Durkan’s First 100 Days: So Far, Not So Good

Jenny Durkan’s administration began November 28 of last year. How should the building community evaluate her first 100 days? A week or so after the mayor took office, I wrote up some ways we could evaluate the new mayor. Now more than two-thirds of the way through the first hundred days, we have some answers. It is still early in the administration. Some of the not so great response might be because lots is still being sorted out. My job isn’t 

Overall, the Mayor hasn’t been responsive to requests to engage around issues related to permitting and the many snafus that have hung up housing production. In fact, from what I’ve heard, the message has been clear that she doesn’t like criticism and people close to her have implied that such criticism means less access. So let’s take a look at the new mayor. 

DOES SHE LISTEN?

Durkan’s first official transition team had 61 people on it including one market-rate developer—Vulcan—and seven nonprofit developers. Thinking Vulcan adequately represents all builders is like having Mexican restaurants represented by Taco Bell. Most builders run small, family operated businesses. Watch to see whether Durkan continues this trend or starts to listen to real Seattle housing builders.

Update: After 70 days we haven’t seen any effort to bring builders and people who operate housing together. Instead, as I mentioned, I’ve heard very strong messages criticism won’t be tolerated. And efforts seem underway to pull apart builders by communicating with a few that have promised to cooperate with Mandatory Inclusionary Zoning. Is it a divide and conquer strategy?  

DOES SHE HELP?

In a previous post, I suggested the creation of a new Seattle program called HELP—Housing Efficiency Leveraged for Production. The goal: task a high-level person with speeding up the permitting process, which today is slow, expensive, and unpredictable.

Update: After several attempts to communicate with the transition team and staff in her office, we’ve not received a single phone call or message back after making multiple requests to implement the kind of effort I’ve described. 

SUPPLY AND DEMAND

Does Durkan talk and act like we need more affordable housing or like we need more housing so that it becomes affordable? The mayor sets the tone and the agenda for the housing economy. If the priority is subsidized housing, prices will never go down and demand for subsidies will keep climbing.

Update: While I haven’t listened to every speech or comment in the press, I don’t see anything changing in a big way in terms of the way this administration talks about housing. The mayor’s office, for example, took no position and made no comment I heard on rent control an issue debated heatedly in January.

THE HIGH COSTS OF SUBSIDIZED HOUSING

Will Durkan consider the high cost of subsidized housing and do something about it?

Will she take action to reduce costs and uncertainty in the housing market for all housing producers, including market-rate builders?

Update: In a chance meeting with a powerful legislator in Olympia, he told me, “A lot of people are mad at you for criticizing non-profit housing developers.” At this point, I doubt that the mayor would want to take on non-profit developers, the most politically powerful interest group in the city. So far, there is no evidence the mayor worries about the high costs of “affordable” housing.

MANDATORY INCLUSIONARY ZONING (MIZ)

It’s unlikely, but Durkan could pause the runaway MIZ process. This is a policy that would give a small increment of extra square footage but require low-income units or the payment of huge fees. This is a recipe for making housing projects infeasible and more expensive to compensate for fees or inclusion, and we also think the program violates Washington state law.

Update: Again, I’ve been put on notice that my advocacy is making powerful people upset. I can’t imagine the mayor putting a pause on MIZ. The whole town, except for some angry neighbors and Seattle For Growth, is all on board with the MIZ scheme.

DOES SHE STAND UP TO CITY COUNCIL?

The origin of most of Seattle’s housing problems is the City Council. The Council has passed clearly illegal ordinances trying to tax income (taxing authority can only be granted by the state Legislature) and others requiring full design review for projects based on the number of units on a neighboring site. Will the mayor say “no” to the councilmembers who keep flouting the law?

Update: We’ll see what happens when the Council inevitably proposes illegal measures to put prices controls on housing. I hope I am surprised, but I’d expect her to go along with whatever they come up with. Why take the side of unpopular landlords – even if the measure eventually gets thrown out.

While I am hopeful for change at and from the top, we must also persist in making our case, no matter how uncomfortable and exhausting it may be at times.

In the end, many of our issues may be settled in court. But until then, we’ll continue to urge the mayor to favor more housing in Seattle of all types, in all neighborhoods, and for all levels of income even if it makes the mayor and powerful forces mad.

SB 6595: The Housing Efficiency and Fairness Act

Rent Control Bills Dead in Olympia

Friday at 5PM was the cut off for policy bills to be passed out of committee. After many visits to legislative offices, emails, interviews, committee meetings, and debates we can say we won this first skirmish.

Vox Populis: A Recap of the Public Hearing on Rent Control

Later today we’ll find out whether proposed rent control legislation will live or die. In this guest post by Spencer R. Clark, Vice President of Investments at Marcus & Millichap runs down what happened early this week in the Senate committee that considered the repeal of the preemption of rent control. If the legislation does not move out of a committee today, then the repeal effort will have failed. 

“What’s going on here today?” a passing bystander asked, surveying the crowd gathered outside of Public Hearing Room 3 in the Washington State Capitol. “Must be a hot one.”

On January 30th, a sizeable crowd gathered to testify at the public hearing of Senate Bill 6400, a proposed repeal of the 1981 rent regulation ban. Landlords, developers, renters, real estate brokers, LGBTQ advocates, Seattle councilmen and women, government employees, in short, anyone and everyone who could have an opinion on the subject came to weigh in.

Here’s a summary of what’s behind SB 6400:

Supporters argue that affordable housing is a human right and necessity. The current rental market, especially in the Puget Sound Region, but also elsewhere in the state, has become inhospitable to the most vulnerable members of our society, including, but not limited to the elderly, disabled, people of color, women, immigrants, and members of the LGBTQ community. This inaccessibility hurts small businesses, causing employees to find housing far from their workplace and spend less money on local business. Furthermore, the rising living costs contributes to the growing homeless population in Washington State. Senate Bill 6400 moves to repeal standing statewide law that bans rent regulations and instead delegate the decision to cities, towns, and counties.

The legislation that SB 6400 would overturn RCW 35.21.830, which was introduced on the same ballot as Ronald Reagan’s presidential candidacy, passed in April 1981, prohibiting the rent controls for single family or multiple unit residential rental structures, besides those properties publicly owned or managed.

If the arguments in favor can be boiled down to a collection of first hand stories about underprivileged people being pushed out of Seattle by rent hikes, then those is support of standing law are based on the unintended consequences of repealing the law, consequences that would make housing prices worse and the argument that there are better solutions.

Opponents of SB 6400 made these points at the hearing:

• Inevitability: If we pass this ordinance, Seattle City Council will inevitably institute rent controls. Passing SB 6400 is not just “starting a conversation” as opponents suggest. Make no mistake; its implementation in Seattle is guaranteed.
• Unintended Consequences, Part A: Rent control harms the same people it intends to help. Units will fall into disrepair, because owners will be unmotivated to spend the money to improve the property. Developers will not build new units, because they won’t be able to make a profit.
• Unintended Consequences, Part B: Rent control harms small landlords who aren’t charging unfair prices. As operating costs and property taxes continue to rise, more small landlords are choosing to exit the rental market. If you add rent control to the mix, the costs outweigh the returns for landlords who will convert the units to condos and sell to protect their financial investments. SB 6400 aims to punish big developers, but it will create unintended consequences that neither side wants.
• Bad precedent: San Francisco and New York City, both of which control rents, serve as ample warning against allowing rent control in Seattle.
• Alternative Solutions: a) Better tax incentives for developers to build affordable units and B) repealing the Growth Management Act to allow for more density would encourage development and keep rents down.

Roger Valdez, Director of Seattle for Growth, pointed out that the tax incentives are working — 2,000 new affordable units came online in the past year because of the incentives. After the hearing, Valdez provided some historical context. “This issue usually presents itself when the market is heating up. The last time we saw a push for repeal of the 1981 ban suggested was in 1999 during the dot-com boom. Representative Judy Nicastro began pushing for rent controls, but the efforts faded away as the economy cooled off in the wake of 9/11.”

If we are anywhere near the height of this economic cycle, it can be expected that the demand for rent control will subside in time as we saw in the last cycle.

How Does Seattle’s Bad Housing Policy Hurt Rural Immigrants?

When people in the media talk about a housing “crisis” (I still haven’t seen a quantitative definition of what that means) the image conjured up is usually an urban one. Whether it is homelessness or high rents or the lack of so called “workforce housing,” the concentration of the energy on the issues is mostly on cities and especially Seattle. But Seattle’s anti-supply regime of fees, process, rules and restrictions doesn’t just make housing prices higher in Seattle, but it is sucking resources away from the rest of the state that has housing problems too. Take the example of families at the foot of Rattlesnake Ridge in Yakima. Their story illustrates how regulatory overreach and the hegemony of non-profit developers harms vulnerable people in rural Washington.

In a story headlined, “Residents Displaced By Rattlesnake Ridge Landslide Struggle to Find New Homes,” radio reporters Anna King and Esmy Jimenez chronicles the struggles of families that had to move out of the path of a potential landslide in Yakima.

In the Yakima Valley, the supply of vacant rental housing is even lower—around 1 percent.

“It is really hard for anybody to find housing and I don’t care what income you’re talking about,” Yakima Housing Authority Executive Director Lowel Krueger said.

That’s because in Central Washington, the Great Recession pummeled the construction industry and for many years, fewer new homes were built, Krueger said. Many who used to qualify for mortgages don’t anymore, so there is a surplus of people looking for rentals instead of owning their own homes.

There it is: supply not keeping up with demand. Seattle’s vacancy rate is around 3 percent, so the scarcity of housing is worse in rural Washington. And who are these people who are struggling with a crisis of supply?

Many of the low-income residents in the area are agricultural workers. They work seasonally, often earning only the minimum wage. Sometimes, like in the dead of winter, there’s no work at all, and so it’s an even bigger struggle to put together the cash they need for a deposit, and first and last month’s rent.

What makes that problem even worse?

Nearby there’s another complex specifically for farmworkers. Catholic Charities has a total of 800 units spanning from Wenatchee to Yakima to Benton City.

But for every low-income unit they build, four families are already lined up waiting to fill it.

Emergency officials managing the Rattlesnake Ridge landslide reached out to Catholic Charities for help resettling the residents who were displaced, but the nonprofit didn’t have any room.

So most of the residents who were evacuated are still holed up in a hotel in Yakima.

Here’s a sad example of how the sucking of money from resources like the Housing Trust Fund for big, expensive projects like Capitol Hill Housing’s 12th Avenue Arts project ($47 million for 88 units, or $500,000 per unit!) is harming the rest of the state. The lack of market rate housing means more people need and qualify for subsidies. This means there are fewer subsidies and longer lines in Seattle. Prices go up, lines for subsidized units get longer and the non-profits cry for more, and more, and more money. They’re even going to wring cash out of market rate development through Mandatory Inclusionary Zoning (MIZ).

This cycle of exaction from market rate housing to fuel the growing need for subsidies is a self-imposed crisis if anything. If market rate housing could meet the demand without as many rules, prices wouldn’t be so high, and the demand for subsidies would fall; that would free up resources like the State’s Housing Trust Fund for other needs across the state. Instead, the City Council would rather choke the supply of housing with crazy bike parking requirements, make prices worse, then complain there is a crisis and clean out the housing trust fund.

Meanwhile a Farmworker family faces an uncertain future.