Disappointed by Tesla’s Battery Day? The electric-car maker has been winning by playing the long game

My wife had a baby in June. She has $140,000 in student loans — and just asked for my ‘blessing’ to work part time

A new Seattle housing law forbids landlords from checking tenants’ criminal history — but does it go too far?

The fight over a groundbreaking law forbidding landlords from looking at criminal records

With slews of tent encampments in a fast-growing city flush with tech-sector cash, it’s tough questioning Seattle’s serious problem with homelessness and affordable housing.

But an unprecedented new city law — forbidding landlords from checking into potential renters’ criminal past — is very much in dispute and setting up a closely-watched court battle.

Landlords argue their free speech, property rights and possibly their safety is being jeopardized by a law that forces them to close their eyes to relevant public information about possible tenants. They’re backed by landlord groups and background screeners who call the ordinance a perilous precedent.

The “Fair Chance Housing Act” was anything but that, according to landlords’ lawyers. Ethan Blevins, an attorney at the Pacific Legal Foundation, said the law’s premise “is this paternalistic idea that the city gets to decide what information is relevant or important to a landlord’s decision making process.”

The City of Seattle and tenant advocates are fighting back. They say the act helps chip away at a housing crisis, especially for over-policed minorities disproportionately saddled with arrests and convictions.

It’s a court case that landlords and lawmakers in the other parts of the country are looking at with keen interest. A ruling upholding the law could pave the way for its enactment elsewhere, said Kimberlee Gunning, a lawyer for tenants advocates at Columbia Legal Services. “Folks across the country are watching this,” she said.

Though the law has been in effect since February, a judge will be scrutinizing its merits following President Donald Trump’s enactment of criminal justice reforms. The “First Step Act” signed Friday, among other things, broadens re-entry efforts and quicken a well-behaved inmate’s release.

The new federal law was a sign Seattle “on the vanguard” of needed reforms with its own housing law, Herbold said. The city also was one of the first cities to enact paid sick leave laws and $15 minimum wage requirements, she noted.

“We’re all safer if people are housed,” Council member Lisa Herbold, the bill’s chief sponsor, told MarketWatch. “You’re reducing the likelihood of recidivism. That goes for violent crimes as well.”

What should matter to landlords, Herbold said, is someone’s ability to make the rent on time and not wreck the place; Blevins said criminal background checks had bearing for those kinds of issues.

While other cities limit how far in time landlords can delve into a tenant’s criminal past, Herbold said Seattle’s law appears to be the first blocking any inquiry at all.

“It is an embarrassment and shame that a city like ours, with so many resources, is not doing a very good job taking care of those who have the most significant barriers to access in housing,” Herbold said, “And having a mark on your background related to the criminal justice system is one of those barriers.”

A January 2017 tally put Seattle’s homeless population around 8,500. Average Seattle rents jumped 43% from 2012 to 2017, accord to a local task force. During that time, vacancy rates in buildings with at least 20 units have hovered between 4% and 5%, it said. Almost one-third of Seattle residents have an arrest or conviction on their record, court papers said.

The city has been fighting with landlords who objected to ordinances capping deposits and requiring landlords to take the first applicant who comes to them. A judge upheld the limits on move-in costs, but another judge voided the rule on taking the first tenant to come along. Landlords recently dropped the appeal on move-in fees but Seattle is trying to overturn the ruling about accepting the first eligible tenant.

Ahead of its unanimous passage, some residents in support of the Fair Chance Housing Act said landlords kept dredging up their past as they tried to make a new life. One man testified at a bill hearing he had enough money, good credit and a good rental history. “But I kept hearing ‘no.’” The law, he said, “will help level the playing field for some of us.”

The plaintiffs include landlords who rent out a handful of units and live close to their tenants. One landlord couple that’s suing, Chong and MariLyn Yim, say they charge below-market rent prices. But they’ll “have to raise rents in order to build up a larger cushion of reserves to absorb the risks they face under the new law,” court papers said.

The Yims, two other private landlords and the Rental Housing Association of Washington are asking Seattle Federal Judge John Coughenour to call the statute unconstitutional.

Some say Seattle’s law is not an outlier

The law prevents landlords from checking prospective tenants for any convictions or arrests. The ordinance does not apply to convicted sex offenders who committed their crime from age 21 and above. It does shield juvenile criminal records from landlord eyes, including those for sex-crime charges. The law doesn’t apply to federally-assisted housing, the landlords note.

Don’t Miss: ‘Ban the box’ makes former criminals more employable

Renters across America face a mix of federal, state and local laws when it comes to what publicly-funded and private landlords can weigh when deciding on a tenant.

There’s a variety of anti-discrimination laws barring the consideration of race, sex, religion and disability. The range of state and city rules for considering tenant’s criminal past get more complicated — with many laws now confining what parts of a criminal record landlords should weigh, housing advocates point out.

“Seattle’s ordinance is by no means an outlier. It is part of a larger trend at the federal, state, and local levels toward removing barriers for people reentering society,” said lawyers for the National Housing Law Project and the Sargent Shriver National Center on Poverty Law.

But renters on the private market don’t have “the same constitutional protections against arbitrary admission denials as applicants to federally subsidized housing,” the organizations said, noting 87% of Seattle’s rental housing stock is owned by private landlords.

A spokesman for the city’s Office for Civil Rights said that, as of last month, the agency has filed nine civil charges against several landlords since the law went on the books. Four ended in settlement, four are pending and one was dismissed.

Clashing Arguments

Blevins acknowledged city officials are trying to cope with “legitimate problems” of recidivism and the criminal justice system’s disproportionate lean on minorities. “The problem is, they’ve taken the wrong approach by burdening landlords with this inability to look into valid information about rental applicants.”

Blevins noted Seattle has been under a federal consent decree since 2012 to stop biased policing. “It’s ironic for them to point the finger,” he said. In January, a judge said the police was in full compliance and had two years to keep it up before the order lifted.

Landlords argue they could be exposed to liability if they don’t do their due diligence. There was one dire example in a pending lawsuit where a family of a raped and murdered tenant is suing a Chicago property manager for not running a background check on a fellow tenant.

The landlord arguments are seconded by supporting groups like the National Apartment Association and the National Consumer Reporting Association, which assailed the ordinance as vaguely worded.

John McDermott, general counsel of the National Apartment Association, a trade association for owners and property managers in the rental market, said Seattle’s law was “stunning in saying our solution to the [shortage of affordable housing] problem is you should make decisions with less information.”

But tenants’ advocates said the ordinance was a break from Seattle’s troubled housing history.

Seattle was a segregated city with racially restrictive covenants and “redlining” in its past — not to mention gentrification that were now pricing out certain areas, filings said. Companies like Amazon AMZN+2.49% and Starbucks SBUX+1.52% are based in Seattle, while the headquarters of Microsoft MSFT+2.28% are nearby.

Background checks on their face didn’t ask about race, but landlords, playing “private juries and judges” kept the divided city’s status quo intact.

“The Ordinance will not eliminate racism and segregation in Seattle entirely”, said lawyers for the groups Pioneer Human Services, a social enterprise based in Washington, D.C. that serves individuals released from prison, and Tenants Union. “But, by eliminating some of the barriers to finding adequate housing, it will strengthen families and, by extension, communities.”

Arguments about landlord duties to protect tenants were “misleading,” the court papers said. Landlords can’t be expected to be on notice about a tenant’s past when they’re not even allowed to look at a person’s criminal past, housing advocates said.

The sides have to file all their arguments in the suit by next month.

This story was updated on Dec. 28, 2018.

More From MarketWatch

See original version of this story