Rendering of the future senior housing and Filipino Community which received $1 million in funding from the City of Seattle Equitable Development Initiatve. We believe MHA can determine a permanent and adequate funding source for projects like this.
The Seattle City Council has officially started deliberations on the Citywide rezones to implement MHA (read our original blog post here) after more than 6 months of delay due to an appeal to the Environmental Impact Statement, the Council will move forward to adopt the rezones. So, to remind Council with what our demands were for a companion resolution we have resent a letter that has made the full round through Seattle City Council, Mayor Durkan’s office, and other City of Seattle departments. Click here to read the updated letter sent from Puget Sound Sage and our community partners.
The Puget Sound region has seen unprecedented growth of population in the last few years and this trend is expected to continue. By the year 2040, the population is projected to grow by roughly one million people, with a majority of the growth occurring in cities like Everett and Tacoma. Continue reading “ST3: Ramping up for an equitable, accessible transit future”
A local urbanist, Owen Pickford, in a popular urbanist magazine literally called “The Urbanist,” recently published a call to urbanist action to support linkage fees. His article provides the strongest evidence yet that a linkage fee will build a better Seattle. Pickford methodically unpacks somewhat misleading arguments we’ve heard for a decade and half from big property owners and developers. He then calls on his fellow urbanists to heal their myopia and see the bigger picture:
“(w)e can remain the smallest voice in this debate. We can continue to conflate regulatory costs with housing limits. We can continue to ignore the problem of increasing land values. We can continue advocating only for policies that lead to displacement and segregation. We can expend our energy fighting against regulatory costs when we should be fighting for reduced housing limits. We can continue to use narratives that explain-away evidence rather than seeking to understand. We can continue to give people the perception that we are adversaries of affordable housing and integration by opposing a policy that evidence shows would be beneficial.”
Source: The Urbanist, May 7th, 2015, “Why Urbanists Must Support Linkage Fees. . . “
What’s an urbanist?
Urbanism is defined by Miriam Webster as “a) the characteristic way of life of city dwellers, or b) the study of the physical needs of urban societies,” but is often understood as a movement for urban density, walkability, public transportation, and other modern urban “aesthetics.” Much appealing to the urbanist aesthetic is a value known as “vibrancy” which often goes hand-in-hand with the value of diversity, a.k.a. integration. However, the land-use and other policy decisions required to support both racial and economic diversity are often an afterthought, rather than a priority of decision-makers.
In our most recent op-ed, Puget Sound Sage also made the case for inclusionary housing programs by demonstrating a linkage fee will help prevent us from perpetuating land use patterns that perpetuate de facto segregation. De facto segregation is segregation inherited from a time of de jure segregation, like racial covenants or redlining. Linkage fees ask developers to set aside a small portion of new units as affordable or contribute to the city’s affordable housing fund. Because it would be applied broadly across the city, it requires only a modest contribution, but would become one of Seattle’s best tools to create affordable homes for low and moderate wage workers and families, because it would create new affordable housing within city limits, and mitigate the impacts of rising rents. Therefore, a linkage fee helps to prevent displacement, and contribute to the racial and economic diversity that both urbanists and social justice advocates hold dear.
The Growing Together Coalition, co-led by Puget Sound Sage and Housing Development Consortium, represents hundreds of individual signatories and over 50 organizational endorsers, including the some of the largest human service providers, faith, labor, housing, environmental, and social justice organizations in Seattle. All believe that the City of Seattle must pass an inclusionary housing program like the linkage fee, which would enable Seattle’s workers and their families to live near their jobs in the city.The Growing Together Coalition is pro-economic-growth, pro-density, pro-transit, pro-public investment, as well as pro-integration.
Pickford’s urbanism mirrors that of the Growing Together Coalition. Pickford highlights that linkage fee opponents have been detrimental to the plight of urbanists because they conflate height and density limits with regulatory costs like a linkage fee. He says this is a “mistake [that] has been detrimental to urbanists’ goals, creating an adversarial relationship between urbanists and affordable housing advocates. Furthermore, blurring the lines between housing limits and regulatory costs induces urbanists to overlook the most important factor in housing affordability: land values.”
In fact, Pickford’s article (which we will explain in layman’s terms in a separate post): 1) demonstrates that regulations like a linkage fee actually reduce land values, the increase of which contribute to our housing crisis for everyone, not just the extremely low-income; 2) provides evidence that linkage fees do not reduce supply of market-rate housing, but increase affordable housing production; and 3) calls on urbanists and social justice advocates to stand together because they ultimately share the same values.
This concept is not new – urbanists like Mike O’Brien, who sponsored the linkage fee legislation and others have long-supported social justice policies. If a linkage fee is not passed, the city would miss a significant opportunity to create thousands of permanently affordable homes where persons of color and people with lower incomes are experiencing displacement, like Southeast Seattle. This means that Seattle will not be “vibrant” or diverse, values that urbanists hold dear. In fact, demographic changes indicate that Seattle is becoming less diverse.
Last, Mayor Murray’s goals of creating 20,000 new affordable housing units in the next decade cannot be realized without a developer contribution program, even with the much needed renewal of the taxpayer supported Housing Levy. It is time to put to bed how linkage fees will end density as we know it, for good, if we want to live our values as urbanists and support economic growth, density and integration.
If you would like to stand with the 50+ organizational endorsers and individual petition signers in support of a linkage fee, visit our coalition website today!
A City Council Committee just recommended a promising new policy approach to Seattle’s housing crisis, authored by Councilmember Mike O’Brien. Called a “linkage fee,” the policy establishes a reasonable city-wide fee on construction of new buildings that links job growth associated with development to increased demand for affordable housing. Many cities in the U.S. have adopted linkage fees for affordable housing and multiple studies show such a fee can work in Seattle. Listening to critics, you would think that a linkage fee is the scariest thing since Nightmare on Elm Street, and will frighten away the timid investors who have been paying above top dollar for property in Seattle.
Lead Coalition Organizer Ubax Gardheere testifying in support of the linkage fee to City Council October14th
The policy was voted out of the Planning, Land Use and Sustainability Committee yesterday and is headed to Council next week. However, it’s only a resolution that directs staff to write the final ordinance for adoption next Spring, which is two seasons away. So, we though it ‘twas the season for a little debunking of scare tactics being employed by critics of anything asking developers to pay their fair share.
MYTH #1: Developers are being unfairly demonized. They pay taxes just like everyone else.
The best part about the linkage fee is that that the City must demonstrate – for both legal and policy reasons – a causal connection between new job growth associated with a project and the need for affordable housing that it creates. In other words, the fee is used to mitigate an impact that can be “linked” back to the developer, hence the term linkage fee. The policy calls on developers to pay their fair share towards the public bill of creating adequate affordable housing for our growing low- and moderate-wage workforce. Yes, developers pay taxes like everyone else, but their impact on affordable housing is basically an “externality” – a cost they don’t have to bear in making a profit. This is also why it is a mitigation fee, and not an illegal tax.
MYTH #2: A linkage fee will result in less affordable housing being built, not more.
This myth is premised on a simplistic explanation of housing markets and why they contract or expand. Even amidst one of the biggest real estate expansions in Seattle history, for-profit developers are simply not building housing affordable to low-wage workers (60% median income and below). Why build at the lower end when so much profit is available at the higher end? How can linkage fees result in less affordable housing when private, unsubsidized production is already near zero?
Furthermore, fees and regulations have a marginal effect on housing markets – market swings drive real change in supply and demand. David Paul Rosen and Associates conducted a study over a twenty year period in California to determine the impact of inclusionary housing programs (which, like linkage fees, require developers to contribute to affordable supply) on housing production. In larger cities, housing production increased, sometimes dramatically, after the passage of similar ordinances.
The report also found that in no case did the adoption of an inclusionary housing program slow housing production. Based on the City’s own economic analysis, Councilmember Mike O’Brien has designed the proposed linkage fee so that developers will still make significant returns on equity. For example, a tiered fee model is built into the resolution so that slower-growth areas will be subject to a lower fee. Also, the fee level will be reassessed regularly and adjusted for market conditions.
MYTH #3: Over-regulation is strangling housing supply. If we got rid of regulations, the private market could build our way out of the crisis.
This “invisible hand” argument assumes that developers and investors would be willing to build in the lower-end of the housing market if only costs were cheaper. However, housing prices in strong markets are mostly determined by high-end demand. Most new market rate buildings target well-off urban professionals, such as Amazon, Google and bio-tech workers, because those consumers are willing and able to pay top dollar for housing. As a result, Seattle’s overall market is skyrocketing, with average rent increases of 33% just since 2010. As long as Seattle continues to attract and sustain high-paid professionals, developers and investors will continue rational, profit-maximizing decisions to cater to their housing needs.
Moreover, developers will never be able to build enough new supply to a point where prices will meaningfully drop. Even if they could build a fictional, unlimited supply of housing, other counter-forces can slow investment just as lower-end housing becomes interesting to investors. For example, interest rates often rise to cool hot markets, making it more expensive for developers to finance new construction. Production of housing is just as likely to slow for reasons unrelated to local regulations and prices will remain high.
As we have most recently seen with the massive housing market crash, a lack of regulation is often the problem, not more regulation. Regulation can act as a buffer to unpredictable and imbalanced markets. In fact, regulatory requirements to protect the environment, workers and consumers have often led to an increase in economic activity.
With a reasonable amount of funds to build affordable housing, the City can provide assistance to those negatively impacted by the swings of financial markets and the gross inequality they create. Even in San Francisco.
MYTH #4: If you increase costs for developers, they will just pass that onto renters.
Suppose there are two developers building identical buildings with the same market-rate rents. All costs are equal, but one developer took a higher interest loan than the other. Will the higher interest loan developer pass the cost onto renters? If she did, her rents would be higher and tenants would go to the second developer. The term “market rent” is precise – it represents the most a landlord/developer can charge for a given product. If a landlord could charge more in a given market, they already would – a City linkage fee will not change market rents or housing prices.
Further, over time, the cost of the regulation is largely absorbed into the price of land, not the cost of development on top of the land. When cities impose new requirements on buildings – such as safety, health or environmental regulation – it puts a damper on the increases in commercial land value. The property owner does end up absorbing the cost; however, landowners in Seattle have been enjoying exponential growth in value and benefit from business expansion, population growth and massive public investment in infrastructure.
MYTH #5: Linkage fees are a tax on density. Developers now have less incentive to build up, resulting in lower-density growth.
Currently, developers can gain bonus density to build higher and bigger through the City’s multiple incentive zoning programs. The linkage fee does not take away any of these incentives – developers would be allowed to continue to access the bonus density. Also, existing incentive zoning ordinances will be amended with a provision allowing for the payment of the linkage fee as satisfaction of the incentive zoning program.
Additionally, the relative cost of a linkage fee reduces as developers build to a greater density. Here’s why: shorter buildings (under 85ft) are built primarily with wood. Above that, much more expensive materials are used – concrete and steel. For example, say that a developer is choosing between a seven story, wood-frame residential project and a 24 story concrete and steel structure in South Lake Union. The linkage fee per square foot would be the same for both buildings. As the developer builds higher, the fee decreases as a proportion of total construction costs per square foot. In other words, the linkage fee becomes relatively cheaper the higher you build.
MYTH #6: Developers did not have time to weigh in. We should slow down.
Developers have not been left out of the discussion or debate. Consultants have been studying how to improve on the City’s Incentive Zoning policy for an entire year with many occasions for public review and discussion. The economic and financial feasibility assumptions forming the basis for the linkage fee have been informed by developers in multiple venues.
More importantly, growth is happening now and we need more affordable housing now. There is no time to wait. City Council should adopt the strongest linkage fee feasible and the fastest timeline possible.
Martin Luther King once said something that is scarier than these scare tactics: “we must learn to live together as brothers or perish together as fools.”
