Sightline Corroborates Our Points About Mandatory Inclusionary Zoning
Posted by Roger Valdez on Wednesday, January 25, 2017 · Leave a Comment
I’ve been after the Sightline Institute for a long time now urging it to abandon it’s support for Mandatory Inclusionary Zoning (MIZ). Last year they hired one of the smartest guys in town, Dan Bertolet, who I had worked with before challenging the City’s housing need numbers. Since then I’ve been after Bertolet to finish his math and finally tell us what was at the bottom of the page. He finally finished, and he’s come to the same conclusion we did a long time ago: implementing the current MIZ scheme is “worse than doing nothing.”
You can read his whole post which is linked below. The reason Sightline’s opinion matters is because we didn’t put them up to this analysis, he arrived at this conclusion on his own. I think Bertolet has known this thing won’t work for a long time, at least as long as me. Sightline is still clinging to the notion that MIZ can “work” if the City gets the math right. I think anyone looking at the idea — add costs to a product to make it cheaper — makes no sense. And MIZ is not “a smart balance of developer requirements and additional building capacity;” it’s a racket to squeeze money from market rate development and pour it into really inefficient non-profit housing, a move that will increase overall prices to make up for the new costs.
So now that a think tank not in the pocket of greedy developers has almost decided that MIZ is infeasible because of math mean the City will rethink it’s position? I doubt it. But I asked them anyway. Here’s my letter to City staff working on this. We’ll see if we ever get a response. I’m not holding my breath.
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Hello,
First I will say again how much I appreciate the difficult nature of staff work in support of the effort to impose Mandatory Inclusionary Zoning (MIZ) or Mandatory Housing Affordability (MHA) as the City has termed it.
This program is not going to work.
It won’t lower overall housing prices. In fact, as Geoff has admitted and Council staff have at least suggested, it will increase overall housing prices to offset the costs associated with the imposition of MHA.
As I have been pointing again and again and again MHA makes many housing projects infeasible and when they do work it will be because prices in the rest of the project will have to go up to rationalize the expense.
Finally, we’re pretty convinced this program will fail to stand up against a legal challenge based on RCW 82.02.020.
If you haven’t already, I urge you to read Dan Bertolet’s post on this topic:
Bertolet says, “the City cannot hope to get MHA right without conducting thorough, before-and-after feasibility analyses.” He also suggests that the program you’re working on today will be “worse than doing nothing.”
We completely agree. Do you have any response?
It’s my understanding that a directive has been given NOT to do this kind of analysis and I heard Geoff specifically say that value capture was off the table as a measure of whether the program would work. We’re still unclear on exactly how you’ll measure whether this program works outside of the number of units established as a goal. Are we going to wait for a few years for this program to spin before we figure out whether it’s working?
I’m making another effort, with this e-mail, in light of Bertolet’s work, to urge you to reconsider your methodology. We had no hand or influence over his work. None. He arrived at his conclusions entirely on his own. It is an analysis we’ve run ourselves from a variety of different start points. Almost always, additional costs from inclusion or from fees mean that projects won’t happen, land won’t sell, housing won’t get built, and when it finally does, it will add to the average overall cost of housing.
And pressure on Council will mount to increase inclusion rates and fees. This will not make an already fragile proposal any stronger — it will make it much weaker.
This is not about being right, it’s about looking out for what is best for the people who want and need to live in this city. And if we can’t get answers from you, on the record, we may have to pursue deep and pointed public disclosure requests to surface whatever we can about the math and the process behind this program. This has not been a transparent process.
The HALA process started because people in this city were worried about prices. Prices are a quantitative measure of the supply of housing relative to demand for it. Imposing an unauthorized tax or forcing production that will actually increase prices to create very expensive subsidized units is NOT going to make life better for people struggling in this city. It won’t. It will make it worse.
It’s worth going back to the white board, starting over, and getting it right. All of you are incredibly smart and motivated people who care about making the housing economy better. We’re willing to be part of that if we can.
Roger–
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Geoff Wentlandt responded to my e-mail and I responded back.
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Hi Roger,
There will likely be a response coming in some form to the article. I don’t want to start putting a response in an email chain, however I do want to point out, since you mention me by name, that I have not stated MHA will increase overall housing prices, and I’m not sure where you are getting that.
Thanks,
Geoff
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Hi Geoff,
You are on video and on the record. Here’s what you said:
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).
And Geoff, you are mentioned by name because you are accountable for this work. It’s not like you are some anonymous cog. We also have the Mayor on video saying that the fees are a “penalty.”
I think it’s pretty clear this isn’t a value capture effort at all, it’s simply an effort to tax new development. All of this will see the light of day eventually. And I am really looking forward to your counter to Dan’s post. Perhaps then you’ll show us how you all think this will work without increasing over all prices.
I can’t understand why the City wants to do this the hard way.
Roger —
