require landlords to meet minimum code requirements before raising rents went to the City Attorney’s Office for review before council members went public.

Sawant’s Tuesday press conference at City Hall came with the support of small business owners, mostly from Capitol Hill. Sawant remarked that it was “incredible how little of our policy making in City Hall” has been passed on behalf of small businesses. Large-scale development, she contended, was driving out small business, the “backbone of our community.” To drive home just how difficult it’s been for some small businesses, she distributed a list — titled “Today we mourn” — of more than 50 recently closed businesses on Capitol Hill.

At this stage, Sawant’s small business plan is only a proposal. Actual legislation will not likely surface until January. Her plan includes a few more straightforward goals, such as an expansion of late-night transit, increased social service outreach for the homeless and the establishment of a small business task force. But it also includes some more lofty items, such as a City-sponsored retirement account for small business workers, the establishment of a City-run municipal bank that would provide low-interest loans for small businesses, priority leasing for small businesses, and, as the cornerstone, rent stabilization.

“Enacting a rent control policy on commercial property,” a statement from Sawant said, “will disproportionately benefit small businesses that otherwise struggle to sustain their storefront operations and compete with big business outlets.”

Virdone called the legal argument for commercial rent stabilization “relatively straight forward.” When asked about a clause that seems to forbid all sites “other than properties in public ownership” from being rent stabilized, he said he hadn’t heard that argument, but pointed to the title of the ban: “Controls on rent for residential structure –prohibited.” Because the ban makes no specific mention of commercial properties, his interpretation is that commercial properties are fair game.

Sawant’s arch-nemesis and advocate for the development community Roger Valdez believes otherwise. “The fact it’s silent is no indication it’s legal,” he said. “Do we want to spend time in court fighting whether it’s legal?” Valdez, who is staunchly anti-rent control, said Sawant’s plan would pit one small business against the other, his argument being that most developers are small to mid-level businesses. “Councilmember Sawant is living in a socialist fantasy world,” he said.

There does not seem to be any disputing the notion that many small businesses on Capitol Hill are struggling. Paula Lucas, owner of Le Frock, the Capitol Hill consignment store, said she feels crushed by development and abandoned by the city, and she’s unsure how much longer she can stay open. (Crosscut reported on the complaints of Capitol Hill business owners, including Lucas, last June.) K. Wyking Garrett of Africatown Seattle said economic growth is displacing small, minority-owned businesses and discouraging others from starting. David Meinert, owner of the Five Point Cafe and the Comet, said the City needs to show it’s serious about the community’s “backbone.”

But opinions of how that help should materialize vary. Access Seattle, an interdepartmental effort by the City, was set up to help businesses that feel overwhelmed by development, although many business owners think it has moved too slowly. Valdez advocates for code changes within low-rise residential neighborhoods to open up the city to more retail space. And now Sawant has come in with her “progressive plan for Seattle’s small businesses and their workers.”

With days to go before the general election, it was inevitable that questions of political motivation would arise — Sawant is facing an energetic election challenge from Pamela Banks, the CEO of the Urban League of Metropolitan Seattle. Sawant, though, said she is just doing the job she was elected to do. Further, Virdone pointed out that the deadline to submit Statements of Legislative Intent during the current budget cycle – essentially a heads up – is tomorrow.

Valdez didn’t parse words, however. “It’s a political ploy,” he said. In a statement, Banks echoed his sentiment. “I’m glad that Councilmember Sawant has finally realized the importance of locally owned small business,” she said. “I will be an advocate for small business from day one, not one week before an election.”

The specifics of the plan are to be worked out over the next few months in Sawant’s small business task force. At some point, the City Attorney’s Office will take up its legality as well. But in going public before knowing if the City’s legal department is even on board, Sawant has clearly figured it’s worth the gamble.

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