Afternoon Jolt?

Actually more of an Afternoon Fizzle: 

With too little support for any of three competing proposals to promote affordable housing in South Lake Union this afternoon, the city council agreed to meet privately this week and come up with a compromise. (The city council roundly rejected the mayor's proposal, arguing that it didn't go far enough to promote affordable hosuing development).

Afternoon Jolt

 The legislation would modify the city's current incentive zoning program, which provides developers additional height and density (the incentive) if they agree to pay for amenities like affordable housing.

The proposals—from Nick Licata's, which would require the most from developers, to Sally Clark and Tim Burgess', which would require the least—would all require developers to either provide a certain amount of affordable housing on site, or to pay a "fee in lieu" of providing on-site housing; that fee would go into an affordable housing fund. Where the proposals differ is in the level of the fee; the income levels that would qualify for affordable housing; and how fast they would be phased in. 

Here's how the proposals stack up, and what council members had to say about each one. (For purposes of this post, I'm only looking at residential density, not commercial.)"It's really hard to look any affordable housing advocate in the face and say we are going to adopt legislation that ... will not produce any on-site housing."–City Council member Bruce Harrell

The Clark/Burgess proposal: Ramps up from a fee-in-lieu of $16.12 a square foot to $18.34 a square foot of additional density over a year and a half, with future increases based on inflation.

Clark and Burgess' proposal would retroactively apply inflation, in the form of the consumer price index, to zoning incentives in South Lake Union going back to 2006. The increase would happen in three stages over the next year and a half, starting in June 2013. By the end of 2014, the price per square foot of additional residential density would have increased 21 percent, to $18.34, and would continue to rise with inflation after that.

In the meantime, the city would appoint a panel of experts to advise the council on changes to the incentive zoning program. 

Clark noted that the Clark/Burgess plan would give developers "fair warning" to get used to the idea of paying more for affordable housing ("affordable," in this case, being defined as 80 percent of the area median income, or about $45,000 for an individual), although both she and Burgess acknowledged it was probably not high enough to actually prompt developers to build housing on site instead of paying into an affordable housing fund. Overall, Clark and Burgess estimated that their proposal would produce an additional 596 units of housing in the city.

The O'Brien proposal: Fee-in-lieu of $21.68 per square foot of additional density, with future increases based on inflation.

O'Brien's proposal would immediately implement the inflation adjustments in Clark's and Burgess' plan, and add a 20 percent premium on top of that to encourage developers to build actual housing instead of paying into the city fund, or a fee of $21,68 a square foot. O'Brien estimated that his plan would lead developers to make five percent of their new housing units affordable to people making up to 80 percent of median income, for about 620 new units. 

"By not keeping place with inflation, what we have done is effectively lower the price every year for the last 12 years" since incentive zoning was first introduced in 2001, O'Brien said. "What we can do today, in 2013, is make up for all that lost time, at least going forward."

Burgess pointed out that O'Brien's proposal would only produce 24 more units than his and Clark's proposal. O'Brien responded that by producing actual on-site housing, his proposal would free up millions in city housing levy dollars. Whereas Burgess' and Clark's proposal would require the city to spend $22 million in levy funds to leverage the money in the fee-in-lieu account, his proposal would only cost the city $11 million, freeing up those dollars to build more affordable housing—an estimated 128 additional units, for a total, O'Brien said, of "up to 748 units compared to 596. I would argue that is a real, meaningful difference."

The Licata proposal, AKA the Licata Leap:  Fee-in-lieu of $96 per square foot of additional density.

Licata's proposal would require developers to build 10 percent of their total units at levels affordable to people making, respectively, up to 60 percent of median (five percent) and between 60 and 80 percent of median (five percent).

If a developer chose not to build on-site, they would have to pay a fee in lieu of $96 for every additional square foot of density—a sharp hike from the mayor's proposal, which would require a payment of just $15 per square foot. The idea is that by charging a very high fee-in-lieu, Licata's proposal gives developers a financial incentive to build actual on-site housing. 

"This proposal will produce significantly more affordable housing units than the other proposals," Licata said—an estimated 1,187 units over 30 years. "The profit margin may not be as rich as some of the other proposals [but] if we don't do it when we have a healthy market, a growing market, when will we ever do it? Because there will always be risk." Other cities with "robust" housing markets, like San Francisco, have much more stringent incentive zoning programs and affordability requirements, Licata pointed out. 

However, Bruce Harrell—who at one point seemed to be leaning toward Licata's proposal, saying, "It's really hard to look any affordable housing advocate in the face and say we are going to adopt legislation that ... will not produce any on-site housing"—threw water on that idea, saying, "I think we'd be fooling ourselves to think that in the near future we'd be in the $90 a square foot range." 

The council plans to meet behind closed doors this week to hammer out a compromise between the proposals, and hopes to hold a final vote at its meeting Monday.