City Hall

O'Brien Calls for Audit of Affordable Housing Program

O'Brien concerned zoning loophole widely abused, costing city needed affordable housing dollars

By Josh Kelety June 30, 2015

Caving to pressure  from a local union representing hotel workers and from neighborhood activists in the Denny triangle, the Department of Planning and Development pulled an about face and issued an opinion contradicting the permit they originally gave to the R.C. Hedreen Company hotel project, a 50 story downtown development of hotel rooms, condos, and apartments. The whole affair revealed a loophole in the incentive zoning program that Council Members Mike O'Brien and Kshama Sawant think may be rampant. Earlier today they called for an audit of DPD's implementation of the program.

On 8th avenue outside of the Stewart Street Market near where the old Greyhound bus station used to be, council members O’Brien and Sawant held a press conference this morning alongside affordable housing advocates to request that the city auditor investigate the city’s handling of the incentive zoning program, citing how the Hedreen development company allegedly skipped out on paying into the city’s affordable housing fund with legal loopholes (The city's incentive zoning program allows developers to build taller in exchange for providing public benefits such as affordable housing).

“Unfortunately, what we've seen in a few instances is that we're not maximizing our access to affordable housing [and affordable housing fees],” O’Brien told the  gaggle of reporters. “They're [the city auditor] going through to ensure that we, the people of Seattle, are getting
every penny we deserve.”

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Describing the Hedreen loophole,  the Alliance for a Livable Denny Triangle (the neighborhood activists) and Unite Here Local 8 (the union) say the developer used a DPD opinion letter from 1993 as a justification for combining the two lots they plan to build on into one lot, raising the amount of base floor space they get thus reducing the amount of floor space above that would be subject to affordable housing fees in the bonus calculation. This maneuver eliminated a whopping $3 million Hedreen would've had to pay into the city's housing fund, as per the incentive zoning program.

In a nut shell, the city’s incentive zoning program is intended to generate affordable housing by requiring that downtown commercial developers either include affordable units in their projects or pay into the city fund which is used as seed money for various affordable housing
projects in Seattle.

According to Stefan Mortiz, Director of Strategic Affairs for Unite Here Local 8 (the union), public records requests revealed communications between DPD and Hedreen regarding reconfiguring the project to accommodate this loophole. And though DPD originally issued Hedreen its master use permit last fall, an appeal by the union and the Denny triangle neighborhood group forced the agency to put the deal on hold.

Residents of an adjacent apartment building—which Hedreen would demolish if the hotel project were to go through—were also present this morning.  All of them had allegedly received eviction notices 30 days prior, despite Hedreen not having a permit yet.

“This is another example of affordable housing and affordable retail spaces being displaced in our city. But we are also here to celebrate a victory for accountability. Through our vigilance, the alliance, and the hotel workers union unite here, [we] ensured that $3 million dollars are secured for our city's affordable housing fund,” said Carla Berrick with the Alliance for a Liveable Denny Triangle.

Despite the DPD reversal, the incident has prompted O’Brien to request an audit of DPD's application of the incentive zoning program to see if such incidents are rampant. “There is a dynamic set up [in DPD] is that this is a complaint based system. DPD typically is engaged with developers, but the affordable housing advocates are not at the table in those negotiations. In this instance there were watch dogs, but there aren't always,” said O’Brien.

Mercedes Elizalde,  a staffer with Low Income Housing Institute and a city council candidate in North Seattle's District Five, spoke briefly as well. “That $3 million dollars to leverage more housing is critical. And to have it be an oversight by the department that is supposed to be leading the effort is really scary."

O’Brien, towards the end of his spiel, gestured at a poster board sign a union member was holding behind him. “I want to point out one of the signs behind me. It says 'buy one, get one free.' Wouldn't it be great," he joked, "if that was what our housing market looked like today,'s not [like that]. 

Sawant railed against a city government that is “dominated by corporate interests.”

I have calls in to DPD and the Hedreen company for comment. 

[UPDATE] DPD responds to the audit: 

"We review construction proposals of all sizes, whether it’s a single family home or a new high-rise downtown. During this process, our role is to communicate our rules clearly with the property owner and apply them fairly on each proposal. We look forward to working with the auditor to explain our application of existing land use regulations," – Wendy Shark, DPD PIO


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