Fear, Loathing, and Confusion Persist About Mandatory Inclusionary Zoning
Last week the Puget Sound Business Journal ran a story called “Ahead of HALA: Fear and loathing among small real estate developers.” The story is locked behind a pay wall, but here’s a key paragraph:
HALA is built on the idea that even with the added fees, the MHA program is worth it since developers get to build projects with more rent-producing space. But building bigger, taller buildings is more complicated and more expensive. Plus, “the city isn’t a very reliable partner,” Neiman said.
It’s annoying that throughout the story, the Housing Affordability and Livability Agenda (HALA) Committee report is confounded with the City’s version of Mandatory Inclusionary Zoning (MIZ) called Mandatory Housing Affordability (MHA). It’s simply shocking that after three years, this distinction is still not being made in the media.
But I’ll take the story. It’s the first time I can remember where a local journalist has actually talked with people who design and build housing about how MHA won’t work to solve any problems only add costs and make housing more difficult to build. I spoke with the PSBJ for the story but wasn’t quoted. Which is fine. I’ve been repeating over and over again that MHA will make many projects infeasible, is inflationary, boosting prices and rents to cover fees, and finally illegal.
I’ve also made these points about a million times:
In downtown and South Lake Union, though, there’s been little pushback and developers have embraced the program.
Developers in the urban core “got a really sweet deal,” said Neiman, because they were at the table when the HALA deal was struck.
“No one was there to negotiate a fair deal for small developers out in the neighborhoods,” he said.
Now, with MHA fees, “It is very difficult to get any projects to pencil out,” said Armbruster, who thinks the current situation will slow down development only until the MHA takes shape.
“Given enough time, it will all balance out,” he said. “But I will guarantee you market rate housing will be more expensive.”
Do I think now the City will stop and consider the damage they will do to the housing economy if they push ahead? Probably not. It’s probably going to require legal action to make that happen.
