By Erica C. Barnett
On Seattle Nice this week, Sandeep and I brought on two special guests to explain why developers want a holiyday from Mandatory Housing Affordability fees, which are added on to of the cost of every new multifamily residential building in Seattle. The fees pay for affordable housing (or a developer can skip them by building affordable units on sight), but they’re bringing in less money than ever as housing development slows.
Since MHA passed, in 2019, Seattle has undergone a political evolution on housing. Density, which neighborhood activists and most political leaders once saw as having an entirely negative impact on neighborhoods, is increasingly seen as a necessity as Seattle’s renter majority grows. Many people no longer agree that the city should segregate renters from property owners by restricting them to dirty, polluted arterials far from parks, libraries, and tree-lined streets. There’s a growing consensus that to reduce the cost of housing, you have to build more of it.
Our guests this week, land use and housing consultant Natalie Quick and former Seattle Chief Operating Officer Marco Lowe, don’t go so far as to call for a total repeal of MHA, but they do make a strong case for its eventual replacement with an incentive-based approach called funded inclusionary zoning. FIZ, which we’ve covered at PubliCola before provides tax breaks, similar to Seattle’s existing Multifamily Tax Exemption program, in exchange for a requirement that developers build affordable units on site. Instead of charging a fee for housing, which drives up rents, FIZ makes it possible for affordable and market-rate housing to coexist.
As Marco points out, housing slowdowns don’t just lead to a shortage of housing, driving up rents. They also deplete city resources, because when developers decide it’s too expensive to build, the city loses out on all other kinds of non-MHA revenues, from sales taxes on materials to taxes on real estate transactions to property taxes on the housing itself.
This one’s a wonky episode, but one well worth listening to if you want to understand why so little new housing—particularly larger units—is getting built right in Seattle right now and what the city could do to reverse the trend.
Editor’s note: This story originally identified Marco Lowe as the former Office of Economic Development director. This error has been corrected.
No FAMILY housing increase in this city until we can get building permits inside 90 days, current tractor start 2-8 years from land purchase is not survivable, do NOT believe SDCI process claims. Until you try to get all the permits for a family home you have NO right to say anything about housing. If you doubt the city is deliberately preventing family homes look at SMC 23.44.010 d historic lots. I fought that code in 2014 until the councilman that sponsored it admitted the city didn’t want small homes on small lots, not a coincidence all affordable housing was lost in the next several years and now we can’t even build upper income homes. Permit failure and democrat controlled are the common factors in the top 17 housing failure jurisdictions in the country.
Seattle citizens passed the social housing tax. So now developers are saying – citizens are paying our tax for us. Let the citizens pay for social housing, and utility infrastructure upgrades (thru utility fee increases) and transportation infrastructure and schools. We get to build and sell for astronomical profits while they get priced out.
The “House Our Neighbors” crew hasn’t built any housing to date and don’t even seem to be planning on building any. Right now the group has enough money to build less than 250 units and the revenue coming in adds about a 100 units a year. Regardless of your political take on “social housing” the math behind it points towards failure.
I read they got $115 million! It was reported in multiple news outlets. That is enough to build something. As a voter I expect them to deliver or cancel them if they can’t
Ballardiye,
Public housing costs around $500K per unit, maybe $300K per unit if you’re thrifty. So let’s say that’s 3 units for a million bucks. So that 115 million cooks down to what? Less than 350 units? This does absolutely nothing to change the housing market. Social housing is about as effective as shooting a rhino with a BB gun.
How about making it possible for builders to be able to pay supplier-rate prices for building materials?