Smart Growth Seattle: A Year in Review

This post is also an article in the January edition of Master Builder, the print magazine of the Master Builders Association of King and Snohomish Counties.

I made a presentation about Smart Growth Seattle to the Community Development Round Table in January of this year at a regular meeting of local business leaders convened by the Greater Seattle Chamber of Commerce. The opportunity came thanks to the late Jim Potter. Along with a presentation about micro-housing, I also talked about housing supply and choice. Here’s how I closed my comments:

Join with me, and the partners of Smart Growth Seattle, in making 2014 the ‘Year of Increased Housing Supply.’ Invite us back in a year and ask us about the progress we’ve made in shifting our civic discussion away from scarcity to abundance, from fear of change to having open arms for new people, and a local economy that can provide housing and shelter opportunity for everyone in our city.

How much progress have we made in shifting the discussion in Seattle? To talk about not whether we grow, but how? To be honest, it’s been a tough year. Small-lot legislation was not favorable, with the council adding more rules and limits with confusing height limits calculated on average height of surrounding homes. It is hardly the clear language we had asked and gives less certainty to neighbors and builders.

Then, micro-housing legislation passed, imposing deal busting requirements that are sure to slow down micro-housing production to a crawl, raise rents and make the product scarce. Nationally, other cities are trying to expand micro-housing. They are finding ways to eliminate the process and size limits to get what Seattle accomplished. Meanwhile, the Seattle City Council was reversing course.

Now we’re still facing significant uncertainty about the building of housing in Seattle, as the council contemplates serious reductions in density and housing capacity in the low-rise zones of the city and an exorbitant linkage tax that could add thousands of dollars in costs to new housing projects throughout the city.

What accounts for this growing trend away from the ideal I pointed out? Why the motion towards resistance to change and a clamp down on housing (ironically) in the name of affordability? There isn’t an easy answer, but part of it is the worry and suspicion among many in Seattle is that we are growing too fast. The collective notion is the rate of growth is helping a few and harming many.

Fortunately, I can report that the idea that building more housing of different types in neighborhoods all over the city has caught on as our key message. People now identify the argument about housing price and opportunity as one between whether we build more housing or whether we try to slow growth. That’s the shape of the debate.

It is frustrating that the majority of the city council* seems to be listening to people wanting slowed or no growth. The good news is that we know the evidence is on our side, and Smart Growth Seattle is committed to widening the debate about housing to include all levels of income in 2015. When market rate housing is scarce, it means people with more money can muscle out people with less, and that isn’t fair. When we make it more expensive to build housing by adding rules, regulations and fees, we’re not solving the problem of affordability – we’re making it worse.

*Councilmember Sally Bagshaw voted “no” on the resolution proposing a “linkage tax” and she has actively worked with builders and developers to propose real solutions for Seattle’s housing needs.

From Oregon: Model Code for DADUs

Eli Spevak who was a co-presenter with me several weeks ago on a panel exploring alternative housing models sent me a great blog post outlining a model code for what we call in Seattle DADUs or Detached Accessory Dwelling Units. This housing option has also been called backyard cottages.

As editors of www.accessorydwellings.org, we’d like to offer a model zoning code that ensures ADUs are small and discreet, while also providing enough latitude in their creation that they actually get built. Commentary is provided in italics, along with some alternative clauses that could be helpful for particular circumstances. You can also download it as an editable Word or PDF file. This needn’t be a static document. I expect we will update it periodically as we gain more experience with ADUs and the codes that govern them.

The sample code addresses one of the most troublesome aspects of DADUs in Seattle, the owner occupancy requirements. This makes DADUs a mostly ineffective tool to increase housing supply.

Owner-occupancy requirements make properties with ADUs unsuitable for income-based valuation by appraisers, constraining their value and making them more difficult to finance. Affordable housing restrictions on ADUs sound appealing, except that deed restrictions and tenant income screenings are (unsurprisingly) obstacles for mom-and-pop landlords (fortunately, ADUs provide a surprising amount of market-based affordable housing without subsidy or use restriction).

Allowing homeowners to build and rent out their DADU  (or sell them) is essential for improving the financing of the units. Without that, most people would have to add more debt to their own home without a way to recover that investment. The model code is a good place for Seattle to start creating options for using DADUs to increase housing supply.

State Must Step Up to Housing Need

As executive directors of housing advocacy organizations, we hear a lot about the state’s affordable housing shortage.

We hear from advocates with full time jobs, unable to find an apartment close to their work. We’ve listened in on the stories of families struggling to buy a home by their ideal school. Even our own staff members have recently had to move because of skyrocketing Seattle rents.

Everyone should have the opportunity to live in a safe, healthy, affordable home. And one of the most effective ways to do that is to ensure our state continues to invest in building different kinds of housing affordable to the spectrum of income levels across the state. Historically, the state has invested in affordable homes through the Housing Trust Fund in the capital budget.

Market-rate rents are usually out of reach for lower income families and individuals. That’s why Washington State has a central role in ensuring safe, healthy, affordable housing. Our state can even the field by funding these homes.

The state’s capital budget has created homes for low-wage workers, families, seniors, veterans, and more. It’s created homes for people leaving homelessness and helped low-income families purchase their first house.

Last year, the legislature failed to pass a capital budget, so the state passed on an opportunity to expand the supply of affordable homes. This is bad news for King County residents who are living in an affordable housing crisis. According to a recent report from the National Low Income Housing Coalition, for every 100 extremely low-income families in the Greater Seattle area earning less than $23,850 a year for a family of three, only 28 affordable apartments are available. Across the state, the numbers are no better. The coalition also found a shortage of 161,243 homes affordable and available to extremely low-income renters in the state, making Washington tied for the 8th worst affordable housing gap in the nation.

The state’s affordable housing shortage didn’t happen overnight. We got here in large part because of more than 30 years of federal policy choices that reduced the availability of housing affordable to people with low incomes. Today, lawmakers at every level have solutions right in front of them. At the state level, making a significant capital investment in affordable homes is a good start.

Another way we can address local affordable housing needs, championed by Housing Development Consortium (HDC), is allowing the King County Council to issue revenue bonds to create affordable homes.

Here’s how it works. In 2011, the state legislature authorized 37.5% of King County’s lodging taxes to fund affordable housing near transit centers for low- and moderate-wage workers. Unfortunately, this funding doesn’t start until 2021. But as the above numbers show, the need and opportunity is right now.

As an example, Link Light Rail expansion provides a prime opportunity to create affordable homes near reliable transit. However, land in these station areas is being bought up fast. This means land costs are rapidly escalating. If the county could pull a fiscally sound portion of the housing revenue forward, then affordable housing construction can begin years earlier while land near transit stations is still available and construction costs are lower.

That is why the Housing Alliance joins with HDC and others in the region to ask the legislature to clarify King County’s ability to bond against the lodging tax revenue stream and start building today. King County estimates we can reduce construction costs by nearly $60 million and provide affordable housing now!

Everyone wins when this happens, including employers, workers, the construction industry, transit agencies, and neighborhoods. Similar to the Housing Trust Fund, construction of this workforce housing will leverage nearly $200 million in other public and private sources, create more than 1,000 local jobs, generate economic activity, and produce tax revenue.

Housing Alliance State Housing Trust Fund page: http://wliha.org/advocacy/stat

Housing Development Consortium Advocacy page: http://www.housingconsortium.org/advocacy/

Washington State Department of Commerce Housing Trust Fund page: http://www.commerce.wa.gov/Programs/housing/TrustFund/Pages/default.aspx

Rachael Myers is the executive director of the Washington Low Income Housing Alliance, a statewide affordable housing and homelessness legislative advocacy organization. Their vision is that all Washington residents have the opportunity to live in safe, healthy, affordable homes in thriving communities.

Marty Kooistra is the executive director of Housing Development Consortium, a professional association and advocate for the King County affordable housing community. As a member organization, they collectively advocate for policies that encourage the creation or preservation of affordable housing throughout King County.

Why is Housing Expensive? Builders Know.

Editors Note: This post originated from a discussion about linkage taxes at the presentation of the painting pictured above to honor Martha Rose’s service over the past year as President of the Master Builders Association. Her e-mail reminded me of F. A. Hayek‘s seminal article, The Use of Knowledge in Society, written in 1945. Rose succinctly describes the profound principle of price and knowledge in the market that Hayek expounds in his longer article. 

While some may wonder why housing costs are going up, builders in Seattle – often on site at construction projects – know what drives up housing costs.

Even without the proposed linkage fees factored in, the cost to construct a housing unit can be too great, especially for the smaller developers.

Unbendable rules and regulations add huge costs

Every site has different characteristics, but as far as the City is concerned, they are all alike. The paper pushers adhere to multiple sections of fine print in a thousand page tome called the Land Use Code, to find requirements that may be there for a good reason, but make no sense for some sites.

Sometimes the unbending requirements are policies related to infrastructure such as storm water and other utilities, where there is sometimes a logical reason to deviate from the policy of the day.

Here is an example of Land Use Codes and storm water policy run amok: I have a site that consists of a 2-unit row house. It replaces a crumbling duplex, and has not increased density at all. We are in drywall phase and after the New Year, we will tackle street improvements and a storm water tie-in to the main that will add $50,000 to the cost of each of the two new homes.

Here is why this is absurd. Through a variety of green storm water techniques, we managed to mitigate 105% of the storm water runoff from the site. Despite that, the City is insisting that we cut a hole in the storm main in the road so that we can overflow directly into the main. Never mind that there is an inlet abutting the property and it’s entirely feasible to do a curb discharge. In the unlikely event of an overflow, excess water would immediately go into the inlet to the storm main.

The City wants urban villages to be walkable and I agree! However, on my site, there is no access to the west from the two row houses because it is on a dead end that is populated with townhomes on private property. My sidewalk to nowhere has triggered a full Street Improvement Plan (SIP), which is too complicated to cover in this post. Just understand that I will have to rip out an almost brand new asphalt street, several new concrete street panels and 2 perfectly good wheelchair ramps that are “outdated” so that this street meets new standards.

In an email I sent to Mike O’Brien, I summed up the building climate in Seattle this way:

You need to understand that our rising costs are mostly [imposed] by the City, and a vocal minority of angry neighbors, and City electeds who don’t have our backs. This creates a climate that makes building in this town too risky, especially for small developers. The City needs to look at ways to help builders cut costs.

I will not be part of this industry anymore in Seattle. – A fact that would please the neighbors – because that is their goal! So in a way, I don’t care about the trainwreck that is happening with linkage fees, design review, escalating and never ending rules with never ending fees, etc.

I do care about the hypocrisy of the stated goal of sustainability and the opposing actions of some City departments.

Let me reiterate: the Council, the Department of Planning and Development  and Seattle Department of Transportation don’t accept responsibility for their roles in the rising costs of building, they don’t care that design review adds layers of costs and they seem oblivious that fees associated with existing and new rules add costs. Besides the shortage of buildable lots, these three items are the number one reason housing prices are becoming so high.

Martha Rose is outgoing President of the Master Builders Association of King and Snohomish Counties. She is best known by many as the ‘Queen of Green,‘ and is a national leader in the Green Building Movement. She also is owner and operator of Martha Rose Construction. Her interest in energy efficiency and sustainable building practices goes all the way back to the 1970‘s and currently is her main focus. Today Martha is striving toward building Zero-Energy spec-homes.

Housing Tax: Will “Eliminate . . . Sustainable Features.”

Local green developer Sloan Ritchie has delivered his verdict on Councilmember Mike O’Brien: It’s a bad idea. In an article in the Puget Sound Business Journal, Ritchie, founder of Cascade Built, talks about a project he just built, the first multifamily passive house in Seattle. Ritchie’s approach to building is articulated at the Cascade Built website, which also highlights the View Haus 5 project.

Each and every Cascade Built project emphasizes durable craftsmanship and product selection, livability through thoughtful modern design, non-toxic finishes, and comfort enhancing features, adherence to sustainable standards and affordability achieved through significant reduction in energy and maintenance costs.

Such an approach to development is, Ritchie says, is risky partially because of the additional expense. Because passive house standards are so energy efficient, in the long run, they end up being more affordable because of the energy savings. So much of the cost of a home are associated with heating and cooling interior spaces, and this is especially true of larger multifamily housing. And all the energy and equipment also accounts for climate changing emissions. Passive house aggressively tackles that problem.

View Haus 5 is Seattle’s first Passive House-constructed townhome project, delivering healthy indoor air, thermal comfort and quiet in the city’s urban core. Designed by the award-winning b9 Architects, View Haus 5 is named for its five distinct home designs that share views of the Cascade Mountains. View Haus 5 is a mix of modern 3-story 2b/2ba and 3bd/2ba townhomes ranging between 1,100 and 1,700 square feet that bucks the trend of cookie-cutter townhomes with individually designed units. View Haus 5 complies with the rigorous standards for design and construction set by the Passive House Institute US.

What would happen to these kind of innovative and sustainable features with the passage of a housing tax?

The Seattle City Council is considering a housing tax on real estate development in most multi-family and commercial zones to help the preservation and construction of affordable housing.Sloan Ritchie’s advice to city leaders: Don’t do it.

The possible tax rate is between $5 and $22 a square foot.

“The impact of this on my business model is that we’d have to eliminate most or all of the sustainable features we now do, “ Ritchie said, adding his company is “definitely beyond what we ‘should’ or could be spending to make a project pencil with adding green features. With that tax, those features would be the first to go.”

Spending at the front end on such innovations pays off in the long run for homeowners and renters with energy savings and the planet with reduced carbon emissions. Councilmember O’Brien’s proposal would put those innovations on the chopping block. Along with adding costs, raising rents, affecting the feasibility of new projects, the measure would reduce innovation in sustainable building. Yet another reason to not do it.