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Refusing to Pay Rent: A Cause or an Agenda? By-Zach Kosturos

Posted on 01. Sep, 2020 by in all

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There is a difference between a leader who fights for a cause for the betterment of their community and one who games the system in a hypocritical pursuit of their own agenda. In critical times such as these, we need more of the former and as few as possible of the latter.

On May 1, 2020, Renata Rollins, a member of the Olympia City Council, published an article telling her landlord that she wouldn’t be paying rent in May and didn’t know when she would start paying again, even though she hadn’t lost her job or received a reduction in pay. She called for other renters to follow her lead.

I am her landlord and I received her letter. I would have preferred not to respond publicly, but for the health of our community, I feel I must.

Community Leaders Should Help, Not Hinder

Renata is demanding free rent solely on the basis of Governor Inslee’s recently extended “stay” on evictions related to COVID-19.

That stay was put into effect to help individuals and households that are unable to pay rent because of a job loss, a reduction in hours and/or pay, and/or a business closure/reduction in revenue. Renata knows she does not qualify for special assistance, so her reason for not paying is that she wants to “preserve resources for future self.” This from a community leader?

As landlords, we are more than happy to work with tenants who find themselves out of work or in a legitimate position where they are unable to pay their rent to the extent we are able. The vast majority of us are not greedy people getting rich by taking advantage of others. Most of us are small business owners who live and work in the community Renata talks about serving and trying to protect. We are part of her community and we provide housing, which our community desperately needs.

I have worked with Renata and with the Olympia City Council for years. Over the last several years, I have spent more hours of my time than I care to count developing a financial model to help jurisdictions, like Olympia, work with developers to make more affordable housing a reality. I have presented this work dozens of times to a wide variety of audiences in the state, and several jurisdictions in the state are currently using the model. Additionally, I sit on the City’s Home Fund Advisory Committee that is tasked with helping the City award funding to developers looking to build housing for our community’s most vulnerable populations. I have given my time and my expertise to the City, without pay or compensation of any kind because I, like so many other real estate professionals I know, care about my community and because I want to help those who are less fortunate have a chance at a better future. It is short-sighted actions like Renata’s that make private sector professionals, like me, hesitant to work with the public sector.

As an elected leader who professes to care deeply about housing, Renata should educate herself as to how the industry works. Unfortunately, her lack of understanding undermines the entire housing system in Olympia and, especially, the affordable housing she says she champions.

She fails to recognize that landlords have bills to pay too. Landlords don’t get bailouts, and we have no moratorium on paying Renata’s water, sewer and garbage bills, her toilet repair costs, her roof repairs, or paying taxes or the salaries of our employees who look after the unit that she says she loves.  

And why is it that Renata believes some products/services are more worthy of payment than her rent? Why does she believe the City should get paid for its water, sewer and garbage service but that her landlord shouldn’t get paid for providing her with housing?

Should I be able to go to the grocery store or coffee shop and take their goods without paying? Should I be able to stop paying sales tax, property tax, B&O tax, payroll tax, and every other tax if I decide that I don’t like the taxation system? Should we all stop paying medical professionals for their expertise because “healthcare is a human right?”

Why do Renata and people who share her viewpoint, feel as though they should get to decide who gets paid for the work they do and the value they create and to what extent? That’s a very slippery slope.

Our Economic System is Much More 

Complicated Than She Thinks

Renata seems to think that there is a simple solution, that if we enact a long-term mortgage/rent moratorium (and raise people’s taxes, which is a whole other issue) everything will work out just fine. What she fails to understand is that PEOPLE own those mortgages. Those mortgages are part of tens of thousands, more likely, millions of Americans’ retirement portfolios. Most mortgages are ultimately owned by endowment funds, pensions (including those for teachers, firefighters, police, and state workers), and individual investors all throughout our country. When we stop paying those, the people who rely on the passive income they create, many in retirement, are greatly harmed. When we stop paying bills, the result is, people in our communities suffer.

The reality of the financial world today is that it’s all interconnected. You can’t just take from those “who have” without it negatively affecting those who don’t. Renata seems to miss that fact and here’s an example…

She “has” the ability to pay her rent. She is refusing.

Her neighbor may not have the ability to pay his/her rent.

Both of them are asking for rent relief.

We must now negotiate with Renata and her neighbor instead of just her neighbor, who actually needs help. Now we have less ability to help her neighbor because we are having to help her, even though she doesn’t need it. She is actually hurting her own cause.

Additionally, an unintended consequence may be that now people like me and my clients may not want to be property owners in Olympia and may stop investing or reduce our investments in real estate, thus reducing the availability of housing and increasing its real cost to people like her and her neighbor.

You see, in this scenario, Renata is the one taking from her neighbors – fellow community members – who are actually in great need. She says she’s doing it to “help the community” and to make a statement, but she didn’t think it all the way through. She didn’t see the full picture when she made her decision.

A Glaring Contradiction

Renata also stated to us that she wanted to save money for an unknown future. So, is it that she’s wanting to help the community or that she’s wanting to help herself? 

Her statements are contradictory in nature. This is so often the case when we see these kinds of positions being taken. On the surface, they look like compassionate, “others-centered” acts but when the onion is peeled back, too frequently, it’s actually not about others at all. A true others-centered response, from a true leader, would have been to tell us that she was paying her rent so that we would have the ability to help more people who really couldn’t pay theirs.

She also stated that she thinks property owners should open their books and offer transparency so that people like her could “understand your business model and investment strategy.” Aside from that being a ridiculous statement, I can say I have already done that with the Housing Model the City of Olympia, and its City Council, are in possession of and have been using. It clearly shows everything Renata could want to see. Second, it takes about two minutes to do a Google search and find the kind of information she is looking for. Third, what business is it of hers what someone’s business model and/or investment strategy is unless she’s interested in investing? Fourth, should every tenant be subjected to landlords scrutinizing their purchasing behavior and offering advice as to how to better spend, save, and invest their money? Come on. Her request is ridiculous, and I think she’d be appalled if I asked our tenants to let us scrutinize their finances to that degree. 

What should happen during this time is that people who can pay their bills should keep paying their bills so we can help the people who actually need it. Now, that would be true community-minded action. Furthermore, that’s how we will keep the entire economic system from becoming unrepairable. That’s how we will mitigate the economic damage to the greatest extent possible. 

My company houses more than 1,500 households in the area and since this lockdown began, we have been responding to those who live in our properties who have reached out to us for rent relief. Renata is the ONLY person who has stated she will not be paying rent though she has the ability. Every other tenant on our list has actually lost a job, had their pay cut, and/or their business closed. The other requests we’ve received have been honest and earnest explanations of need. She has only hindered, not helped their cause and the purpose of the Governor’s eviction moratorium.

 

Lead with Integrity

Because their signature on a lease means something to them, the vast majority of our tenants who have requested rent relief have communicated that they will pay whatever they can, when they can. They are taking responsibility for the agreement they signed their name to. We are working every day with individuals on plans to ensure they stay in their homes. Stonewalling the payment of rent, when one is fully capable, lacks integrity, accomplishes nothing and is a stark contrast to our other tenants’ respectable and dignified requests. She would do well to follow their example.

Renata, you are an elected official. You are a community leader. What you are encouraging others to do is reckless and could result in irreparable damage to the people you say you care about. That’s not what good leaders do.

Our community doesn’t need politically motivated action right now. We don’t need our leaders working to incite even more conflict and destruction. Our community needs leaders who will work toward the good of all.

True leadership, at least in my opinion, would be to pay your rent because you can, even though you don’t know what tomorrow may bring. True leadership would be to advocate through the proper channels for those in need without personally taking advantage of the system and, as a result, harming the people who truly need help. True leadership would be to encourage your constituents that while the system is far from perfect and certainly needs some fixing, our first priority is to get through this together and that gaming the system won’t help us get through it, rather, it will make it worse.

True leadership would be to rally people to do what’s right and what’s right, at least as it relates to rent, is to be a person of your word and abide by the agreement you signed (as we have done) and pay your rent (and your other bills). 

 

Zach Kosturos is the President of Prime Locations, Inc, a commercial brokerage firm. As a business owner, he has taken an active role in serving the community. He has been a key contributor of innovative solutions for increasing affordable housing in Thurston County.

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