How’s That Gonna Work?: More Questions for the City About MIZ

Increased development costs resulting from such changes may influence the feasibility of high-rise projects in the U District and may result in increased rents for market rate units. It is difficult to determine the extent this modification would have on future development given the range of factors that contribute to the feasibility of any given development project. 

How would [paying fees] not increase the rate of the, increase the price of the market rate units on that development? And that’s a great question. And it is, um, a trade off and I think part of the policy and it may be the case that the market rate units have to, to some extent subsidize the inclusion of the affordable units and that it is a valid way to view the program. But uh, the proposal and the fees that are being proposed and set are such that we feel pretty confident that development will still be feasible and we would work with the development community that we wouldn’t be over impacting feasibility (the full exchange is in this video starting at about 49:45)

Roger,

We want to set the record straight.  Your statement, taken from your below email:

We have already expressed substantive disagreement: Mandatory Inclusionary Zoning (MIZ) is an inflationary policy that will only make housing prices worse for consumers by adding additional costs and slowing production with inclusion mandates and fees. The City and the Chairs of the HALA Committee have publicly agreed that this “a valid way to view the program.”

is flat out wrong.  Neither of us made the statement you are attributing to us and furthermore neither of us agrees with your larger misconstruction of a supposed point.  We request that you not misquote us or twist our statements to appear to serve your interests.

Faith Pettis and David Wertheimer

HALA Co-Chairs

Deregulating the Arts in Seattle

It’s a familiar pattern. An arts organization lands a great deal on space in Seattle. The new space is flexible, allows for artists to be noisy and make a lot of dust preparing and tearing down shows, and it’s super cheap. Somehow nobody noticed that big white sign out in front, the one with the “Death to Capitalists!” graffiti.

It’s called a MUP (Master Use Permit) board, and it indicates the site is about to be redeveloped. When? Who knows? It’s part of the challenge all new building faces, unpredictable permitting. The board explains a lot about why the site is so cheap and why nobody really cares about how the space gets used.

Still our hypothetical arts groups is happy with the space — and it’s working! Attendance is up. Lots of people are hearing about the innovative things being incubated in the space. Artists are hitting a creative stride, audiences are having fun and being challenged, and enough money is coming in the door to just about off set the costs. Then one night the fire marshall shows up: the space has too many people in it. The arts group has a choice, bring the space up to code, which could cost tens of thousands of dollars, or limit attendance, or shut down. Soon the venue is shut down. The building gets redeveloped into housing. Everyone says, “All this development is killing the soul of Seattle.”

I shake my head and sigh. I’ve been here before.

More than 10 years ago I addressed this issue as an arts funder. When I was at the County we built a program called Art Patch that was part educational outreach to artists about health and business but also funding art too. This scenario became all too common as the city was growing before the last economic collapse in 2008. What’s the answer. I wrote a proposal in the Seattle Times about ideas to prevent this AND keep building housing. It’s a long story. But Seattle is facing the same issues again.

The Arts Commission wrote a letter with some great recommendations to the City Council and Mayor. Two dangers lie ahead. One is that this becomes about race and social justice. Already references to the tragic fire in Oakland have been made and implications also about the disproportionality of the experience I described — the suggestion is being made that more organizations of color are being impacted. We don’t need to do all that. I know, I know. We don’t.

And we don’t need to blame growth and greedy developers for knocking down sites that have been great venues. We need to work together for a change. The one group in town the struggles with the same regulatory gauntlet is housing producers, both market rate and non-profit.  The second danger is making this the same Seattle routine about economic and social repression and issuing fiats and mandates from downtown instead of figuring out ways to meet health and safety standards at lower costs. Please. Let’s do that. And let’s look at Transfer of Development Rights (TDR) to help preserve low-rise buildings that could have a much longer life as arts and cultural venues if the unused FAR could be used somewhere else.

The tragedy in Oakland unfolded in minutes, killing human potential. Everyday a slower fire is killing off hope as well in the form of housing scarcity. Much of this slow motion tragedy, a story of talented artists giving up on trying to make a living and be creative in Seattle, is self imposed by our code. We can be safe, successful, creative, and build a better, more diverse city. But it won’t happen picking out villains and victims but combining forces to solve the problems (the featured image for this post is from a Seattle Weekly feature on arts and growth in Seattle).

For what it was worth, I offered my experience and of the development community to work to address this issue. There is a great program in Chicago that I learned about my last time around on this issues. Here’s what I sent the Commission and Council. We’ll see if we go the route of working together or of putting more of a squeeze on growth which is sure to make the problem worse.

Hello [Matthew and Councilmember Herbold],

While we are an organization that is working for more housing of all types, in all parts of the city, for people of all incomes, we also agree that arts and cultural venues are what make a great city.

We support the spirit of your recommendations which seek to meet basic health and safety requirements without necessarily fully complying with all code requirements. Your take on this is absolutely correct: compliance is along a spectrum, and goal is health and safety of patrons and the community, not simply complying for compliance sake.

We face many of the same issues in trying to deliver safe, affordable, and livable housing for people who need it. Often we’re confronted with the same issues, code requirements that push up the size and the price of units, for example, to meet arbitrary square footage requirements.

I also am trying to reconnect with Julie Burros who is now head of the arts and cultural office in Boston but who several years ago was working on the issue in Chicago. Chicago received a MacArthur Grant to address this issue (you can read about it here:  https://www.macfound.org/press/press-releases/new-macarthur-fund-to-help-small-chicago-arts-groups-obtain-city-licenses/).

In any event, if there is anyway we can be supportive of this kind of effort please let us know and I’ll share what I learn about what happened in Chicago

Roger

Mayor and City Council Still Riding the MIZ Tiger. But for How Long?

Hey Wallingford: Developers and Builders Didn’t Ask for and Won’t Benefit from MIZ

There are so many really dubious arguments being advanced by the Wallingford Community Council (WCC) and by wannabe Councilmember Alex Pedersen against upzones in the U District, that knocking them all down could take weeks. It’d be a lot easier for them and everyone involved if they’d just say what they mean and what they want: we’re worried about the effect change and growth will have on us, make it stop. But most of the angry neighbors engage in the usual, “I’m all for growth and change, just the right kind of growth and change.” It’s the Goldilocks Principle of growth. No surprise.  I’m only here to take on one bad idea, the biggie, that developers want and will somehow benefit from upzones as part of Mandatory Inclusionary Zoning (MIZ).

Here’s the phrases embedded in an invitation to a meeting last Saturday about the proposed upzones, emphasis is mine,

The HALA Mandatory Housing Affordability program rewards developers and speculators, while Seattle residents pay the price.  This “Grand Bargain” devised by Seattle’s Mayor and City Council . .

and

 . . . learn more about the Mayor and City Council’s plans for a developer giveaway under the guise of affordability

I guess the WCC must have missed it, but for the last two years we’ve been opposing MIZ because it adds costs, slows down the development process, and contributes to higher costs and makes many projects infeasible. So, yes, it is a “giveaway under the guise of affordability,” but not a giveaway to us. There are no rewards or upsides in MIZ for builders of housing. The Mayor himself has called the fees that would be paid instead of inclusion a “penalty,” something also clearly illegal. And who gets the money collected from fees generated when builders and developers pay the “penalty?” More on that “giveaway” in a minute.

As I’ve said again and again, MIZ makes many projects infeasible, and when they do work it will be because rents rise enough to pay for the inclusion or the fees. In the end, MIZ is illegal since it is an unauthorized tax on housing not a value exchange program that would essentially sell additional square feet for housing development. And the so called Bargain was not between developers and the City, but between one developer, Vulcan, non-profit developers who get the fees, and Councilmember Mike O’Brien.

What the WCC gets right about the whole MIZ scheme is that it will raise housing prices. 

Every new MHA building will increase the cost of housing in Seattle

That, WCC, is absolutely true! And you ought tot be going after the organizations that are really pushing the MIZ scheme, non-profit housing developers that want the fees that will be collected by the upzones. 

Pedersen essentially recycles most of this language in his missive but in all caps says this,

VOICE YOUR CONCERN OVER POORLY PLANNED, PROFIT-DRIVEN UPZONES.

Poorly planned. Agreed. Profit driven? All I can do is point to the fact that we are opposed to MIZ and what the same “City Hall ideologues” who are pushing this horrible plan without any regard for the devastating consequences it will have on the housing economy in Seattle. The upzones are not profit driven from our perspective. We never asked for them! We weren’t in the room or represented when the Grand Bargain was signed. Let me remind the WCC and Pedersen what the Mayor, in an unscripted moment without legal advisors present, said about a year ago of the upzones:

The heart of HALA is you don’t get to develop housing in this city, multifamily housing, unless you build affordable housing as part of it. That is the key piece to it. We have developed . . . .We have grown as a city, but we have not grown affordably. What we are saying is, if you are going to build a multifamily unit in an urban village, you are going to build affordable housing, or you are going to pay penalties that will go into a fund for building affordable housing.

The Mayor is trying to penalize developers except for Vulcan and larger developers downtown who get to write a check and get on with their projects. Everyone else that builds housing in the city will be faced with, as I said above, infeasibility, uncertainty, and having to raise their prices to cover the costs of either upzones and inclusion or from the fees. And don’t forget the other winners in this are the non-profit developers at the Housing Development Consortium (HDC) that get those fees to build really expensive subsidized units with years long waiting lists. That’s the real giveaway here folks. 

So WCC et al, if you want to create some real discomfort, go after the organizations that signed the deal and want the cash. Those organizations (here’s a list of HDC members, and you’ll see many for profit banks, architects, and lawyers who profit from low income housing) are the ones that are pushing the whole MIZ effort along with Vulcan. We had nothing to do with it, and will likely eventually sue the City because MIZ is plainly an illegal, unauthorized tax on housing under RCW 82.02.020. This whole thing is a tragic waste of time. But don’t blame developers and builders. We had nothing to do with it.

 

Bright Idea Department: Democracy Vouchers

In snail mail boxes all over Seattle, registered voters are getting an unusual envelope filled with something called, “Democracy Vouchers.” Each registered voter in town will get $100 worth of vouchers in $25 increments. The idea is that anyone with a voucher can give it to the candidate of their choice provided that the candidate agree to certain limits on their fundraising. The candidate must:

• File for office;
• Collect requisite signatures and contributions (e.g. 400 signatures and $10 per signature for at large City Council seat);
• Submit the petitions;
• Collect and then redeem the vouchers for cash payments from the City;and
• Accept contribution limits (see below)

You’ll notice that a voter can add their voucher to their $250 contribution so the individual limit is essentially $350.

Here’s a couple of other odd provisions. The first one is ripe for legal challenge:

Does this mean individuals or companies or non-profits. I can’t think of anyone, who would, out of their own bank account, spend $10,000 on a lobbyist. So does the Government Affairs guy at Boeing get cut out of the vouchers? How does that work? It seems really dubious for a person paying taxes into a program to be denied access to it because of their job. We’ll see what the courts say.

Here’s another odd one:

Weird. So if Jon Grant is running for the at large Council seat and his opponent raises $500,000, Grant can raise as much money as he wants. Does he keep the vouchers? Does he have to give them back? I thought that was the idea, “to get money out of politics!”

And that brings me to my main point: the purpose of the vouchers is to, well, I can’t quite get a straight answer out of advocates for the program like the Sightline Institute other than some version of, “It means less money in politics.” But does it? That’s still a lot of money. And is the idea, too, that we would get more involvement so we’d get better people running for office — people that might have, you know, unpopular views. You’d think.

But here’s what a socialist told me about the program and whether it would help Jon Grant, a proponent of rent control and a host of other, really bad, but really popular, housing policies:

It solves the problem of needing large sums of money to run for office, and yes, I think it will benefit people I support.

And at last report that seems like exactly what’s happening, Grant is already up to $50,000 in democracy vouchers. The socialists and everyone in town who advocates for growth moratoriums and height limits, are against microhousing, and for taxing new housing will be rushing to give Grant their vouchers. Good work Sightline Institute. I really don’t get it. I think that supporters like Sightline will be in real trouble with urbanists and the housing community when Grant’s win is attributed, in part, to democracy vouchers.

Also, and this is another reason why sometime smart people shouldn’t be left alone with legislation, this is a form of price control for campaign spending. The guys at Sightline seem to be saying, just like advocates for rent control, the price is just too high! Let’s put a limit on spending. But what does campaign money fund? Communication, and for a pro market person to stand up to the people that will be supporting Grant, is going to take money to make that case to people on the fence.

And vouchers will create inflation of campaign costs. When consultants and mail houses realize there is a set universe of dollars, they are going to charge more for their work, knowing there won’t be more money raised in the future. And instead of chasing dollars, candidates will be chasing vouchers.

A great business idea would be a service that charged 10 percent on all vouchers wrangled for the candidate. This is almost inevitable. Do you get it? By limiting expenditures you’re not limiting corruption or greed, you’re making it harder for views that are good economics but unpopular from getting a fair hearing. That makes no sense. If anything, we need more money in politics, and that’s why a matching funds program would make a lot more sense.

But sometimes feeling passes for cleverness and long term thinking about democracy and how it works. When Congresswoman Pramila Jaypal took to the floor of the Congress she protested the election of Donald Trump as electoral votes were counted. She was gaveled down by Vice President Joe Biden. About 5 minutes later I got this in my e-mail in box:

I pointed out that Jaypal’s stunt was intended to get her attention but also to raise money. She probably raised a lot. I said, “She’s fitting right in” when I posted this to Facebook. To which one of her supporters responded:

I’ve got no problem with her raising money. I have a problem with it being necessary.

Yeah, me too. And rent. I’ve got no problem with people working to pay rent, but I have a problem with it being necessary. It’s unfortunate that we’re wasting $3,000,000 tax payer dollars on a gimmick that is likely to get someone antithetical to our agenda elected while doing absolutely nothing to benefit democracy. Once again, instead of taking the obvious root of increasing the supply of money to engage in democratic communication, Sightline and others have tried to limit supply. Hardly democratic.