The U District led the way in generating Mandatory Housing Affordability (MHA) fees in 2021 thanks to a spate of highrise projects. (Doug Trumm)

At a West Seattle community meeting on Wednesday, Mayor Bruce Harrell teased the prospect of zoning reforms and said the City is assessing the Mandatory Housing Affordability (MHA) inclusionary zoning program with an eye toward modifications.

“I’m not happy at all with how the MHA program is,” Harrell told the D1 Community Network, later adding: “I’m watching the growth happen on unsatisfactory levels.”

The Urbanist followed up with Harrell spokesperson Jaime Housen to see if he could add any details, but mostly to no avail. Housen did say maximizing affordable housing production would be the focus, but that can mean different things to different people. Some growth skeptics have used high inclusionary zoning requirements to squash new development (which then costs affordable homes tied to new development, too) rather than maximize affordable housing creation.

“We are looking to review and address issues in the program now that we have a few years of data,” Harrell’s spokesperson said. “We want to evaluate where there are issues and make improvements where needed to ensure we are building as much affordable housing as possible.”

So far, MHA appears to be on pace to produce the 6,000 affordable rent-restricted homes over a decade the City had promised when it passed the program over a series of votes in 2017 and 2019. The program traded modest upzones for new requirements that new residential and commercial projects provide affordable housing on-site or pay an in-lieu fee calibrated to fund a similar amount of housing via the City’s nonprofit partners.

As of the end of 2021, the MHA program has pulled in $171.4 million in developer fees, which has helped boost the City’s affordable housing awards to new heights. The Seattle Office of Housing said the 2021 MHA revenue will fund more than 900 affordable homes, in addition to the 95 MHA units created on-site. While in-lieu MHA payments have been strong, developers have not opted to produce as many affordable homes on-site as the City projected, which has some councilmembers suggesting reforms are in order to get more on-site production. Loudest among them is Alex Pedersen, who has a long history of criticizing the MHA program.

“The first iteration of MHA has been a disappointment with the vast majority of developers choosing to write a check to avoid building any affordable housing on site in the neighborhoods that need them,” Pedersen wrote in an August 2021 newsletter. “Based on the 2020 figures from the City, the MHA program appears to be a grand bargain mainly for developers who get the ability to build more while skirting the full cost of providing the affordable housing originally promised.”

Pedersen argued increasing fees would increase production of low-income housing: “Rather than an indirect tinkering with land use code definitions and acquiescing to for-profit developer requests for additional blanket upzone giveaways, let’s do what’s actually needed: increase the fees so that growth pays for growth and we produce more low-income housing faster.”

The City, however, has argued that because MHA payments can be leveraged with other funding sources, they actually produce more affordable housing than on-site production. MHA critics like Pedersen dispute this claim and see the in-lieu fee as a copout.

“One of the easiest ways to improve the MHA program is by increasing the fees so that developers are incentivized to produce more low-income housing on site, serving households earning no more than 60% of the area median income,” he wrote.

Pedersen said the blame would fall on his colleagues if they didn’t pursue reforms.

“The failure of MHA to result in inclusionary low-income housing is not the fault of developers whose profit motive will maximize whatever opportunities are allowed,” he wrote. “The shortcoming is on City government policymakers, especially if improvements to the MHA program are avoided by City Hall.”

In a February 2022 newsletter, Pedersen fretted about “profit-drive construction” bringing “all the disruptive downside with none of the affordable housing upside.”

At the Wallingford [Community Council] meeting, for example, some expressed concern that former City leaders imposed onto Wallingford a substantial upzone causing disruptive demolitions and profit-driven construction in several areas with overcrowded schools and without robust transit. However, they left loopholes enabling developers to avoid building the needed low-income housing there — all the disruptive downside with none of the affordable housing upside. This points to the ongoing shortcomings of the Mandatory Housing Affordability (MHA) program many believe is overdue for an update. I believe we should encourage more immediate onsite production of low-income housing instead of letting for-profit developers write a check for different projects years away. If you’d like to get involved in your neighborhood, attending community council meetings is a great way to start.

Alex Pedersen in newsletter from February 25, 2022

While Pedersen seems keen on using MHA fees to curb new housing production by what he views as profit hungry developers, his colleagues may be hesitant to go that far. Still, there may be an appetite to recalibrate to seek a 50/50 split between on-site production and in-lieu payments. The Mayor has so far to declined to weigh in on that particular debate, however.

At his West Seattle appearance, Harrell also teased a proposal that he may reconstitute the District Neighborhood Councils that Mayor Ed Murray cut official ties with in 2016 after they fought to obstruct his Housing Affordability and Livability Agenda (which resulted in the MHA program) and a City report found the district councils were slanted toward White, wealthy homeowners and not representative of the larger population. Harrell pledged that his administration would announce a District Neighborhood Council proposal by the end of summer, Ryan Packer of The Urbanist noted.

Another proposal Harrell has teased is design review and permitting reform, where he spoke of streamlining permitting while still keeping design review “safeguards.” In a March interview with Puget Sound Business Journal, Harrell also voiced interest in microhousing and regulatory changes to promote production of it. So far such a proposal is still in development and Harrell has declined to offer much in the way of specifics: “We continue to explore a return of microhousing and are still studying options at this time,” Harrell’s spokesperson said.

Overall, some Harrell housing initiatives are slowly forming, but the policy details remain fairly murky. Mayor Harrell has claimed that the City lacked a plan for homelessness and affordable housing when he came to office and insisted that he had righted the ship and implemented one, led by his recent rollout of a homelessness data dashboard. However, that dashboard effort could be seen as repackaging existing programs and information, as discussed in a recent episode of The Urbanist podcast.

The Urbanist asked Harrell’s spokesperson how Seattle’s homelessness and housing strategy is tangibly different than it was last year, when Mayor Jenny Durkan — formerly a close ally of Harrell’s who he also glowingly endorsed during her 2017 mayoral run — was still in office.

“Under Mayor Harrell, the City has been addressing the homelessness crisis with a new level of urgency and collaboration,” Harrell’s spokesperson said.

Through his spokesperson, Harrell provided the following examples of how the City has been working to expand housing options and get homeless people indoors, which implicitly weren’t happening over the last couple of years:

  • “Forming the Unified Care Team to bring all City departments working on this issue into the same room to drive a more streamlined, efficient, and collaborative City effort to address homelessness;”
  • “Bringing that same approach to the creation of a Housing Sub-Cabinet dedicated to developing more housing of all kinds more quickly;”
  • “Supporting regional solutions and for the first time convening the RHA with other partners to address encampments like Woodland Park, leading to the most referrals to shelter during an encampment closure in City history;”
  • “Improving and consolidating data collection to better understand and respond to the scope of the homelessness crisis;”
  • “Showcasing clear, transparent, measurable and accountable goals for adding units of shelter and housing;”
  • “Setting a clear commitment to approve all affordable housing permits within 12 months of submission;”
  • “Supporting acquisition efforts to swiftly open additional permanent housing options like Dockside.”

The list is heavy with bringing people together or working to improve processes or set clearer metrics. Absent from the list is new funding to build more affordable housing or land use changes to allow affordable housing in more places. It’s not clear how the MHA changes Harrell has in mind on that front will help or hurt the City’s attempts to address homelessness.

Overall, when it comes to increasing affordable housing and curbing homelessness, Seattleites will likely ultimately judge Mayor Harrell by how well he arrives at the destination rather than how well he quantifies the journey and brands the process.

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Doug Trumm is publisher of The Urbanist. An Urbanist writer since 2015, he dreams of pedestrianizing streets, blanketing the city in bus lanes, and unleashing a mass timber building spree to end the affordable housing shortage and avert our coming climate catastrophe. He graduated from the Evans School of Public Policy and Governance at the University of Washington in 2019. He lives in East Fremont and loves to explore the city on his bike.