A Washington appeals court has cleared the way for the owners of a Seattle affordable housing complex to sue the city, arguing that a stack of renter-protection ordinances amounted to an unconstitutional taking of their property.
The Washington Court of Appeals ruled Monday that GRE Downtowner LLC, the company behind the 254-unit Addison on Fourth development, can pursue its claim that Seattle’s regulations destroyed what had been a financially viable $39 million affordable housing investment. The property operated under the federal Low-Income Housing Tax Credit program, which uses tax incentives to draw private investors into building rent-restricted apartments for lower-income tenants.
According to court filings, the property generated positive cash flow from 2015 through 2018. But as Seattle layered on ordinances restricting criminal-background checks, expanding tenants’ rights to add occupants to their leases, limiting evictions and requiring relocation assistance after certain rent increases, GRE says its finances collapsed. Rent collections fell from 93.9% in 2018 to 44.1% in 2023, and the company accumulated nearly $5.8 million in operating losses. A federal judge appointed a receiver to take over the property in January 2026 after a mortgage default.
Sean Flynn, executive director of the Rental Housing Association of Washington, who is working with GRE in the case, said the city’s rules combined into what he called a “toxic cocktail of legislation” that took a functioning affordable housing property and “destroyed it.”
“The policies they’re passing are detrimental to the folks they’re actually trying to help,” Flynn said, arguing that heavy-handed restrictions on landlords ultimately discourage the housing investment renters depend on.
Flynn said the broader effect is already visible in Seattle’s skyline. “Once upon a time in Seattle, you could stand from my office and you could see crane after crane after crane building housing,” he said. “They’re gone, and they’re not coming back.”
GRE’s suit relies on a legal theory called inverse condemnation, which allows property owners to seek compensation when government regulation effectively takes or damages their property without payment. The company argues Seattle’s ordinances, alone and together, crossed that line.
A Precedent Watched Beyond Seattle
Ilya Somin, a George Mason University law professor specializing in property rights, said the ruling carries weight beyond the immediate parties, though he cautioned against overstating it. “This is only moderately significant, but it’s more significant than just a routine legal decision that only affects the people immediately involved,” Somin said, noting courts in other states could look to the decision in similar disputes. He said a Supreme Court appeal was theoretically possible but unlikely.
Somin singled out Seattle’s rule requiring landlords to accommodate additional occupants they never agreed to rent to, calling it the strongest part of GRE’s case. He compared it to the U.S. Supreme Court’s 6-3 ruling in Cedar Point Nursery v. Hassid, which found that a California rule forcing farm owners to let union organizers onto their land was a physical taking under the Fifth Amendment. “I believe the plaintiffs in this case deserve to win at least on that roommate provision,” Somin said.
Seattle is far from the only Democrat-led city with sweeping tenant protections. San Francisco has long enforced rent control and eviction limits. New York City expanded eviction protections in 2024 under the state’s Good Cause Eviction law. Portland, Oregon, restricts landlords’ use of criminal history in tenant screening and requires relocation payments after rent increases of 10% or more. Philadelphia has adopted its own limits on criminal-history screening.
The Seattle City Attorney’s Office said it is reviewing the ruling. “We haven’t made a decision on an appeal yet,” Chief of Staff Dan Nolte said in an emailed statement Thursday.
Flynn argues the ultimate losers in these policy fights are the renters the rules are meant to protect. “When you take the investment incentive out of providing a product, you get worse products at a higher cost,” he said. “Investors listen and they vote with their feet. And as a result, there’s less housing and the housing that is available is of lesser quality.”
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