25 percent

Developers can afford 25% affordability

In 2015 Mayor Ed Murray convened a 28 member panel to form the Housing Affordability Livability Agenda (HALA) committee. Half of the committee was comprised of members representing the interests of private developers. I was a member of HALA representing the members of the Tenants Union who are mostly working class and low income tenants. At the heart of the negotiation was whether Seattle should adopt mandatory affordability requirements on private developers. The crisis is clear, already the gains made in wage increases are being grabbed back because 81 cents of every new dollar earned by a typical minimum-wage worker has gone to pay for rent hikes.

After 10 months of negotiations the committee voted on the “Grand Bargain,” and as the only member that abstained on the vote I felt it was important to communicate that the deal was indeed a bargain for developers, but not the community. Given the makeup of the committee it became clear the political will did not exist to demand for more. Seattle is in an incredibly powerful position to use our growth as leverage with private developers, and we should not waste this opportunity to significantly expand our affordable housing stock.

It’s time for a new approach to Mandatory Housing Affordability (MHA) in Seattle. The current “Grand Bargain” that undergirds the HALA framework requires as low as 2% MHA in some neighborhoods, with other neighborhoods receiving 3-9% MHA requirements. A central component of my campaign’s platform is a 25% MHA target for all new development. Twenty-five percent MHA is a practical demand as well as a value statement about the kind of city we want to live in. Our goal as a city must be to build as much new housing as possible for the more than 100,000 new residents moving to Seattle in the next twenty years while at the same time aggressively protecting against displacement of our neighbors.

In practical terms, a 25% target is on par with what other growing cities have demanded, from large cities like New York and San Francisco to growing suburbs like Issaquah and Tysons Corner, VA. A recent overview of inclusionary policies nationwide found targets ranging from 15-30%, far above Seattle’s current framework for 2-9%.The city should conduct feasibility analyses to assess whether neighborhoods can meet or exceed the standard and adjust the MHA requirement to maximize affordability. Currently, not every neighborhood or project in Seattle will be able to absorb a 25% requirement. Some neighborhoods may need to increase building heights in order to build 25% affordable units. Most importantly, limiting MHA in Seattle to less than 10% means that we are potentially missing out on construction of thousands of affordable units.

Certain proponents of lower MHA requirements focus on increasing the supply of market-rate housing as the primary means of preventing displacement and lowering rents, relying on a process called filtering. However, a recent study completed by researchers at UC Berkeley found that subsidized housing has more than double the impact of market-rate housing in reducing displacement pressures at the regional level. Additionally, those researchers found that filtering is insufficient or ineffective in strong-market cities like Seattle and San Francisco in increasing supply of affordable housing. We know we cannot rely on supply-side economics to solve our housing crisis. Instead, we must implement robust demands on market growth to fund affordable housing.

Other critics of the 25% MHA standard point to San Francisco as a cautionary tale. In 2015, San Francisco passed Proposition C, which increased the inclusionary zoning (MHA) requirement in San Francisco from 12% to 25%. In response, the city convened a Technical Advisory Committee to review the policy. The TAC ultimately suggested reducing the MHA to 14-18% for rental projects, with a fee option set at 18-23%.

However, we find three points of disagreement with this critique. First, two members of the TAC released a letter of dissent criticizing the working group for ignoring feasible alternatives that would increase MHA requirements further, using an incorrect methodology and mishandling legal issues. They note that the TAC was comprised of five for-profit housing financiers/developers, one “mega-national” non-profit developer and two local affordable housing developers, which obviously tilts the final recommendation toward a proposal which maximizes profits and provides the least inclusionary housing. This is not dissimilar to the problems with how the HALA committee was comprised.

Second, even given the improper methodology and tilted make-up of the TAC, the reduced MHA requirements suggested are nearly quadruple the MHA requirements for Seattle. It’s clear that Seattle has room to operate in increasing MHA. Limiting our affordability requirements to the HALA framework prevents us from asking for more.

Thirdly, before the affordability requirement was reduced, there were already examples of the 25% policy taking effect and working despite developer objections. One such developer, Lennar Corp, planned to build a 157 unit building (1515 South Van Ness) and after firmly saying it would kill the project, was still able to find the money to build the project with a 25% mandate. Essentially the city called their bluff, but key to this success was that the city must to do the math itself rather than rely on the developer's word.

With the potential for a new Mayor and an open Position 8 seat there is an opening to revisit the Grand Bargain, and demand a better deal. Seattle voters will get to choose if they want candidates who hold themselves accountable to the same coalition of powerful people that supported Mayor Ed Murray’s agenda. Ultimately, the data and experience of other cities show that Seattle can and should ask for more. Setting a 25% mandated affordability target will unlock thousands of additional affordable units in a time of housing crisis.