Morning Fizz

Affordable Housing Plan Threatened by Fake Math

Sightline pushes mayor to stand by development goals.

By Josh Feit January 11, 2017

One thing I forgot to mention in yesterday's bittersweet Afternoon Jolt is that I'm still working at Seattle Met and PubliCola through January 20. And speaking of  yesterday's news:

Screen shot 2017 01 10 at 9.24.35 pm qrbjwp

I must figure out how to work all of those positions into a Mayor Murray speech.

Hey, one of my fellow developer shills, Dan Bertolet at Sightline, published a major post yesterday that’s actually sure to rankle my (soon-to-be) new boss’s policy staff.

Bertolet takes on mayor Ed Murray’s mandatory housing affordability (MHA) program. The MHA program makes developers pay into an affordable housing fund or build affordable housing on site and Bertolet argues that Murray isn’t paying close enough attention to the “value exchange” for developers between the extra height developers are getting versus the fees (or on-site performance) they have to cough up or build.

Bertolet, a former PubliCola columnist, by the way, summarizes like this:

The main findings are that (1) the MHA program as proposed would create serious inconsistencies in the balance between the value created by the upzones and the cost of the affordability mandates, and (2) in many cases that balance is tilted toward mandates that are too onerous relative to the value of the upzones. The resultant added costs imposed on homebuilding will suppress development, jeopardizing the program’s goal of 6,000 new affordable homes. To avoid that failed outcome and get the MHA program back in balance, additional real estate development feasibility analysis is the critical missing ingredient. inconsistent value exchange will have capricious effects on housing development. Without consistency, in one zone MHA might cause, say, a five to ten percent net increase in the total cost of building—enough to kill feasibility. Meanwhile, the owner of a property around the corner in a different zone with balanced MHA requirements might see no net increase in development costs at all. An imbalance in the opposite direction could leave affordable units “on the table,” that is, construction would have remained feasible under higher requirements.

More importantly, the biggest risk to the success of MHA is if inconsistency leads to affordability mandates so onerous that homebuilding diminishes. In this lose-lose outcome, the city not only gets fewer new rent-restricted homes, but also ends up with a lot less market-rate housing. And when market-rate homes don’t materialize in a high-demand city such as Seattle, competition for what housing remains intensifies through a cruel game of musical chairs in which the poorest families always lose. The loss of market-rate housing eliminates affordable housing through the process of economic displacement—by far the most common cause of displacement in Seattle, when rising rents force tenants to move.

Ultimately, Bertolet’s political point is that if the mayor’s office doesn’t intellectually commit to real math and ground the pending debate in facts, the reactionary utopianist wing in Seattle politics, which is simply committed to the convenient, sweeping soundbite that developers must pay more, is going to own the argument.

In other words, without standing by the fundamental principle that the city needs developers to actually develop, the mayor’s office, and the urbanists who want to support them, will have no way to overcome the political will of those whose radical numbers will arrest development. And ultimately, given the unfortunate natural alliance against developers between social justice lefties (whose DNA rightly demands more money for housing) and wealthy and modest single-family homeowners who are wary of increased development around them (because, it brings their values down), both higher mandates on developers and smaller upzones are going to carry the day. That outcome, as Bertolet has it, will sink MHA’s goal of creating about 30 percent of the affordable units in the mayor’s overall affordable housing program of getting to 20,000 affordable units in the next decade.

By the way, I saw Dan Bertolet and Sightline director Alan Durning's names on the sign-in sheet at the mayor's office front desk in late December. So, my guess is, they've had a chance to tell Murray's office how they feel.

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