Seattle's Mandatory Housing Affordability Policy

Background

By July 2015, Seattle’s population growth was explosive.  Estimates from 2009 for the Puget Sound region suggested that total population would top 5 million by 2040, a nearly 40 percent increase—but in reality, the region, particularly the Seattle area, was growing faster than projections, driven by a continuously growing technology sector.  As part of Washington State’s Growth Management Act, ratified to ensure the availability of affordable homes for all residents, the City of Seattle was expected to absorb a residential growth allotment of 70,000 new households. Such present and future residential growth—with around 1,000 people moving to Seattle every week—meant substantial competition for a relatively limited supply of available and affordable homes.  The increased competition for homes drove prices upward and exacerbated a persistent limited supply of income- and rent-restricted affordable homes—leading to an intensified focus upon housing affordability in Seattle. 

 

While the debate over how to address housing affordability and create enough subsidized homes for the region had been ongoing for nearly ten years, local leaders’ ability to effectively address the burgeoning crisis was limited by shortfalls in state and federal subsidized affordable housing support, broadening income inequalities, and political hurdles to enact needed policy change.  In places where developers were keen to build, local regulations limited the production of housing supply. Two-thirds of Seattle’s urban land area was zoned for single family housing.

 

While the inclusionary zoning had been a priority for affordable housing advocates for decades, the politics around mandatory affordability requirements had stymied progress on the policy. In order to meet the housing of the city’s booming population and help address its growing affordability challenges, local leaders began to consider various inclusionary zoning policies.  The idea of incentive zoning first began to be popularized as a voluntary version of inclusionary zoning around City Hall back in 2001, when it applied only to commercial buildings downtown. Over the following decade, the program was expanded to several downtown core neighborhoods and to include residential development. Incentive zoning allowed developers to build at greater height and density within these fast-growing areas of the city, in exchange for paying a fee for each additional square foot of floor space granted by the program.  The fees collected under the incentive zoning law were to be used to support the production of affordable housing by non-profit builders.  However, the number of affordable units produced under the payment or performance provision of the city’s incentive zoning program proved to be insufficient to meet the need for affordable housing. From 2001 to 2014, only 714 affordable units were built as developers only volunteered to participate with about one third of all their eligible projects[1].

 

In late 2014, seeing the need to achieve greater production of affordable units, Seattle’s City Council, backed by affordable housing advocates, community groups, faith, labor, and environmental organizations, began to consider proposals to impose a mandatory linkage fee on every square foot of multifamily residential and commercial development citywide (again, this excludes 65% of the city that’s zoned exclusively for detached single-family houses).  The proposed linkage fee policy would have required payments ranging from $5 - $22 per square foot developed under the program, or a set aside of 3 – 5 percent of units built for affordable housing accessible by households at 80 percent of area median income or less.  In contrast to the city’s incentive zoning program, the proposed linkage fee included no provision of additional zoning capacity for developers.

 

Dilemma

In March 2015, a group of Seattle-area developers sent a letter to city elected leaders opposing the passage of the proposed linkage fee and signaling their intent to file a formal legal challenge. They argued that linkage fees were both impractical and illegal under state law unless such fees were both voluntary and needed to mitigate the impact of specific projects[2].  The City’s own legal analysis found that the linkage fee proposal had a roughly half-chance of surviving a legal challenge based on the “taking” clause affecting regulation of private property in Washington State.

 

To forge a path forward to achieve action on affordable—and market-rate—housing production during this time of unprecedented growth in Seattle, city leaders empaneled Seattle’s Housing Affordability and Livability Agenda (HALA) committee, including representatives from the coalition supporting the mandatory link age fee along with members representing the private development community.  Recognizing the need to, “balance the needs of a fast-growing city with almost unimaginable new wealth and the acute needs of people who experience systemic inequities driven by issues of income, ethnicity, and race on a daily basis”, the city charged the 28-member task force to craft a plan to achieve an increase of 20,000 affordable housing units and 30,000 units of market-rate housing within ten years[3]

 

Proposed Solution

By July of 2015 the HALA committee published a list of 65 policy recommendations at the state and local levels designed to work together as a comprehensive approach to housing affordability and identified its highest impact recommendations[4].  HALA’s leading recommendation was a policy of Mandatory Housing Affordability (MHA), a “both/and” approach to inclusionary zoning that would, for the first time ever, require new multifamily and commercial development to contribute to affordable housing and increase development capacity wherever requirements were imposed. The MHA program was designed to achieve the goal of 6,000 new rent- and income-restricted homes over a decade while allowing for the creation of more housing options overall to meet the growing need. This approach would bring market rate developers in favor of zoning changes allowing for greater citywide housing density into alignment with the coalition of affordable housing advocates favoring inclusionary zoning policies, making passage of the policy much more achievable than past iterations.  Under MHA, it was mandated that all new multi-family housing developments reserve between 5% and 11% of planned units as rent restricted housing for low income families or contribute between $5 and $34.75 per square foot of development to the Seattle Office of Housing fund to build affordable housing[5].  MHA would also change zoning laws in 27 of Seattle’s urban villages, allowing for increased height and density of buildings for developers—in many ways, the more politically challenging aspect of the policy, given longstanding local pushback on efforts to increase zoning capacity in Seattle neighborhoods.

 

To forge this approach, members of the HALA committee, including six non-profit affordable housing developers and advocates, and representatives from the private development sector, signed an agreement to jointly support MHA, which included a commitment by the major market rate developers to not pursue any further legal action.   With this agreement in place, City leaders, with the backing of the newly forged (and-first-of-its-kind) coalition of housing advocates, labor, environmentalists, urbanists, alongside private developers and business stakeholders, known collectively as Seattle for Everyone, got to work on the development of rezone proposals for roughly 30 neighborhoods. Meanwhile, the coalition—in partnership with local neighborhood housing activists—began organizing to galvanize supporters around the issue of zoning and housing affordability. Over the course of four years, several rezone packages triggering MHA were passed for some of the fastest-growing urban center neighborhoods, and in March of 2019, “citywide” implementation of Mandatory Housing Affordability was signed into law. 

 

 

 

[1] Cornerstone Partnership, “Seattle Incentive Zoning” http://clerk.seattle.gov/public/meetingrecords/2014/plus20140213_1e.pdf, (2014). 

[3] Seattle Housing Affordability and Livability Agenda, “Final Advisory Committee Recommendations…” http://murray.seattle.gov/wp-content/uploads/2015/07/HALA_Report_2015.pdf (2015).

[4] Seattle Housing Affordability and Livability Agenda, “Final Advisory Committee Recommendations…” http://murray.seattle.gov/wp-content/uploads/2015/07/HALA_Report_2015.pdf (2015).

[5] City of Seattle, “Implementing Mandatory Housing Affordability (MHA) Citywide” http://www.seattle.gov/Documents/Departments/HALA/Policy/MHA_Overview.pdf