City Hall

Council Considers Ditching "Incentive Zoning" Program

The city council reconsiders its "incentive zoning" program, which is designed to pay for affordable housing for mid-income tenants.

By Erica C. Barnett July 28, 2014

The Seattle City Council is considering  on of two options to address the city's shortage of affordable housing. The first option would be an expansion of the city's incentive zoning program (which gives developers the right to additional height and density if they agree to build housing affordable to people making 80 percent of the area median income on-site or, in the more likely scenario, pay into a citywide affordable housing fund).

The second option would be a new program known as a "linkage fee," which would involve charging housing developers across the city a flat fee per square foot, whether or not those developments are located in a current "incentive zone" where developers can pay a fee to build higher in high-growth zones (i.e. not single family zones).

Speaking to a council committee, the city's consultant seemed less than positive about the prospect for expanding (specifically, doubling) the fee for the incentive zoning program, which he said would make only a "marginal" difference in the amount of affordable housing the city produces. 

The linkage fee policy, which the city council's planning, land use, and sustainability (PLUS) committee considered last week, would effectively upzone all "incentive" areas (eliminating the incentive zoning program altogether), while charging developers in every high-growth part of the city (urban villages and urban centers, in particular, although the details of the program haven't been worked out) more money to build taller.

"We are moving away from the idea that you build extra height and you get a public benefit," consultant Rick Jacobus said. "We’re going to set the fee where it doesn’t impact your development project. We’re saying, you don’t need an incentive to six to eight stories." 

Effectively, the linkage fee would charge many more developers in the city a slightly smaller amount of money to help pay for (more) affordable housing. 

According to Jacobus, very few of the projects built in the city under the existing incentive zoning program have produced many affordable housing units; instead, most developers have paid into the incentive zoning fund, which the city's Office of Housing has used to leverage federal dollars that benefit people making between 50 and 60 percent of the Puget Sound's area median income, as opposed to the people making up to 80 percent of median that the program is designed to help.

And taller buildings fare worse: Buildings above six stories, despite being aided by the incentive program, tend to cause developers to lose money rather than to make it because they involve building with more-expensive steel, rather than cheaper wood-over-concrete construction. 

"Even if you had the affordable housing requirements, most developers would not choose to build higher density," Jacobus said.

Currently, if you're a developer wanting to build affordable hosuing on-site, you have to build 10 percent of your housing to be affordable to people making 80 percent of the Seattle-area median income.

Jacobus suggested that it might make more sense to lower the affordable housing "performance" requirement—that is, the number of units that are affordable to lower-income residents a developer builds on site—to five percent, from the current 10 percent—"so that you get more developers considering building units on site" as opposed to paying a fee to the affordable housing fund, whose dollars can be spent anywhere in the city. 

Additionally, Jacobus said the city should consider lowering its "affordability" ranking to include those making between 50 and 60 percent of median income, rather than the current 80 percent of median, for studio apartments and one-bedrooms.  

"We’re concerned that the linkage fee is based on fundamentally flawed logi—that is, that it’s the building of housing rather than the demand for affordable housing by residents, that creates an affordable housing problem," Vulcan lobbyist (and former city of Seattle planning commission director) Barb Wilson told the committee.  

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