Councilmember Nick Licata has an editorial in the pages of the Daily Journal of Commerce that is a response to a March 27 op-ed on incentive zoning by Ada Healey, vice-president of Vulcan Real Estate writing about incentive zoning. In trying to refute Healy, though, Licata ends up making the point that dense, high rise development is risky. What he doesn’t seem to grasp is that adding more costs to that doesn’t make it less risky. The City’s incentive zoning program is really disincentive zoning. Here’s a breakdown of the key points.

First of all, Licata’s entire article is fundamentally flawed because it leaves out the most basic truth about new housing: more is a good all by itself. When we advocate for more density it isn’t because we want bigger buildings, but because there is widespread agreement that more housing in urban centers is a fundamental ingredient of sustainable development.  And granting up zones allows more people access to all the benefits of living in our city.

But reading Councilmember Licata’s article one would think that additional density and housing is an impact that needs to be offset. When one reads Licata’s article with this in mind his arguments just don’t add up.

Licata suggests that it isn’t the extra fee and process that accounts for the fact that only a third of eligible projects participated in the incentive program, but other “factors that influence the decision whether or not to build 240-foot towers.”

For starters, the development standards for some of the lots in the SLU rezone area simply preclude tower development. For instance, one property is in the zone for high-rise development, but the small size of the lot and meeting the requirements for maximum tower floor plate size means a similar amount of floor area could be developed in a midrise product.

This one is simple; change the development standards to allow development on smaller lots. It’s good that Licata sees the design standards as a problem, but unfortunately he fails to acknowledge that eliminating or revising them to solve this problem would actually be the most beneficial solution. Current zoning isn’t working to create more housing, even with additional density purchased through the incentive zoning program.

Licata cites another reason why projects eligible for a height bonus didn’t take it: risk.

Further review of permitting for several of the properties in question, reveals that some of the developers are midrise developers with no high-rise development in their portfolio. Midrise development is less risky given that it’s less expensive to build and the construction period is shorter.

Again, it’s encouraging that Licata and his staff appreciate this point, even though they misapply it when considering the bigger picture. Reducing risk and cost is the point of an incentive program. To suggest that midrise developers didn’t go high rise because of additional costs and risk makes our point perfectly. If the program was a true incentive it would have changed the risk

profile and costs so that those risk averse developers and investors would have opted for more height. But they didn’t, because what the current program does is add cost and risk that fails to be offset by the value of additional development capacity.

Licata then suggests that even though the percentage is small, lots of housing is getting built anyway and he cites numbers from New York.

But what, if anything, does that mean? In New York City, the utilization rate of the program is 10 percent (ours is 38 percent) yet it has resulted in 13 percent of all new multifamily units in the targeted zones being affordable units. In other words, fewer development projects eligible for their bonus program have elected to take the bonus, but their program still produces more affordable housing than ours.

The reference is a bit of a non sequitur since we have local data on how much housing has been created by the incentive program, and Licata cites that data himself later in his article. We know that the program only created 616 units of affordable housing over the last decade. That’s compared to over 6,000 units created by the Multi-Family Tax Exemption (MFTE) program, and more than 3,000 units created by the City’s housing levy over roughly the same period.

Licata again makes our argument for us in later paragraphs:

Here are two key factors driving the delivery of high-rise projects in SLU:

1. Supply of sites available for high-rise development, given the potential for alternative development of those sites with offices and biotechnology research and development laboratories.

2. Risk associated with high-rise residential development, recognizing that demand is limited because the ability to command higher rents needs to be proven by the market to finance construction and there is competition from development in other areas that also allow high-rise development.

In pointing out the “other reasons” why the incentive program isn’t working, Licata perfectly makes the case that to actually incentivize denser, high-rise development the Council should be fixing regulations to reduce costs and risks. The current incentive program, by Licata’s own argument, does none of these things.

Why are so many proponents of growth and density also opposing incentive zoning when their support for it could in fact address many of the concerns people in Seattle have about growth?

Clearly Licata and his staff didn’t listen as to why we are opposed to this way of addressing the challenges of housing more new people in the city. So here it is again.

There is no workforce housing “crisis.” We know that there is actually a surplus of housing for people who earn 60 percent of Area Median Income (AMI) and above. So the tool of incentive zoning is being used to solve a problem that we don’t have.

Second, that tool acts as a disincentive with fees that are too high, adding more costs and risk to building more density, truths that Licata uses to make his own case. And this leads to underdeveloped sites, an outcome in conflict with the City’s own goals for sustainable development.

Third, current zoning and process make the program a challenge to feasibly implement, something Licata also agrees with.

Fourth, the program doesn’t create much affordable housing compared to other programs and it never will, because increasing the fee will only lead to decreased participation.

And lastly, and most importantly, the idea of new development paying for affordable housing is a good one, but that would require adding value not siphoning it off with a tax that adds costs and more risks. Remember that simply allowing development to the maximum feasible levels would create more housing, additional sales tax revenue, and jobs without any fees and taxes. New development already creates lots of public benefits and the incentive program is actually inhibiting these benefits, not creating them. And it seems strange that Licata is so suspicious of MFTE a program he admits creates lots of affordable housing with a fair distribution across the city, including single-famly home owners who disproportionately occupy land in the city. Shouldn’t everyone contribute to welcoming new people our city?

We’ve proposed some ideas that the Council should review as part of an overall comprehensive housing strategy, something the consultants hired by the City have said we don’t have. Having a plan would help the Council develop some tools that, when used together, could act as real incentives to what we need and want, more housing.