NEWYou can now listen to Fox News articles! Seattle’s effort to protect tenants allegedly helped destroy a $39 million investment aimed at providing affordable housing, sending a 254-unit apartment complex that served low-income residents into receivership. Now, its owners have won a court victory in a battle that could influence similar fights in Philadelphia and other Democratic-led cities. The Washington Court of Appeals ruled Monday that GRE Downtowner LLC, the company behind the 254-unit Addison on Fourth affordable housing development in Seattle, can proceed with claims that the city’s sweeping rental regulations amounted to an unconstitutional taking of private property. GRE alleges that the restrictions, including an ordinance requiring landlords to accommodate certain additional occupants without their consent, caused rent collections to plummet, caused millions in losses, and ultimately made investment in once-viable affordable housing financially unsustainable. The development operated under the federal Low Income Housing Tax Credit program, which offers tax incentives to private investors in exchange for providing rent-restricted apartments to low-income residents. Sean Flynn, executive director of the Washington Rental Housing Association, explained that while these types of developments typically generate relatively modest profits, federal tax credits make them financially attractive to investors, helping to attract private money to affordable housing projects that would otherwise struggle to be built. Flynn, working with GRE Downtowner on its case against the city of Seattle, told Fox News Digital that successive city ordinances targeting landlords ultimately created a “toxic cocktail of legislation” that took a functioning affordable housing property and “destroyed it.” LANDLORD ADVOCACY GROUPS REJECT MAMDANI’S ‘RENTAL SCAM REPORT’, PUBLIC LANDLORD DATABASE A photograph of a housing development in Washington state. (Wolfgang Kaehler/LightRocket via Getty Images) According to court documents, GRE’s investment initially proved financially viable, with the property generating positive cash flow from 2015 to 2018. But as Seattle enacted a series of ordinances restricting criminal background checks, expanding tenants’ ability to bring additional occupants into their apartments, limiting certain evictions and requiring relocation assistance after qualified rent increases, GRE alleges that its rent collections collapsed from 93.9% in 2018 to just 44.1% in 2023, contributing to nearly $5.8 million in accumulated operating losses. The financial deterioration eventually culminated in a federal judge appointing a receiver in January 2026 to take control of the property following a mortgage default. “The policies they are passing are harmful to the people they are actually trying to help,” Flynn warned, arguing that excessive restrictions on landlords ultimately harm renters by discouraging investment in housing. “No one will invest to build more housing if they believe that the government can intervene and carry out an expropriation (take away their property) and they have no legal recourse.” OREGON DEMOCRATS PROPOSE ‘RIGHT TO REST ACT’ TO DECRIMINALIZE PUBLIC CAMPING AS HOMELESS CRISIS INCREASES Sean Flynn is a Seattle-based real estate attorney and president and CEO of the Rental Housing Association of Washington (RHAWA). (Fox News Digital) “What this decision says is that the government can regulate, it can regulate to its heart’s content,” Flynn added. “But if your regulations get to the point where you take my real estate, I can sue you for it.” Ilya Somin, a George Mason University law professor specializing in constitutional law and property rights, told Fox News Digital that the ruling is more consequential than a routine procedural decision, but cautioned against exaggerating its broader impact. “This is only moderately significant, but it is more significant than just a routine legal decision that only affects the people immediately involved,” Somin said, explaining that courts in other states could consider Washington’s ruling when weighing similar constitutional challenges. He also said that, in theory, the case could reach the U.S. Supreme Court, but said that was highly unlikely. Seattle isn’t the only country imposing sweeping restrictions on landlords. San Francisco has long enforced rent controls and limits on evictions, and New York City expanded eviction protections in 2024 under the state’s Good Cause Eviction law, limiting landlords’ ability to remove certain tenants or reject lease renewals, while allowing tenants to challenge excessive rent increases. Portland, Oregon, limits landlords’ use of criminal records when screening prospective tenants and requires relocation payments after certain rent increases of 10% or more. Philadelphia has also adopted restrictions related to criminal background screening. These policies reflect a broader push to strengthen tenants’ rights in major Democratic-led cities, even as landlords express concerns about the consequences of increasingly restrictive housing regulations. OBAMA-ERA MANDATE SHORT AFTER BEING BLAMEED FOR ‘RAISING’ HOUSING COSTS Former Clinton adviser Mark Penn warns Democrats about Zohran Mamdani’s victory in New York, calling the socialist platform “extreme” and urging them to focus on the issues, not Trump. (Getty Images) Flynn warned that the consequences of Seattle’s housing policies extend far beyond Addison on Fourth, arguing that increasing restrictions have driven smaller developers and homeowners away from Seattle, a city once bustling with residential construction. “Once upon a time in Seattle, you could stand from my office and you could see crane after crane after crane building homes,” Flynn said. “They’re gone and they’re not coming back.” Flynn argued that the resulting drop in investment ultimately hurts ordinary renters, leaving them with fewer housing options and higher costs. “When you remove the investment incentive when offering a product, you get worse products at a higher cost,” he said. “Investors listen and vote with their feet. And as a result, there is less housing and the housing available is of lower quality.” NYC RENTAL BOARD DISSENT WARNS MAMDANI-SUPPORTED FREEZE COULD DAMAGE AFFORDABLE HOUSING OVER TIME: ‘SLOW BURN’GRE lawsuit seeks compensation under a legal principle known as inverse condemnation, which allows property owners to demand payment when they believe government actions have effectively taken or damaged their property without providing just compensation. GRE maintains that Seattle’s ordinances, individually and collectively, went so far in restricting its property rights that the city should be held financially responsible for any resulting losses. The Seattle City Attorney’s Office told Fox News Digital that officials are reviewing the appeal ruling and weighing their next steps. “We have not yet made a decision on an appeal,” Chief of Staff Dan Nolte said in an email Thursday. Housing against the skyline of Atlanta, Georgia, USA, on Sunday, November 13, 2022. (Elijah Nouvelage/Bloomberg via Getty Images) “I think the plaintiffs in this case deserve to win at least on that roommate provision,” Somin told Fox News Digital, referring to Seattle’s restrictions on landlords’ ability to exclude certain additional occupants from rental properties. CLICK HERE TO DOWNLOAD THE FOX NEWS APPSomin noted the Supreme Court’s 6-3 decision in Cedar Point Nursery v. Hassid, who ruled that a California regulation requiring agricultural employers to allow union organizers access to their private property constituted a physical taking under the Fifth Amendment. He argued that Seattle’s Roommate Ordinance raises a similar constitutional issue because it requires landlords to accommodate additional occupants with whom they never signed a rental agreement. SIGN UP FOR THE POLITICS NEWSLETTER “I think the strongest argument per se is just an argument against this provision of the ordinance, which says that they have to take in these people that they never signed any contracts with, that were never tested, etc.,” Somin said. “The additional requirement of allowing them access to their land goes beyond what is in the contract, and the same would apply here in Seattle’s case.” Alec Schemmel is a political reporter for Fox News Digital and is originally from Charlotte, North Carolina, but now resides in the Washington DC-Baltimore metropolitan area.
