Category: Development

Development, homelessness, Parks, Taxes

Waterfront Tax Stalled Due to Concerns Over Security, Assessments, and Cost
Image via City of Seattle.

A version of this story first appeared at Seattle magazine’s website.

A controversial one-time tax assessment on commercial and residential property near the downtown waterfront, which was supposed to be approved before the end of this year, has been held up by protests from some of those property owners, who say the proposed $200 million tax assessment, known as a Local Improvement District (LID), is too high and should be scaled back. LIDs allow cities to impose a special tax on properties that will gain value because of improvements paid for with the tax; the city has long planned to use a LID of some size to help fund the $688 million Waterfront Seattle project. Property owners have the right to protest the tax; if owners representing more than 60 percent of the value of the land inside the LID write protest letters to the city, the LID can’t go forward.

The Seattle Times reported last week that high-profile land use attorney Jack McCullough is representing some of the large waterfront property owners in negotiations with the city, and that, according to some condo owners, the city had agreed to lower the LID to $160 million. (Condo owners, who would pay a median assessment of $2,400, payable over 20 years, represent just over 12 percent of the properties along the waterfront, where most of the land is owned by big commercial companies.)

Through conversations with property owners, city officials, and other sources familiar with the negotiations, The C Is for Crank has learned more details about the proposed deal, as well as the remaining sticking points.

The proposed total assessment of $160 million would be supplemented by additional contributions from the city of Seattle and the Friends of the Waterfront, a private nonprofit established in 2012 to raise money for and help operate and maintain the new park. The city will reportedly contribute an additional $30 million, and the Friends another $10 million, to get the total back up to $200 million. (Seattle Office of the Waterfront director Marshall Foster would not confirm the additional contribution from city tax dollars, but added, “What I can say is the strategy here is in no way to pursue funds that would otherwise be used for neighborhood parks or other facilities in the city [but] to really look at funds that are associated with the replacement of the viaduct and the parks district,” a reference to funds dedicated to the waterfront park in the citywide parks district created in 2014. That ballot measure established an annual budget of around $4 million to operate and maintain the park.

“The only discussion right now is that we will build the project, with a LID of a size that the city can complete the whole project,” says Friends executive director Heidi Hughes, “because without a significant portion of that funding, we end up with road and a wider sidewalk.” Current plans for the waterfront call for a grand, terraced “Overlook Walk” staircase leading from the new Marketfront development at Pike Place Market down to the waterfront (and onto the roof of a new Seattle Aquarium expansion); a wide new waterfront promenade flanked by protected bike lanes and hundreds of new street trees; and year-round events, including the return of Concerts at the Pier (at Pier 62).

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Another sticking point has been the budget for operations, maintenance, and—especially—security.  Friends of the Waterfront plans to supplement Seattle Police Department patrols and the city’s Law Enforcement Assisted Diversion program with its own version of the Downtown Seattle Association’s Downtown Ambassadors—essentially, private staffers who keep an eye on the park, offer information, and help people in crisis—but property owners want more assurances that the city will enforce the city’s anti-camping laws. Former mayor Charles Royer, who co-chaired the waterfront committee and supports the LID,  says that property owners are worried that “the waterfront could open and the first tents could go up the next day.”

Seattle Office of the Waterfront director Marshall Foster says the city plans to keep the new park secure and inviting through a combination of daily maintenance by parks employees, year-round programming in partnership with the Friends, the ambassadors program, and police. “Our focus is primarily on trained ambassadors and outreach staff who will be backed up as needed by SPD,” Foster says.  “This isn’t about prioritizing exclusions” from the park, he adds. However, Foster said he couldn’t confirm any details about the LID negotiations, including whether the city has committed to spending more money on security in the park.

Ivar’s CEO Bob Donegan, who served on the Central Waterfront Committee that came up with the original waterfront plan, says downtown property owners said that they “would not support the creation of this park if there is not enough budget to do four things: Program, landscape, maintain, and secure the park.” Although Donegan says that ultimately, “I think the security is going to be fine,” others involved in the negotiations say the issue remained a sticking point last week.

Former mayor Charles Royer, who co-chaired the waterfront committee and supports the LID,  says that property owners are worried that “the waterfront could open and the first tents could go up the next day.”

Another issue that has come up in the negotiations is what impact the LID assessments, which were conducted by an independent assessor, will have on their property taxes in the future. Although the LID is a one-time assessment, some property owners have expressed concern that the King County Assessor, which determines individual property values, will look at the higher LID assessments and raise their property values (and thus their annual property taxes) accordingly.  “They wanted assurances that [King County assessor] John Arthur Wilson wasn’t going to bump up their county assessments,” Donegan says. Deputy King County Assessor Al Dams says his office bases assessments on the sales prices of nearby properties, not on independent assessments like those done by Zillow or, in the case of the LID properties, Valbridge Property Advisors. However, Dams notes that “if you put a desirable amenity in a neighborhood or by a piece of property, that may drive up the values. Will the waterfront be really nice? If so, that probably will drive the values up.”

Although some condo owners have joined the protest against the LID, others say they’re happy to pay the tax. Cary Moon, the former mayoral candidate, lives in the assessment area. She says she’s “going to happily pay our assessment, because I know our building is benefiting and I know our property values are benefiting” from what she calls a “really big and ambitious and bold” waterfront proposal. Royer, too, says he’s happy to fork over his share of the LID, which he estimates will be around $24,000—or a little over $1,000 a year. “A thousand dollars a year for me to live next to the beach, with a view of the waterfront … is a fair deal,” Royer says. The negotiations are expected to continue through December, with an announcement on a deal likely sometime next month.

Affordability, City Hall, Density, Development, housing, Mayor Durkan, Morning Crank, Transit, Transportation, Urbanism

Morning Crank: Details Emerge About Megablock Sale

1. Yesterday, six months after the city put the largest remaining piece of publicly owned land in South Lake Union on the market, the city council got its first look at the bids for the property. The conjoined parcel, which some affordable housing advocates have argued the city should hold onto and develop as public housing, is worth upwards of $90 million on the open market.  Although the city budget office wasn’t willing to say much about the bids in open session (for fear, according to city budget office director Ben Noble, of weakening the city’s bargaining position), a few details did emerge during the public discussion.

First, budget staffers revealed that seven teams presented proposals to either purchase or lease and develop the property, and that the city determined that six were responsive. After a team made up of city staffers and one private citizen—former Downtown Seattle Association director  and deputy mayor Kate Joncas—reviewed the applications and interviewed the candidates, they decided to move all six forward to the “best and final offer” stage of the process rather than eliminating any of them right away. Noble said that most, but not all, of the proposals included the 175 units of affordable housing suggested in the request for proposals, and that some of the bidders proposed developing the land under a long-term ground lease, rather than buying it outright. Some of the bidders apparently proposed two different offers—one price with affordable housing, and another, higher price without—and staffers said that one goal of the negotiations will be reducing the difference between those two numbers. If the city decided to keep the property and develop it in cooperation with a nonprofit housing provider, budget office staffer Steven Shain said, the cost to the city would be about $100,000 a unit, or about $100 million for 1,000 units of affordable housing.

City council members questioned why Joncas was the only non-city employee on the committee reviewing the bids for the Megablock property. “I was unaware until very recently that it is even possible to have somebody not of the city family to participate in a process like this,” council member Lisa Herbold said. “It would have been really helpful, knowing now  that we could have external stakeholders participate… having somebody participate with expertise in nonprofit affordable housing production.” Shain said the executive reached out to other people and organizations, including Capitol Hill Housing, but they weren’t able to commit the amount of time the job required without any kind of compensation from the city.

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“As the issues facing our city become more critical and more complicated, we are as elected leaders… pursuing the expertise of subject matter experts within the community more and more often,” council member Lorena Gonzalez said, but there isn’t a clear policy about how and when to pay people who work for nonprofits, rather than for-profit consulting firms. “That’s an inherent inequity in how we engage subject matter experts in a variety of areas. We tend to not monetarily value nonprofits, but we will monetarily value people who are literally in the business of providing expert consultant opinions.”

Gonzalez also suggested that the council think about whether they’re overusing executive sessions and invoking confidentiality provisions when they don’t have to. “My frustration is that we just assume that everything is confidential, and we don’t afford ourselves the opportunity to take a scalpel approach to the issues related to confidentiality,” Gonzalez said. “So, yes, while the details of the transactions and the proposals mightbe subject to confidentiality, there are several details around the transactions… that could have been daylighted in a more transparent way that could, at a minimum, contribute to a higher level of public confidence in whatever deal that we’re going to be judged for approving or not approving.”

Then the council went into executive session.

2.  After the council approves Mayor Jenny Durkan’s appointment of two more Transportation Choices Coalition staffers to the city’s bike and transit boards next week, there will, by my count, be just one person on TCC’s entire full-time staff who Mayor Durkan has not appointed to a city board, commission, or advisory committee during her first year in office. This year, Durkan has appointed TCC staffers to serve on the advisory committee overseeing the selection of a new Seattle Department of Transportation director; the Bicycle Advisory Board; the Transit Advisory Board; and the Levy to Move Seattle Oversight Committee. And, of course, her deputy mayor is Shefali Ranganathan, who left her job as TCC director to join the Durkan administration last year.

Honestly, there are worse things than a takeover by the IlluminaTCC. As I wrote back in November, the group is a strong, effective voice for alternatives to driving, especially transit, in a city that too often takes a windshield perspective on transportation planning. (New director Alex Hudson, who ran the uber-YIMBY First Hill Improvement Association, was an especially inspired hire.) Still, it’s worth asking whether other voices—the voices of groups that did not support Durkan’s election campaign, as TCC did, for example—are being displaced. As advocates from advocacy groups like the Cascade Bicycle Club and Seattle Neighborhood Greenways worry that they’re being shut out of official city appointments, TCC’s presence inside the city’s power structure appears to only be growing.

Affordability, City Council, City Hall, Density, Development, housing, land use, Renters, Urbanism, zoning

The J is for Judge: The Most Contrarian Power Point in Seattle

Mild-mannered Office of Planning and Community Development senior planner Nick Welch doesn’t look like the kind of guy who would pick a fight. But if I was him, I would advise against bringing his recent PowerPoint presentation into a local bar.

Welch confined his presentation to the safety of city council chambers last week, where he ran his slide show in front of the Select Committee on Citywide Mandatory Housing Affordability. There were no fisticuffs, but the MHA presentation did draw scoffs from the neighborhood protectionists in the audience and a challenge from their council ally on the dais, West Seattle council member Lisa Herbold.

Particularly Slide No. 10, which is possibly the most contrarian slide ever presented in Seattle.

MHA is a holdover HALA housing plan from former Mayor Ed Murray that exchanges upzones for affordable housing; HALA is expected to produce 20,000 new housing units over the next  decade, including about 6,000 new affordable units from MHA (compared to just 205, if the city simply let the market status quo play out without MHA). With Murray long gone, the remaining piece of the plan—a narrow, stair-step upzone along the fringes of 27 single-family zones —is being shepherded through City Hall by council YIMBY Rob Johnson, whose term ends next year, and with strong support from first-year urbanist all-star, council member Teresa Mosqueda.

Slide #10 is a direct response to what Welch and other OPCD staffers have heard over and over in Seattle neighborhoods (where, in fact, Welch has been gathering input in countless MHA community forums over the last few years): New market-rate housing is a threat to overall housing affordability because it’s more expensive than existing options. It’s a seemingly intuitive take on gentrification that defines the local anti-development storyline and unites everyone from Magnolia First NIMBYs to social justice socialists, from dudes at the Wedgwood Broiler to queer working artists at Kremwerk.

The ubiquity of Seattle’s anecdotal anti-development refrain convinced OPCD to see if that narrative was actually true. So the department looked at the germane historical data—market-rate housing production between 2000 and 2015 in all of Seattle’s census tracts, overlaid with the change in low-income households in the same census tracts over the same period. The finding was definitive. The text to Slide #10 spelled it out for council members: “No correlation between market-rate housing growth and loss of low-income households.”

If anything, the trend line shows the exact opposite: Affordable housing stock increased as market rate housing production increased.

A potential criticism of Slide #10? It defined affordable housing as housing that people making less than 50 percent of the Seattle Area Median Income (AMI) can afford. Affordable housing advocates could certainly contend that people making 60, 70, and 80 percent of AMI are part of the working class too, and are losing ground as more market development comes on line to serve tech bros. But, voila: Slide #11.

This slide overlaid the same snapshots of affordable households  and market-rate housing production, this time defining affordable housing as housing affordable to people making up to 80 percent of AMI. The conclusion was the same. No correlation between new production and economic displacement.

The data didn’t lead OPCD to go as far as saying more market rate housing production actually led to the creation of more affordable housing, but they did present another contrarian slide illustrating their research on another bit of conventional wisdom—that the MHA upzones will lead to physical demolition of existing affordable housing at a rate that neutralizes any new affordable housing production from MHA. Again: Nope. Gaming out future physical displacement based on historic trends of production and teardowns, the data shows that teardowns remain roughly consistent whether the city enacts MHA or not. Without MHA, about 520 households would be  physically displaced by demolition, with no mandatory affordable housing to replace them. Under the city’s preferred MHA alternative, about 574 would be displaced—and those demolitions would be dwarfed by an estimated 5,633 new affordable units created under MHA.

One other bit of conventional wisdom that OPCD tried to fact-check is the notion that new development displaces people and businesses that share a common culture, a phenomenon known as cultural displacement. Perhaps even more than economic displacement, cultural displacement is at the emotional core of anger about gentrification. OPCD couldn’t confirm or disprove this observation. The data—the change in housing production overlaid on change in racial population—was all over the map. The population of some groups, including African-Americans, declined in some census tracts where market-rate housing increased and stayed put in tracts where market-rate housing increased.

Of course, one factor that could have mitigated displacement was missing from that historical data: MHA’s mandate that affordable housing be part of new development.

Affordability, City Council, Density, Development, housing, Morning Crank, neighborhoods, race, Renters, Urbanism, zoning

Morning Crank: Eliminating “Single-Family” Zoning Altogether

1. It’s been three years (and three mayors) since the city first adopted a plan to implement the affordable housing plan known as Mandatory Housing Affordability, which requires developers to fund affordable housing in exchange for greater density in some parts of the city. Although some aspects of the plan are now in place, the most controversial element—expanding the city’s urban villages and centers to incorporate 6 percent of the city’s vast swaths of single-family land—was locked up in appeals until late last month, when city hearing examiner Ryan Vancil ruled that the city had adequately addressed almost all of the potential environmental impacts of the proposal.

The fundamental debate about whether to upzone any of the city’s single-family neighborhoods, however, continues. On Monday, at a council committee meeting about next steps, city council members Lisa Herbold and Rob Johnson (with assists from Sally Bagshaw and Teresa Mosqueda) played out a miniature version of that debate, with Herbold taking up the banner for activists who claim that allowing more types of housing will lead to massive displacement of low-income people living in single-family houses. “My concern is that we are grossly underestimating the number of affordable units that are being lost to development” by using eligibility for tenant relocation assistance as a proxy for displacement, Herbold said. (Tenant relocation assistance is available to people who make less than 50 percent of the Seattle median income. A subsequent analysis, based on American Community Survey data, included people making up to 80 percent of median income, although as Herbold pointed out, this still may not capture people who share houses with roommates, and thus have a collective household income well above 80 percent of median). Johnson countered that while the council has dithered on passing the MHA legislation, hundreds of new apartments have been built with no affordable housing requirement at all. “Would it be fair to say that the ‘no-action alternative’ results in a whole lot of displacement?” he asked Nick Welch, a senior planner with the Office of Housing and Community Development. “Yes,” Welch replied.

Herbold also suggested that the council should adopt separate resolutions dealing with each of the city’s seven “unique” districts that would include “individual urban village commitments” in those districts. Johnson said that was certainly something the council could discuss in the future, but noted that the city has already spent years learning about the issues various neighborhood groups have with the upzone proposal. “I think we have a pretty good sense of what community issues and concerns are out there,” Johnson said. “We want to outline a process that would allow us to address some of those issues.” Herbold also said she was considering amendments that would require developers to replace every unit for which a tenant received relocation assistance on a one-for-one basis, and suggested requiring developers building in areas with high displacement risk to build affordable units on site, rather than paying into the city’s affordable housing fund.

Under the city’s current timeline, the council would vote to approve the legislation, with amendments in late March of next year.

2. As the council debated the merits of modest density increases, the city’s Planning Commission suggested a far more significant rewrite of the city’s housing laws—one that would include doing away with city’s “single-family” zoning designation entirely. In the report, “Neighborhoods for All: Expanding Housing Opportunity in Seattle’s Single-Family Zones,” the advisory commission recommends reducing displacement and increasing economic and racial diversity in Seattle’s increasingly white single-family areas with “a return to the mix of housing and development patterns found in many of Seattle’s older and most walkable neighborhoods.” In other words: Backyard cottages and basement apartments aren’t enough; the city needs to allow small-scale apartment buildings, duplexes and triplexes, and other types of housing in those areas as well. Crucially, the report notes that these changes wouldn’t represent a radical shift or a departure from single-family zones’ vaunted “neighborhood character”; in fact, both minimum lot-size requirements and “Seattle’s current single-family zoning code came into being in the 1950’s.”

At a time when arguments about development often center on the need to protect the “historic character” of Seattle’s neighborhoods, minimum lot sizes and laws restricting housing to one house per lot, this bears repeating. “Small lot houses, duplexes, triplexes, and small apartments built prior to 1957 remain in single-family zones, but building them is illegal today.” Rules restricting development in single-family areas effectively concentrate all growth into narrow bands of land along busy arterials known as urban centers and urban villages; since 2006, according to the report, “over 80% of Seattle’s growth has occurred in urban villages and centers that make up less than a quarter of Seattle’s land. Urban villages have seen significant change and new construction, while most areas of the city have seen little physical change. Overall, multifamily housing is only allowed in 12 percent of the city’s residential land—a constriction of opportunity that perpetuates the historical impacts of redlining, racial covenants, and other discriminatory housing policies by “excluding all but those who have the economic resources to buy homes,” the report says.And Seattle’s restrictive policies don’t even work to preserve “neighborhood character,” the report points out. Instead, they encourage homeowners and builders to tear down existing houses and build McMansions in their place. “Even under current zoning, the physical character of neighborhoods is changing as existing houses are replaced with larger, more expensive ones, as allowed by today’s land use code,” the report notes. “The average size of newly constructed detached houses in 2016 was 3,487 square feet, more than 1,000 square feet larger than the average for the first two-thirds of the last century.”

The planning commission offers a number of suggested policy changes, including:

• Expanding urban village boundaries to include all areas within a 15-minute walk of frequent transit lines. Currently, the report points out, many urban villages are extremely narrow—the Greenwood/Phinney urban village, pictured below, is an extreme but not unique example—dramatically limiting housing choices for people who can’t afford to buy single-family homes. At the same time, the report recommends getting rid of frequent transit service as a requirement to expand urban villages, pointing out that this becomes a chicken-and-egg problem, where lack of transit justifies keeping density low, and low density justifies a lack of investment in transit.

• Renaming “single-family” zoning as “neighborhood residential,” with various levels of density (from backyard cottages to small apartment buildings) to reflect lot size and neighborhood amenities. Areas near parks and schools, which the report identifies as amenities that tend to be most accessible to people in single-family areas, would get more density so that more people would have access to those resources.

• Eliminating or reducing parking requirements—not just in urban villages, but everywhere. Single-family-housing activists have long argued that if the city allows more housing without requiring new parking, they will have no place to park their cars. Though the planning commission report doesn’t explicitly mention a recent study that found that Seattle already has more than five parking spaces per household, they do point out that prioritizing cars over people conflicts with the city’s stated climate goals. “Requiring parking on site takes away space that could be used for additional housing or open space,” the report says. Under their proposal, “While driveways and garages could still be allowed, people would not be required to provide space for cars over housing or space for trees–especially if they choose not to own a car.”

3. The J Is for Judge himself stepped up to the mic at city hall yesterday to explain why he wants to see more of every kind of housing in every neighborhood. At yesterday’s MHA briefing, after the authors of this piece (one of whom lives in Bellevue) claimed that the council was withholding information about displacement from the public,  Josh Feit got up to speak. Here, in slightly abridged form, is what he had to say.

My name is Josh Feit, and I am not originally from Seattle.

I did not grow up here.

I’m am not a 7th-generation Seattleite.

I was not born and raised in Ballard.

I did not go to Roosevelt High School.

I am not a lifelong member of my community.

To those of us who choose to move here, Seattle stands out as an exciting 21st Century landmark that’s taking up a brave experiment in progressive city building.

I’m excited to live here.

I have a public sector job.

I am a renter.

Please stop letting some residents of Seattle’s Single Family zones play Seattle First politics by mythologizing neighborhood “character” and stigmatizing renters.

That kind of dog whistling has no place in Seattle.

Please stop letting quarter-century-old neighborhood plans that were developed without a Race and Social Justice analysis be the blueprint for Seattle’s future. (Thank you, Council Member Mosqueda, for challenging the anti-growth narrative by taking a closer look at that vaunted 1994 plan.)

As you know, the Mandatory Housing Affordability legislation and upzones in front of you today did go through a displacement analysis by income and race.

Thank you for passing the six MHA Urban Center and Urban Village rezones last year.

But to make MHA work, to address the housing affordability crisis, all of Seattle needs to be neighborly.

Please pass this small but significant first step in taking down the walls that keep too many of Seattle’s residential neighborhoods–off limits for too many residents.

I am not proud that I’m from here. I’m proud that I moved here. I hope I can continue to feel that way.

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Affordability, Density, Development, Historic Preservation, housing, land use, Mayor Durkan, Morning Crank, neighborhoods

Morning Crank: Ruling Bolsters Housing Plan, Chides City for Failing to Do “Granular” Analysis Neighborhood Activists Demanded

1. Urbanists celebrated a ruling yesterday that could allow a long-delayed plan to increase density and fund affordable housing to move forward. The ruling by city hearing examiner Ryan Vancil, which mostly affirms that an environmental impact statement on the plan was adequate, came in response to a challenge by a group of homeowners, the Seattle Coalition for Affordability, Livability and Equity (SCALE), who have long opposed the plan. The plan, known as Mandatory Housing Affordability, would allow modest density increases in urban villages and urban centers, and would rezone six percent of the land current zoned exclusively for single-family houses—currently, two-thirds of the city’s land—to allow townhouses and small apartments. Developers who build under the new rules will have to include affordable housing in their buildings or pay into an affordable housing fund.

“This ruling is a step forward for more affordable housing in Seattle,” Durkan said in a statement. Meanwhile, Seattle for Everyone, the group that formed in 2015 to support then-mayor Ed Murray’s Housing Affordability and Livability Agenda, planned a celebration party and issued a statement, titled “Yay for MHA!” celebrating the ruling as “a win for affordable housing.”

We’ll see. Toby Thaler, the leader of the group that challenged the  Seattle Coalition for Affordability, Livability and Equity (SCALE), told the Seattle Times that he plans to keep fighting against the MHA legislation, although it was unclear in what venue (the courthouse or city council chambers) he intends to do so. (Thaler did not immediately return an email last night, but I will update this post if I hear back from him.) Meanwhile, the city will have to do more analysis of how allowing more density will impact designated city landmarks;  according to the ruling, the city failed to consider impacts on historic properties other than those on the National Register of Historic Places, which Vancil called inadequate.

“The more ‘granular’ level of analysis called for and debated at the hearing may have averted at least some of the deeply felt community concern expressed in nearly four weeks of hearing and in a hearing process that has taken the better part of a year.” — Seattle Hearing Examiner Ryan Vancil

Vancil’s ruling also chides the city for failing to include detailed, “granular” analysis of the impact the zoning changes would have on individual neighborhoods in the environmental impact statement, and suggested that including this kind of analysis could have forestalled the whole drawn-out appeal. “[I]t is certainly the case, at least in part, that the choice not to tell a more detailed story of the City’s neighborhoods contributed to why the City faced a very protracted appeal and hearing process from representatives in many of its neighborhoods,” Vancil writes. “While the level of analysis for most of the FEIS satisfies the rule of reason and requirements under SEPA, the more ‘granular’ level of analysis called for and debated at the hearing may have averted at least some of the deeply felt community concern expressed in nearly four weeks of hearing and in a hearing process that has taken the better part of a year.”

Whether you believe that a detailed neighborhood-by-neighborhood breakdown of the upzone’s impact would have made neighborhood opposition evaporate (dubious, given that challenging the EIS for a project is one of the most common obstructionist tactics in the Seattle neighborhood activist playbook), what’s undeniable is that while the upzones have been tied up in appeals, tens of millions of dollars’ worth of affordable housing—and hundreds of units of market-rate housing needed for the thousands of people moving to Seattle every year—remained unbuilt.

“Unfortunately …  this appeal has cost Seattle at least $87 million worth of affordable housing that we could have brought in during the year since the appeal was filed,” council member Rob Johnson, who has led the charge for MHA as head of the council’s land use committee, said in a statement. (Johnson asked for this analysis last month). “Had we been able to adopt MHA across the city without this delay, more neighborhoods would be receiving the investment in affordable housing they need, and more families in our city would have an affordable place to call home.”

2. On Tuesday, Queen Anne Community Council leader Marty Kaplan sent out a bombastic email blast (subject line: “Single-Family Rezone: Negotiation Rejected!”) announcing his intention to “proceed full-speed ahead in preparing and proving our case” against the city, in the ongoing battle over new rules that would make it easier for homeowners to build basement and backyard units on their property.

The “negotiation” Kaplan’s email refers to is apparently a meeting he had on Monday with council member Mike O’Brien, who led the charge to liberalize Seattle rules governing backyard and mother-in-law units, about a final environmental impact statement (FEIS) concluding that the proposal would not have a detrimental environmental impact on the city. was sufficient to allow the long-delayed rules to move forward. The new rules, which would allow homeowners to add up to one unit inside an existing house and one detached unit in the backyard, subject to existing height and lot coverage limits, would produce about 2,500 additional units of housing citywide.

“Unfortunately, I must inform you that CM O’Brien has closed the door to negotiating.,” Kaplan wrote. “He relat[ed] to me unequivocally that the EIS spoke to all his issues leaving no room to consider any compromise.  He remains firmly entrenched in every line-item of his legislation to eliminate every Seattle single-family neighborhood without considering any important neighborhood, property, infrastructure or economic differentiations.  One-size-fits-all!” 

“In addition,” Kaplan’s email continues, “he shared his confidence that every councilmember firmly supports him and his legislation.  He left no door open and even told me directly that there was no reason for us to withdraw our appeal – nothing would change!”

On Wednesday, O’Brien put up a blog post responding to Kaplan’s email. (The post appears to have since been taken down.) In the post, O’Brien wrote that during their conversation over the weekend, “I explained to Marty that while the legislation I plan to introduce was likely to reflect the Preferred Alternative in the EIS, I am open to changes to that legislation as we work through the legislative process.  Furthermore, even if I disagree with certain changes to the legislation, a majority of the Council, not me alone, make the decisions about what changes are acceptable.  …If Marty was asking me to cut a special, secret deal with him so that he would drop the lawsuit, I made it clear to him that I am completely opposed to that type of back room dealing.  … Despite what Marty claims in his email blasts, I explained the many doors that remain open throughout the upcoming process to influence the outcome of the legislation.”

The email concludes with “a quick note on the tenor of city politics that Marty is playing on in all of his communications,” which, O’Brien says, represented “our friendly conversation as a divisive fight.  Instead of communicating where we have common ground and where we differ, explaining the opportunities to influence the process and sharing my willingness to remain open to alternative approaches during the legislative process, Marty choose instead to double down on a mean-spirited and polarizing approach, representing the worst of our current tone in politics.  As a community, we must decide if we are going to let divisiveness prevail and be the new way we govern, or re-embrace what I have known my entire life in Seattle: a collaborative approach to policy making.” 

Kaplan responded more warmly to comments Mayor Jenny Durkan made about the proposal over the weekend, at a community meeting on Queen Anne. According to the  Queen Anne News, when a constituent asked what should happen with the appeal, Durkan said “she’d like to get all parties in a room to hash out a compromise” rather than moving forward with the “litigation” process. (Kaplan’s challenge is currently before the hearing examiner, but litigation is an option if the hearing examiner rejects his argument that the FEIS is inadequate). Durkan, according to the Queen Anne News, expressed concern at the meeting that loosening the rules too much could “fuel a more expensive Seattle by letting people speculate on that land.” That argument—that “developers” will snap up single-family houses and turn the land into triplexes—is belied not only by the FEIS, which concludes, again, that the changes would result in just 2,500 new units citywide, but by the economic logic of development. To wit: If you’re a developer (or, as Kaplan and the mayor suggest, a “speculator”), are you going to build a house with a basement apartment and a small backyard cottage in a single-family zone? Or a 20-unit apartment complex in a multifamily area?

Kaplan did not attend the meeting with Durkan, but says that from conversations with another community council member who was there, “the take-away was that she [opposes] what I have called a one-size-fits-all rezoning of single-family throughout the city.”

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Affordability, Development, Equity, gentrification, race

The Beauty Contest: Or, How John Maynard Keynes Explains Seattle’s Gentrification

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Earlier this month, Washington, D.C.-based economist Ben Klemens and I wrote a two-part series about how the human desire to emulate other people can help explain (and help cities address) gentrification for the website Strong Towns. The two-part series can be found here (Part 1) and here (Part 2). Here’s a bit of the beginning of Part 1, which explores a game-theory concept known as the Beauty Contest (which, as the non-economist author, I’ll describe as the process by which people sometimes make decisions based not on their own preferences or prejudices, but on the perceived preferences and prejudices of other people). The series focuses on the corner of 23rd and Union in Seattle, and the neon-clad monument to cannabis consumerism that is Uncle Ike’s.

It’s a little more academic than the usual fare here at The C is for Crank, but I encourage you to read it if you’re interested in alternative ways of looking at gentrification.

 

This story takes place in Seattle, but it could be set in any large or midsize city where gentrification is changing the political, cultural, and physical landscape. For the purposes of this story, we’ll define gentrification as the process by which the residents of historically working-class, minority neighborhoods are displaced, often rapidly, by people with lighter skins and higher incomes. [Editor’s note: Read our own previous discussion of the different understandings of “gentrification” here.] How you choose to explain gentrification says a lot about your political worldview. Do gentrifiers act out of self-interest? Racism? A little of both? Or something else entirely?

In Part 1 of this two-part series, we use the example of one Seattle neighborhood to argue that it’s entirely possible to explain gentrification with something we can easily observe—signals, which communicate to prospective homebuyers what other people like them believe about whether it’s a good idea to invest in a certain neighborhood. Then, in Part 2, we use accessible theoretical modeling to demonstrate two ways in which, even in the absence of conscious beliefs (such as racism, classism, or the belief that land values will rise over time) or preferences (a desire to live next to popular amenities), signals can still lead to gentrification.

But before we get to Seattle, we have to go back to 20th-century economist John Maynard Keynes, and an economic concept called the beauty contest. In 1936—a time when newspaper sweepstakes were popular—Keynes came up with the following thought experiment: What if newspaper readers were asked to choose the most beautiful woman from a roster of photos, and the sweepstakes winner was drawn from a list of everyone who chose the most popular woman? The trick to winning that kind of “beauty contest” isn’t to pick the woman you personally find most beautiful, but to guess which woman other players think is the most beautiful, knowing that they’re doing the same thing.

The crux of the beauty contest is that we don’t form our opinions about beauty, the value of a dollar, or a house, in a vacuum—we come up with those beliefs based on a long chain of assumptions about what we think other people think. Why do I think a piece of paper printed by the Treasury that says “$1” in the corner is worth a dollar? Because I think I can give it to somebody, Steve, because Steve values it. Why does Steve value it? Because he thinks Maria thinks it is worth something. And I believe Steve thinks Maria values it because she knows Paula will accept it. And so on.

If the piece of paper said something else (maybe the ID for a bitcoin wallet), the same process might not happen. Given multiple options, it isn’t always obvious who’s going to win the beauty contest, or which centrally located neighborhood is going to suddenly shoot up in value. What is certain is that as long as human beings make predictions about value based on these signals, they will result in predictable behavioral patterns—you may not know where gentrification is going to happen next, but there will be some sequence of signals that will precede it.

So let’s make this less abstract.

Consider buying a new condo, with an asking price of $500,000. Whether it is a good deal today at $500,000 is partly a question of whether it will one day sell for more or less than $500,000. Your purchase is a wager, based on the information available to you, that the value of your condo and similar properties in the area will continue to appreciate.

Your decision to buy also depends on what amenities are nearby now. Will your friends want to move in nearby? Will restaurants and a grocery store start filling up empty storefronts nearby, and will they be able to stay in business? Will you have access to reliable transit lines when you move in? In a decade? All these questions also factor into whether you choose to buy here or across town.

There is no way to poll all the people somehow involved in such questions, so we have to play a beauty contest game, guessing what our friends, local restaurateurs, and transit planning agencies are thinking, and what they will be thinking in a decade. Meanwhile, they’re all doing the same thing: just as I don’t want to move to a neighborhood with no restaurants, no restaurant wants to open in a neighborhood where they aren’t likely to have customers.

In the 1950s, determining a neighborhood’s status was easy: check the map. As part of an arrangement by the National Association of Realtors and the U.S. federal government to limit the ability of African American homebuyers to buy houses in “white” neighborhoods, maps were developed with clear red lines around black neighborhoods and explicit racial covenants or bank practices enforced the racial divides on those maps. Today, these formal covenants have been replaced in most US cities by zoning, which walls off certain areas—often those originally segregated by redlines—as designated single-family-only neighborhoods, which tend, by historical precedent and by design, to be mostly white.

Seattle’s Central District in 1968. (Source: Seattle Municipal Archives)

Recent years have seen the demographics in the Central District nearly flip. In the 1970s, the neighborhood was more than 70 percent black; by 2016, that number was 20 percent. Whites now make up about 60 percent of the area’s population, and the trend is on track to continue.

Few neighborhood businesses more perfectly exemplify this demographic shift—or serve as more of a lightning rod for protests and accusations of racial insensitivity and white colonization—than a flashy recreational pot shop called Uncle Ike’s. (Washington state voters legalized recreational pot in 2012.) Lit by cheeky neon signs—on the next block: “Hey, stoner, around the corner”—it sells recreational pot like fancy coffee: expensive and unabashedly bourgeois. A ten-pack of Magic Kitchen peanut butter brownie bites will set you back $28, and a bottle of Moss Cow Mule cannabis ginger ale goes for $20.

Situated between an old car wash (recently purchased by Uncle Ike himself, Ian Einsenberg, and rebranded as Uncle Ike’s Car Wash) and an African- American church, Uncle Ike’s is a sign of the apocalypse for anti-gentrification activists, at the literal crossroads of old and new. Across one street: A doomed strip mall anchored by a liquor store, a barber shop called Earl’s Cuts and Styles, and Africatown, a local nonprofit working to build affordable housing and preserve the history of the neighborhood. Across the other: A sleek modern apartment box called The Central, where open-plan one-bedrooms go for $2,060 a month.

Uncle Ike’s wasn’t the first new business in the neighborhood to cater to a largely white crowd—a quaint, quirky bar next door called “The Neighbor Lady”, which a local news report said would “breathe new activity” into “the troubled corner,” preceded the pot shop by two years. But Ike’s opening in 2014 was quickly followed by an influx of new businesses catering to a similar crowd, which converged on the intersection as if summoned by a pot-leaf-shaped bat signal. Today, a strip that once housed a 25-year-old soul food restaurant called Thompson’s Point of View and was notorious for gang-related violence is home to an airy, loft-style coffee shop, a salon/cafe owned by two women who have said they were priced out of a nearby neighborhood known in past decades as a haven for artists and hipsters, a bike shop that sells $3,000 electric bikes, and a doughnut shop specializing in gluten-free mochi doughnuts.

Read the rest of this piece, and Part 2, at Strongtowns.org.