Developers would pay new fees to help fund affordable housing programs in Seattle, if the City Council follows through with a preliminary plan it approved on Monday.
The Council voted 7-2 to in favor of a resolution stating its intent to implement a "linkage fee" program. Under such a program, the city would charge the fees on new commercial and multi-family residential construction in denser parts of the city. Developers argue that the cost of the fees would jack up rental and purchase prices for property, undermining the Council's affordability goals. And in a letter sent to council members last week, a group of land use attorneys questioned whether the envisioned fees are even legal under state law.
Councilmember Mike O'Brien helped shepherd the resolution through the committee process. Despite the misgivings property developers and some of his fellow councilmembers have expressed, he believes it was time for the Council to take a stance on the fees.
"We're seeing a ton of interest in new development in Seattle," O'Brien said during an interview after the Council vote. "It's having a real impact on affordability and I think now is the time to address it."
"This is not an easy position to take," he added. "Developers in this community are, you know, not just developers; a lot of our leading civic leaders are in the development community and to have seven Councilmembers stand up and say, 'we respect developers' positions but we want to move forward on this,' is really a reflection of where the public is on this right now."
Councilmembers Sally Bagshaw and Tom Rasmussen cast the two no-votes.
"I have very serious concerns with the prescriptive nature of this resolution," Rasmussen said during the meeting. "It reinforces the belief that the Council has already made up its mind."
The resolution is only an initial step toward the fee program, which would need to be finalized with a city ordinance. The resolution says that the Council should aim to phase in the fees over a three-year period beginning on Oct. 1, 2015.
The resolution also includes a projected fee structure that is based on a study the Council commissioned from an outside consultant. The fees vary depending on where a project is located and are charged for each square foot of "rentable" area (space devoted to uses such as walls or mechanical equipment is exempt). In parts of the city where residential and commercial property prices are lower, the projected per-square-foot fee range is $5 to $7; in medium cost areas it is $10-$12; and in high cost areas it is $16-$22.
A map included with the resolution shows low-cost areas along corridors such as Lake City Way and Rainier Avenue South, while high-cost areas, where the fees would be set at the upper level, include neighborhoods in Downtown and South Lake Union.
During Monday's meeting, Bagshaw put forward an amendment that would have eliminated the fee figures from the resolution. Bagshaw spoke at length about the need for more affordable housing in the city, but said if the numbers were not removed, she would not back the legislation. She expressed uneasiness with narrowing the resolution by including the specific fee prices.
Councilmember Jean Godden and Rasmussen also spoke in support of the amendment. But it ultimately failed.
According to the resolution, the city's Office of Housing will be responsible for coming up with policy proposals for how the fee revenue should be spent. These would need to be approved by the Council. According to spokesperson Todd Burley, the Office of Housing has not completed any draft policies or plans. "It's a little too early," he said last week.
Supporters of the fees were pleased with the outcome of Monday's meeting.
"This is a huge step forward for working families," said Rebecca Saldana, who is deputy director of community affairs and programs at Puget Sound Sage. "What the linkage fee does is actually makes sure we're growing in the right way."
Developers were far less enthusiastic.
"The development community and my clients are extraordinarily concerned," said Matthew Gardner, chief executive officer at Gardner Economics, LLC, a land use and real estate advisory firm located in Seattle. Gardner added that he would expect development to "slow down very, very dramatically" if the fee program was put into place.
"There's no doubt about that," he said. "It is something that has not been well thought-out."
O'Brien pushed back on the assertion that the fees would lead to higher rents.
"To simply say that a developer could tomorrow just choose to charge $100 more rent on all their units and get away with it, that doesn't make sense," O'Brien said. "That's not the reality of the market; none of these developers control the market like that. They're all price takers not price makers."
Despite the divided views on the linkage fee resolution, O'Brien said he was satisfied with where the Council ended up.
"I think it's easy to say, 'hey, we really need to address affordable housing and let's just put everyone in a room and come up with a solution,' and sometimes that process works and sometimes it doesn't," he said. "It's time for the council to just take a position on it."