On Wednesday, Seattle Mayor Jenny Durkan and Councilmember Lisa Herbold both issued policy ideas to stem displacement. Mayor Durkan issued a new executive order outlining how city departments should act in developing anti-displacement policies over the near-term. Likewise, Councilmember Herbold released a draft of legislation that she proposes would ideally be adopted along with other Mandatory Housing Affordability (MHA) legislation. Her bill would push for replacement of affordable units in areas of the city identified as high risk of displacement and low access to opportunity.
Mayor Durkan issues new anti-displacement executive order
Mayor Durkan issued a wide-ranging executive order to address displacement across the city. These of sense of the executive order is very much an all-hands-on-deck kind of policy platform.
“To help create a city of the future, we must work together to protect against gentrification and displacement and make it possible for families to stay in Seattle,” Mayor Durkan said in a statement. “As Seattle has grown, we have seen far too many communities of color pushed out of their homes in Rainier Beach, the Central District, Beacon Hill, and Chinatown-International District. With this Executive Order, we are refocusing our work on strategies to prevent displacement and gentrification. It begins with community, and we will continue our work together to develop a holistic response so we can make a more affordable future real for families across Seattle.”
Mayor Durkan’s executive order lays out four general themes of actions:
- Implementing a suite of short-term actions in 2019 to address displacement and affordability;
- Pushing the state legislature to provide more resources and tools to provide more housing affordability and reduce displacement;
- Continued commitment to the Equitable Development Initiative (EDI), which helps address issues of displacement and gentrification; and
- Commit to community engagement and interdepartmental collaboration to address displacement.
Mayor Durkan wants the Seattle Office of Housing to update its Housing Funding Policy by April 30th. Several policy changes that she wants to see for areas with high risk of displacement, include:
- A preference for existing community members to benefit from and be housed in a new affordable housing projects that the city partners with non-profit developers to deliver;
- Policies to encourage homeownership development on city-owned surplus property;
- Expansion of a city home repair program that provides no-interest loans to low-income homeowners to improve or increase their habitable space; and
- A policy to use funds from loans to acquire and preserve buildings that are subsidized and set to expire.
Her executive order also reaffirms her administration’s commitment to the MHA program with intent to monitor its performance and deliver 6,000 affordable housing units by 2028. Other priorities include delivery of new Multi-Family Tax Exemption legislation this year, recommendations by the new Affordable Middle-Income Housing Advisory Council, leveraging tax incentives through Opportunity Zones.
In terms of lobbying the state, the executive order suggest that the city will make it a priority to increase affordable housing funding, reduced property taxes for low-income seniors, and modify eviction laws of tenants. Mayor Durkan appears to be open to a variety of funding avenues to bankroll affordable housing construction. For evictions, she wants the state to adopt a just cause requirements to reduce unfair evictions of tenants.
Lastly, departments across the city are directed to dig deep and determine how the regulations, incentives, funding sources, and tenant protections could be leveraged to reduce displacement. This could result in new processes, policies, regulations, and protections for residents, cultural assets, and commercial businesses.
Councilmember Lisa Herbold releases anti-displacement legislation
For her part, Councilmember Lisa Herbold has drafted legislation that could provide additional tools for decision-makers to rely upon through the permitting process to reduce displacement risks to residents in areas of the city that are considered to be high risk of displacement and low access to opportunity. These are already identified through the city’s comprehensive plan, encompassing the Urban Villages of South Park, Bitter Lake, Rainier Beach, Othello, and Westwood-Highland Park.
“This ordinance would use authority granted under the State Environmental Protection Act (SEPA) to create a requirement for developers to mitigate the impacts resulting from the loss of affordable housing in those areas of the city that, if we didn’t do so, the result would be a failure to fulfill our obligation to ‘affirmatively promote fair housing’,” Councilmember Herbold said. “In other words, in areas where disproportionate displacement of communities of color and other protected classes is likely to occur.”
SEPA applies to most new development in Urban Villages since the categorical exemptions are set low. For instance, developments with four or fewer dwelling units in the Lowrise 1 and commercial zones are SEPA-exempt, while developments with 20 or fewer dwelling units in the Midrise, Highrise, and Seattle Mixed zones are SEPA-exempt. Categorical exemptions for non-residential development is similarly low with 12,000 square feet of gross floor area being the upper limit and 4,000 square feet being a common maximum in many zones.
Councilmember Herbold argued that displacement may be happening at a quick pace in light of recent MHA rezones:
In the case of the University District MHA upzone in 2017, the city estimated that only 40-275 units of existing affordable units of housing would be demolished over 20 years. The EIS estimated likely demolition by identifying specific redevelopable parcels and quantifying their existing housing (zero, for parking lots and commercial buildings). The “full build out” scenario wherein construction occurs on all redevelopable parcels to the full capacity of the proposed rezone was estimated to result in the demolition of 275 homes over 20 years. In less than 2 years, based upon a Council Central Staff analysis of new development projects that are currently in some stage of having their Master Use Permit issued or Early Design Guidance reviewed and that are subject to the new zoning put in place in 2017, 96 units of affordable units are already planned for demolition.
It is not yet clear how much affordable housing will be constructed as part of the University District developments, but they are all subject to MHA requirements. Nearly all of the developers that have identified how they plan to comply with MHA have said that they intend to pay fees to the city to leverage development of non-profit affordable housing. Interestingly, that method, according to city analysis, produces more affordable housing than if a developer constructed on-site affordable housing themselves due to how MHA is structured–the fees are leveraged roughly three times over with other funding sources. Note, the first four U District towers out of the gates will pay more than $20 million in MHA fees by our math, so it really adds up with larger projects, especially in higher intensity M2 zones.
One development could result in the demolition of 69 dwelling units and presumably many more tenants. In place of it, 446 dwelling units would be created, but even under the highest MHA requirements, there would not be one-for-one replacement. In some cases, development is proposed on sites with no existing housing at all, which will deliver new affordable housing units. And another developer has pledged to construct two on-site affordable housing units as part of their development, which would directly replace two existing housing units. The trade offs are deeply complex, but for tenants facing losing their housing, the pain of displacement is real.
In this context, Councilmember Herbold wants SEPA as a relief valve and tool to reduce displacement.
Her legislation could require mitigation any time a project is not exempt from SEPA and includes construction of more than four dwelling units as part of a new structure, construction of an addition, or change of use from commercial to residential and involves demolition of affordable housing units available to households with incomes making up to 80% of the area median income (AMI) within the five specified Urban Villages.
Decision-makers would be given two options, whichever is less:
- Increasing the MHA requirements equal to that of the M2 level (the highest MHA requirements) for the Urban Village; or
- On-site replacement of units that are demolished and served households making up to 80% of the AMI.
In the latter case, developers would only be obliged to construct the replacement to the same standards of other MHA dwelling units and could rent them at rates up to 80% of the AMI. Failure to comply could allow the city to deny a project.
The legislation creates a guideline for use of the mitigation measures. “In determining the necessary affordable housing impact mitigation, the decision-maker shall consider the need for affordable housing created by the development, whether a tenant relocation assistance license is required for the development, whether units affordable to households earning up to 80 percent of median income would be demolished, and whether the development is in a location identified as a having a high risk of displacement,” the legislation reads. This puts a bit of a box on its use, but still appears to be fairly broad in potential application.
Possible issues with anti-displacement legislation
The challenge with this legislation, however, will be whether or not it can meet the legal muster for MHA. The prevailing thinking of the MHA program has been that the city could defend a framework where MHA requirements do not exceed the added value that zoning and land use regulation changes provide to property owners. For instance, if a site currently allows for 10,000 square feet of floor area to be built and would be allowed to be developed with 15,000 square feet of floor area under MHA, the MHA requirements could not exceed the delta and value that the extra 5,000 square feet of floor area would provide. That is why different MHA zoning changes receive M, M1, and M2 level bumps for MHA requirements (from lowest to highest intensity). The bigger the zoning and land use regulation changes, the bigger the MHA requirements are.
Under the proposed legislation, that paradigm could shift in some cases where the impact mitigation greatly exceeds the value that MHA development capacity increases provide, resulting in a regulatory taking–an unconstitutional act under state law without just compensation by the regulator, which is the city in this case. Applicants could choose to sue the city over this, and if successful, render the legislation moot, though it may not harm the entire MHA program since it is a separate and severable piece of legislation.
The legislation could also have unintended consequences. Consider where an applicant could have development capacity under MHA to build nine units on a Lowrise 3 lot but does not want to risk being subject to the displacement and mitigation of two very low-income households. The applicant may choose to only build eight dwelling units instead to avoid SEPA and impact mitigation.
The legislation could also have other unintended impacts where a single-family house on a Residential Small Lot (RSL) zone is torn down to construct a new single-family home built as larger single-family home and sold at the top end of the market. The legislation does restrict the size of new single-family homes in the RSL zone, but the thresholds for its application mean that this type of situation would remain entirely unaccounted for.
While these examples may seem extraordinary, they are worth contemplation to ask what kind of impacts they could have on delivering affordable housing units and the legal defensibility of the SEPA policy.