DPD: We Didn’t Reduce Housing Capacity, but the Reduction Was Minor

Last week Smart Growth Seattle had it’s day in court with the City’s Department of Planning and Development (DPD). Well, it wasn’t court exactly, but the Hearing Examiner. The City had tried to throw our appeal of DPD’s and Councilmember Clark’s significant reduction of housing capacity in the city’s low-rise zones (Councilmember Clark continues to maintain that there is “no legislation,” but DPD staff acknowledged that, indeed, there is legislation on the table). But the City’s motion, based on the idea that Smart Growth Seattle is a “creature of the internet” was denied. We made what I think was a compelling case that the City failed to do appropriate quantitative review of the environmental impacts of the reduction in housing capacity in the proposed legislation.

To win, we don’t need to prove what the environmental impacts might be, but that they were dismissed and not properly considered when putting the legislation together.

Our case:

• The proposed legislation is a significant loss of housing capacity;
• With less supply, there will be higher prices;
• New people trying to find housing in the low-rise zones will likely to go elsewhere, and possibly outside the city, for housing;
• DPD didn’t consider this or conduct appropriate environmental review to account for reduced housing supply and fewer housing choices;
• DPD and Councilmember Clark were motivated to change the low-rise zones based on neighborhood complaints that new housing was ‘out of scale’ with other buildings;
• DPD chose to address the building size issue by reducing density;
• DPD chose their examples of ‘bad’ development from controversial projects selected by angry neighbors; and
• The City need to complete additional quantitative review of possible impacts before they, with the wave of a hand, say there aren’t any.

The City’s case:

• DPD never thought there would be as much density in the low-rise zones when they made changes in 2010;
• DPD expected a density of 1 unit per 1,800 square feet, but got 1 unit per 1,250 square feet;
• This outcome wasn’t a ‘mistake’ by DPD however;
• The city can take density back if it wants to, otherwise we’ll get too much
• The reduction in housing was ‘minor’ and ‘not significant;’
• There really isn’t a reduction in capacity; and
• The problem will go away because the legislation simply undoes what happened in 2010, essentially putting density limits where DPD had originally intended them to be.

This last point, that the reduction in housing capacity was small and not worth a quantitative environmental review but also didn’t happen, was the strangest argument offered. Under cross-examination, Geoff Wendtland consistently said the impact was minor, but denied that there was a reduction in housing capacity. When asked repeatedly, “will this result in less capacity in the low-rise for housing,” Wendtland would say things like, “I wouldn’t say that.” And when asked directly, “could there be more capacity after the legislation,” Wendtland said, “yes, if people build more densely.” The City wants it both ways, suggesting it didn’t take housing away, and the housing it did take away wasn’t all that much. And the code controls density, except when it doesn’t.

On it’s face the City’s argument was strained and relied on calling the possible environmental impacts “speculative” and “too difficult to analyze.” But isn’t all environmental impact challenging to review and analyze? The truth is that most environmental review has become boilerplate stuff; no developer or project reviewer would ever do anything that would trigger a finding of environmental impact. In other words, everyone knows what the rules are and just follows them.

Except in this case the City specifically calls out an impact, and then says it’s minor. It’s like a vendor saying he’s going to charge you more money for the hot dog you just ordered, but when asked, “how much more,” the vendor says, “Oh, it will be minor and not significant.”

One last point; what’s also clear is that while the neighborhood made the greatest noise about building height bulk and scale, the legislation does absolutely nothing to change that. In essence, their proposal will simply reduce the number of available units while keeping buildings the same height. So, nobody wins. Angry neighbors will still push for what amounts to a downzone, and DPD staff will continue to comply, saying, “pay no attention to what we passed in 2014, it was denser than it should have been.

In the end, the City has an obligation to be transparent when it carries out the whims of angry neighbors: they’re making it worse for people who want to move to our city to share the great things we have here. We think we made an excellent case.

Microhousing: City Shuts Down Projects in Permitting

Microhousing developers all over the city got this letter below in response to a Superior Court decision that ruled that microhousing rooms are really units. For purposes of enforcing code requirements, a kitchen counts as a unit. Units trigger extended review under SEPA and also require design review. Part of what makes microhousing work, is it’s innovative use of shared kitchens and the allowance of up to eight unrelated people in a unit. Therefore, a unit can have up to 8 rooms. Each room can have a sink and a countertop, a refrigerator, and a microwave. Typically, these items have not been considered kitchens.

But the letter from Department of Planning and Development head Diane Sugimura was sent to people who already have gone most of the way to getting permits for their projects. Applying the court decision this way is a questionable reading of the law, but it also ensures that many projects now won’t work or will have to go through extended review or revision. The “fix” for DPD: move your sink into the bathroom and lose the refrigerator. We’ll be working on a response, and this decision is likely to mean some legal response. We’ll keep you informed. 

I wanted to let you know about the status of your micro-housing residence project. Approval of another project with a configuration similar to yours was recently challenged in King County Superior Court. Like yours, that project included multiple bedrooms, each with a private bathroom and a counter area, including a sink, which appeared to be suited for food preparation.

In a decision issued August 13 and currently under appeal, the judge ruled that each bedroom was configured for use as a separate dwelling unit, and must be regulated accordingly. We have re-examined other similar projects, including your own, in light of that decision. We have concluded that the individual rooms within your proposed development, project no. 6404485, also must be regulated as separate dwelling units.

If you want us to proceed with review of your project before a decision is reached on the appeal, you must either revise the project to meet code requirements based on the larger number of dwelling units, or else modify the plans so that the bedrooms no longer would be regarded as separate dwelling units.

If you wish to revise the project to reflect a larger number of dwelling units, it will be necessary to add Design Review and SEPA. Development standards based on the number of units, such as requirements for bicycle parking and trash storage areas, and any applicable density requirements, must be met. Alternatively, you may wait and redesign based on standards for small efficiency dwelling units, currently under consideration by the City Council, once those standards have been adopted.

If you wish to modify the plans so that the rooms are no longer counted as separate dwelling units, you must modify the plans so that bathrooms are shared rather than privately associated with individual bedrooms, or else you must eliminate food preparation areas within each room, including sinks outside of bathrooms, cooking or refrigeration equipment and built-in counters and cabinets.

Additional modifications may be required based on Building Code standards for separate dwelling units. If the project has received bonus floor area for provision of affordable housing under Section 23.58A.014, that approval must be reviewed to ensure continued eligibility based on the change in unit count or any changes to the structure.

Please let us know how you wish to proceed. If you have questions or concerns about this letter, please contact Christopher Ndifon, at (206) 233-7938 or christopher.ndifon@seattle.gov.

Why We Appealed the Low-Rise Downzone

This post originally appeared on July 1st of this year. I am reposting it because today we get to make our case before the City’s Hearing Examiner. We think we have a good case that shows that the Department of Planning and Development failed to adequately address the environmental impacts of what amounts to a serious downzone of the low-rise. I’ll write more when I can about the process as it unfolds today.

The legislation put forward by the Department of Planning and Development to “fix” things in Seattle’s low rise zones can only be understood as a downzone. To understand why, it’s important to understand how FAR works. The proposed legislation in response to a request from Councilmember Clark ends up in reducing FAR the low-rise zones, a reduction that takes away housing capacity. It does this by affecting the way FAR gets calculated in the zone.

Floor Area Ratio, or as it usually known, FAR, is a measure of how much living space can be on a piece of land. For example, if the code allows 20,000 square feet of living space on a lot that is 10,000 square feet, the FAR on that lot would be expressed as 2. The general rule is that all enclosed spaces are included in FAR. So interior stairways and hallways are included as FAR, but exterior hallways and stairways are not. Partially below grade spaces are not counted as FAR, most commonly used for parking mechanical storage bike rooms laundry and less expensive basement units.

20,000 square feet living space    =  2
10,000 square feet of lot

The higher the number, the more livable space is allowed on a lot. This means that FAR is also a measure of density and height since more living space can mean more people and with more living space allowed, heights also go up. With more height, a designer and builder can configure living space in a way that lowers lot coverage and enables them to plan for set backs, open space, or other design features. Using FAR is a flexible way of increasing density without being overly prescriptive about how the space is configured.

The DPD proposal tries to appease neighbors angry about what they see as buildings that are too tall in the low-rise zones, especially in the LR 3, the zone that allows the highest densities. It does this by adding more spaces into what gets included in living space. So in the above example, the numbers stay the same but things like basement areas, crawl spaces, and parking get lumped into that 20,000 number.

Instead of 20,000 square feet of living space, the 20,000 includes lots of spaces that people can’t live in; that means smaller units or fewer units, or fewer amenities like parking, laundry, bike storage, etc.

With more living space, a project has more space that can be sold or rented. That means FAR is also a measure of financial opportunity and risk. With a higher FAR, a developer can create more units, for example, but she also would have additional costs and risks with building more.

What effects does FAR have on rents and costs to consumers? All development projects use borrowed money, or money that has to be paid back either at the end of the project or over time. Rents generate the income stream to pay that money back and pay for operations of the building. More FAR can lower rents because a builder can create more units and spread those costs among more units.

Rents are driven by the supply and demand, but with more FAR a builder can more efficiently and competitively spread those costs and offset the risks of building higher or building more. But more FAR doesn’t necessarily mean more profit since any development is a careful calibration of costs, what the market allows for rent, and what is feasible on a site; higher FAR does mean that more people can live on a smaller footprint.

Keeping the FAR number the same but adding more things considered living space in the calculation is a kind of sneaky way to downzone the low-rise zones. It means fewer units will be built, which means less housing. Many projects that work using today’s calculations just won’t work. They either wouldn’t get built or they would be downsized. It also means that energy efficiency measures that rely on configuring space differently won’t be feasible.

And here’s the other downside of the downzone: the proposal won’t really affect the size of buildings, just the number of units. Here’s a sketch of what a project in the LR3 Zone would look like before and after the downzone.

 

As you can see the overall scale of the building is unaffected, but there is a loss of 20 percent of the units.

This is why we’ve appealed the Determination of Non Significance (DNS) made by DPD on this legislation they’ve drafted. The proposal deliberately takes space away from housing use, which won’t really reduce the size of buildings, but will make some projects unbuildable, reducing overall housing supply and increasing prices; which is what the neighborhood wanted after all, no more people and no more building.

Stepping Forward: We Need More Housing

The Seattle Housing Authority is proposing a new plan called Stepping Forward that aims to free up existing housing capacity to relieve growing wait lists for housing. The problem is that there is no housing for people even if the program is successful. This is because the Council has been relentlessly trying to solve the “workforce housing” problem, a problem that doesn’t really exist. However, there is a great need for housing at lower levels of income. Here is my comment letter on the program and why I think it won’t work under the current circumstances. 

Dear Councilmember Burgess and Executive Director Lofton,

The Seattle Housing Authority’s (SHA) Stepping Forward Plan appears to have the right motivation: taking advantage of a recovering economy to move some residents out of SHA housing to make more room for hundreds of other families on waiting lists.

However this is a deeply flawed strategy and, as long as the City Council doesn’t change course, won’t work.

First, the housing market as it exists today is not producing housing for families that have household incomes less than 60 percent of Area Median Income. The recent King County Affordable Housing Needs Assessment (attached) found that the greatest housing need is for families earning less than 60 percent of AMI. To put these families into Seattle’s housing market means they’ll likely have to move out of the city and will have a great challenge finding adequate housing. This exodus would also undermine the principles of the Growth Management Act and our efforts to impact climate change.

Second, the Council has been impervious to this need, focusing instead on taxing growth in order to subsidize what it has called “workforce housing,” housing for people who earn 60 to 80 percent of AMI. There is no data to justify this policy. On the contrary, the Needs Assessment and other reports show that the market is producing lots of housing for people earning 60 percent and above. Council fees, taxes, and rules would reduce supply there too.

As long as the Council ignores the greatest need and continues to tax areas of the market that are producing appropriately priced housing, families with lower incomes, even earning more after getting better jobs, will face inadequate housing supply in Seattle.

Therefore, we urge you and the Seattle Housing Authority to work with the Mayor as he convenes a committee to address housing in Seattle. We must meet the needs of current residents of SHA and on waiting lists who want to live in our city. Stepping Forward won’t work until the Council stops misallocating resources to Workforce Housing and directs it’s energy to where the greatest need is: family housing for poorer families.

Sincerely,

Microhousing: Burgess Didn’t Listen

Councilmember Tim Burgess has been sending out an e-mail in response to supporters of microhousing explaining the Council’s vote. Councilmembers often send out these kinds of comprehensive responses, and Burgess’ is mostly in the form of a blog post linked in an e-mail from his legislative aide. Along with comments at the very end of the committee meeting, it is pretty clear from listening and reading Burgess’ comments that missed something. Burgess cites a very long, discursive monologue given by Councilmember Licata (the comments sound like Licata arguing himself to a more politically acceptable position that the one he initially took, which would have committed him to a minimum of 180 square feet for micros) as reflective of his own thinking about minimum room sizes.

Some have expressed concern that mandating in the 220 square foot minimum size will decrease the prevalence of these more affordable units. Arguments that the actions we’ve taken will make microhousing too expensive to develop or less affordable don’t stand up to scrutiny. These units will still rent for much more per square foot than average studio apartments, making them attractive to developers. And the rents will remain at what the market will bear; any marginal increases in development costs will cut into the developer’s profit margin, not be passed on directly to renters. Councilmember Nick Licata argued this line persuasively in committee (in a five-minute explanation).

Matt Gangemi, who did some great posts on small-lot legislation, wrote a great e-mail responding to  a key line in Burgess’ blog post:

“And the rents will remain at what the market will bear; any marginal increases in development costs will cut into the developer’s profit margin, not be passed on directly to renters.”

Oh no.  Please reconsider the logic in this.  Builders build based on profit.  If profits are high many other builders will join in to get a piece of the pie, until profits drop to that of other projects.  Adding cost to a housing type drops the interest in providing that product, as they could spend their money and effort on other projects (the prime example is exurban housing).  The end result is fewer units and higher rents.

I understand the desire to fight and tax big developers, but there really is no free lunch.  The more expensive and difficult we make it to build, the fewer homes that are built, the  more rents go up, and the more we push people out to the far suburbs (emphasis mine).   

Please keep the discussion going.  I think the council is going in a terrible direction but with good intentions.

Thanks for listening,

-Matt Gangemi

 not a developer