Tag: Incentive Zoning

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:

  1. More Affordable Housing: a linkage fee allows the City to ensure production of far more units on a faster timeline than IZ.
  2. 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.
  3. 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.
  4. 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!

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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.