By Erica C. Barnett
Although a proposal to temporarily slash the Mandatory Housing Affordability fees paid by developers in most residential zones appears dead for this year, the City Council’s land use chair, Eddie Lin, said to expect legislation early next year that will address what housing developers have identified as a critical problem: The fees, which pay for affordable housing, have become make-or-break for new housing projects thanks to the skyrocketing price of construction since MHA passed seven years ago.
As we’ve reported, developers sought a two-year, 80 percent reduction in MHA fees earlier this year, arguing that the development “pipeline” in Seattle is drying up; without the temporary cut, they argue, they won’t be paying any MHA fees because new housing simply won’t get built.
Mayor Katie Wilson had planned to propose a bill backed by the Housing Development Consortium, a large coalition of affordable housing developers and advocates, when the deal fell apart. Groups like the Seattle Renters Commission argued that cutting MHA fees would eliminate a key source of funds for affordable apartments, and council support for the bill also seemed on the verge of evaporating when Wilson pulled the bill.
Lin, who supported Wilson’s proposal in principle, said he supports both short-term MHA. fee relief and long-term reform. “MHA was never supposed to be a completely static thing. … It should be more responsive to updates in our zoning, updates into the housing ecosystem.” But, Lin added, “that’s going to take years, and we need to do something in the short term. And I think the pressure for that is only going to continue to build as permits continue to plummet.”
So far this year, according to the city’s housing dashboard, developers have filed permits have been filed to build just 1,137 new housing units citywide, down from 8,600 during the same period in 2020, when new permits were at their peak.
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“Hopefully we’ll be able to do something in early 2027” to provide a short-term solution to MHA fee pressure, Lin said.
In a bit of positive news, the latest report on MHA, from the city’s Office of Housing, shows that fees brought in about $47 million last year, reversing what appeared to be a long-term decline. But the gains are likely short-term, for a couple of reasons. First, more than half of last year’s MHA fees, around $24 million, came from just four large apartment buildings, according to the report—and nearly half of that amount, $10.6 million, came from a bond-financed senior housing project for the nonprofit Horizon House, a large windfall from an unusual type of project.
The second reason next year’s MHA fees are likely to drop off is that most of the remaining 2025 money, more than $20 million, comes from new housing (generally townhouses) in areas zoned for low-density developments. These low-rise (or LR) zones are almost certain to see a major drop-off in new housing permits thanks to legislation, passed last December. that allows up to eight apartments per lot in former single-family areas, which are not subject to MHA fees.
The Office of Housing report acknowledges this new reality, noting that “MHA-applicable townhome development could fall off going forward,” as developers start building in neighborhood residential areas to spare themselves the expense of MHA fees.
“Until we update MHA, especially in the LR zone, we’re going to see development in neighborhood residential, for better or worse,” Lin said. “Because why would you build an LR if you can build the same thing in neighborhood residential?”