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Seattle Met: Developers for 7 Projects Opt Into City’s Mandatory Housing Program

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This article was published in Seattle Met on May 18, 2017.

By Hayat Norimine

In the past month—since Seattle council members passed mandatory affordable housing legislation downtown and in South Lake Union—developers from seven already-permitted projects have opted into the program. It’s expected to raise $25 million toward affordable housing and create 320 new low-income units. The units will likely take a couple years to complete.

Ten other projects—which would raise another $20 million—have been identified as good candidates to opt into the program, council member Rob Johnson said. He announced the development at a former Chevron gas station on Brooklyn and 47th Avenues in the University District, an example “of an unsustainable, car-dependent past,” Johnson said. (Because of the new zoning regulations for the U District passed in February, Johnson said, it allowed the plan for a midrise building at the site to expand from 74 units to 142 units.)

The legislation last month for the MHA program downtown and in South Lake Union required new developers to either dedicate a certain percentage (ranging between 2 to 5 percent, depending on the location) of their square footage to affordable housing or impose fines if developers don’t meet that amount. An amendment by Johnson also allowed developers who have already been permitted to opt into the program voluntarily.

 The housing should be affordable for 60 percent of the area’s median income or less. (That’s at $1,219 a month for a two-bedroom including utilities, according to the city.) The city will use the housing levy to fund about a third of the cost to build affordable housing, then leverage the rest from county, state, and federal sources, said Paul Lambrose, executive director of the Plymouth Housing Group.

All of those opting in are commercial buildings, and very few commercial developments are going to choose to build rather than get fined for affordable housing, Johnson said, since it’d be difficult to put residents in an otherwise commercial building.

The announcement comes in the middle of an election season that’s made affordable housing the center of some candidates’ platforms. Council member Kshama Sawant and Socialist Alternative on Wednesday endorsed Nikkita Oliver for mayor and Jon Grant for city council position eight, and announced the group’s affordable housing plan. It involved tens of thousands of public housing units “paid for by taxing big business,” 25 percent of new housing to be dedicated to affordable units, and rent control as an emergency measure.

An advantage to the MHA program is the market rate housing and the revenue it creates by incentivizing developers, allowing the city to meet demand for all income brackets. It’s unclear what kind of taxes from big businesses they would propose, but the city’s already working on a city income tax proposal that would likely take a couple years to implement (and that’s only if the legislation wins in its inevitable legal battle); the city’s already increased the business-and-occupation tax, and a capital gains tax would also have its challenges.

Rent control is illegal by state law implemented in 1981. And despite Sawant’s pressing since her election promise in 2015, that’s not going to change anytime soon with a Republican majority in the senate. There’s also a question of whether rent control accomplishes its objective at all.

 In a 2009 study (provided by Kevin Schofield of SCC Insight), economist Blair Jenkins wrote that “the preponderance of the literature points toward the conclusion that rent control introduces inefficiencies in housing markets.” The study said economists generally agree that when there’s a ceiling in rent prices, it actually causes a housing shortage—both in quantity and quality—because supply can’t meet demand. Jon Scholes, president of the Downtown Seattle Association, said he thought the city struck “the right balance.”

Johnson said in other cities that accomplished the 25 percent number have also seen “very few” units, both affordable housing and market rate housing, being built. Units that were being built were also at a very different scale than the current zoning, like a five-story to a 20-story building in New York.

“We’ve got a solution here that’s identified that will result in real funding for affordable housing without depressing the production of market rate housing,” Johnson said.