Seattle has experienced unprecedented growth for years, leading to rapid densification and economic development. Growth has consequences. A sharp influx of folks occupying positions in a new economy increased demand for housing. Because supply struggled to keep up, prices rose. New residents in a new economy willing to pay higher prices for what homes were available ultimately led to the displacement of low- and middle-income households. Seattle City Council’s response was to approve blanket upzoning in neighborhoods through the city, planning to radically reshape local landscapes. I will work to strike a balance between new development and maintaining our affordable housing stock, including reviewing City owned properties and upper floors in commercial zones to find a variety of options.
With the passage of the Mandatory Housing Affordability plan (MHA), it’s imperative to consider how housing can and should fit into existing neighborhoods. When new developments are permitted, and developers opt-out of providing affordable units, the alternative payment option must adequately cover the cost of producing the same affordable units. Currently, in-lieu-of fees are too low which, in practice, has meant developers continue to refrain from providing affordable units and guarantee the perpetual displacement of households who cannot afford higher housing costs. With minimal money coming back to the City from these fees, the City cannot afford to produce affordable units at the same rate they are lost.
When affordable units are unavailable and families cannot otherwise afford the high rents that come with living in Seattle, rental assistance has clear utility. People must be able to live here. Steep and sudden rent increases must be curbed. I will work with tenants, landlords, and my colleagues on the Council to adopt fair policies that encourage affordable housing production and maintenance.
We must get back to the basics and review our planning processes. Zoning is not planning. We must also improve permitting to streamline the arduous process of development. I will work with the City’s planning department, external stakeholders, and impacted neighborhoods to strike a better balance in the City’s zoning/planning processes and look at neighborhood plans which have been primarily mothballed.
In increasing the City’s density, we must incorporate sustainable development plans. This means ensuring expansions of access to services, maintenance of green spaces, and other common or community spaces. Accepting the reality of a larger population entails an obligation to adjust our neighborhoods for that growth and to include a diverse set of stakeholders throughout our processes to guarantee we maximize outcomes for all.
Let’s look at the details
Take the example of a 30-unit development. Under MHA as it stands, the developer would pay around $10.75/sqft on all non-exempt residential space. Using Seattle averages, this would be about 22,000 sqft for a one-time expense of $236,500. Based on average rent for the average apartment, that developer would go on to make at least $3.45 million over five years after paying the fee. Meanwhile, the City receives less than what it costs to build affordable units on the public side to keep up with affordable units lost. If this were not bad enough, those dollars are rarely spent in the neighborhood which experienced the development.
Should the developer choose to provide the three affordable units that would have otherwise been required, the units would cost the developer a recurring $24,000 annually - costing more than the original one-time fee after ten years. Developers see this difference in cost and almost always pay the fee. For our neighborhoods here in District 1, MHA is a lose-lose.
We must amend MHA to include fees in lieu of affordable units that incentivize performance over payment. One alternative is to increase the one-time fee to match the true cost of production to the City. Another alternative is a fee paid every year by developers who are not providing affordable units.