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Seattle's golden ticket: Could land-use changes make us wealthier?

Forget that nagging societal fear of debt and fiscal policy. How changes in zoning and land-use codes could inject money into the Seattle economy and make it more sustainable. 

Looking east on Yesler in Pioneer Square

Looking east on Yesler in Pioneer Square Joe Mabel/Wikimedia Commons

Fiscal policy – the practice of government boosting the economy through creating more money – has been widely discredited as a strategy to reverse the economic downturn. I tend to agree with Paul Krugman, who feels that both Democrats and Republicans are repeating mistakes made in the 1930’s — extending the great depression by focusing on cutting budgets and fretting about debt. Slashing budgets and killing stimulus are moves antithetical to what we badly need: more jobs.

At least at the local level hope is still alive for fiscal policy in the form of innovative land use policy. Cities can’t print money, but they can ease limits on land use that currently increase costs and limit new development. This regulatory easing can support sustainable growth and job creation.

The principle is pretty straightforward: There are some natural limits to the way we use land. The most obvious are health and safety, engineering, and design. Even if a developer wanted to and money was limitless, it would be really tough to construct a 6,000-foot-tall building shaped like a cowboy hat . Some things just go beyond the limits of physics.

There are economic limits to land use as well. Even if the gigantic cowboy hat might someday be physically possible, someone has to be willing to buy, rent, or lease the space at a rate that will generate enough money to pay for it. The law of supply and demand limits land use — even without any zoning — because new developments have to meet a need for which people are willing to pay. Furthermore, the amount they are willing to pay must offset or exceed the costs of building a project in the first place. A project has to pay for itself, whether it’s a cowboy hat or an apartment building. This simple rule easily gets lost in land use debates.

When it comes to land use, local city councils can’t suspend the laws of economics any more than they can suspend the laws of physics. In recent discussions about Transit Oriented Development (TOD) in Roosevelt and zoning in Pioneer Square, opponents of density have acted as if the Seattle City Council might suddenly lose its mind and increase zoning from the square's current squat 40-foot buildings to mile-high sky scrapers. Local land use politics being what they are, that’s not going to happen. But even if it did, the developers would only build what they thought they could sell. It’s highly doubtful that such Brobdingnagian boosts to development capacity would be fully utilized. There simply isn’t any way to pay for it.

But what the Seattle City Council can do is allow developers to act in the interest of profit. Private profit isn’t a bad thing, but our process often behaves as if it is. Listening to local elected officials talk with derision about “private property interests” ruining our city would be laughable if it wasn’t such a serious and almost deliberate misreading of basic economics. When private interests are profitable, jobs are created. That’s equally true for small companies stamping out widgets or developers who create housing. When developers create successful and profitable projects, people are put to work, new tax revenue is generated, and our plans to sustainably support growth can succeed.

So should we abolish zoning, liquidate single family neighborhoods, and bulldoze our historic neighborhoods to allow a wild west willy nilly development pattern? Not exactly. Two proposals now before the City Council would use the city’s zoning authority as fiscal policy through what I would call regulatory (instead of quantitative) easing.

The first proposal is a regulatory reform package a group of developers, environmentalists, and neighborhood advocates (myself included) have proposed to the City Council and Mayor. This modest set of proposals would encourage new entrepreneurial endeavors by allowing home businesses in garages, retail business on the ground floor of residential buildings, and by speeding up the creation of more new housing units. As Chuck Wolfe pointed out in his article last week, “this SEPA aspect of the proposal could result in 40 new construction projects with 100 to 250 units each year.”


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Comments:

Posted Thu, Jul 21, 8:49 a.m. Inappropriate

TDR is a great idea, used effecively in many cities.

That said, I'd rather protect three and four story buildings in Pike Pine and other historic districts. One-story buildings can be protection-worthy too, and neighborhoods don't need to be uniformly dense, but on a large scale that's too low for a good urban district.

mhays

Posted Thu, Jul 21, 8:51 a.m. Inappropriate

Gasp! Encourage development in Seattle? What about the homeless?

sonny

Posted Thu, Jul 21, 10:24 a.m. Inappropriate

Roger, by no stretch of the imagination are you a "neighborhood advocate". Please quit referring to yourself as such. It tarnishes the long hours real neighborhood advocates have put in to make Seattle one of the most livable cities in America.

ddmiller

Posted Thu, Jul 21, 11:08 a.m. Inappropriate

Amen Mr. Miller. Shilling for developers does not a "neighborhood advocate" make. Quite the opposite, really. These New Urbanist gentrification advocates won't rest until every last member of the working class in Seattle has moved to Federal Way or further south....

Posted Thu, Jul 21, 11:53 a.m. Inappropriate

I'm a neighborhood advocate, too. Here's my message to The Mayor: quit listening to the self-anointed experts who would play SimCity with your constituents.

BlueLight

Posted Thu, Jul 21, 1:44 p.m. Inappropriate

"When private interests are profitable, jobs are created."

Yes, and trickle-down economics will enrich us all! Thank goodness the invisible hand will preserve our neighborhoods. I'm looking forward to it's beneficial effect on education and our environment, as well.

psj

Posted Thu, Jul 21, 1:59 p.m. Inappropriate

"When private interests are profitable, jobs are created."

So could you please explain why we remain in a stagnant economy even as the wealthy get to keep their tax breaks? Speaker Boehner would have us believe that taking those away would prevent job growth. Well, they haven't helped.

Nope, I think when private interests are profitable, a small number of people profit.

westello

Posted Thu, Jul 21, 3:17 p.m. Inappropriate

Kinda makes you wonder who the "us" in the headline is. Not me or the people in my peer group, to be sure.

Posted Thu, Jul 21, 3:43 p.m. Inappropriate

If that mile-tall cowboy hat is ever built, I hope it looks like this. http://www.hatnboots.org/

Posted Thu, Jul 21, 5:01 p.m. Inappropriate

I stand with Thomas Sowell on this one. IBD 3/16/2011:
http://www.investors.com/NewsAndAnalysis/Article/566241/201103161818/Redevelopment-A-High-Priced-Political-Hoax.aspx

afreeman

Posted Thu, Jul 21, 5:15 p.m. Inappropriate

While personally I applaud the relaxing of restrictions on small businesses in residential zones and judicious use of TDR, much of the new proposal is not worth cheering about.

I can see though how Mr Valdez's colleagues are hurting for work, and he is definitely an advocate for his "urbie" (pub) neighbors. But as to Mr Valdez's general suggestion, construction jobs are often short term jobs, and obviously, cyclical.

A building bubble is what we just went through, and I think it is arguable that most people aren't fairing well because of it. And thankfully it will take more than hot air and dismissal of SEPA to re-inflate it.

Posted Fri, Jul 22, 4:09 p.m. Inappropriate

This article makes me think that Roger is paving the way for the teardown of the viaduct and is sidetracking the topic to avoid saying "the developers have bought and paid off politicians in order to build 100-story condos along the waterfront, and your view will be worthless, compared to what developers promise the city in exchange for the mega-condo", and of course the teardown of the viaduct will be on the taxpayers dime.

makes you feel all warm and fuzzy, doesn't it?

salmonjim

Posted Sat, Jul 30, 7:34 p.m. Inappropriate

Seattle is to be saved by businesses in garages? Every time a neighborhood allows for any expansion of use it is at risk of being found to have "changed in character" and found no longer to be "residential." Well-to-do neighborhoods like Queen Anne and Windermere understand this and resist these changes.

Before there is any expansion of allowed uses in residential neighborhoods, the city needs to prove it can enforce existing codes. Roosevelt put up with decades of abuse by one large property owner. The city's response was one long whine about their inability to deal with decaying vacant homes, "renters" living in homes lacking electricity and water and so on. I own a rental home (in a neighborhood commercial zoning) and found the city to be completely unwilling to enforce obvious code violations in an adjacent property. The city acted only after I brought in county and state agencies over illegal dumping of hazardous waste.

The real land use problem is income inequality. Seattle used to have a very large blue-collar and middle-class population. These were the people raising families in Ballard, Wallingford and, yes, even Queen Anne. The growth of the very affluent priced working people (and even relatively well-to-do professionals) out of the city.

If land use rules were really the barrier to affordable housing or sustainable growth, Hong Kong would have the world's cheapest real estate instead of the most expensive. Developers, however, still lobby against land use restrictions that maintain livability. Remember, when an area becomes too crowded, unsafe, or unpleasant, people who can afford to move do so and leave everyone else behind. But I could be wrong; start putting high-rise, multi-family and commercial structures in Magnolia, Windermere, and along Lake Washington. Let's see how that works out.

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