Council Does More Damage to Affordability Without Debate
I think the Seattle City Council has forgotten what a legislative body does: debate issues. Yesterday the City Council, with very little process or discussion, plowed ahead and passed substantial changes to the Multifamily Tax Exemption (MFTE) Program for Small Efficiency Dwelling Units or SEDUs, the new version of microhousing created by the City last summer with the passage of Councilmember Mike O’Brien’s legislation. The Council is rapidly losing intellectual and political credibility as it makes decisions that will have huge impacts on housing without substantial discussion of the facts.
The Council has become monolithic in their support of punitive fees and overly simple changes to programs that have been working for renters. Their questions are superficial and fail to raise the most serious issues about where the greatest need for housing might be and what the best tools are to address it. I feature a debate from the House of Commons above to show what actual debate looks like. We don’t have debate at the Seattle City Council. We have Councilmembers who can’t debate housing issues in person or in public because they either don’t know the facts or want to ignore them. It makes them uncomfortable to confront ideas different from their own.
A Facebook friend asked a great question and I offer this as an example of what a debate about the changes of MFTE might have looked like. Moser asks a great question. Anyone listening to the discussion would have clearly have asked why we support rent restrictions for “workforce” housing. See my response below. But Councilmember Clark never bothered to engage. Maybe some Councilmembers might “take a lecture” here and actually try to engage on the facts rather than marching along passing legislation that feels good, but really ends up hurting renters.
——-
David Moser Honest question: if, as I think you and others have previously demonstrated, the “workforce housing” range of prices (affordable to 60-80% AMI) is already being produced at sufficient levels by the market(one of the reasons the linkage fee is problematic), what is the point of having a tax exemption target that range of prices in the first place? Not saying I necessarily agree with this change(if it truly will lead to less participation and production), but that is the rationale right? To shift the target to encourage production for the lower ranges of income where the crisis is greater?
-
David Moser Simpler version: in your view does the market need subsidies/exemptions at 60-80% AMI or not?
Roger Valdez Thank you David Moser, you have asked a great question. If Councilmember Sally Clark and her colleagues weren’t so desultory in their policy making they might have asked the same question. Instead they ignored us, listened to bad, outdated data cut and pasted by the Office of Housing and screwed things up. Maybe, if the Councilmember was actually doing her job rather than playing politics the exchange might have gone something like this:
Clark: But wait, Mr. Valdez, I thought you said we don’t have a workforce housing problem. I don’t mean to play “gotcha,” but gotcha. Over and over again you’ve gone to pains to point out how we don’t need more subsidies at 60 to 80 percent. Now that we’re trying to lower the income to help the levels of income you and John Fox said need the most help, you’re crying foul. So what is it, Mr. Valdez, do people in SEDUs who earn between 60 to 80 need help or not?
Valdez: I thank my Honorable Colleague for paying attention. Yes, indeed, we have said that we don’t need subsidies for people earning 60 to 80 percent AMI because there is a surplus of housing affordable to people who earn that much. But I guess I have to remind my colleague that part of the reason we don’t need a linkage tax for those levels of income is because, in no small part, the MFTE program is working already for those levels of income. The proponents of the linkage tax want to tax renters (for they are the ones that will ultimately pay the tax) who earn 60 to 80 percent to subsidize other renters who earn 60 to 80 percent. This is true because when we tax new rental housing, that tax will end up hitting those levels of income the hardest. They will end up down renting, pushing up prices of older housing and making it harder for people at even lower levels of income.
But we’re not talking about the linkage tax of course, we’re talking about SEDUs. The issue here is whether we are “fixing” MFTE or simply ending it for SEDUs. The information you’ve been given from the Office of Housing are rents based on mircrohousing, which you’ve eliminated. And guess what, prices for SEDUs are HIGHER than for microhousing, just as we said they would be. Instead of $900 micros we have $1200 or $1400 SEDUs because there are fewer of them and they are bigger with more sinks and bike parking than anyone needs. You made that decision.
Therefore, lowering the entry level to 40 percent for the program means that the tax benefits are exceeded by the rent concession, a situation that isn’t an incentive it is a penalty (which it is easy to think is what you’re really after).
The question about what and where to use the very useful MFTE program is a good one. But you didn’t ask that before proposing this legislation. We’d have been happy to engage in that discussion. But there was none. You simply highlighted and deleted. “65 Percent” and the replaced it with “40 percent;” highlighted “20 percent of the units” deleted it, and replaced it with “25 percent.”
You did nothing to find out what impact this would have, engaged nobody who builds these, and simply went along passing the legislation knowing full well that because this is a complicated program to explain that you and your colleagues would look like heros and we would look like whiners.
What you lack in ability as a policy maker, I concede, you almost make up for in your shrewdness at the use of your office to make renters feel better, even while you are removing real benefits to them.
Clark: But wait, Mr. Valdez, I thought you said we don’t have a workforce housing problem. I don’t mean to play “gotcha,” but gotcha. Over and over again you’ve gone to pains to point out how we don’t need more subsidies at 60 to 80 percent. Now that we’re trying to lower the income to help the levels of income you and John Fox said need the most help, you’re crying foul. So what is it, Mr. Valdez, do people in SEDUs who earn between 60 to 80 need help or not?
Valdez: I thank my Honorable Colleague for paying attention. Yes, indeed, we have said that we don’t need subsidies for people earning 60 to 80 percent AMI because there is a surplus of housing affordable to people who earn that much. But I guess I have to remind my colleague that part of the reason we don’t need a linkage tax for those levels of income is because, in no small part, the MFTE program is working already for those levels of income. The proponents of the linkage tax want to tax renters (for they are the ones that will ultimately pay the tax) who earn 60 to 80 percent to subsidize other renters who earn 60 to 80 percent. This is true because when we tax new rental housing, that tax will end up hitting those levels of income the hardest. They will end up down renting, pushing up prices of older housing and making it harder for people at even lower levels of income.
But we’re not talking about the linkage tax of course, we’re talking about SEDUs. The issue here is whether we are “fixing” MFTE or simply ending it for SEDUs. The information you’ve been given from the Office of Housing are rents based on mircrohousing, which you’ve eliminated. And guess what, prices for SEDUs are HIGHER than for microhousing, just as we said they would be. Instead of $900 micros we have $1200 or $1400 SEDUs because there are fewer of them and they are bigger with more sinks and bike parking than anyone needs. You made that decision.
Therefore, lowering the entry level to 40 percent for the program means that the tax benefits are exceeded by the rent concession, a situation that isn’t an incentive it is a penalty (which it is easy to think is what you’re really after).
The question about what and where to use the very useful MFTE program is a good one. But you didn’t ask that before proposing this legislation. We’d have been happy to engage in that discussion. But there was none. You simply highlighted and deleted. “65 Percent” and the replaced it with “40 percent;” highlighted “20 percent of the units” deleted it, and replaced it with “25 percent.”
You did nothing to find out what impact this would have, engaged nobody who builds these, and simply went along passing the legislation knowing full well that because this is a complicated program to explain that you and your colleagues would look like heros and we would look like whiners.
What you lack in ability as a policy maker, I concede, you almost make up for in your shrewdness at the use of your office to make renters feel better, even while you are removing real benefits to them.
Jack Edson Whisner Does not the MFTE also shift the tax burden to all other parcels, many of which are rented by low income households and will have to pay higher rents as a result? Was it always a flawed program?1 hr · Like
-
Roger Valdez Again, a great question, Mr. Whisner.
Both the levy and MFTE cost all property owners and those that rent from them. However, when we consider that the median home about pays about $10.49 per year to create over 4000 rent restricted units, we think i…See More -
Bill Kirlin-Hackett 4,000 rent restricted units, none at 40%? True? Let those who need such rent go elsewhere; in fact, commute, clog the roads on the way to Seattle jobs. After all, that’s not the builders’ problem.Housing near jobs… Right? The market will provide. An…See More -
Roger Valdez Bill why would a bank or investor loan a baker, for example, to make bread if the baker couldn’t pay them back because the Council lowered the price of bread?
Nobody has argued here there isn’t a need, but simply cutting and pasting “40 percent” won’t create more affordable units. It won’t.
