Standing along side affordable housing advocates yesterday, Mayor Ed Murray unveiled his latest legislative proposal to tackle rising housing costs that are pushing lower income residents out of Seattle. In sum, the proposal would create new requirements for most multi-family residential development to set aside a certain percentage of units as affordable housing. This legislation will form an integral piece of the Mayor’s affordable housing framework, known as the Housing Affordability and Livability Agenda (HALA), by helping to directly contribute toward the larger goal of creating 6,000 new affordable housing units over the next 10 years. The HALA framework itself is built upon a subset of far reaching policy objectives ranging from enhanced tenant protections and backyard cottage reform to the adoption of a new Housing Levy and changes to state law.

Late last year, the City adopted a similar affordable housing proposal to the one that the Mayor is now seeking, except in that case it was to require affordable housing to be set aside for new commercial development. The two affordable housing policies are meant to work in concert with each other as a complete toolkit: one as Mandatory Housing Affordability-Commercial (MHA-C), the other as Mandatory Housing Affordability-Residential (MHA-R). Once both toolkits are formally established, the City can begin to unlock their fruits in phases. Both policies are predicated on giving additional value to developers in exchange for guaranteed affordable housing units. The City plans to use additional development capacity (i.e., rezones), typically through the additional allowance of one to two stories of floor area, as a carrot to bring developers onboard with the policy framework.

How It Will Work

The proposal has a few key aspects to it, and they’re important to understand. Firstly, the legislation will be applicable to new residential development only, specifically in areas of the city where development capacity has been increased. That means that a piece of property is only subject to the requirements of the legislation if a rezone would result in the allowance of additional residential development capacity. Assuming that has occurred, new development would only be captured by the MHA-R requirements if new residential units would be added.

Diagram of the MHA-R policy framework. (City of Seattle)
Diagram of the MHA-R policy framework. (City of Seattle)

Secondly, developers will have flexibility in deciding how to provide MHA-R units. A developer could construct affordable housing units on-site (performance option) as part of their project or pay a fee in-lieu (payment option) to the City so as to fund the acquisition of affordable housing. Assuming a developer proposes affordable housing on-site, they will have two options: rental units or ownership units. In both cases, the units must be affordable to tenants for at least 50 years; the only difference is the targeted area median income (AMI) requirement.

Affordable rental units will be required to serve households with incomes no more than 60% of the AMI while affordable ownership units will be required to serve households with incomes no more than 80% of the AMI. If a developer chooses to forego on-site affordable housing, then they’ll automatically be subject to the payment option. Any fees collected for affordable housing will be used to produce or preserve affordable rental units with a target to serve renters at 60% of the AMI or less.

For context of how AMI plays into all of this, the Office of Housing has a handy set of tables that outline the income limits for individuals and families as well as the maximum rent for affordable units:

2016 income limits for AMI by household size. (City of Seattle)
2016 income limits for AMI by household size. (City of Seattle)
2016 affordable rents by AMI and bedroom count. (City of Seattle)
2016 affordable rents by AMI and bedroom count. (City of Seattle)

It’s also worth bearing in mind that the average rent for new market rate units ranges between $1,399 and $1,887 per month. Individuals and families that would be able to partake in the affordable housing program will get the benefit of quality units entering the housing market at substantially reduced rates.

The amount of affordable housing required will differ by area in the city. (City of Seattle)
The amount of affordable housing required will differ by area in the city. (City of Seattle)

Thirdly, the amount of affordable housing that would be required from residential development will differ by area of the city. Developers choosing to provide on-site affordable units could be required to provide between 5% and 8% of their units as affordable, depending upon the location. A commensurate amount of units could be paid for by fee if the developer elects to forego the provision of on-site units.

Fourthly, the legislation will be applicable to more than just what one might ordinarily think of as new development. Developers will be required to participate in MHA-R whenever:

  • A new structure with residential units is constructed;
  • An alteration of an existing building would result in net new residential units (e.g., adding basement units to an apartment);
  • A change of use would add new residential units (e.g., converting commercial space to residential units); and
  • An addition to an existing structure would add  new residential units.

Fifthly, developers that choose to participate in the on-site affordable housing performance option will have to abide by strict rules on the quality of housing. In essence, affordable housing units will have to be comparable to other units in the development. That means that the status of the affordable housing units (live-work, congregate, or standard apartment/condo) will need to be functionally the same with regards to square footage, number and size of bedrooms and bathrooms, unit amenities, access to building amenities, and the term of lease.

And sixthly, the legislation makes it clear that any affordable units created through the MHA-R program cannot benefit from public subsidy (e.g., the Multifamily Tax Exemption program). The obvious reason here is that the City doesn’t want developers to double dip from added development bonuses and public expenditure on social welfare. Instead, developers have an obligation to first meet their affordable housing requirements and secondarily can assign additional units for separate housing subsidy programs.

Baked into the legislation is monitoring and fail safes. The Seattle Department of Construction and Inspections will be responsible for monitoring implementation of the MHA program and delivery on the goal for 6,000 affordable housing units by 2026. The first MHA report is due by the end of the second quarter in 2018 and thence annually by July 1st. The primary purpose of this is to determine the effectiveness of the program and if additional amendments to the ordinance are necessary. Four circumstances are laid out in which the Council could consider amending the ordinance:

  1. The program fails to meet the expectations for performance in the first five years;
  2. There are major positive or negative changes to the real estate market for development;
  3. There is a need to adjust the amounts required for the payment or performance options; or
  4. If none above circumstances are applicable, then the ordinance could be amended generally after 10 years.

Policy Timeline

With the introduction of the legislation to Council, the timeline for review, deliberations, and adoption is targeted to be short. The Planning, Land Use, and Zoning Committee will take up the proposal on Tuesday (May 3rd) for the first time and a second committee review is planned again in early June. The Mayor anticipates that the legislation could make it out of committee by mid-July and end up on the full council consent agenda for July 25th. Once approved, the MHA-R will complete the MHA framework and allow the Council to pivot to legislation concerning rezones that will help implement MHA.

In fact, the first set of rezones that could find approval by the Council are expected this summer. The University District Urban Design Framework has been waiting in the wings for nearly a year and will likely kick off the slate of rezones immediately after the adoption of MHA-R. Rezones on 23rd Avenue could also be approved in fall, but the biggest set of rezones — area-wide/zone-wide rezones — will wait until a more robust series of discussion in 2017. Under the HALA framework, those are expected to come in the Summer 2017/Fall 2017 timeframe.

We hope you loved this article. If so, please consider subscribing or donating. The Urbanist is a non-profit that depends on donations from readers like you.

Previous articleWhich Of These Is Seattle’s Worst Intersection In 2016?
Next articleMake Your Voice Heard On ST3
Stephen is an urban planner with a passion for promoting sustainable, livable, and diverse cities. He advocates for smart policies, regulations, and implementation programs that enhance urban environments by committing to quality design, accommodating growth, providing a diversity of housing choices, and adequately providing public services. Stephen primarily writes about land use and transportation issues.

12 COMMENTS

  1. Oh good. More complicated rules and another inspection agency. Remind me who’s going to ensure that the 5th owner of a rent-controlled condo unit doesn’t sell for market rate in 30 years? Will the rent-controlled unit owners be allowed to AirBnB their units?

    • Agree too complicated. Why not have developers simply pay money and fund non-profits to build permanently affordable housing (set the target rent now and index to CPI or wages). Even better, create an exemption from single-family zoning for them to build small multi-family units anywhere. Simple.

      • To your first point, they essentially have that option if they choose it.

        On the second point, I’m not sure what the Comprehensive Plan says regarding that. It may take more than just a text amendment to achieve such a goal. I don’t think it’s just a flick of the wand.

        • Sure, I accept that. But Seattle seems to keep coming up with Potemkin solutions that still make everyone angry and do little or nothing to remediate inequity. Why not start sharpening the contradictions since the forces of reaction are hostile to any change anyway?

    • The only inspection agency is the City. If a developer chooses the performance option, they are required to have a third party verify compliance with the law. That’s a very typical provision by planning agencies whenever there is ongoing monitoring of performance.

      Also, the any units that are income restricted will require a covenant to be recorded. The deed will run with the unit for the specified time and future homeowners will be subject to restrictions attached to it just like any other property. There are *abundant* examples of trust-like property around here. It’s not particularly special or unique.

      • “The only inspection agency is the City.” “they are required to have a third party verify compliance” How does “inspection” differ from “verify compliance”? So the builder would also have to pay for this compliance verification – for how many years? How intrusive is it (interviewing tenants? mailing in contracts?), and how much will it cost?

        I was being a bit flippant with my first comment (and I appreciate your knowledgeable response). But it just seems to me like our efforts to implement rent control in a state where rent control is illegal involves unnecessarily complicated solutions. These complications add risk and cost to projects and leave us with less housing supply.

        • This is already being done. It’s no different than verifying MFTE compliance or verifying that the subsidies used in non-profit housing are for the correct income levels.

          • There was a sign at my dentist’s office saying that there’s a program to pay for gas for your visit. All you need is to document your driver’s license, registration, and proof of your income level. That sounds like a high bar for free gas for a visit to the dentist’s office even for those in need – but could you imagine if they required that for everyone that visits the dentist? What would that do to cavity rates?

        • Obviously the mandatory affordability program isn’t technically rent control because then it would be illegal as you alluded. To equate this program with rent control strikes me as reactionary. Yes, IZ resembles rent control in some ways, but obviously restricting rents in only 5% to 8% of units has much fewer if any of the negative side effects as full bore rent control has.

          It seems you’re assuming that upzones would pass without the mandatory affordability program, but what would the route to passage been without the Grand Bargain? It’s easy to dream an alternate reality where massive upzones are easily implemented but I think the political reality is quite different.

          • And that’s why in the end I may end up supporting the GB – despite everything I dislike about it, there’s a coalition actually getting it done. If the upzones are large enough and the fees/requirements are small enough (I don’t see real numbers on these things yet), it will probably do more good than harm. But the hoops we need to jump through to get this bit of good seem to defy logic. Honestly, I’d love to see a citizen’s initiative to just plain upzone and bypass all of the politics and fears of the council.

            Regarding rent control, I see this as pretty openly a way to get the private sector to implement it because it’s illegal for the city to do so. Up until now they’ve used incentives to ask developers to implement rent control in exchange for money or extra height, but MIZ requires them to do so. It seems like an easy lawsuit for a developer to win to me, but IANAL. Fundamentally the city is requiring developers to limit the rents for some of their tenants, right? I think you’ll have a hard time arguing that’s not rent control. Is it because it’s not every unit? Or because there’s and option of paying a fee to get out of rent control? I don’t see a way out of it, and don’t see why you’d think this opinion is reactionary.

          • Yes I think the in-lieu fee option was likely added in part to pass the legal muster. And strictly speaking that’s what makes it not a form of rent control. The developers on the HALA committee also agreed not to sue as part of the bargain. Some rogue developers might still sue but probably won’t have the legal firepower of big firms that did participate and thus even less chance of success in their suit.

          • “And strictly speaking that’s what makes it not a form of rent control.” I think we’ll have to disagree on this point. As long as the council sets the rent rate they’re controlling rents, even if you let people out using fees. That’s kind of the definition of control – if you ask everyone who sets their rent and some people can say “the council”, I don’t see how that’s not rent control. Then again, I’m no lawyer. And I don’t think there were lawsuits in the incentive case (of course, it was an incentive and wasn’t mandatory so less reason to sue).

Comments are closed.