Afternoon Jolt

With Sharp Drop in Pod Apartment Production, HALA Report Calls on Council to Revisit Regs; O'Brien says it's not a Priority Right Now

DPD numbers show a 97 percent drop in pod apartments since new regulations approved last summer

By Josh Kelety July 17, 2015

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One overlooked aspect of the headline grabbing HALA recommendations, is a call on the city council’s land use committee to examine  the effects of pod apartment regulations  the full council passed last year. (For those who don’t know, pod apartments, or "aPodments," are compact one-person micro-housing units with communal bathrooms and kitchens.) The HALA report also recommended that the city council renew and expand the Multi-family Tax Exemption Program [MFTE]—multi-family developments can get a tax exemption for residential improvements in exchange for including rent restricted units—to encourage micro housing.

The committee’s legislation (which passed back in 2014) requires that each unit on of a  micro-housing building be counted as single living unit (developers had previously been counting each floor as one unit) in the design review and permitting process, minimum apartment sizes, parking, and that micro housing projects be limited to urban villages. But council member Mike O’Brien and chair of the land use committee (a major backer of the legislation along with council member Tom Rasmussen), told PubliCola this week he's reluctant to revisit the "controversial" issue any time soon.

“That’s probably not my top priority right now. It was a very contentious discussion. We ended up in a place that was okay,” O’Brien said (when the legislation passed council in 2014, he dubbed it a “compromise” between neighborhood activists opposing high density projects and development advocates). “Do we want to pick at that thing right now?” he asked us this week.

Seattle has seen a significant decrease in the number of pod apartment projects popping up around the city. In 2014 there were an estimated 1,422 micro housing projects permitted by DPD, compared to the mere 40 following the legislation’s enactment in 2015, showcasing a massive drop.

David Neiman, an architect with Neiman Taber Architecture, member of the HALA committee, and proponent of micro housing, said that the main driver of the decrease in projects is due to the urban village restriction. In upzoned urban villages—where the cost of the land is greater—developers are incentivized to build up to their maximum height limit (generally 65 feet to 85 feet in urban villages), which then requires an elevator and therefore bigger units because of accessibility requirements. “Once it [a project] has an elevator, it’s no longer micro housing,” Neiman said.

“The whole idea of congregate micro-housing is to make units affordable by making them smaller,” Neiman said. “It [micro housing] gives people choices." A typical congregate micro-unit averages about $850 monthly rent, with a typical market range from $700 to $1000. "If micro-housing was included, as HALA recommends, in the Multifamily Tax Exemption program, the units would drop to $628 per month,” Neiman contends.

“Before the new rules passed, congregate micro-housing was being developed at the rate of several hundred units per year.  Over ten years we could [have built] thousands of units of affordable housing, with no subsidies whatsoever,” he added.

This particular HALA recommendation reads like a challenge to O’Brien and his micro-housing crack down legislation. 

“My intent with that legislation was not to stop it [micro housing construction]. But to just have it be regulated comparably to other things,” O’Brien said. He said that while he’s not writing off the possibility of negative effects of the regulations on micro-housing development, he would like to see some data to support Neiman's claims before considering any action. “I do want to see the numbers,” he said, referring to the DPD numbers we posted earlier this week.

According to city data, there has been a sharp decline in pod apartment production this year; DPD spending estimates on construction per square foot on pod apartment construction show a 97 percent drop between 2014 and 2015 so far— in 2013, permitting was estimated at $12.6 million; in  2014, it was estimated at $39.1 million; and in 2015 to date, it's estimated at $1.1 million. More to the point, here are the estimated unit counts: 2013: 459; 2014: 1,422; 2015 to date: 40 

“There was some question from DPD that that market was already starting to peter out," O'Brien says. "How many single people [are there]? Obviously, it’s a great product, but it wasn’t like we could convert the whole city to that. I don’t know if it has reached market saturation or not.

“It probably hasn’t [reached market saturation], but I would give it another year to get some data and see what kind of permits are coming in. If it feels like there’s still demand for this product type, but it can’t be delivered because the barriers we put in place were too great, then it may be time for a discussion. If it turns out [the legislation] fully stopped it, then I want to understand what the economics were around that because that wasn’t what we anticipated. And if we have to make some changes we can cross that bridge in a year or so,” O’Brien added.

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