affordable housing – Page 2

What is a Linkage Fee and Why Do We Need it Now?

Last week, Councilmember Mike O’Brien introduced a proposal to strengthen Seattle’s incentive zoning (IZ) program: a “linkage fee” rather than recommend tweaks to the existing IZ policy. If Seattle is serious about not becoming a city only for the elite and serious about carbon reduction, the linkage fee proposal is a no-brainer.

We have been long critical of the City’s IZ program. Under the current IZ policy, developers built affordable units or paid a reasonable fee to the City in exchange for permission to build to a greater density. Because developers volunteer to participate, the affordable housing requirements only kick in for a portion of a new building and applies to only a few neighborhoods that have undergone upzoning, Seattle’s program is considerably weaker than those in other cities. To date, the IZ program has only produced an estimated 714 units since 2001.

Unlike IZ, a linkage fee policy requires all new residential office or commercial development above a certain size to contribute to an affordable housing fund. The policy, as adopted in several major cities in the U.S., is premised on a link between new development and a subsequent increase in demand for low-income housing.

AN AFFORDABLE HOUSING DEVELOPMENT IN WEST SEATTLE. Photo: Kaizer Rangwala (Courtesy of Marty Kooistra's Op-Ed in Crosscut, September 16th, 2014) — AN AFFORDABLE HOUSING DEVELOPMENT IN WEST SEATTLE. Photo: Kaizer Rangwala (Courtesy of Marty Kooistra’s Op-Ed in Crosscut, September 16th, 2014)

Why is a linkage fee vastly superior to any revision of the City’s IZ policy? Below are some top reasons:

More Affordable Housing: a linkage fee allows the City to ensure production of far more units on a faster timeline than IZ.
Fair to Developers: linkage fee is fair to developers because it distributes the responsibility of contributing towards affordable housing evenly and removes uncertainty about costs of projects.
Fair to Individual Taxpayers: linkage fee is fair to taxpayers who already generously tax themselves for the housing levy and are investing billions in new infrastructure that benefits developers. Seattle taxpayers have paid their fair share since 1981. Through the Housing Levy, they have paid for 58% of all affordable housing stock to date. Private developers, through the incentive zoning program, have contributed 11%. Also, renters will not absorb the cost of these new fees because Econ 101 dictates that developers would charge more now if they could.
Encourages Urban Sustainability: linkage fee increases overall urban sustainability by making the most of public transit investment and is not contingent on density.

So, why do we need to pass this fee now? There are many reasons developers should pay their fair share of affordable housing, the most important of which is absolute necessity. Growth is happening now. People are being displaced now, and 40% of Seattle will not be able to live here if we do not create and preserve affordability now. We need more money to build and preserve more housing now, and into the future.

We have written about the housing crisis in Seattle. Affordable housing is not available for low income people and families. It is well-documented that low-income people and families mainly consist of communities of color, immigrants, refugees and single mothers. Demographic changes in Seattle and South King County indicate that people of color have been displaced from Seattle as rents have risen over the past ten years. Rents have increased even more dramatically in the past year, and Seattle is currently the fastest growing city in the country. In order for Seattle to walk a path of justice, we need more affordable housing now.

A linkage fee is necessary to prevent displacement, is good for the environment, and good for Seattle. It is only fair that developers, who profit from our infrastructure investments, pay their share for affordable housing. Stand with Puget Sound Sage and the Growing Together Coalition and urge City Council to pass a linkage fee in October!

Click here to take action now.

New Affordable Housing Policy Options are Good for the Environment

Across the country, Seattle is well known for its commitment to environmental sustainability. And with the recent passage of a $15 minimum wage, the City of Seattle is poised to become not only a leader in protecting our environment, but also a leader in addressing income inequality. These dual priorities are best intertwined in Mayor Ed Murray’s commitment to prevent displacement of low-income communities and people of color, ensuring that everyone who works in Seattle can also afford to live in Seattle. By building sustainable and dense communities, everyone will have the opportunity to have good jobs and an affordable place to live.

High-density cities contribute less greenhouse-gas emissions per person than other areas of the country, largely because people who live in cities do not need cars to travel to and from work. When low-income people and people of color – who are more likely to be transit reliant – are priced out of cities and become suburban auto users, the environmental gain of building dense neighborhoods is undermined. In fact, higher income households moving to new development near transit are more likely to own a car than lower-income people who are displaced.

Exacerbated by recent bus cuts in the suburbs, displacement could become a driver of increased greenhouse-gas emissions and increased traffic. In light of this, solving the crisis of affordable housing in Seattle may be one of the most effective strategies for reducing our carbon footprint.

To address the need for affordable housing, the Mayor and the City Council is revamping the City’s Comprehensive Plan, a 20-year plan for most of Seattle’s big-picture decisions on how to grow while preserving and improving our neighborhoods. Councilmember O’Brien’s Sustainability Committee is looking to harness this growth to build or preserve affordable housing.

Next month, the City Council will wrap up a year of study and advisory committee meetings on how market-rate developers can contribute to affordable housing. Specifically, the City Council is examining its controversial incentive zoning program, generally criticized by housing proponents as weak and currently being challenged by developers in court.

The current incentive zoning program allows developers to build higher and bigger buildings in exchange for contributing a small number of affordable units or marginal fee to an affordable housing fund. This current policy is considerably weaker than similar policies in other major cities such. The City’s consultants estimate that since 2001, the program has created only 714 affordable units, prompting the City Council to review new options for the program to increase the amount of affordable housing.

As we have mentioned in our previous post, the City’s consultants have recommended two options to strengthen developer contribution to affordable housing. First, the City can increase required units or fees under the existing program, though the consultants caution this will create only a marginal gain due to legal constraints and limited geographic scope. Second, the City could opt for a new strategy that requires developers in most areas of the city to pay a fee for new construction of market-rate real estate.

These two strategies take advantage of the very thing that is causing displacement – rising property values. Commercial property owners across the city are enjoying record land values, due in part to relaxed zoning limits and massive public investment in infrastructure, such as the light rail, a new street grid north of downtown, transformation of the waterfront and new investments in parks. With these benefits, property owners and developers are granted enough economic value that allows them to build densely, contribute a fair share to affordable housing and make a profit.

We need all tools available to ensure affordable housing. Seattle residents have certainly been doing their part – paying for affordability for many years through the Housing Levy. The proposed policies affecting developers won’t single-handedly solve our crisis, but they represent an important piece of a comprehensive housing affordability strategy. With a strategy that does not deter growth, we can achieve both sustainability and equity in a city in which all families can thrive.

Developers Should Pay Their Fair Share

As we mentioned early this week, over the next 20 years Seattle needs to add approximately 28,000 more homes to meet future demand. We do not have enough units to meet current demand because 40% of Seattle’s residents are low income and are being pushed out of the Seattle housing market.

Seattle voters have a long history of supporting affordable housing, and have approved a Housing Levy every year since 1981. The levy has paid for 10,000 affordable apartments for seniors, low- and moderate-wage workers, and formerly homeless individuals and families, as well as providing down-payment loans and rental assistance. However, it is not enough to meet future demands. As we mentioned in our last post, Seattle is considering implementing new fees for developers who are poised to profit off of Seattle’s growing housing market and infrastructure investments.

Puget Sound Business Journal, “Developers move forward along Seattle’s waterfront,” Marc Stiles, Jul 28, 2014.

Developers claim that if they are asked to participate in an affordable housing program that requires them to pay a fair fee to build in Seattle, this will disincentivize growth. In other words, they will take their marbles and go somewhere else. But has that really happened since Seattle, adjusting for inflation, added a 43% increase to its in-lieu incentive zoning fee for residential developments, and a 22% increase for commercial developments last year?

Just this year, Chris Hansen has spent nearly $64.7 million for around 7.3 acres of land in SoDo. Mill Creek Residential is starting two apartment projects here this year, one on Dexter Avenue in South Lake Union. The University of Washington Board of Regents approved two 80-year ground leases and a pre-development agreement for a 1.15 million-square-foot mixed-use complex on Rainier Square. These are just a few examples from a very long list of new development projects cropping up in and near downtown Seattle. In reality, there has been a feeding frenzy of development in Seattle, and investors from all over the world have plans in the works. This means that investors will continue to be attracted to Seattle, even with continued regulation.

Seattle does need an influx of housing, but the housing market needs to respond to the full housing demand of Seattle’s current and future residents. New apartments in Seattle are already outside what low-income people and families can afford, and an unregulated housing supply will leave low-income people – who are mainly people of color, immigrants and refugees – displaced from Seattle. They will be forced to commute long distances to work in Seattle, and travel back to suburbs with less investments and limited time to contribute to the health and well-being of their communities and children. Private developers contributing their fair share could go a long way in closing the affordable housing gap as our city grows.

Seattle City Council Introduces New Affordable Housing Policy Options

Seattle’s housing crisis has gone from bad to worse. Over the next 20 years, we will simply not have enough housing for the number of people who need and want to live and/or work in Seattle.

Right now, 40% of Seattle’s residents are low-income – and our city is becoming too expensive for nearly half of our population. The influx of new workers in high-paying, largely tech jobs, combined with the development of high-end (and more expensive) housing, has caused housing prices to skyrocket, driving up the cost of rent by 33% since 2010 in some areas of the city.

Seattle is now 40% Low-Income (Makes Less than 80% of the Area Median Income). Data provided by Seattle City Council Housing Needs Data Report–Existing Conditions: Workforce and Affordable Housing — 40% of Seattle’s residents are now considered low-income. They make less than 80% of the Area Median Income. (Data provided by Seattle City Council Housing Needs Data Report–Existing Conditions: Workforce and Affordable Housing)

While 2 out of 5 people in Seattle are low-income, only 1 in 5 newly built homes are affordable to them and their families. Making things worse, higher and median-income people are forced to compete with lower-income residents for the lowest priced housing in Seattle. This is called “down-renting” and squeezes lower-income people out of housing that should otherwise be available to them. These pressures are displacing low-income people – mostly immigrants, refugees and people of color – out of Seattle to the suburbs – where there is limited public transportation.

Seattle has a few policies in place that attempt to address this crisis. One small slice of this policy pie is called “incentive zoning.” It requires market-rate developers to build affordable units – or pay a fee in-lieu of building the units on-site – in exchange for permission to build a taller/bigger building. Developers often choose to pay the fees, instead of building affordable housing on-site. However, incentive zoning has resulted in very few affordable homes, because the program is voluntary, restricted to only a few neighborhoods, and it is often not as profitable for developers to build affordable housing in order to build bigger and higher.

On Monday, the Seattle City Council Planning, Land Use and Sustainability Committee, chaired by Councilmember Mike O’Brien, presented two policy options that could address our housing crisis. The first option would increase the fees for developers who participate in the voluntary incentive zoning program: resulting in a bigger bucket of money for affordable homes, and ideally, encouraging developers to build affordable units instead of paying the in-lieu fee. The City’s economic analysis suggests that the success of this option would be incremental.

The second policy option is a “Linkage Fee,” which is a mandatory fee for potentially all new projects across the city, regardless of density or location. The revenue from the linkage fees would be used to build affordable housing at designated locations throughout Seattle. In other words, it could result in significant amount of new affordable units. In order for the fee to be legal, it must be based on a study that connects the impact of development with the need for affordable housing. This study, called a “nexus” study, will be released from City Council shortly. This study will also determine the amount of the fee and locations of Seattle where the fee will be implemented. It is too soon to tell how the money will be used, and for what purpose. We will hopefully have more information by early September.