Tag: affordability

Affordability, Density, Development, housing, Mayor Murray, zoning

Grand Bargain Preserved, with New Barriers to Development in “At-Risk” Neighborhoods
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Last of its kind? Vulcan’s proposed project at 23rd and Jackson.

Weeks of heated behind-the-scenes negotiations ended in compromise over the affordable-housing provisions of Mayor Ed Murray’s Housing Affordability and Livability Agenda (HALA) late Monday afternoon, as Murray announced an agreement that will maintain the current affordability requirements in South Lake Union and downtown, impose affordability mandates (also known as mandatory housing affordability, or MHA) that vary based on how much additional development capacity is being added, and create additional hurdles for developers looking to add housing in moderate-income, racially diverse areas like the Central District.

I wrote about the variable affordability requirements a couple of weeks ago. Basically, the new rules say that in areas where zoning capacity (potential density) is being increased more than in other areas (say, a single-family block where three-story buildings are now permitted), developers have to provide more affordable housing or pay more into an affordable-housing fund. The logic is obvious—developers who take advantage of greater height increases should pay more for that privilege—but also flawed: Penalizing developers for building density in densifying areas arguably discourages development in those areas.  At any rate, developers at the negotiating table these past few weeks clearly decided they could live with the higher fees, and agreed to the new formula.

More contentious were the fees and performance requirements (the amount of housing that has to be affordable, and at what level) in downtown and South Lake Union, which were negotiated as part of a separate process than the rest of HALA back in July, and are generally lower than what the fees and performance requirements will be in other parts of the city. (The Grand Bargain stipulated that the requirements downtown and in South Lake Union under MHA would be no greater than what was already required under the previous affordability program, known as incentive zoning. It was considered a Grand Bargain, in part, because social-justice advocates agreed to leave the downtown and South Lake Union requirements untouched).

Despite the signed agreement, Sage and other advocates reportedly wanted to increase the fees in those two neighborhoods significantly, to as much as double the rates both sides agreed to, which could have ended the Grand Bargain and blown up the coalition that came up with the agreement over a year ago. (Opponents of the Grand Bargain, and of MHA in general, have predicted this would happen all along.) After weeks of discussions, the two sides came to an agreement, and the fees will remain the same.

One thing that will change, at the behest of lefty activists and their allies on the city council, is the affordability requirement in neighborhoods whose residents are supposedly at a “higher risk of displacement” from new development—that is, areas with more black and brown people, fewer job opportunities, and lower housing costs. In those areas, developers will have to preserve as much as 11 percent of new units for housing affordable to people making 60 percent or less of Seattle median income, or pay as much as $32.75 a square foot into a city-run affordable housing fund—the same fee as areas of the city that are being upzoned the most.

The change is supposed to “increase affordability in areas at higher risk of displacement,” according to Murray’s proposal. But developer advocates have argued that by making it much more expensive to build in areas like the Central District, the Rainier Valley, and the International District, the city will make it much less likely that new projects like Vulcan’s 570-unit, 6-acre development at 23rd and Jackson, which is vested under pre-Grand Bargain standards, get built. (Another large development, at 23rd and Union, has also been permitted under the current rules.)

That means not just less “gentrification” (another term for providing amenities like shops, modern grocery stores, and cafes in low-income neighborhoods). It also could mean less low-income housing. Vulcan plans to make 20 percent of the units in that project affordable for people making up to 65 percent of median income, under the Multifamily Tax Exemption program that keeps units affordable for 12 years. An 11-percent, 75-year affordability requirement—what could be required under the new plan Murray proposed yesterday—will be a much tougher sell.

Vulcan, of course, was the developer heavyweight at the Grand Bargain table. The fate of another proposed project, at 23rd and Union, is unclear.

Seven members of the council—all but Lisa Herbold and Kshama Sawant—have signed off on the mayor’s proposal.

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Affordability, housing

As Rents Increase, Homeownership Even More Elusive

Back-to-back presentations in council chambers Monday morning painted a stark picture of a Seattle divided between the homeowning haves and the renting have-nots, and also showed once again with data (not the ever-popular anecdotes) that the tighter the supply of any form of housing, rented or owner-occupied, the more expensive that housing is.

First, the good news: For renters, a development boom over the last few years is already starting to relieve pressure on prices, meaning that rents are likely to go down or at least stabilize as vacancies go up. Mike Scott of Dupre+Scott, a longtime Seattle apartment market analyst, likened the development pipeline as “a snake eating a small animal—it’s going to digest it, but it’s going to take some time.”

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The relationship between supply and demand—or, put another way, vacancies and rents—is starkly illustrated in the following graph, which shows that as supply tightens (that is, as development slows down), rents go up; as more housing gets built, rents decline.

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That’s true, Scott pointed out, even though new apartments are usually more expensive to rent than existing stock. (The Housing Affordability and Livability Agenda, which proposes to build 50,000 new units over the next decade, including 20,000 affordable units, would make a dent in the need but would not by itself accommodate the 120,000 people expected to move to Seattle by 2035).

The exception to that rule was microhousing, small efficiency units that are expensive per square foot but affordable in practice; according to Scott’s presentation, the average microunit rented for $871 in 2015, compared to an average studio rent of $1,433. Unfortunately, city regulations have effectively banned the development of new microhousing, and that housing type has been replaced by so-called small efficiency dwelling units, or SEDUs (which Scott insisted on pronouncing, “Said-Yous”). Those are still cheaper than studios, but significantly more expensive than micros, at an average of $1,151 a month.

Screen Shot 2016-03-15 at 7.13.05 PMNone of those rents are particularly affordable to struggling working-class or middle-class renters, of course, and the solutions seem obvious: More housing, and more opportunities for homeownership. Unfortunately, city rules that reserve nearly two-thirds of the land in Seattle for single-family homeowners make it extremely difficult to build the massive quantity of new housing stock the city would need to significantly push rents down, and first-time homeownership, as a presentation by Zillow’s chief economist Svenja Gudell illuminated, is elusive to all but the wealthiest and becoming more so. In January, single-family home values were up 11.8 percent over last year, and condos were up 14.2 percent. “That’s very, very strong—much stronger than you would see in a normal year,” Gudell said. The average home in Seattle was valued at $533,000, making this the definition of a seller’s market as long as you don’t want to buy another home in Seattle.

As for first-time buyers, they’re being buffeted by a near-perfect storm: High rents that make it difficult to save money for a down payment; a high-demand market where lenders can afford to be selective about who they loan to; lending standards that have tightened in general since a recession caused largely by banks loaning money to people with bad credit; and the simple fact that there just aren’t many houses, condos, and townhomes on the market to begin with.

“Rents are extremely high, so it’s still hard to save for that downpayment, and if you’ve qualified, it’s quite difficult to find anything at all, because affordable housing at all price points is in very tight supply right now,” Gudell said.

How tight? Here’s an unsettling stat to ponder as you write your next rent check: Right now, there are only 906 homes of any kind for sale in Seattle—a 21 percent drop from last year. So while buying a home is currently much more affordable than renting one (as the graph from Zillow, below, illustrates), it’s out of reach to all but a few. One reason for that is the fact that there are still a significant number of homeowners (about 7 percent) whose homes are underwater, meaning they owe more than the value of their condo or house. Those people, according to Gudell, tend to be lower-income owners of lower-price houses, and they aren’t selling, which means that what would be entry-level homes are simply off the market.

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Actually, pretty much all homes are off the market. Another reason for that: People who want to stay in Seattle don’t really benefit from elevated home prices, because they have to turn around and buy another house in the same overinflated market. “Seattle is a distinct seller’s market right now—as a seller you definitely have the upper hand and have more power in that negotiation compared to the buyer—but most sellers turn around and become buyers and they can’t find house they want to buy.”

The moral, for both renters and buyers? Hang tight and hope* Organize and demand that the city allow more density, which will reduce rents, and wait for the next downturn to roll around.

*Mike in the comments makes an excellent argument for this edit.

Affordability, City Hall, Density, Development

Density, Affordability, and Livability Are Compatible: The HALA Report

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I’ll be on KUOW’s live show from the District 4 this Friday at 10, countering the anti-development, pro-NIMBY narrative you may have caught on last week’s Week in Review. Listen in on 94.9FM or on KUOW’s website.

It’s a rule in Seattle that policies having to do with density, neighborhood “character,” and development tend to get hacked down to a nub by the blunt machete of consensus, even more so when that consensus is reached by a committee numbering in the dozens.

It’s even more of a rule that when committees like the 28-member Housing Affordability and Livability Committee announce multiple delays, that means they’re on the verge of imploding.

Throw in a disgruntled committee member who leaked a draft copy of the group’s long-anticipated report to the press, and there was every reason to believe that the HALA committee would come up short; the day the draft leaked to NIMBY apologist Danny Westneat of the Seattle Times, in fact, the committee frantically disavowed the draft, calling it “outdated and inaccurate.”

So it was a true jaw-dropper when Mayor Ed Murray’s HALA Committee recommendations emerged Monday largely intact. The plan (which replaces controversial linkage fees on residential development with inclusionary zoning, upzones multifamily areas across the city, eliminates many parking mandates for new development, and promises 20,000 new units of low-income housing) fully embraces the reality that it’s impossible to create an affordable city while simultaneously protecting the two-thirds of Seattle land that consists of unaffordable single-family houses on 5,000-square-foot lots. We live, essentially, on an island–an island where tens of thousands of new people want to live. The built environment must change to welcome (and “accommodate”) those new neighbors.

By acknowledging the fundamental incompatibility of protectionist NIMBYism and affordability, HALA spit in the eyes of the pitchfork-wielding old guard that really just wants to keep “outsiders” out, that resents new residents, that sees growth as numbers, not neighbors.

The city council will undoubtedly come under tremendous pressure from hardline neighborhood activists who think ceding 6 percent of their protected land area to slightly greater density will bring their homes and property values crashing around them. Those activists are organized, and they are loud. Their allies on the council, including the departing Tom Rasmussen, have amplified their voices and encouraged them to drown reality-based advocates for density out. And it will take all of urbanists’ effort to keep them from scuttling the plan, from preserving the old Seattle (which was, as HALA points out in its report, created and sustained by restrictive racial covenants) and keeping everyone new outside the walls protecting suburban-style city development patterns.

But Murray didn’t call this plan a “Grand Bargain” for nothing, and the HALA committee wouldn’t be making its plan public now if it didn’t have rock-solid support from the vast majority of the players. (One outspoken exception is committee member and council candidate Jon Grant, who not only abstained from the vote but held a press conference immediately after HALA’s announcement to roll out his own sour-grapes plan, flanked by supporters including Kshama Sawant, Position 9 candidate Bill Bradburd, and North Seattle neighborhood activist Sarajane Siegfriedt, calling for rent control and the reinstatement of linkage fees.) Despite the volume of shouting from the old guard, I’m hopeful that the consensus and determination HALA has demonstrated will hold together despite the shouting, and despite the possibility, remote but real, that a renegade developer could sue the city and scuttle the whole deal.

It’s been a crazy few days. Between life and work and blogging, I haven’t had much time to sit down and process my thoughts about HALA in black and white. Instead, I’ve been talking to friends and fellow urbanists about what the plan will mean and how we can convince our friends in the world of affordable-housing advocacy that growth is not just inevitable but good and how we can help hold the plan together until the city council passes the goddamn thing over Tom Rasmussen’s dead body. (Sorry, Tom.)

So I can’t add much to the already rapturous (and detailed) coverage from the density proponents at Sightline, PubliCola, and, well, The C Is for Crank.  Nor can I thumb my nose more disdainfully at the hardline NIMBYs at Crosscut and the Seattle Times. I can, however, encourage you to cross your fingers, write your city council members and neighborhood representatives, and urge them to support the plan that represents the best shot we’ve had in decades to preserve what’s best about our city while making sure it’s livable for the tens of thousands of people who want to become our newest neighbors.

Affordability, City Council

The Vehicle License Fee Discount: An Open Letter to Council Members
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After news broke that a $10 low-income discount on the new $60 vehicle-license fee to fund Metro bus service would cost an additional $17 to administer, city council member Tom Rasmussen proposed cutting $100,000 from funding to administer the program. His colleague Mike O’Brien seemed supportive of the move, noting in a meeting earlier this month that he was “extremely skeptical” that the city’s projection of 51,000 applicants was realistic, given the disappointing number of applicants for Seattle City Light’s low-income discount program. For years, O’Brien has worked to increase the number of people who take advantage of the program, which offers discounts on both Seattle City Light and Seattle Public Utilities bills, with little luck.
Part of the problem resides in the city’s Human Services Department, which reportedly removes people from the rolls of the discount program annually, forcing people to reapply for assistance every year. But a larger issue is the application itself, which requires applicants to provide physical copies of: State-issued ID; a copy of a current lease and “current rent payment receipt” (a fantastical document I have never encountered in nearly 15 years of renting here), or mortgage statement; paycheck stubs for the past month (the city used to require three months of paycheck stubs, but recently rolled back that requirement), plus documents revealing any other forms of income; a request for employment verification to be sent to the state of Washington; and a standard application that includes detailed information about the household for which you’re applying.
In addition, if you’re a renter, your application must include a written form filled out by your landlord, which includes detailed information about who lives in your apartment, how much you pay, and whether you participate in existing discount programs or have a rent subsidy. This is problematic for many reasons, but here’s a big one: Many tenants don’t feel comfortable talking to their landlords, for fear of retaliation, because of past conflicts, or because they don’t want their landlord to know they’re applying for low-income assistance. (How many landlords in the city have driven out “undesirable” tenants in hopes of increasing rents for older apartment buildings?) In addition, many tenants simply don’t have easy access to their landlords, who may live in another city or across town. It’s a big hurdle that I suspect is much more significant than people simply not knowing the program exists.
How do I know all this? you may well ask. Well, I did a lot of on-the-ground research. Which is to say: I applied for the discount program myself. Back when I wasn’t making a lot of money, I sought assistance wherever I qualified, and the utility discount program was one of those places. Although I did manage to pull together physical copies of all the required documentation (including the permission slip from my landlord, whose office is fortuitously just a few blocks from my apartment), I gave up after more than a month of runaround from the program administrators over “missing” documentation, including proof of income from my nonexistent pension. I can’t know whether I would have given up earlier if I had had kids and a full-time job or two to deal with, but I did abandon my efforts convinced that the problem with low opt-in rates isn’t that people are apathetic or simply don’t know about the program, but that the program itself is hopelessly antiquated and flawed.
As the city considers cutting funds from another low-income discount program before it has time to even get off the ground, I thought it would be a good time to deliver an open letter to council members Rasmussen and O’Brien urging them to take a serious look at the process for signing up for well-meaning programs like the license-fee rebate before simply concluding such programs don’t work.
Dear Council Members O’Brien and Rasmussen,
Just one person’s opinion, but I think using low signup rates for the City Light utility discount program (which I was ultimately never able to do because SCL kept dropping the ball and I gave up after months and months of sending reams of physical documents and calling and emailing repeatedly) as a reason to cut back on funding for the vehicle license fee discount program is very short-sighted.
It would be a chicken and egg problem (we don’t have enough people signing up therefore we don’t need as many workers therefore we have fewer people signing up) except for one thing: We know the chicken came first. The barriers to signing up for discount programs are baked into the process, which is ridiculously onerous and requires most tenants to get a permission slip from their landlords in addition to all the other proof of income, residency, and other eligibility information.
People don’t sign up, in my opinion, because they look at all the steps they have to take, including getting a physical signature on a piece of paper from their landlord, and give up either at the beginning of or somewhere during the process. I can only imagine that the same will be true of the VLF program. Unless something is streamlined–and in the case of the utility discount, I would start with loosening up the proof-of-rent requirement, since so many tenants are month to month or don’t want to irritate their landlords or draw attention to themselves–the exact same scenario is going to play out with VLF, only even more so because it’s a once-a-year discount rather than an ongoing utility savings. This will only be exacerbated by cutting the number of people administering the program, creating a self-perpetuating cycle: It shouldn’t get funding because it doesn’t work therefore it shouldn’t get funding.
I do wish the council and other elected officials who have never been long-term poor would consider a thought experiment: Go through the process of signing up for multiple programs for low-income people–photocopying licenses, printing bank statements, obtaining bank stubs, getting something that suffices as a “rent receipt” (a document neither I nor anyone I asked had ever heard of), collecting pay stubs, proving citizenship, mailing everything in, and then going through the inevitable rigmarole of questions and demands for more information and delays–and then do the same thing over again for every single program for which low-income people are eligible. It’s hard being poor, and the city shouldn’t be in the business of making it harder.
The city is not to blame for the lack of streamlining between agencies, but it could do a lot to clean up its own house before throwing up its hands and saying, “Well, this isn’t working; let’s just cut funding, I guess.”
Poor people aren’t signing up for these programs not because they aren’t interested. They aren’t signing up because it takes a huge amount of effort to sign up for each individual program (fun fact: To challenge a denial of food assistance, you have to go down to your local DSHS office and stand in line, potentially for hours, to get a hearing with an individual program administrator who decides your case).
Instead of cutting staff to spite your entire program, or papering over the problem by running ad campaigns that don’t work, consider looking at root causes: Why are people opting out of our programs? What could be changed to make signing up for assistance easier? How would I, a busy City Council member, feel if I had to ask the person who can kick me out of my apartment to help confirm that I’m income-burdened? And then get to work on those causes. It’s simple, not easy. But the low-income people in your community will thank you immensely if you get it right.
If you want to contact O’Brien, Rasmussen, or any other member of the council, you can find their addresses here.