The cure-du-jour for skyrocketing housing prices, at least in Seattle City Hall, is something called inclusionary zoning, or IZ. It's in effect in more than 300 urban areas in the country. Typically IZ requires residential developers to include a percentage of affordable housing in new projects. Does it work?
To many developers, the question has been: Does it backfire? They contend that the price of building low-cost housing in a project just drives up the prices on the 90 percent or so of the rest of the project; and that the requirements can inhibit developers from building more housing, thus limiting supply and driving up housing prices all over town. Such are the arguments bouncing off the walls in Mayor Greg Nickels' office, where he's trying to build a case for IZ.
Update: To be precise, what the City allows is "incentive zoning," whereby a developer gets to exceed height and density restrictions in exchange for paying into an affordable housing fund or building affordable housing on site. The classic form of IZ, discussed below, is not legal in Washington state.
Comes now a comprehensive study by the Furman Center for Real Estate and Urban Policy, which has looked at IZ programs in San Francisco, Boston, and Washington D.C. The good news for IZ advocates like the Mayor is that the sky is not falling. In San Francisco there was no evidence of rising prices or lower production of single-family houses. In suburban Boston there was some negative effect, but very small.
The bad news for IZers is that not much affordable housing was produced. If IZ is not a menace, neither is it a panacea. Apparently the IZ skeptics are right in their contention that developers shy away from such projects, even with incentives. Set the requirement at, say, 10-unit projects, and developers will build nine. Or they will focus on the next town over, increasing sprawl. Denver, for instance has IZ, but the surrounding counties do not, and it's politically tough to get the suburbs to join in.
Where you have a full county, such as Mongomery County in suburban D.C., the results have been more impressive, especially over time. The full report notes 15,252 affordable units built in the D.C. area (most in Montgomery County) since the program started in 1974. San Francisco area has numerous IZ jurisdictions, with 9,154 new units reported. But the report finds that other tools in San Francisco work better in generating lower-cost housing, notably density bonuses and exemptions for smaller projects.
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Comments:
Posted Sat, Mar 29, 1:50 p.m. Inappropriate
"Either/Or": David,
the IZ is an antique regulation to create affordable housing.
First we have to define what groups (s) we need to house, ie, families, workers, disabled, elderly, etc.
Then we estimate, by actual numbers or by so many/ sq. ft., the number of affordable housing units that need to be created when a development/applicant enters the MUP process. They will know in advance what conditions they need to meet.
Now, indstead of including those units in the development, allow the developer the choice of building those units in proximity to their development, say within a 1/2 mile . That gives the developer the oportunity to build the development of his/her desire to meet the market conditions desired, and focus, in another location, on the needs of affordable folks. One good measure is locating those units within waolking distance to the development or near public services such as bus routes, etc.
The gatekeeper on this is that the developer gets his/her occupancy permit for the development at the same time as the issuance of the occupancey permit for the affordable units.
We should research this option and see if it gets a better response that the IZ idea.
I casll this the "Either/Or Option".
Art
Posted Sat, Mar 29, 5:52 p.m. Inappropriate
_: Allowing the affordable housing to be offsite helps substantially.
But really, any IZ program does make the majority pay more...a lot more. We should spread the burden to everyone. I'd love to see an expanded housing levy for the
Posted Sat, Mar 29, 5:53 p.m. Inappropriate
RE: _: (Wierd!)
...80-100% people.
Posted Sat, Mar 29, 8:32 p.m. Inappropriate
Affordable?: Affordable Housing. What's the definition of "affordable"? That's the elephant in the room that no-one is talking about. Consider the following: 1) according to the Seattle Planning Commission (and I suspect every single pol in City Hall) "affordable" means 0%-60% of meadian income, 2) another definition of 0%-60% (according to HUD standards) is "low-income", 3) state law only allows public money to be spent up to 65% of median income (I believe that's the threshold). So, we can't use public money for "workforce" (typically defined as 80%-120%), there are powerful constituencies (sp) that want to keep it that way, and all the while pols in City Hall keep saying "affordable" when what they really mean is low-income.
Seattle is becoming a city of the haves and the have-nots. People making 150% and above, and those below 60%. This is not healthy, folks. As a resident of SE Seattle I see this every day. We've got the Gold Coast of Mt. Baker and Seward Park, and then there's the Rainier Valley (where I live). We're doing OK down here, but trust me, all this talk of "affordability" means we'll be creating pockets of poverty, and I suspect that they'll all be in my neighborhood, High Point, and probably around Northgate.
Posted Sun, Mar 30, 10:18 a.m. Inappropriate
HELP ME OUT: Ganado82, what do these percentages mean for rents or sales price in terms of dollars?
I am assuming that the 65% figure means that a customer can allocate 65% of his/her income for housing (doesn't sound right).
Locations: the affordable housing has to go where land is relatively cheap. I don't think there is any way around that.
Remember that Ballard and Fremont were cheap, working class housing markets just one generation ago. Rainier Valley will probably undergo the same transition.
Posted Sun, Mar 30, 10:45 a.m. Inappropriate
RE: HELP ME OUT: The percentages are of median income. I believe that Seattle's median income is around $55K, so 65% is around $35K. The affordability comes from then allocating approximately 1/3 of income toward housing.
On the cost of land, dirt is expensive everywhere in Seattle. In Columbia City developers just spent $12 million and $6 million for parcels to build on. In who's book is that cheap?
The main reason you're going to see "affordability" in the areas I mentioned is because the residents are diverse, their "communities" are insular and don't talk to one another so they can't build a coalition against ghetto-izing their neighborhoods. In SE Seattle we humiliated the Mayor by building a broad concensus that we didn't want the City utilizing eminent domain to take property from one private entity and giving it to another private entity (see the Kelo decision by the US Supreme Court in 2005). That took an all out effort by many individuals against a "threat" people could really see. With the nice sounding "affordability" you're not going to see that concensus.
Posted Sun, Mar 30, 2:19 p.m. Inappropriate
Inclusionary vs. Incentive Zoning: David - you finish your post by mentioning that density bonuses are one of the strategies that seem to work well. As I understand it, the mayor's proposal is precisely that - it would offer developers a density bonus above current allowed heights in exchange for affordable units or other amenities like transfer of development rights for park or open space. It would be great to have more of your insights on how density bonuses have worked or not worked around the country.
Posted Sun, Mar 30, 4:39 p.m. Inappropriate
RELATIVELY cheap: is what I wrote. Are you arguing that SE Seattle is expensive RELATIVE to other areas? not likely.
Why does eminent domain enter into this issue? is Seattle assembling land for these developers? if so it is not something I have heard of.
If the developer is tasked with building a dwelling unit for someone making $35k then, using the 33% proportion, you have to rent the unit, utilities included, for about $12k per year. I hope developers can do that but it sounds financially challenging, to say the least.
Posted Mon, Mar 31, 9:40 a.m. Inappropriate
Land, Land Land!: Affordable housing is determined by the cost of the land, whereever it is desired. Due to comprehensive code requirements, all basic construction costs are the same for low to high income catagories. The major price differences are in the finishes,appliances and square footage dsired.
So, what we need to do is have a government or non-profit fund to provide developers with appropriate funds to buy down the land cost to achieve a rental/purchase level for the affordable rentor or purchaser. No eminent domain is needed. Keep the property private with covenents to make sure the long term housing goals are maintained for the life of the development.
The right vehicle for this kind of partnering gives the government what it wan't, makes units available for the target resident, and let's the private sector do what it does best. The key to making all this work for all, is having a high degree of project overview and knowledge of all factors involved. The dollars provided by this fund is basically buying the "affordable Housing easement/covenent" so as not to give money away with no strings attached.
Art
Posted Mon, Mar 31, 7:18 p.m. Inappropriate
RE: Land, Land Land!: "Spot on" on the reason everything is so expensive. I'd have to look into your specific remedy. Sounds like it's possible, but again we get back to the definition of "affordable". This is a conversation this City and community as a whole is going to have to undertake. State law only allows funds to be used for "low-income" housing. There are powerful and vocal interests who do not want the ceiling raised above 65% of median. So we're back where we started, a new Seattle populated the wealthy and the poor with no middle class.
Posted Mon, Mar 31, 7:31 p.m. Inappropriate
RE: Inclusionary vs. Incentive Zoning: The Seattle Planning Commission recently completed their "Affordable Housing" study (in late February) and you can find it on their web-site. They did investigate density and affordability in other cities, and the results weren't that impressive (by my estimation).
The Council will soon have the Multi-Family Zone amendment to address, which would allow increased density by providing "affordability". The affordablity requirements are quite small, so we will soon start to see versions of Ballard pop up in these zones with very little affordable housing.
Posted Mon, Mar 31, 11:35 p.m. Inappropriate
Wolves in Sheep's Clothing: Fifty percent of all the land in King County is owned by government or land trusts. So there's plenty of land. The problem is zoning, growth management, permitting, and regulation which jack up costs due to scarcity (supply and demand), delay (time is money), and permitting costs (your average city typically has about 500pp of development regulations).
A little zoning, a little delay, and a little regulation aren't necessarily bad things. But these three little puppies have grown into ravenously corrupt wolves. The current Growth Management Act has become a shakedown operation that artificially inflates real estate prices. The schemes talked about here to fund affordable housing ignore the wolves in the room eating the poor and middle class, and instead suggest that the wolves set aside some of their scraps for the wounded and maimed.
I went to a meeting a while back where it was estimated that it would take two years to get a relatively simple permit from King County. The estimated cost including fees to King County and consultants was $60K to $100K. The end result, all costs considered) will be about $50K to $100K added to each of two lots, forcing each to become a lot for a high-end home.
In places where this shakedown doesn't occur, fees, regulation and consulting costs are way down, and permits can be gotten in a month or two. My understanding is that Tacoma and Snohomish County are like this. That's the way it should work: no special favors, but no holding hostage either.
What we have is legal waste and corruption by bureaucracies who make more money if they're slow and incompetent than if they're speedy and efficient. Your average municipality typically has a "pre-app" meeting where someone seeking a development permit gets run through a gauntlet of bureaucrats representing the bureaus of the bureacracy, usually about a dozen clerks each of whom is charging $115/hr to tell you that there's 500pp of regulations that you'll have to follow, but don't take the individual clerk at his or her word, because that would be something for which the municipality might be held liable. This passes for customer service.
In the case of King County, if I recall correctly, the permitting department, DDES, is charged with paying for its entire bureaucratic expense through permitting fees. Therefore, it's motivation is not to help citizens, but to delay and extend any permit as long as possible. This seems an awful lot like the old Soviet Union, except it was colder there and they spoke Russian.
In this sort of setup, who you know is what matters, since the system is rigged to hang you twisting in the wind if you become a problem. Successful developers take this all in stride, and play the cards they're dealt. Or they hire lawyers and go to war. Little guys and new guys, get eaten up by the wolves and their innards left for the vultures and coyotes.
The current system rewards mega-property owners, mega-builders and government for their existence, and punishes the poor, the middle class, blue-collar workers, single moms, students, young people, retirees, et al. The system is geared to attracting "family wage" jobs for people without families, such as software developers from India, bio-tech graduate students, and retired millionaires. Not many of these people produce children, so family-wage families are often just dual-income professionals with no kids.
Indeed, Seattle is one of the least child-friendly cities in America, with a run-down dysfunctional school system, partly because we're paying our tax dollars to venal bureaucrats instead of to inspiring teachers or for state-of-the-art schools. These messed up priorities would suggest a malignant system presided over by George Bush. But no. It's the kindly democratic governmental grandmas with the large incisors.