NIMBYs: “We Live in Fear” of Rowhouses

I’m not going to post much commentary on yesterday’s Planning Land Use and Sustainablity (PLUS) Committee meeting. I encourage you to watch for yourself about two hours of some of the most over the top reactionary NIMBY testimony to proposed low-rise legislation. I open the proceedings with a warning to Council (at 30:00) that they are about to hear lots of emotion and red herrings.

One of the best comments (some people actually cried about how much love their single-family house) was a NIMBY who said that the neighborhood “live in fear” of the next rowhouse project because new housing has turned their neighborhoods into a “war zone.” Also, the NIMBYs manage to contrive a new term: East Block Housing. They arrived at this formulation by pushing together the Cold War term Eastern Bloc with the architectural term, “Blocky” or “Block” describing Brutalist architecture. So now neighbors have to fight against East Block Housing in low-rise zones.

Sadly, the Committee is listening to the wild and emotional defense of single-family property values. Councilmember Rasmussen has promised amendments to turn back the progress made on previously bad legislation.

Low-Rise Legislation: Still Taking Away Supply, Choice, and Opportunity

This afternoon the Planning Land Use and Sustainability (PLUS) Committee of the Seattle City Council will consider legislation to make changes to Seattle’s low-rise zones. This is legislation that we have been fighting against for well over a year with some benefit. The legislation that is being proposed is nowhere near as bad as what we unsuccessfully appealed last year. However, there are still many things in this legislation that are, well, maddening. The over all approach to this proposal seems to be aimed at somehow appeasing angry neighbors with more restrictions. While those new rules aren’t as bad as before, they still eliminate housing potential. The question is, why, at a time when we’re going through a “housing crisis” would the Council do anything to take even one unit off the table? One reason is politics. Here’s the comments we submitted for the record.

 

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June 2, 2015

Dear Councilmember O’Brien,

The many hundreds of local builders, contractors, architects, and others in the real estate business are very appreciative that the City appears to finally have listened to the many issues we have raised about legislation proposed in 2014 to substantially reduce housing capacity in the city’s low-rise zones. Thank you!

However, there are still serious issues left with the legislation that will have an adverse impact on what you and your colleagues say is your main interest in all housing legislation, affordability. As I said in public testimony, this legislation was unnecessary from the beginning, born mostly of red herrings from angry neighbors.

While there has been progress here (thanks in part to the delay created from our having filed an appeal of the original legislation which Councilmember Clark promised to pass in the first quarter of 2014), there is still frustration among our members about the fact that there are many elements here that still seem to ignore the principle of doing no harm to housing supply, choice, and opportunity.

If this legislation must go forward, please consider the following issues that remain with the current proposal:

• Establish an upper-level setback on street-facing façades. The setback would be 16’ at a height of 44’ in a 40’ zone, and 12’ at a height of 34’ feet in a 30’ zone.

It remains unclear exactly what the purpose of this is other than appeasing a hypothetical neighbor walking their dog in front of a building and not liking the fact that the building looks “too tall.” While we appreciate that the 16’ setback is departable through the design review process, this set back probably won’t make that neighbor happy and will cost housing units that will cause rents in the project to be higher.

Please eliminate this setback requirement and, instead, remind neighbors that the height in low-rise zones allows for more multifamily housing, a public benefit that you and your colleagues have said you are committed to. Each unit eliminated to improve a neighbor’s view of a building is a person or family without a housing option.

• Place limits on the use of clerestories:

Builders are not trying to build what you call a “de-facto extra story” with the use of clerestories. This, again, seems like a solution in search of a problem. Even if more units were being created through the use of clerestories, those additional units add to housing supply and are a good thing. The fact is that units with lofts create light and additional space for residents, a benefit to future residents that shouldn’t be eliminated unless there is a serious public benefit as an offset and there doesn’t seem to be one other than to make planners feel as though they aren’t being outsmarted by builders.

Please consider eliminating the arbitrary percentage (which has no rationale) in favor of a more flexible design standard.

• Change rounding rules and density limits in LR1 zones:

You say something in your memo that is pretty offensive: “developers have been gaming the rules in a couple of different ways in order to increase the number of units they can construct.”

Nothwithstanding the fact that we need more units of housing, nobody is gaming anything. You and your colleagues created the code, and staff at the Department of Planning and Development (DPD) implemented that code. Are you suggesting that buildings they approved are illegal? Are you implying that the staff at DPD misinterpreted the code? It would be appreciated if you’d make a public clarification of this at the next available opportunity.

Also, you and your colleagues continue to claim you care about housing affordability, however this element of the proposal would eliminate hundreds of potential units of housing for no apparent reason. You have not made any clear statement about why the public or anyone else benefits from reducing a project with 4 units of housing to a project with 3. The fact is there simply isn’t one.

Please eliminate this change unless you can offer a rationale that benefits the public other than the false statement that anyone is gaming the system or failing to do their jobs.

You call out the “practice that involves the building of two or more rowhouse units (which do not have a density limit) in front of two townhouse units on subdivided 5,000 square foot lots where only three townhouses would have otherwise been allowed.”

Please eliminate this change since, again, you offer zero rationale about why eliminated potential units would benefit the public or housing affordability. Also what exactly is one house in a row? A rowhouse seems to presume a row of housing which means more than one house.

• Clarify rules about exterior hallways.

As with the other elements of this legislation, we’d prioritize maintaining existing housing capacity over all other priorities. Provided that City staff works with design professionals to ensure that clarification of this regulation doesn’t result a significant impact on creation of additional units, we have no further comments at this time.

• Add design review threshold for LR2 zones.

Design review is a process that is costly and the additional costs result in few changes that make neighbors who oppose a project in the first place. That means nobody is happy, builders who end up having to incur additional costs from time delays, renters who end up paying for those costs in the end, and neighbors who feel their time is wasted by a process that isn’t responsive to what they want. This process needs an overhaul. The Mayor agrees with us as well, that requiring design review at this stage could add costs to housing and is inappropriate since DPD is developing changes to the design review program.

Please eliminate this addition of these projects to design review as the Mayor and DPD have suggested.

Again, we appreciate that your committee did what we explicitly asked you to do: allow the Mayor’s Housing Affordability and Livability Agenda (HALA) Committee to review the original legislation and listen to their recommendations. We’d ask that you’d take that a step further and consider shelving this legislation or narrowing its scope to what everyone could agree would be clean ups and corrections, not significant policy changes.

Sincerely,

 

Roger Valdez
Director
Smart Growth Seattle

Making S**t Up: The Problem With Zoning Regulations

I am deeply skeptical of efforts to regulate outcomes in the market place using the land use code, zoning, and housing policy. What do I mean? Well an article by John McNellis at the Bay Area real estate blog, The Registry called Big City Dreaming points out one example: mandated commercial space. Many jurisdictions, including Seattle, require set asides for commercial space, and those set asides are typically square footage ratios that have absolutely nothing to do with demand for the space from retailers. Planners at the Department of Planning and Development (DPD), the Office of Housing, and other departments come up with some pretty random and bizarre directives about what should be required in new housing and development, like the .75 parking ratio for covered bike parking for Small Efficiency Dwelling Units (SEDUs).

Zoning itself started out with the well intended purpose of segregating noxious uses like a rendering plant from where people lived. But it’s become the crutch of the lazy planner, who these days tends to rely on incremental tweaks of layers, and layers of code based on pushing uses apart. From McNellis’ article:

Ever since New York City began formal zoning in 1916, municipalities across America have struggled to balance public health and safety, orderly growth and property rights. In their struggles, they nearly all succumbed to the temptation of Euclidean zoning, a neat yet simple-minded approach to city planning. Euclidean zoning is the segregating of towns into exclusive use districts—typically, one for single-family homes, another for apartments, a third for commercial and the last for industrial. The American standard throughout the 20th century, it remains so today across a wide sash of the country. This geometry gave us pristine neighborhoods, a wrong side of the tracks and far more driving than would result from a less stratified approach to zoning.

I’ve pointed this out before in a post at Seattle’s Land Use Code,

The idea that geographic parts of our city are zoned for use and standards–like single family or NC 85–is the relic of ancient zoning history. Zoning came about to separate use. We need to do the opposite. In a walk down any block in our city we should be able to see many uses and many typologies pushed together and even on the same lot. It’s going to take time to get away from the idea of preventing a “pig in the parlor” to welcoming the whole herd in the house.

The term “pig in the parlor” refers to the landmark Euclid decision that validated the concept of zoning 100 years ago leading to the wide adaptation of Euclidian zoning, a policy that mandates strict separation of use and, now, building typology.

The well intended folks downtown have an amazing ability to misread basic economics. McNellis’ point is that efforts to create walkable neighborhoods end up being read by planners downtown as, “You shall build X square feet of ground floor retail in Y zones.” Why? The planners don’t have any idea. Studies about the economic value created by the ratio? A longitudinal review of 50 years of successful retail square footage in relation to residential? Nope. Just a random decision driven more by the Goldilocks principle than any sound economic review. You’ll excuse the colorful expression, but planners are very good at “making shit up,” whether it’s ratios of this to that, building heights and scale, or the number of housing units we’ll need over the next decade. At the risk of ladling on too man cultural references, it reminds me of Dr. Evil’s poorly thought out and comical requests for ransom; we’ll charge a linkage tax to generate $100 million for housing. Why?

Zoning, generally speaking, is a 20th century solution to a 19th century problem, and it’s far easier for planners to tweak ratios than actually do the hard work of figuring out what makes economic sense. As McNellis points out,

Designing cities to escape the tyranny of the automobile, to allow us to walk from home to work to shopping is a laudable goal, but when that goal is alloyed with a misunderstanding of basic economics and a “We know what’s best” arrogance on the part of cities, buildings no one wants and, worse, no one can use are too often the result.

Ironically, it was Councilmember Mike O’Brien’s vote that killed the idea of allowing commercial space in low-rise zones if it made economic sense, a decision that will likely go down in history as the first big win by NIMBYs living in low-rise neighborhoods in their effort to stop things they don’t like, like microhousing. If commercial retail space makes economic sense then developers should be able to build it and if it doesn’t they shouldn’t have to. When planners downtown take the easy way out, we end up with empty store fronts or areas that could support retail that don’t have it. That’s not only bad planning, but doesn’t support what our city needs, better neighborhoods with diverse uses that meet the needs of people who live and work there.

Economy Sinking? Just Jump in Your Kayak!

A recent article on the state of the global economy got me thinking about our own local housing economy and how fragile it may actually be. It also made me think that there may be ways that we can design interventions in our local housing market that are more responsive to the push and pull of market forces that are truly beyond local control so we’re better prepared for a downturn. The problem with the typical Seattle approach to solving housing price issues when the economy is hot is, ironically, to make it harder to build housing by imposing taxes, fees, rules, and controls that end up squeezing supply. Then, when the economy slows down, everyone moves on to job creation and the “safety net” to help people suffering from the downturn. Housing and land use is forgotten until the next upturn. Maybe there is a better way.

The article in The Telegraph, HSBC fears world recession with no lifeboats left, lays out in great detail why one of the world’s largest banks thinks the global economy is sailing toward trouble without many options if the ship springs a leak. The typical intervention the article is referring to is the lowering of interest rates, a dial that governments use to either slow or speed up an economy. When an economy starts moving faster the result can be inflation, when it’s too slow, prices drop. In the first case, governments want to protect people’s savings and investment from being consumed by inflation and in the second, they want to prevent widespread unemployment when prices fall. But the problem is that governments have the interest rate dial set at just about zero, meaning that if demand falls, prices drop, production slows, and unemployment goes up, there isn’t any way to encourage more borrowing by the private sector to generate more goods and services, boosting supply and demand by lowering the cost of money.

Locally, we feel a drop in global demand because some of our biggest employers are global suppliers; Boeing’s airplanes, Amazon’s stuff, and Microsoft’s operating systems and programs. That line of brogrammers a the food truck some Seattlites whine about, could easily turn into an unemployment line — or a line on freeway ramps and airport gates as those people leave our region for jobs elsewhere.

The Seattle City Council can’t control interest rates, but it does have a form of monetary policy: land use regulation. The dial the City has on our economy is largely the value they allow to be created by the development of more housing and office space. Now, generally, there are two limits to what will and can be built in our city. The first of these limits is economic, the rate of return that can be generated, for example, from a mixed use building versus a parking lot or a high rise apartment building. If there was no limits on land use we would not see Hong Kong style density as a result; there simply isn’t that much demand to create that kind of density. But there is enough that in places like South Lake Union there would be more units built in response to demand.

The second limit on our local economy is the way that the Council constrains what the market is signaling builders and investors to do. When the economy is hot, a particular site that previously a poor investment for housing can suddenly turn into a great place to build housing because the demand for housing is increasing. But if the Council has imposed a myriad of limits on that site, either the building won’t happen (see Dan Bertolet’s post on what will happen if linkage taxes are passed) or fewer units than the market would allow will be built. Either way supply is slowed down and, in the face of rising demand, prices will go up too.

But the study of economics is often criticized by the left as not being a “hard science,” a field that is part social science and part divination, and in practice nothing more than guesses by people with a financial interest in the outcome. Here’s an example from the comments on my recent post about rent control in Publicola:

The proof is in the pudding. The results of 40 years of screwing United States Citizens in order to enrich a cadre of wealthy individuals from around the globe.

“Economists” are frauds, and hucksters for the wealthy.

“Economics” is not a science, but “economists” try hard to get people to believe it is. More fraud.

Yep. It’s all fraud. The left usually adopts this Lysenkoist position because to do otherwise would force them to change their preferred brand of economic intervention, price controls and taxes. And while regulation is critical to shape the economy, it is not an either or proposition. The truth is that an economy is like the weather, it can be studied and we can manage our response to it. But we can’t control it. But two Councilmembers seem to think they can control the outcome of our local economy, and oddly, they both should know otherwise. Councilmember Mike O’Brien holds an MBA and Councilmember Kshama Sawant is a Ph.D in economics. Yet, Councilmember O’Brien is proposing interventions that would lower land value and add costs to the production of housing when we need it the most, while our local economy is humming. Councilmember Sawant want’s to impose inflationary price controls at the same time.

When the economy does hit that ice burg and demand drops and we start to feel it here, we’ll still be left with the dials of local land use set to slow a hot housing economy, largely because of worries about “developer profits” and displacement. It’s kind of like holding down the breaks on your bike as you go down a big hill, but then not having the sense to let up on them when you get to the bottom and have to climb the next one; without the momentum climbing that next hill will take a lot more work.

If we had a sensible approach to housing economics our dial would be permits and housing subsidies; when demand was skyrocketing, we’d turn that dial up as high as we could, to the point where the local housing market might even be overbuilt.We’d take the many taxes and fees (yes, developers already pay millions into the City’s treasury) and turn up the subsidy dial.  If you really want to harm developers, let them build too much inventory — let them overshoot the market. When demand starts to fall, so will prices and the motivation to build. At that point, the subsidy dial could be turned down because prices would drop or it could be diverted to, yes, pay developers to build more housing that makes no financial sense to build otherwise. Maybe vacancy rates would climb, but that would be great for housing prices.

Interestingly, it might be that the bogus theory of induced housing demand might actually become a reality, with housing prices in Seattle so low and enough jobs in the construction world that people, and companies, would start coming back to Seattle and we could have a local recovery.

But for all this to work Councilmember O’Brien would have to combine what he must have learned in economics, riding bikes, and paddling his kayak. In economics there are price cycles that are driven by supply and demand. When you’re riding a bike down the hill you break just enough to keep enough energy and momentum to make taking the next hill faster and easier. And when it comes to kayaks, you need to know how get yourself and others out of trouble, and that means being well trained and prepared.

But, locally, if we are to get though the next down turn we need to think ahead, stop fearing change, worrying about developer profits and pay attention instead to using our land use code and housing policy to create as much housing as we can now, and when things start to turn down, use subsidies to keep housing production moving as far beyond the cycle as possible. If we do that, we may not need a life boat since we could deploy our well trained flotilla of kayaks. Lots and lots of kayaks.

  
 

Affholter: Successful Density Opponents Mean Higher Housing Prices, Sprawl

Shannon Affholter, the Executive Director of the Master Builders Association had an important opinion piece in the print edition of the Seattle Times. In it, he makes the point that we’ve all been making over and over again: when anti-growth and opponents of growth succeed in slowing down housing supply, prices go up. 

Having Affholter’s regional perspective is helpful, because, often, where Seattle goes so does the region. Damaging linkage fees, if they aren’t ruled illegal first, might be used by other cities in King County and other parts of the region that are growing too. It’s difficult to explain and even harder for people worried about growth that developers use other people’s money–investors or depositors–to build housing. When Councilmember O’Brien messes with a project’s financing by adding costs, either renters pay or the investment goes elsewhere. 

Local resistance to growth presents itself in planning commissions as well as city and county councils all the time, often by small but vocal groups. These anti-growth sentiments can push local decision-making in favor of measures designed to slow, limit or outright stop new home construction altogether.
In Seattle, anti-density sentiments helped spur costly regulations on micro-housing as well as proposed rules to restrict housing in the city’s low-rise zones.

Collectively, these decisions can undermine our region’s ability to direct housing toward urban areas and create much needed “infill” development. This ultimately prices working families out of the market and leads to sprawl, which is exactly what the state’s Growth Management Act is designed to contain.

And that’s frustrating: seeing Seattle’s leaders in kayaks one day protesting Shell Oil, and then the next day raising housing prices and promoting climate changing sprawl the next. 

Here is a link to the full article.