Tag: affordable housing

Seattle’s MHA Program Should Come with a Tax Break, Not a Fee

We’ll never have Portland-style density if we don’t have Portland-style incentives. Photo by M.O. Stevens, CC-by-SA 3.0 license

by Josh Feit

I have repeatedly argued in this column—and long before— that liberalizing our land use code is the best way to address Seattle’s housing affordability crisis. Summary: We need to allow apartments in the vast majority of the city where they’re currently banned. Thankfully, there’s a recent glimmer of hope. The state passed a new law last year, HB 1110, that will upzone Seattle’s neighborhoods. Thank you state Rep. Jessica Bateman (D-22, Olympia); her legislation requires cities with populations of 75,000 or more to allow four-unit buildings wherever single-family homes are allowed, and up to six units if two of the units are affordable.

This encouraging uzpone goes into effect statewide after the cities update their local comprehensive plans, as Washington cities are required to do every 10 years; Seattle’s Comprehensive Plan update is on the docket for 2024.

I have to admit, though: The fact that the bill is tied to Seattle’s Comprehensive Plan update makes me nervous. Readers may recall that we started the year with some 2024 PubliCola predictions, including my pessimistic prognostication about how Seattle will sabotage Rep. Bateman’s upzone requirement through our comp plan update.

Here’s what I wrote on January 1 (italics added this time around): Undermining the new state mandate for increasing density in traditionally single family zones, Seattle “will come up with lot coverage minimums, setback requirements, and height limits along with hefty affordable housing fees that will keep housing developers from building any apartments in Seattle’s touchy neighborhood residential zones.”

As our comp plan update gets underway behind the scenes, I’m hearing affordable housing fees are already in play at City Hall. It’s hardly surprising. One thing that unites all political stripes in Seattle—lefties and NIMBYs alike—is a call to tax developers, everyone’s favorite scapegoat. Why has pickleball colonized traditional tennis courts? Evil developers!!

Call it Funded Inclusionary Zoning, or FIZ. How would we pay for it? Portland has a smart model. Under their IZ program  they give developers a property tax break.

Seattle’s gut instinct to tax housing production to pay for housing production is a political pathology. And it stalls development, leading, ironically, to less affordable housing. It’d be like targeting Swedish, Virginia Mason, UW Medical Center, and Seattle Children’s with a special tax to pay for local health clinics even though these institutions help reduce greater health care costs down the line.

Let me be clear, I’m all for government intervention to create affordable housing. It’s precisely what governments are supposed to do: Regulate essential marketplaces. Like all good governance, ensuring universal access to life’s fundamentals—such as housing and health care—not only promotes equity, it also benefits society as whole by preventing things such as spiking health care costs en masse through widespread upstream care. Or, per UW real estate prof Greg Colburn’s 2022 book Homelessness is a Housing Problem, here’s a more germane example: Building more affordable housing helps address homelessness.

Unfortunately, when it comes to the swath of land that HB 1110 opens up to new housing development, Seattle is likely to tax it. Watch for the comp plan update to expand Seattle’s Mandatory Housing Affordability program, a quasi-inclusionary zoning program the city created in 2019. Inclusionary zoning, or IZ, is housing policy that requires developers to include affordable units in their projects. MHA isn’t classic IZ because there’s also an option to pay into an affordable housing fund rather than building on-site. But either way, MHA puts the cost of building affordable housing on developers.

Certainly, requiring developers to contribute to affordable housing stock in the city is an important step, but mandates aren’t going to create affordable housing on their own. Progressive governments also need to help pay for that housing. Otherwise, as projects become financially untenable, developers are going to build less. The best affordable housing policy would require developers to include affordable housing in projects (or an in lieu program) while also providing government subsidies to help the program pencil. Additionally, as I already mentioned, we need to upzone to allow dense housing citywide,  ending our restrictive zoning policies that perpetuate classist and racist policies of the past.

MHA, which also came with an upzone, including peripherally around the edges of single-family zones, was an earnest attempt to address the ugly legacy of Seattle’s restrictive zoning, and it got off to a good start, raising tens of millions for affordable housing (about $68 million in 2020). However, we may have already hit peak MHA; while MHA payments raised more than $70 million annually in both 2021 and 2022, the 2022 number represented a slight drop—a 1.5 percent decline in cash along with a drop in the number of affordable units developers committed to include in new buildings, from 107 to 66.

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Showing the same downward trend, and perhaps even more worrisome, as Erica reported, production of in-fill housing like townhomes has dropped in the MHA era with permits shrinking from more than 1,800 permits filed in 2018 to just 165 in the first nine months of 2023. And the Seattle Times reported that overall apartment and townhouse construction permits dropped 42 percent  and 27 percent, respectively, between 2021 and 2022.

We need more evidence to see if MHA requirements are squelching development, but these are not good signs. The drag on development (and the related drop in affordable housing dollars) makes sense in an Econ 101 way—and highlights the irony I called out above: We’re taxing, thus discouraging, something we want.

Rather than discouraging affordable housing production, let’s make it easier for developers to meet the inclusionary zoning mandate by funding it. Call it Funded IZ, or FIZ. How would we pay for it? Portland has a smart model. Under their IZ program, which requires developers to include affordable housing in projects that include 20 or more units (or pay a steeper version of an MHA-style fee), they give developers a property tax break on all the units in a building. The program was initially limited to Portland’s downtown core, but the data showed it was working so well at creating affordable housing that their city council voted unanimously to expand it citywide last month.

Coupling IZ with property tax breaks is a logical next step here. Seattle  already has an optional incentive zoning program, known as the Multi-Family Tax Exemption credit, that rewards property owners with a 12-year tax break if they choose to make units affordable. There are currently 6,300 affordable MFTE subsidized units citywide, according to the most recent data.

Now that we’ve decided, as demonstrated by our MHA inclusionary zoning program, that affordable housing production is no longer optional, let’s also make sure that funding isn’t optional.

However, now that the city has decided, with MHA, that creating affordable housing should no longer be optional, let’s also make sure funding is no longer optional. A property tax exemption—for all buildings whose developers participate in the expanded program, including those where developers opt to pay a fee—would do just that by making affordable housing pencil out for developers.

There’s one asterisk. Government intervention requires more than just funding. Witness our famed Housing Levy, a property tax that’s been dedicated to affordable housing production for more than 40 years; the latest seven-year iteration will raise $970 million. Clearly, given that the root of our current housing crisis is a scarcity of affordable units, the levy is not delivering enough.

While we’re paying to build where we can, there’s not enough opportunity to build in general. Bateman’s zoning reform legislation could change that, adding substantially to the housing pipeline by allowing apartments in historically off-limits single-family zones. IZ would also help. If it’s funded!

Zoning changes in isolation won’t solve the housing problem; mandating affordable housing production in isolation won’t solve the housing problem; and funding affordable housing in isolation won’t solve the housing problem. Rather than defaulting to MHA’s unfunded mandate in our comp plan update, let’s seize the opportunity to combine all three approaches—housing production mandates, funding, and allowing citywide development—to properly address our affordable housing crisis.

josh@publicola.com

Seattle Affordable Housing Awards Plummet Amid Economic Challenges

Office of Housing director Maiko Winkler-Chin

By Erica C. Barnett

The city will award far less money to affordable housing projects this year than it has in previous years—just $53 million, compared to $147 million last year. Those funds will pay for just four projects, including two in north Seattle, one in the Central District, and one in Beacon Hill. In comparison, last year’s awards—known colloquially as the “NOFA,” for the Notice of Funding Availability that starts the funding process each year—funded 12 projects across the city.

Another 18 projects that applied for funding this year will not receive it.

City officials, including Mayor Bruce Harrell and Office of Housing director Maiko Winkler-Chin, announced the awards yesterday at El Centro de la Raza in Beacon Hill; the event also included announcements about homeownership programs that are not part of the affordable-housing NOFA.

PubliCola reported on the reduction in funding on Tuesday; the Seattle Times had its own story on the awards yesterday.

A primary reason for the reduction, Winkler-Chin told PubliCola Wednesday, is the need to “backfill” projects that are unable to pay their construction loans due to issues like the increased cost of labor and construction materials (which went up 15 percent last year), the concrete strike, interest rate hikes, and “operational issues,” like tenants failing to pay their rent.

Typically, an affordable housing project gets a certain amount of funding from OH—say, $10 million— based on a set of assumptions about what the project will cost to build and how much revenue the project will take in from rents once it’s up and running. Those assumptions then inform the size of the loan the developer will be able to get from a bank after construction is complete and the building is leased up.

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If those assumptions are wrong—if, say, construction costs spike, there’s a concrete strike, and 20 percent of the tenants aren’t paying rent—the bank will reduce the size of the project’s “permanent” loan based on the new numbers, leaving a gap. If an expected $10 million loan gets reduced to $8 million, the Office of Housing will step in to fill that gap. And when that happens, say, 50 times, the gap works out to around $100 million—about the size of the reduction between 2023’s awards and this year’s.

Ben Maritz, an affordable-housing developer whose proposal the Office of Housing did not fund this year, said unpaid rents have become “the biggest problem” for providers who need those revenues to pay their construction loans.

Rents in subsidized housing, which are set by the US Department of Housing and Urban Development based on local median, have climbed much faster than wages for low-income people, making it harder and harder for tenants to keep up, Winkler-Chin said. “A lot of people are unable to really recover and pay their rent, and that does have an impact on how much of a loan a developer can get as they’re building up their housing.”

Another reason for the lower award amounts, Winkler-Chin said, was that the city had already “forward-committed” funding from the JumpStart high-earners payroll tax and the housing levy in previous years—guaranteeing funds for projects that were in the works but wouldn’t begin construction until later. About 43 projects funded in previous rounds of funding are currently in the works, the Office of Housing confirmed.

The JumpStart fund, most of which is supposed to go toward low-income housing, has reportedly been frozen as part of Mayor Bruce Harrell’s effort to address an estimated budget shortfall of more than $220 million.

But there may be other factors contributing to this year’s relatively paltry awards.

The JumpStart fund, most of which is supposed to go toward low-income housing, has reportedly been frozen as part of Mayor Bruce Harrell’s effort to address an estimated budget shortfall of more than $220 million. Projects already funded through JumpStart will continue moving forward, but  revenues from the payroll tax are reportedly not being dedicated to new projects, reducing the overall pool of funds for affordable housing significantly. Last year’s city budget, for example, included $138 million for affordable housing from the payroll tax.

Asked about the reported freeze on the use of JumpStart funds for new projects, Harrell spokesman Jamie Housen said the City Budget Office’s “direction to the Office of Housing (OH) is to use JumpStart [Payroll Expense Tax] funds on housing. Payroll tax is one of several large revenue streams in the OH budget, and the annual NOFA opportunities are just one of the ways OH makes investments in the community. Other investments include supporting operations, maintenance, and services (OMS) for affordable housing providers—including wage increases for staff who work in affordable housing buildings—and providing support for increased costs on previously awarded projects.”

Every year since its inception, Seattle mayors have used JumpStart funds to fill budget gaps and fund priorities that aren’t in the JumpStart spending plan; last year, about $89 million in repurposed payroll tax revenues allowed the city to pile the budget with new programs (like the police surveillance system Shotspotter as well as generous police recruitment bonuses). This year, given the size of the deficit, it’s probably that the new council and Harrell will again view JumpStart as a solution to help close the revenue gap without cutting pet programs or laying off large numbers of city workers.

If the the payroll tax is converted, at some point in the future, into an all-purpose funding source for city needs, that would represent an abandonment of its official, legally codified purpose: Building new housing, funding small businesses, and supporting climate-friendly economic development.

Social Housing Backers Propose New Tax on Pay Above $1 Million

House Our Neighbors director Tiffany McCoy and social housing supporters at City Hall on Tuesday.

By Erica C. Barnett

House Our Neighbors, the group that in 2023 passed an initiative setting up a new development authority to create permanently affordable, mixed-income housing, filed a Seattle initiative on Tuesday—I-136—that would impose an “excess compensation” tax on employers with workers who make more than $1 million a year. HON’s goal is to put the measure on the ballot in November 2024.

HON will need to collect more than 26,000 valid signatures from Seattle residents to get the initiative on the ballot.

The proposal, if adopted by voters, would impose a 5 percent tax on individual compensation above $1 million, including stock options, bonuses, and deferred compensation; the tax would be paid by businesses, not employees. The proposal is modeled on the city’s JumpStart payroll tax, with at least two significant differences: It would only kick in after the first $1 million in compensation (JumpStart currently applies to companies whose workers make over $182,000), and it would apply to grocery stores and health care companies, both currently exempt from the JumpStart tax.

Also, unlike JumpStart, the social housing tax could not be raided by the mayor and city council to fill budget holes unrelated to its purpose.

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HON estimates that the tax could bring in about $50 million a year and create around 2,000 new units of housing over 10 years, through acquisition of existing buildings and the construction of apartments, including two- and three-bedroom “family-size” units.

At a press briefing outside City Hall on Tuesday, HON director Tiffani McCoy noted that an earlier version of the proposal would have involved building or buying 2,500 units, but those would be all studios and one-bedroom apartments—not the two-and three-bedroom units for which there is much greater untapped demand.

Tomorrow, the city’s Office of Housing will announce which Seattle projects will get funding through the latest annual Notice of Funding Availability (NOFA) process; this most recent round of awards, which amount to just over $50 million, represent a fraction of the $147 million the city handed out last year.

McCoy called social housing a way to provide permanently affordable housing outside the existing affordable housing market, which relies on complex funding streams and can be sold off if a nonprofit housing provider is short on funding. While “we have tremendous affordable housing partners” in the city, McCoy said, “there is no level of government that has a plan to address our housing crisis at scale. There isn’t a plan from the private sector. And the affordable housing sector is constrained by what the Housing and Urban Development Department decides year to year.”

Unlike traditional affordable housing, social housing would be funded, in part, by rents from tenants at higher income levels; the buildings would be open to people making up to 120 percent of the Seattle area median income, who would pay rents closer to market rates than lower-income tenants.

Additionally, “social housing will not be vying for the limited funds of the housing levy or JumpStart,” said Ben Maritz, the affordable-housing developer who drafted HON’s high-level business plan. Tomorrow, the city’s Office of Housing will announce which Seattle projects will get funding through the latest annual Notice of Funding Availability (NOFA) process; this most recent round of awards, which amount to just over $50 million, represent a fraction of the $147 million the city handed out last year.

Are Fourplexes Real?

A historic 1911 fourplex in Portland, OR

By Erica C. Barnett

On the local campaign trail this year, you can’t go to a debate without hearing multiple candidates profess their support for “Comp Plan Alternative 5″—the densest potential option currently on the table for the city’s comprehensive plan update, which will serve as a framework for Seattle’s future growth and development for the next 15 years.

It’s a kind of proxy for an urbanist (or urbanist-lite) position on development that fits neatly into a 30-second debate response: Supporting Alternative 5 signals that you support housing as dense as fourplexes (or even sixplexes!) in areas that were previously zoned exclusively for detached single-family houses—a marked departure from the bad old days when even backyard or basement apartments were a third rail for the homeowner activists who dominated the public debate over density.

We’ve expressed optimism in the past about the way the Overton Window has shifted on density and housing. This, at least, is undeniable: Polls show that Seattle residents are increasingly receptive to the idea of “more housing in my neighborhood,” and politicians have come along, including many on the left who have come to support density coupled with anti-gentrification measures, like targeted investments in affordable housing, homeownership, and preservation.

But lately, I’ve started to think that my optimism may have been misplaced. This is because while the concept of “more housing” is generally popular, the kind of housing people say they support is actually a very specific type: Modest density that looks like the rest of an existing neighborhood—the kind of inoffensive density you don’t even notice if you aren’t looking for it. Ask a moderate candidate what they mean when they talk about density in residential neighborhoods, and they’ll often describe a fourplex built about 80 years ago— the type that blends in to a single-family neighborhood because it looks an awful lot like the the single-family houses that surround it.

When pressed, candidates are often explicit about this preference. Take Maritza Rivera, running in District 4. When David Hyde, moderating a debate at Roosevelt High School, asked the candidates what they thought of a new state law that allows fourplexes in formerly exclusive single-family areas, Rivera said she supported increasing density “gradually” in a way that preserves “the character of the neighborhood…  for instance, on north Capitol Hill, you can see there are some places that look like mansions, but they’re actually fourplexes.” Or Maren Costa, in District 1, who talked about creating a set of pre-approved architectural plans that homeowners could use to convert their property into a fourplex while adhering to the current neighborhood vibe.

Just look at Minneapolis, which, in 2019, made nationwide headlines as the first city to “eliminate single-family zoning” outright by allowing triplexes everywhere. Fast forward to 2023, and just 17 triplexes have been built in areas previously zoned for single-family use in Minneapolis, a blow to the idea that cities can encourage “gentle” density by gingerly increasing what’s allowed in formerly redlined neighborhoods.

It’s thoroughly unrealistic (and, I would argue, a form of creeping architectural fascism) for a big city to dictate what housing in a neighborhood must look like. But the problem goes deeper than aesthetics, and gets to the question that has been nagging me for months: Are fourplexes real? That is: If we zone the whole city to allow fourplexes everywhere, will they get built? To drill down even further: Will developers find it possible–in other words, profitable— to build four-unit rental housing developments on single-family lots?

My belief, increasingly, is that fourplexes are not a viable option for replacing single-family houses in Seattle—but apartments are. Which is why it’s time for urbanists to stop conceding this point. We have to stop settling for “plexes”—and start advocating for apartments everywhere.

This doesn’t mean allowing high-rises in Laurelhurst, or eliminating tree protections (which, by the way, are easier to follow when housing can go up instead of sprawling out). But it does mean allowing regular old apartment buildings (not “sixplexes”; not “stacked flats”) in a lot more places, and allowing taller, denser apartment buildings everywhere short, stumpy apartment buildings are currently allowed.

I’m not a developer, and I don’t pretend to have the precise zoning formula for what will pencil out for builders and actually create housing in the city, rather than just on paper. (I mean: No zoning at all works pretty well in Houston, but I’m not a lunatic. I know where I live.) What I do know is that when other cities have tried to go for modest, tentative density, it hasn’t worked out the way they hoped.

Just look at Minneapolis, which, in 2019, made nationwide headlines as the first city to “eliminate single-family zoning” outright by allowing triplexes everywhere. The city was seen as a model for the kind of modest, infill density known as “missing middle” housing, including by hopeful urbanists in Seattle. The housing advocates at the Sightline Institute, for instance, argued that by allowing triplexes, cities could start to undo the “ugly legacy of economic and racial exclusion” and break “the entrenched stranglehold of exclusionary zoning.”

Fast forward to 2023, and just 17 triplexes have been built in areas previously zoned for single-family use in Minneapolis, a blow to the idea that cities can encourage “gentle” density by gingerly increasing what’s allowed in formerly redlined neighborhoods.

One reason triplexes didn’t catch on in Minneapolis is that formerly single-family areas retained their old envelope (height and lot coverage) limitations, which means that the new three-unit buildings can’t take up much more physical space than the houses they replace. If you allow developers to build more units but don’t let them build up or out, it turns out they decide to build housing that’s more profitable—like $950,000 townhouses, or 100-unit apartment buildings in the narrow slivers of the city, generally along multi-lane arterials, where renters are mostly allowed to live. You can argue that this is developer greed or unwillingness to get creative or rapacious gentrification all you want; what matters is that this kind of housing, though now legal in Minneapolis, isn’t getting built.

Seattle is facing a similar path. Although the city hasn’t released all the details of the five comprehensive plan options yet—an environmental impact statement that will include this information has been delayed from April to November of this year—a high-level “scoping” document says that new, market-rate “plexes” will have to fit within current height and zoning limits for single-family areas, which means Seattle will likely run into the same problem as Minneapolis.

Paradoxically, if we do increase Seattle’s theoretical zoning capacity without actually increasing the amount of housing, urbanists could end up playing directly into NIMBY hands.

The city’s Mandatory Housing Affordability Program, which allows developers to build more density in small portions of formerly exclusively detached, single family homes, in exchange for building affordable housing (or paying for it elsewhere) provides a local example of what happens when the city plans for a type of development without considering whether it’s practical for developers to build.

Townhouses, which were the city’s dominant low-density development type before MHA passed in 2019, have all but dried up, shrinking from more than 1,800 permits filed in 2018 to just 165 in the first nine months of 2023. This isn’t because people weren’t buying townhouses; it’s because developers can’t make them pencil out now that they have to either build one or two affordable townhouses per four- or six-house development or pay tens of thousands of dollars in MHA fees.

Paradoxically, if we do increase Seattle’s theoretical zoning capacity without actually increasing the amount of housing, urbanists could end up playing directly into NIMBY hands. For decades, traditional neighborhood activists have argued against upzoning by pointing out that there is already “plenty of zoning capacity” in Seattle to accommodate future growth; in other words, if every parcel of land in Seattle was built out to its maximum allowable density, there would be enough housing for everyone.

Let’s stop equivocating, or using euphemisms, to describe the changes we must make in order to have any hope of being the kind of city where working people can afford to live. We need apartments where people can live—not imaginary plexes that “fit in” to our existing suburban-style neighborhoods.

The problem with this faux density argument is that capacity isn’t housing until someone builds it. Until then, it’s existing housing that people already live in—from the  affordable dingbat apartment building that’s been hanging around since the 1960s to the Craftsman bungalow that could be, but hasn’t been, replaced by a triplex. This “capacity” argument has lost currency in the face of Seattle’s growing affordability crisis, as Seattle residents have generally come to accept that we probably could stand to add a bit more density. Adding more theoretical  capacity—even, perhaps especially, in the absence of actual housing—will only give NIMBYs another reason to argue that Seattle has plenty of room to grow.

I’m not completely giving up hope on the possibility that Seattle may yet build more rental housing, and even affordable housing, in its traditionally single-family areas. But I am going to start looking beyond “fourplexes” and “sixplexes” as that housing solution, because I don’t believe it’s going to happen—at least, not in a way that meaningfully makes a dent in the 112,000-unit shortfall we’re expected to face over the next 21 years. Instead of “plexes,” we need apartments—and that means building densely, not tentatively, everywhere in the city.

We could start by re-legalizing small, aPodment-style apartments and bringing back single-room occupancy units—housing types that may shock the sensibilities of people who think everyone needs two sinks in their 180-square-foot microunit but that will be popular among people who don’t have a lot of stuff, or those who would otherwise be unsheltered.

So let’s stop equivocating, or using euphemisms, to describe the changes we must make in order to have any hope of being the kind of city where working people can afford to live. We need apartments where people can live—not imaginary plexes that “fit in” to our existing suburban-style neighborhoods.

House Democrats Cede Ground on Density, Scaling Back Transit-Oriented Development Bill

By Ryan Packer

In the final weeks of the legislative session, the future of one of the year’s most substantial housing bills is in doubt.

The legislation, SB 5466, would have allowed dense development near public transit, but Democrats in the state house significantly changed the scope of this transit-oriented development bill last week—a surprise move, given the resounding 40-8 State Senate vote in favor of the bill just a few weeks earlier.

The original bill, sponsored by Marko Liias (D-41, Edmonds), would have loosened density restrictions within a three-quarter-mile walking distance around light rail, Sounder, and bus rapid transit stops, and also around bus stops with service running at least every 20 minutes for most of the day. The bill would have also allowed residential and commercial five-story buildings within the entire three-quarter-mile area, while also allowing buildings eight to nine stories tall within a quarter mile. Developers would not have to build parking within any of those footprints.

“I think this is the smartest way for Washington to address our housing challenges,” Senator Mark Mullet (D-5, Issaquah) said before the senate passed a version of the bill, which scaled back the density allowance for local bus service to a half-mile walking distance. But several state representatives said the process essentially started over in their chamber.

“The scope of the bill was really large, and we also heard from a lot of our constituents, from a lot of our colleagues, that when we included not only light rail but bus rapid transit, and frequent bus stops, that the scope of redevelopment was a little unnerving for many.”—Rep. Strom Peterson (D-21, Edmonds)

Following complaints from local elected officials that the bill applied too broadly, the slimmed-down version moving through the house would only apply to an area within a half-mile of light rail and Sounder stations, and to a quarter-mile around bus rapid transit stops. Meanwhile, frequent local bus service would no longer trigger density bonuses. The bill still bans mandatory parking minimums in the areas where it would still apply, though cities will be able to petition the state for an exemption to require additional parking.

“The scope of the bill was really large, and we also heard from a lot of our constituents, from a lot of our colleagues, that when we included not only light rail but bus rapid transit, and frequent bus stops, that the scope of redevelopment was a little unnerving for many,” Rep. Strom Peterson (D-21, Edmonds), chair of the house housing committee, told PubliCola. “So we wanted to scale that back, to come up with something that might be more of an iterative process.”

Supporters of the original bill saw its broad scope as the best way to encourage both housing development and public transit investment.

“Based upon how you’re developing [housing] around frequent service, a lot of time those [bus stops] turn into BRT stations,” said Bryce Yadon, a lobbyist with Transportation Choices Coalition and Futurewise, which have been advocating for the senate version of the bill. “We want the best transit service across the region and the state … and to do that, you make fast, reliable, frequent service, and then you make sure that there is developable land around that service.”

The most significant change house Democrats made in the housing committee, though, was adding an extra requirement called “inclusionary zoning” for developers hoping to use the additional zoning capacity. Under his requirement, developers would have to set aside at least 20 percent of new units for households earning less than 60 percent of the area median income, which works out to $62,160 for a family of two in King County.

In addition, house Democrats reduced the maximum density, in most cases, to just three or four stories.

“We really wanted to put a bigger lens of affordability onto the bill,” Peterson said. “This was not only true for the Democrats on the housing committee, but also a lot of stakeholders that got involved: cities, the [Washington] Low Income Housing Alliance, and others.” But many housing developers, including those who build affordable units, argue that the new affordability provision is prohibitively high, and will have a chilling effect on the construction of new units.

“The bill that came over from the Senate was a very strong bipartisan bill. This legislation really rolls back generations of policy efforts to create inclusive communities. It will separate the haves from the have-nots.”—Rep. Peter Abbarno (R-20, Centralia)

Developers argue that requiring too many affordable units in otherwise market-rate buildings often means that a project that would make financial sense can no longer be built at all, leading to underdevelopment. “When we do things like say, ‘We’re only going to build new housing if it’s affordable’, we are making the problem worse because that housing has to be subsidized, and therefore cannot be built,” Ben Maritz, founder of Great Expectations, which specializes in constructing buildings with smaller-than-average units that can be rented for below market-rate rents, told PubliCola.

Maritz pointed to the Cornus House, a 199-unit building that Great Expectations is building near the Tacoma Dome Sounder station. If 20 percent of the units had to be affordable to people making 60 percent of the area median income, he said, the company would need to charge more than $2,300 for a 400-square-foot apartment, something that isn’t feasible in today’s market. On top of that, the new density provisions in SB 5466 wouldn’t allow 199 units on the lot, which would lead to even higher market-rate rents. “When we restrict housing, we make housing more expensive, which just makes the problem harder and harder. It’s an unworkable approach to solving our housing problem,” Maritz said.

The house Democrats’ rewrite has sapped Republican support, in a year when most housing bills are passing with bipartisan backing. “The bill that came over from the Senate was … a very strong bipartisan bill,” Rep. Peter Abbarno (R-20, Centralia) said just before every Republican on the house capital budget committee voted “no” on the bill. Abbarno argued that relying on public investment to build affordable units close to transit would create income-segregated areas. “This legislation really rolls back generations of policy efforts to create inclusive communities. It will separate the haves from the have-nots,” he said.

Seattle lawmakers, including Rep. Emily Alvarado (D-34) and Julia Reed (D-36) have taken center stage in the negotiations around SB 5466 in recent weeks. Alvarado previously served as the director of the Seattle Office of Housing as the city was implementing its Mandatory Housing Affordability program, which offers developers slightly more zoning capacity in exchange for building on-site affordable units or paying a fee to subsidize them elsewhere, and has been an outspoken advocate for the affordability mandates in the bill. 

“This is, in its essence, about creating more affordable homes for those with the lowest incomes alongside homes for people with higher incomes,” Alvarado said before voting “yes” in committee. “It is, in and of itself, about fostering inclusion, and opportunity, and diversity—particularly in the communities like [those] across my district where we invest in our transit.”

The session’s other main housing bill, HB 1110, sponsored by Rep. Jessica Bateman (D-22, Olympia), is also seeing some heavy tweaks as it moves toward a final vote. As originally introduced, it would have required cities to require at least four units on most residential lots in the state’s urban areas, regardless of the population of an individual city. Most recently, an amendment by Sen. Mullet scaled the bill back so that it only requires cities with fewer than 75,000 people to allow duplexes on most residential lots—ceding a lot of ground to complaints from local leaders in cities like Mercer Island who had pushed back on the bill, arguing that their low-density areas couldn’t support more development.

Housing advocates saw both bills as necessary to address the state’s shortage of housing. But with 1110 retaining support on both sides of the aisle, and Democrats deciding to go it alone on transit-oriented development, it looks increasingly likely that only one will make it through this year.

ryan@publicola.com

Maybe Metropolis: Pro-Housing Democrats Poised for Action in 2023 After Ousting Obstructionist Seattle Rep. Pollet

Finetooth, CC BY-SA 3.0, via Wikimedia Commons via Wikimedia Commons

By Josh Feit

Before I get to last week’s quiet yet encouraging news out of Olympia—House Democrats removed single family zoning preservationist Rep. Gerry Pollet (D-46, N. Seattle) from his position overseeing housing policy—I’d like to review a couple of other recent, below-the-radar news items that provide context for why such a seemingly picayune parliamentary move in the state legislature matters for Seattle.

First, in October, the Washington State Advisory Council on Historic Preservation decided to okay a request from Wallingford homeowners to put hundreds of houses in Wallingford on the National Register of Historic Places; this week, the National Parks Service made it official.

Expect to see more and more attempts by “In this House” Seattleites to weaponize “historic” districts as a tool against reforming local land use policy that could otherwise increase affordable housing and density in Seattle.

Meanwhile, another quiet zoning decision reflected the opposite path: Last month, the Seattle Landmarks Preservation Board voted against landmarking the “unremarkable” (as Erica hilariously put it) two-story wood-framed Jai Thai building on Capitol Hill. The decision cleared the way for a new seven-story affordable housing development.

You can attribute Pollet’s NIMBY politics to an old-fashioned brand of lefty populism that elevates provincialism (knee-jerk suspicion of development mixed with tired exhortations about neighborhood “character”) into a fight to preserve single-family zoning.

Unfortunately, these two decisions taken together ultimately reaffirm the prevalence of Seattle’s off-kilter city planning philosophy: Seattle confines multi-story density to the same neighborhoods over and over, while foregoing opportunities for new housing in the hefty majority of the city—75 percent— that’s currently zoned exclusively for detached single-family houses. Sadly, Capitol Hill’s density is a Catch-22 for urbanists: Enthusiastically adding units to one of Seattle’s densest neighborhoods provides fodder for the city’s redundant single-family zones to ward off reforms that could create new housing. This preserves the status quo: Skyrocketing housing prices. The Seattle area has some of the most expensive housing prices in the country, with median rents above $1,700 (over $2,200 in the Seattle region) and a median sale price of $810,000.

It’s no wonder King County says we need to build around 240,000 new affordable units in the next 20 years, or 12,000 new units a year. Currently, we’re nowhere close to that pace; over the last two years, according to the Seattle Office of Housing, the city averaged about 1,300 affordable units a year.

Thankfully, pro-housing folks are fighting to reverse this trend. Witness the long overdue progressive coup in Olympia. Earlier this month, under youthful, new leadership, the state house Democrats finally removed Rep. Gerry Pollet (D-46, N Seattle) as chair of the pivotal House local government committee. As we have been reporting for years, Rep. Pollet has repeatedly used his position to kill pro-housing bills. (No surprise, The Urbanist has also called out Pollet for undermining housing legislation.) You can attribute Pollet’s NIMBY politics to an old-fashioned brand of lefty populism that elevates provincialism (knee-jerk suspicion of development mixed with tired exhortations about neighborhood “character”) into a fight to preserve single-family zoning.

Initially, frustrated with Pollet’s history of watering down pro-housing legislation, the House Democratic Caucus voted in late November to shrink the scope of Pollet’s committee by moving all housing issues into the housing committee, whose chair, Rep. Strom Peterson (D-21, Everett) supports urbanist legislation. Last year, for example, Peterson co-sponsored Rep. Jessica Bateman’s (D-22, Olympia) bill, HB 1782, that would have authorized duplexes, triplexes, and fourplexes in residential areas within a half-mile of a major transit stops. It was one of several pro-density bills Pollet helped kill last year. 

The move to take housing policy out of Pollet’s committee was orchestrated by a new generation of Democrats who want to send a message that affordable housing (tied to density) will be a top priority in 2023.

Two weeks later—evidently not done sending their message—the caucus voted to remove Pollet as chair of the local government committee altogether, handing the reins to Rep. Devina Duerr (D-1, Bothell), another co-sponsor of last year’s failed density bill.

With much better odds of passing their bills intact out of Peterson’s committee than under Pollet’s provincialism, pro-housing legislators could bring some necessary state governance to Seattle’s failed local policies.

The Seattle Times, whose editorial board shares Pollet’s preservationist POV, ran an editorial last week lamenting the leadership sea change by parroting Pollet’s go-to  “local control” mantra, claiming that pro-housing bills would prohibit local governments from enacting affordable housing requirements. That’s untrue. The bills that urbanists like Rep. Bateman support simply give local jurisdictions the option to allow multifamily housing in single-family neighborhoods, leaving affordable housing requirements in the hands of local jurisdictions.

“If we’re really concerned with affordable housing,” Rep. Bateman told PubliCola, “let’s first acknowledge some basic facts: Single-family zoning is 100 percent displacing people and causing gentrification.”

This status quo—not the bogeyman of future development—constitutes a current threat to housing affordability. For example, existing policy not only squeezes supply by making most of the available land in Seattle off-limits to multifamily housing, it also encourages teardowns and McMansions. Rep. Bateman’s pending, more ambitious 2023 proposal will challenge that status quo by authorizing fourplexes in residential areas of cities across the state—anywhere detached single-family homes are allowed.

Data show that even this modest increase in density improves affordability. Portland made fourplexes legal citywide two years ago and the first set of numbers indicates that they are more affordable to rent or purchase than duplexes, triplexes, or single-family homes. Additionally, Bateman said her legislation will create an affordability incentive with a “density bonus” that allows scaling up to sixplexes if two of the units are affordable to people making between 30 and 80 percent of the area median income.

On the state senate side, Sen. Marko Liias (D-21, Everett) is cueing up legislation that would target upzones (more dramatic ones) specifically near transit hubs.

This is all to say, for more news that could end up having big implications in the coming year: Pay attention to the state legislature’s prefiled bills page and watch for new pro-housing legislation. With much better odds of passing their bills intact out of Peterson’s committee than under Pollet’s provincialism, pro-housing legislators could bring some necessary state governance to Seattle’s failed local policies.