Category: Development

City Council, Development, Mayor Wilson

Two Seattle Nice Interviews This Week: Mayor Katie Wilson and Budget Director Aly Pennucci, and Councilmember Dionne Foster

By Erica C. Barnett

Seattle Nice has two interviews for you this week!

On Friday’s show, we sat down with Mayor Katie Wilson and her budget director, Aly Pennucci, to talk about Wilson’s deficit-busting budget proposal, which is already facing stiff pushback from councilmembers who have grown accustomed to writing budgets that are balanced in the short term but assume huge deficits in future years. As I’ve reported, a cohort of centrist councilmembers elected in 2023 (plus Debora Juarez, appointed to replace Cathy Moore, who quit a year and a half into her term) are upset that Wilson failed to fund projects they paid for with one-time dollars last year.

Council members have also said they want a commitment to hire 1,400 officers (rather than the 1,250 the budget funds) and add police surveillance cameras to Seattle Center, where seven people were shot, three fatally, at the Bite of Seattle earlier this year.

We asked Wilson and Pennucci about the council’s initial reaction to the budget and how they’re doing things differently this year.

On CCTV cameras at Seattle Center:

Wilson: “There were not cameras right at the scene of the Bite of Seattle shooting, but there are cameras at Seattle Center, and camera footage from surrounding businesses has been used extensively in in the investigation.

“Seattle Center is not, in general, a high crime area of the city, and has never been talked about, to my knowledge, prior to the shooting as a potential location for CCTV cameras hooked up to the Real-Time Crime Center. … My budget does include $500,000 for security and safety at Seattle Center, and I believe that there’s been some conversation at Seattle Center about a potential use of some of that funding …[for]  mobile cameras that could be used during big events. So there might be some solution there that’s not, you know, permanent 24/7 CCTV cameras.”

On demands to commit to hirng 1,400 officers:

Wilson: “It’s simply not responsible budgeting to promise that we’re going to keep hiring police officers indefinitely without any projected way to pay for them. And in fact, even the near-term hiring plan of 1,250 was established without a way to pay for it, which is why we had to come up with extra money in order to fund these 66 additional police officer positions in order to get up to that 1,250 goal. Let alone 1,400 or whatever numbers people like to throw out there. So, you know, really, this is about what can we afford, and to get to any number higher than 1250, first we have to get to 1250. So let’s get to 1250.

“There’s a lot of different factors which influence how many officers we actually need to do the work. And so I don’t really think it’s that helpful to to try to put a specific number on it.”

On ongoing homeless encampment sweeps by the city’s Unified Care Team:

Wilson: “So the Unified Care Team, for the most part, has been continuing to operate the way that they were before I took office. We’ve been doing work with them to figure out how they can adjust some of their operations to get better outcomes for people experiencing homelessness, and that was a directive that I gave earlier this year. And so they’ve come back with recommendations, and we’re in conversation now about ways that they can change how they do their work to be more effective in matching people with with services, and and also more effective in responding to some of the felt needs in in neighborhoods. …

“My values have not changed, and I don’t think that I ever said during the campaign that I was going to stop the operation of the Unified Care Team. I said that we needed to shift to a model where we were moving people from encampments into shelter, and that is what we’re trying to do. And I’m as impatient as everyone else to have that happen faster.

“When you look at how the Unified Care Team does their work, they prioritize encampment sites based on safety considerations, both safety for the people living there and safety considerations for people in in the surrounding neighborhood. There often legitimate hazards. Obviously, when an encampment is is obstructing a sidewalk or an entrance to a light rail station a space in a park, the method of prioritization is really about safety and also about other high priority uses of that of that public space. And so I think there are good reasons often for needing to remove an encampment, even if we don’t have appropriate shelter to offer to people. And I don’t love it, right? I hate it actually. And also, that is the world that we’re living in until we actually have shelter that’s appropriate to people’s needs, and so that is why that is such a high priority for me.”

Listen to our entire interview—including Pennucci’s succinct explanation of the two budget refrains she’s had to repeat ad nauseam in response to council questions—here:

Earlier this week, we spoke with City Councilmember Dionne Foster about her legislation to give developers with stalled housing projects a deep temporary discount on Mandatory Housing Affordability fees. We asked Foster about her proposal to add some form of MHA fee in former single-family areas, where townhouses and small apartment buildings are now allowed, bringing their potential density in line with the city’s low-rise zones, where MHA applies. (Former councilmember Moore proposed imposing existing MHA fees in these areas.) We also asked why her legislation, which includes a window for new (rather than in-the-works) development to get a smaller discount on fees, excludes much of Southeast Seattle, the Central District and the CID.

On expanding MHA to neighborhood residential: “It is not a proposal to take MHA as is and put it in neighborhood residential. So what it does do is say, I want our our central staff, our team here on the second floor at City Hall, to work on a proposal that includes inclusionary zoning in neighborhood residential.

“There’s also some things that we put in there around approaches to make sure it’s a flat fee, or ways to think about it so it’s not constantly escalating, to make it more predictable for folks who are building in neighborhood residential. So there’s more work to do to figure out this concept. It is specifically not the proposal that former council member Cathy Moore put forward last year. Although I think because it’s talking about a form of inclusionary zoning in neighborhood residential, that is sort of the easiest thing for people to reach for. I understand that response, but it’s where I’m actually asking for something different and to work on a process to identify that and get that right.”

On excluding new projects in areas of “high displacement risk” from the proposal: “It’s not exclusion of housing in those areas, but it was really [designed] to take into account the fact that we want to make sure we’re not accelerating, necessarily, the pace of housing in certain geographic areas that have maybe seen a lot of development or where there’s a high risk of displacement concern. The basis for this is using some of the city’s data around high risk of displacement, so that we’re not over-incentivizing production in those areas during this short period of time.”

Listen to our conversation with Foster here:

Business, Development, Economy, housing, Mayor Wilson

Greater Seattle: Inclusionary Zoning, Part 2; Amazon as a Percentage of the Budget; Permitted, but Struggling

By Josh Feit

Last week, I featured Seattle City Councilmember Dionne Foster in an item headlined “Inclusionary Zoning > No Inclusionary Zoning” to reflect her progressive affordable housing stance. However, according to a comprehensive new academic study, she has it backward.

No Inclusionary Zoning > Inclusionary Zoning

So says the study released this summer by an economist at UC Irvine about inclusionary zoning (IZ), a policy that requires builders to couple any market-rate housing they build with affordable housing. Seattle’s version of this—as in Foster’s resolution calling for inclusionary zoning requirements in residential areas where the policy doesn’t currently apply—uses a “fee in lieu” model where developers can pay into an affordable housing fund instead of including the affordable housing in their own projects.

Unlike other (inconclusive) research on IZ, the UC Irvine study had a clean before-and-after look at the policy, thanks to California’s unique history of going through a period when inclusionary zoning (including the fee-in-lieu model) was legal, illegal, and then legal again.

The study indicates inclusionary zoning does the opposite of what it’s intended to do, finding that IZ makes it more expensive to rent. California renters paid approximately $6.97 billion in additional rent in areas with IZ mandates. So, even as IZ funds some affordable units, it comes at a steep cost to renters, including low-income renters, who aren’t “lucky enough to get an IZ unit,” according to the study.

But the real zinger: The study then compared that rent increase to the number of affordable units created and found that it wasn’t worth the tradeoff. As the author bluntly states in the opening summary: “I estimate the cost of generating an affordable unit with inclusionary zoning to be approximately $800,000 [per the 8,990 units created] in ‘excess rents’ paid by market rate renters as a result of the policy’s constraint on supply. This exceeds the cost of directly incentivizing the creation of low-income housing [~$441,00 per unit] in California through existing programs.”

Seattle’s Budget = Amazon’s Stock Price

Speaking of being blunt, Erica didn’t hold back in her report on Mayor Wilson’s $2.5 billion budget proposal last week. And I quote: “JumpStart is Basically Just a Slush Fund Now.”

JumpStart, of course, is the 2020 tax on high-end salaries proposed and passed by former lefty city councilmember Teresa Mosqueda to pay for affordable housing and other progressive priorities. Now, according to a recent economic study commissioned by Seattle’s own Office of Economic Development, it increasingly covers the city’s regular budget shortfalls. Since 2024, when a newly elected city council majority changed the law to eliminate the original JumpStart spending plan, more than half of JumpStart revenues are used to cover the gap between city budget expenditures and general fund revenue.

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I’m not here to cry about that. True believers like me have lost that fight. But here’s a problem with  budgeting-by- JumpStart that everyone should note: The report found that “Seventy-five percent of JumpStart revenue comes from just 10 companies.”

This is emblematic of Seattle’s worrisome status as a one-crop town (big tech). “In summary,” the report states, “the city’s fiscal health now depends on the marginal location and compensation decisions of a handful of employers. It also depends, indirectly, on the stock prices of those employers.”

Zeroing in on the city’s largest company, the report continues: “When Amazon’s stock rises, Seattle’s tax base rises with it; when it falls, the base contracts. (Amazon’s stock price alone has ranged from roughly $85 to $245 over the past three years.) But it means that a fiscal base already concentrated in a few firms is further exposed to the single most volatile attribute of these firms—one the city has no ability to forecast or influence.”

Existing Third Places > New Startups

Wilson explicitly acknowledges the challenge by incorporating her recent “Resilient Economy” executive order  into her budget proposal. Seattle has “become increasingly concentrated on the tech sector,” the EO states. It commits the city to convene a task force “to develop and implement strategies for diversifying and growing Seattle’s economy.”

And while the specifics of the order focus on making it easier to permit and establish startups in tech-adjacent fields, that strikes me as being more top-down than middle-out. As I noted a few weeks ago, the thing that makes Seattle attractive to the talent needed for new startups are third spaces—i.e., existing businesses.

I wish Wilson’s proposal did more for the bars and restaurants and coffeeshops that are already permitted, but increasingly struggling: 67 percent of brick-and-mortar, small, independent businesses told OED they are under more financial stress than during the pandemic. “[Seventy-one] percent reported lower foot traffic than a year earlier, and only 12 percent said customer demand was sufficient to cover their cost structure.”

Josh@Publicola.com

City Council, Development, housing, Mayor Wilson, Transportation

Greater Seattle: Councilmember Foster Breaks the MHA Logjam
Construction workers packed city council chambers last Friday, September 18, to support city councilmember Dionne Foster’s tax holiday on  housing development.

By Josh Feit

Councilmember Dionne Foster > Mayor Katie Wilson

You couldn’t have a clearer juxtaposition. Mayor Wilson tried to cut a deal between housing developers and the affordable-housing left to accelerate housing production. And Councilmember Dionne Foster tried to cut a deal between housing developers and the affordable-housing left to accelerate housing production. Wilson put it off.

Foster moved it forward.

The city currently has an affordable housing program known as Mandatory Housing Affordability (MHA) which makes developers either add affordable housing to their projects or pay into an affordable housing fund whenever they build new projects. Ironically, the MHA program seems to have slowed housing production. Since MHA kicked in back in 2019, housing applications are down 94 percent and permits issued are down 66 percent. This means less housing supply, which increases rents for everybody—while also bringing in less money for affordable housing. To get production going again, developers wanted to cut MHA fees by 80 percent for two years on projects that are already in the pipeline but have stalled due to the fees. Their argument: A smaller fee on some production will generate more money for affordable housing than a hefty fee on minimal production.

Wilson’s efforts ended with a plan to convene a task force (with a goal of cutting a deal on the fees in early 2027). Enter Foster. She brought the parties together and surfaced math that showed two things: MHA revenues had dwindled to a minuscule portion of the Office of Housing’s affordable housing budget (6 percent down from 39 percent a few years ago) and millions in revenue were being left the table from unrealized development. Developers estimate that lowering the MHA fee would trigger about $24 million in affordable housing funds by greenlighting projects they already have cued up, but can’t move forward thanks to the fee. This is millions more than the anemic $11.7 million MHA has brought in so far this year at the full fee, and down from $67 million in 2020, before developers started forgoing projects.

That would also bring in an estimated $225 million in new construction sales tax and create up to 6,700 new units. Oh, and it would create new construction jobs, which is why labor packed a meeting of Foster’s housing committee on Friday to support her legislation to lower the fee by 80 percent for two years.

Despite the obvious boon for affordable housing, you still can’t convince the left that developers should get tax breaks. And so Foster’s deal—which, of course, still has to pass—includes keeping the full MHA fee in place on any new projects in vulnerable neighborhoods such as Beacon Hill, the Central District, and the Chinatown-International District where development is often considered synonymous with displacement.

It’s worth noting, though, that almost all the projects developers are trying to get moving again under the 80 percent discount are on vacant lots or lots that aren’t currently residential.

Wilson applauded Foster on her proposal. From the sidelines.

Inclusionary Zoning > No Inclusionary Zoning

So says Foster herself, who has added a resolution to her MHA-holiday ordinance clarifying that despite the temporary reduction in the MHA rate, she believes developer fees need to be a “core part” of the affordable housing equation in the future. Using developer fees to fund affordable housing is known as “inclusionary zoning,” a policy that conditions issuing permits for market-rate projects on the production of affordable housing.

Foster’s resolution calls for adding inclusionary zoning requirements in neighborhood residential zones—formerly single-family zones—that are currently exempt from MHA fees. Her resolution directs staff to “develop legislation implementing an inclusionary requirement for new market rate residential development in Neighborhood Residential zones … [and] estimate how an inclusionary requirement for new market rate residential development could … contribute to meeting the need for housing affordable to lower income households.”

This startled some urbanists who cheered her MHA holiday ordinance, but then wondered why she’d do a 180 by adding the fees where they currently don’t exist. Given the slumping post-MHA housing production numbers, urbanists ask why Seattle would tax something its wants to encourage—housing.

Foster, who wants to be “transparent that [her] vision” supports inclusionary zoning, says she doesn’t believe MHA is solely responsible for the falloff in housing production; she cites Trump’s tariffs, for one. However, she also says she wants to make sure the fees don’t stall development and wants staff to “recalibrate” MHA fees “to find the right balance.” (As Erica reported last week, Foster differentiates her resolution from a council proposal last year that would have simply applied the MHA fee structure as is.)

“Right now we are doing a short-term fee reduction to help get development back on track in the midst of lots of negative macroeconomic factors we weren’t facing a decade ago,” Foster said when asked about the seeming contradiction in her approach. “And as we look towards the future, I believe inclusionary zoning should continue to be a part of how we build a city that works for everyone. We just have to get the dials right. The resolution focuses on determining the right path to include neighborhood residential in that recalibration.”

City Council, Development, Mayor Wilson

Housing Fee Reduction Sought By Developers Is Back On, Thanks to Deal Brokered by Councilmember Foster

 By Erica C. Barnett

City Councilmember Dionne Foster has introduced a bill that will give developers a break on mandatory housing affordability fees for two years, with the goal of spurring projects forward at a time when housing development is stalled.

Under the deal, which is similar to one that fell apart earlier this year, developers who already have projects in the city’s development pipeline will get an 80 percent break on MHA fees for the next two years, a reduction that could get some of the 30 or so  projects that are currently stalled moving forward. Developers of these projects would have two years to get to the foundation inspection stage, a requirement designed to make sure they actually build the projects quickly.

In a concession to affordable advocates who argued that the MHA “holiday” would inappropriately reduce funding for affordable housing, the legislation exempts non-vested projcets in the Central District, the ChinatownInternational District, and much of Southeast Seattle from the proposal, ensuring that no developer can propose a new project in those areas while the lower fees are in place. Two of the 30 stalled projects are in this area, but both are on vacant land.

The legislation would also allow developers to propose new, or non-vested, projects—in addition to projects that are currently proposed but not moving forward—in 2027 only if they meet two conditions: At least 25 percent of their new units must be two bedrooms or larger, and their project has to reach the foundation inspection stage within three years after they get their building permits. Those projects will get a 60 percent cut to MHA fees, except for “legacy homeowners, who would get an 80 percent reduction as  in MHA fees to develop on their own property.

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“This feels really important because we have a lot of projects that are stalled and permits that are trending down, and this is an opportunity to take action,” Foster said. “I’m really excited about two-bedroom requirement. … I think that’s an example of something that helps address a gap in the market, knowing that we definitely need more family-size units to meet the needs of Seattle renters and Seattle families, and I hope that will have an impact.

Mayor Katie Wilson’s office was not involved in the deal, and in fact had been working on a parallel track, headed up by Councilmember Eddie Lin. When an earlier effort to reach a similar agreement fell apart after affordable housing developers withdrew their support, Wilson announced she would  convene a task force of stakeholders including advocates, labor, and market-rate and nonprofit to broker an MHA compromise, among other policies to spur new affordable housing construction.

Developers, who have been seeking a temporary break from the fees, for months, have argued that Wilson’s drawn-out timeline would have effectively killed the projects that are currently in the pipeline.

MHA fees, which fund affordable housing, have been on the decline as development has slowed, dropping from $74 million in 2021 to $47 million last year. (Editor’s note: An earlier version of this story erroneously said MHA brought in $22 million last year; we regret the error.)

Foster said the work Wilson’s office did on their parallel MHA strategy was “critical. … I see this proposal as taking on a time-sensitive. immediate, short-term approach and I think there’s lots of additional changes that we need to make to support housing and affordable housing production. There’s certainly no shortage of issues for us to all work on, so I think the mayor’s task force will be a really important part of that.

In a statement to PubliCola, Wilson said her task force will “work on multiple fronts to accelerate the production of housing and prevent displacement, including short and long-term updates to MHA. I respect Councilmember Foster’s decision to move forward now with a proposal for a temporary MHA holiday, similar to the one we were developing together this spring. While the Council deliberates, my focus is on the work of the Housing Production Task Force and lining up our next set of key actions and policies.”

Foster’s proposal also includes a resolution that says the council “intends to consider and act on legislation”  that would apply MHA requirements to neighborhood residential areas—former single-family zones, where small apartment buildings are now allowed. Currently, these areas are exempt from MHA. Foster says her proposal is different than former councilmember Cathy Moore’s plan to impose existing MHA requirements on all neighborhood residential areas because it is less prescriptive; the resolution includes a number of possible carveouts, for example, it says the council may consider charging lower fees for denser development.

MHA, which went into effect citywide in 2019, allowed developers to build slightly taller buildings in exchange for variable affordabl-housing fees. The program, part of the Housing and Livability Agenda adopted during the Ed Murray administration, is  based on the premise that new market-rate apartments can cause displacement of existing residents, so developers should have to pay for new affordable housing to offset their impact. The fees are higher in areas the city determined have less access to opportunity and higher displacement risk, making it more expensive to build new housing in, say, the Central District than Laurelhurst.

 

City Council, Development, education, Mayor Wilson, Poverty, Taxes

Land Use Appeal Reform Moves Forward, Council Splits on Funding for School Meals

1. A city council committee voted to move legislation forward on Wednesday that will—if it passes full council next week—shut down one avenue of appeal commonly used to slow down zoning changes that allow more housing in Seattle. The bill, sponsored by land use chair Eddie Lin, would eliminate appeals to the city’s hearing examiner over zoning legislation and changes to the city’s comprehensive plan, which is currently delayed by environmental appeals that began at the hearing examiner’s office.

Hearing-examiner appeals can delay legislation by months or years even if they are unsuccessful, as the vast majority are; the council spends most of the fall focusing on the city budget, so a delay of a few months can mean legislation won’t be heard until the following year.

Lin’s bill wouldn’t eliminate the right to appeal specific projects, and it would still leave two (arguably more relevant) avenues for appeal: Once legislation is finalized and adopted, people can appeal to the state Growth Management Hearings Board or sue in King County Superior Court. Those two avenues don’t stop legislation in its tracks the way “pre-legislative” appeals to the hearing examiner do.

Dan Strauss and Joy Hollingsworth abstained from voting, saying they still had questions about the proposal, leaving Lin, Dionne Foster, and Alexis Mercedes Rinck to vote it through.

Before the vote, opponents raised familiar objections, along with a novel one. The familiar: By eliminating land use appeals to the hearing examiner, the council was “muzzling the voices of the citizens who elected you to serve us” and ignoring the plight of salmon, orcas and birds. The novel: If the council passes the legislation, no one will have the right to appeal the siting of any data center in Seattle in the future.

Councilmember Dionne Foster addressed both objections. “From my perspective, cities are an incredibly important element to how we combat climate change—growing in a way that is responsible, growing in a way where we take into account that so much of our pollution comes from transportation-related emissions,” Foster said. “If we fail to do our job and build substantial and affordable housing… you also have environmental impacts.”

Foster also confirmed with a staffer that because data centers are “projects,” people will still have a right to appeal any data center proposal to the hearing examiner, if and when the council lifts the current moratorium on data centers. “I I think that’s an incredibly important distinction to make,” she said.

2. Foster and Lin are on different sides of another issue—a proposal, co-sponsored by Foster and Council President Joy Hollingsworth, to delay funding for universal school meals from the spending plan for the Families, Education Preschool, and Promise levy and replace it with vouchers for qualifying low-income families to buy food on weekends and holidays during the school year.

Mayor Katie Wilson’s spending proposal would pay for free breakfast and lunch for every Seattle school student for the first two years of the levy, with the assumption that voters will uphold the statewide “millionaires tax” (a proposed tax on annual income above a million dollars) in a referendum challenge this November. If this happens, and there are no additional legal hiccups, the statewide tax would start paying for universal school meals in 2029.

Foster and Hollingsworth’s proposal would address uncertainty around the millionaires tax by taking universal free school meals off the table for the first year of the levy; if the high-earners’ income tax holds, it can pay for universal school lunches starting in 2029, and if it doesn’t, the city won’t be on the hook. Meanwhile, Foster said the alternative plan will provide groceries to low-income kids who need food the most.

“I genuinely think it’s a balanced amendment,” Foster told PubliCola earlier this week, noting that dozens of Seattle schools already have universal free lunches through the state Community Eligibility Provision, because more than 40 percent of their students qualify for free or reduced-cost lunches.

Opponents of the amendment have argued that means-testing programs for basic needs like food stigmatizes lower-income kids and may leave some students hungry, including those whose parents don’t sign up for income-based programs or who struggle to pay for food but aren’t poor enough to qualify.

Foster said she’s aware of those critiques. “The intent is not, ‘Here’s a hoop that we want you to jump through.’ The intent is to get more resources to the kids who are low-income or who have those financial gaps,” she said.

Lin said he doesn’t doubt Foster and Hollingsworth’s commitment to food access, but says he’s leaning strongly toward supporting universal school meals over income-based vouchers. “I know they have very valid concerns, and there’s concerns about what’s going to happen with the millionaires tax, but at this point I have a hard time imagining not supporting” Wilson’s proposal, Lin said. “I think there’s widespread support for universal free lunch, not just here but across the state.”

City Council, Development, housing

Developers Ask for Mandatory Affordable Housing Fee Holiday as Permits for New Apartments Dry Up

By Erica C. Barnett

A group of apartment builders is asking Mayor Katie Wilson and the City Council to consider rolling back the fees they pay every time they build new housing. The developers, calling themselves the Seattle Housing Roundtable, are asking the city to reduce Mandatory Housing Affordability fees by 90 percent this year, followed by an 80 percent reduction next year and a 75 percent reduction in 2028, with a goal of permanent MHA reforms by the following year.

According to Ian Morrison, an attorney with the land use firm McCullough Hill, MHA “was a good idea when it was originally envisioned, at a time when interest rates were much lower and the economic climate was a lot more positive and predictable.” But, he added, “What we’re seeing now, using the city’s own data, is MHA as a part of a project that was viable in the late 2010s no longer work.   That means housing will not be built in Seattle today.”

The Seattle City Council approved MHA in 2019 as the final component of former mayor Ed Murray’s Housing Affordability and Livability Agenda (HALA). The program made developers build affordable housing or pay a fee every time they built new apartments in Seattle’s multifamily areas (at the time, Seattle still had single-family zoning). In exchange, they were allowed to build more densely.  The framework took for granted that new market-rate apartments have a negative impact on neighborhoods that developers must mitigate by funding affordable housing.

This consensus has shifted just in the seven years MHA has been in effect, as scarcity has made apartments increasingly unaffordable and more people understand that density is an environmental necessity and an answer to growing demand for housing. At the same time, the funding MHA produces for affordable housing has plunged from a high of $74 million in 2021 to just $22 million last year as development has slowed. Last year, developers filed applications to build fewer than 2,000 new apartment buildings, a drop of almost 90 percent from a peak of 17,400 units in 2020.

Developers and land use attorneys we spoke to seemed reluctant to say outright that the city should get rid of MHA altogether, although it negatively impacts their bottom line. Holly Golden, a land use attorney at HCMP Law Offices, said that with lower fees, “you’d still see millions of dollars of MHA fees, plus new construction jobs and permit fees to keep [the Seattle Department of Construction and Inspections running during the building downturn. … Getting projects started provides a huge financial benefit to the city budget at a time when they really need it.”

Taxes on construction are inherently volatile, and there’s a real question about whether MHA aligns with the reality of Seattle as a majority-renter city with an acute housing shortage. If the city agrees to an MHA “holiday” and development rebounds, a surge in other funding sources like the Real Estate Excise Tax could help offset the loss of MHA dollars.

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Not every jurisdiction funds affordable housing by charging a fee on development. PubliCola has reported on a concept called funded inclusionary zoning, in which developers get tax breaks for including affordable housing in their projects. The concept flips the script on development, treating density (i.e. apartments, i.e. renters) as a good thing while also ensuring that affordable housing gets built. Developers aren’t charitable organizations—if a project doesn’t make sense to them, they won’t build it—so instead of penalizing new housing with fees, cities like Portland are trying incentives to build new housing at all income levels.

“There are ways to ensure that inclusionary zoning programs work for the long term and are well calibrated to ensure they don’t impede housing,” Morrison said. “But getting those details right takes time.”

Eddie Lin, the head of the city council’s land use committee, told us on a recent episode of Seattle Nice that he’s “open to a temporary reduction in MHA fees. It needs to be tailored to the right size to get construction going, but not more than we need.”

Eliminating MHA completely, Lin continued, is a nonstarter; the fee, he said, remains “incredibly important for developing additional affordable housing. … We want to be mindful of not giving away too much more than we need to.” MHA reform, he said, might include addressing the fact that developers currently have to pay a fee for building in low-rise zones but not in neighborhood residential—the former single-family zones that now allow essentially the same density as low-rise areas.

Ray Connell, managing director at the developer Holland Partner Group, said it’s possible the impact of MHA and other taxes and regulations in real time by looking east across Lake Washington. “All the cranes are in Redmond,” where fees are lower, “so projects get started,” Connell said. “It’s amazing to go over there and see a bunch of new projects and cranes in the sky. Why is it happening over there? It’s not a hard cost issue, and it’s not an interest rate issue. Yes, it’s the jobs… but it’s also the additional fees that we have to face on this side of the lake.”

Redmond recently adopted an aggressive inclusionary zoning package that says 10 percent of all new units in housing with 10 or more units must be affordable. In four years, Connell said, “there won’t be cranes in certain areas of Redmond. … We can’t get those areas of Redmond to work anymore.”