By Josh Feit
With little fanfare, state house legislators passed a game-changing housing affordability bill out of committee last week. The bill, HB 1491, would require more housing density around rail and bus rapid transit stops and mandate on-site affordable housing as part of new developments in those areas. The bill tanked during the last two legislative sessions. But this session, it includes a change that represents a tectonic shift in how affordable housing advocates are thinking about the issue of inclusionary zoning, a policy that requires developers to include affordable housing in new projects.
I’ll get to that big shift momentarily, but first, a little history. Known as transit-oriented development, or TOD, housing around transit stops is a longtime priority for pro-density urbanists. In Washington State, I trace its origin back to the 2009 (!) legislative session, when the housing advocates at Futurewise first took up the cause.
At that time, their nascent pro-housing movement unwittingly stirred up a hornets’ nest of anti-development opposition from both the homeowner right (who are touchy about “neighborhood character”) and the social justice left (who often equate new housing with developer “giveaways” and displacement).
Thankfully, a lot has changed since then. First of all, gentrification has escalated exponentially under Seattle’s low-density status quo, a trend that calls b.s. on the NIMBY thesis that denser zoning is the cause of gentrification. If anything, the last 10 years under single-family protectionist policies show that it’s the opposite: Sequestering multifamily housing into a minuscule slice of the city’s residential areas causes gentrification.
And, more importantly: The pro-density “Yes In My Backyard” (YIMBY) movement of the past decade has re-framed the density debate in a way that has attracted social-justice lefties. YIMBYs now talk about municipal land use regulations in the context of historic redlining and current exclusionary zoning laws that wall off huge portions of cities like Seattle from lower-income families and renters. As a result, lefties no longer stand in lockstep with wealthier “neighborhood character” obstructionists like they used to.
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Certainly, knee-jerk opposition to developers (along with real issues like displacement) persist, but 1491’s sponsor, Rep. Julia Reed (D-36, Seattle) let go of the orthodox left’s antipathy toward for-profit developers by accepting a Republican amendment from Rep. April Connors (R-8, Kennewick) that includes a new tax exemption to make the housing mandate pencil out. Thanks to Connors’ amendment, Reed’s inclusionary zoning bill, which passed the housing committee 9-5 with two GOP votes, is now a funded inclusionary zoning bill, or FIZ.
“The goal of this bill,” Reed said before last week’s vote, “is to try to address the urgent housing needs in our state, to ensure some public value capture for opening up new areas to development, but also to ensure that builders are incentivized to build, and that cities have the flexibility they need to manage this development effectively.”
Funded inclusionary zoning is exactly what it sounds like. Rather than simply making developers include affordable housing in a portion of their new developments, FIZ also helps pay for the affordable housing. In this instance, the amendment authorizes a 20-year property tax exemption on the development, and provides two options for affordability; a developer who builds in a FIZ zone can either make 10 percent of the project affordable to people making 60 percent or less of area media income (AMI), or 20 percent for people making 80 percent of AMI.
This is a classic compromise: Developers don’t like inclusionary zoning, but were willing to go along with it if it was subsidized; and lefties don’t like giving tax breaks to developers, but they like affordable housing. “This is a supply bill that ensures affordability while offsetting the costs for new development,” said Futurewise executive director Alex Brennan, who is encouraged by the sudden momentum for his group’s longstanding TOD bill.
The funded inclusionary zoning compromise, something I advocated for in this column a year ago, combines two well-intentioned, but limited, affordable housing policy tools: First, traditional inclusionary zoning, which requires developers to add affordable housing if they want to build a project, and second, the state’s existing Multifamily Tax Exemption (MFTE) program, which gives developers a tax break if they choose to include affordable housing in a project. By combining the two tools, 1491 makes the prospect of actually adding affordable housing to the state’s housing stock more likely.
Seattle has had its own (unfunded) inclusionary zoning program, Mandatory Housing Affordability, since 2019. MHA requires developers to either include some affordable housing in new developments or pay into an affordable housing fund. Reed’s bill exempts cities that have their own inclusionary zoning programs from following the new TOD affordable housing mandate. However, let’s hope Reed’s smart bill, which is likely to encourage more housing starts thanks to the tax exemption, prompts Seattle to consider a FIZ program of its own.
Similarly, the increased zoning 1491 contemplates wouldn’t have a big effect around Seattle’s light rail stations, because Seattle has already upzoned those station areas to the same or greater density as what the bill would allow. But the legislation could increase density around many Seattle bus lines where its upzones are greater than Seattle’s current requirements. Seattle’s Office of Planning and Community Development hasn’t done a full analysis, but a spokesperson said, “There is a larger difference between existing zoning around BRT stations in the city and the potential new requirements than there is for zoning in the light rail station areas.”
And the legislation could add more density to Seattle in another way. The bill defines transit areas as locations within a half-mile of rail stops or quarter mile of bus rapid transit. This geographical definition of TOD would overrule the current minimalist “Neighborhood Centers” proposal in Seattle’s pending comprehensive plan, which would limit new density to developments that are just 800 feet from major bus stops. Seattle’s slow-growth council is actually trying to scale back that already-timid TOD plan. Thankfully, if HB 1491 becomes law, Seattle will get more housing and more affordable housing despite intransigence from City Hall.
The funded inclusionary zoning TOD bill is currently in the house appropriations committee.
Josh@publicola.com
20 year tax exemption for building 80% AMI units?!? This is a huge windfall for developers, who can build market rate studios that are affordable at the 80% AMI. Tax exemptions are fine, but someone needs to check the math on what it actually costs to provide a 80% AMI unit.
No mention of the fact Democrats put restrictions and disincentivized developers to convince them in lieu of building affordable housing to pay into an mha fee fund and then the city council of Seattle changed the law to make sure that only their politically connected nonprofits would have access to over a billion dollars those nonprofits are not qualified to build so then they subcontract higher a for-profit that hasn’t been vetted resulting in businesses skimming off of an affordable housing project that has been lowered in the quality and level that’s built in noise polluted air polluted areas to appease and this reporter can’t and won’t point that out acting like living on the side of the bus stop and the parking lot of the bus system is the best choice for housing
If these tax credits are federal, I’d, um, be very worried about them right now. I’m still not sure why the focus has been on producing large, corporately owned developments which neighbors roundly hate and do little for local homeowners. Give the people what they want for spurring small scale renter opportunities and some new tools for creative homeownership. It matters that we keep local/people-centered control of rental stock. Private equity is coming for us all.
Why would anyone be interested in making the power of landlords to make money in their sleep is preserved? I see one mention of homeowners (present/current ones) and two mentions of renters/rental…why can’t developers build properties people can buy? Is owning a flat such an impossibility? Maybe condo or multi-unit law has made it so but that seems like it could be fixed. But everytime I hear about ADUs or new rental development, I wonder why landlords are so important.
Ideally, there is one landlord: the city itself. All land is rented or taxed as if it were so, and property owners, residential or commercial would all be making rent. For some it would be less…residential land owners (who live in their properties) are not using that land to make money, but those who are — commercial land owners of all sizes — are and as such should pay for the value of the land they use. They are here because there is money to be made and those commercial opportunities are the result of everyone else’s labor, in the past and the present. Roads, utilities, public health and education, those are all assets for commerce and for a city like Seattle, are why businesses start or move here vs Spanaway or Spokane.
But please, spare me the idea that we need to preserve a seat at the table for landlords.
@some lurker, developers = landlords. They create the housing units we want and need. They’re “at the table” unless we go full socialism, which is not going to happen. I’ll take small landlords over big ones any day.