By Erica C. Barnett

A proposal that would have given developers an 80 percent break on Mandatory Housing Affordability fees for two years is dead, according to an email to members of the Housing Development Consortium sent by HDC director Patience Malaba yesterday afternoon.

In her message to HDC members,, Malaba wrote, “After careful consideration, I informed the Mayor’s Office that HDC was withdrawing its support for advancing the proposal at this time. Following that decision, the Mayor’s Office chose not to move the legislation forward on a summer, pre-budget timeline and instead will convene a stakeholder workgroup to continue refining the proposal and related policy considerations.”

Wilson’s office confirmed that the proposal isn’t moving forward. “this month,”

Instead, Wilson said in a statement to PubliCola, “we will be setting a table with labor, affordable housing providers, community-driven organizations, and market rate developers to identify shared, collaborative solutions and make sure that our city and region takes every action possible to 1) expedite and encourage housing production 2) support community-driven development, 3) build the critical affordable housing  our city and region needs and 4) prevent displacement of low-income households and Black, Indigenous, and People of Color communities.”

Developers who have been waiting for the legislation say its failure will jeopardize about 30 projects immediately, and make new housing projects far less likely, at a time when market-rate housing development has slowed to a trickle.

The HDC, which represents affordable housing developers, had been negotiating with the mayor’s office for months over the proposal to temporarily reduce MHA fees, which private-market developers must pay as part of the 2016 “grand bargain” that allowed taller buildings in exchange for payments into an affordable housing fund.

Behind the scenes, a number of HDC members and advocacy groups raised concerns over the last several weeks that the MHA “holiday” would lead to the end of the program itself, which is based on the principle that “housing should pay for housing.” New housing, according to this logic, causes displacement and other harms, and MHA fees offset those harms.

Downtown Emergency Service Center Daniel Malone sent an email to Wilson last month expressing “deep concern” about the proposal, which he said would reduce local funding for the kind of housing-first projects DESC builds at a time when federal funding may dry up.

“As we explore solutions and mitigation strategies in preparation for unprecedented federal disinvestment in our existing programs, we will need to rely more on local resources than ever before,” Malone wrote. “Allowing housing developers to receive the benefits of upzoning to only create luxury apartments for the few who can afford them isn’t a solution; it adds to our problems by decreasing the production of affordable housing units.”

Opponents of the temporary fee reduction reportedly sought concessions like a cap on the number of new apartment buildings that could take advantage of the break on MHA fees, along with “backfill” of MHA revenue that would be “lost” due to the fee reduction by other city funding sources.

However, since many of these hypothetical new building projects wouldn’t happen, at least according to the developers who would build them, without the fee reduction, it’s misleading to describe these as “lost” revenues.

Scott Berkley, an organizer with Tech 4 Housing, said the group was “disappointed to see this worthwhile proposal fed to the insatiable maw of the Seattle Process. We encourage the mayor and city council to move beyond a revenue source that demands middle and working class renters fund affordability, while expecting nothing of our city’s wealthiest homeowners and corporations.”

Nicole Macri, a state legislator and deputy director of strategy for the Downtown Emergency Services Center, said there are better ways to reduce costs for developers than slashing MHA fees, even temporarily. The city could, for example, “refund permit fees, or a portion of permit fees, if you deliver the project in X amount of months, or give a partial sales tax exemption for projects” that are finished on time, Macri said. “There are many things the city can control, including the permitting fee,” without giving developers a temporary break on MHA fees, she said.

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The city’s budget process starts in August and ends in November, meaning that any “stakeholder workgroup” process would be delayed until next year, past the point when many developers have said they will have to cancel projects that won’t pencil out with MHA fees attached. The fees range from $6.75 per square foot in the small “urban industrial” zone to $50.46 per square foot in places like north Beacon Hill, with most fees ranging between $10 and $20 a square foot.

In a statement, the leadership of the pro-housing group Seattle YIMBY urged Wilson “to show true leadership on housing by making hard choices to prioritize the homes that can be built right now. Our housing crisis was not caused by having too little process. Seattle has a critical window to show the region we are ready to act, ready to deliver thousands of new homes, millions in new tax revenue, and millions more for affordable housing as we start building again.”

MHA originated at a time before large majorities of Seattle residents agreed that building more housing, not just purpose-built low-income housing, is an urgent need. It also began at a time when development was booming, and for years, it produced tens of millions of dollars of funding for affordable housing projects. But fees have plummeted in recent years, going from a high of $74 million in 2021 to just $22 million last year, because of a precipitous drop in the number of housing projects in the pipeline.

Emily Thompson, a partner at GMD Development, said a lot of developers are currently in their fifth or six round of “corrections,” which occur just before a permit is issued. “I think that shows the applicant is slow playing it because as soon as you get our permits you have to start” the development process. As for the argument that giving developers a break will reduce MHA proceeds, Thompson says, “Any amount of zero dollars is zero dollars”—that is, if developers don’t build because of MHA fees, there won’t be any MHA proceeds anyway.

Development has slowed precipitously since its peak in 2020 and early 2021. So far this year, developers have only filed permits for 1,134 units of housing. By this time in 2020, in comparison, there were more than 8,600 units in the pipeline, which increased to more than 20,000 units by the end of that year.

Meanwhile, according to data provided by the Housing Roundtable, a group of developers who had been pushing for the MHA “holiday,” more than 50,000 units that were going through the city’s development pipeline between 2023 and 2025 have since been canceled.

PubliCola has reached out to Malaba and Mayor Wilson’s office and will update this post when we hear back.