Another Way to Say Supply, “Naturally Occurring Affordable Housing”

There was a lot said about the consultant report delivered to yesterday’s joint meeting of the Seattle City Council’s Housing and Planning, Land Use and Sustainability (PLUS) Committee. The consultants said that

• The City needs a plan;
• That if fees and rules become too onerous, housing won’t get built; and
• The solution to Seattle’s housing issues will largely be solved by the private sector through incentives.

Of course Councilmembers Licata and Sawant didn’t like that answer. Remember it is Licata that thinks we’re going to regulate our way to affordable housing. The truth is that we need more housing supply of all kinds and at various price levels.

Councilmember Sally Clark said more than once we should try to find ways to learn from “naturally occurring affordable housing,” or “affordable housing out in the wild.” What does she mean by that? It’s as if she thinks that affordable housing is like Big Foot or a unicorn, a mythical beast that nobody can capture or find. Does it even exist? How do we get it? But how we get better housing prices for people looking for housing isn’t a mystery or a mythical beast. It happens when we have more housing.

Someone joke that Councilmember Clark means supply; what she is naming is housing that is actually lower priced because there is more of it. This person joked, “but she can’t say that word, because it’s your word. Now she won’t say supply.”

Maybe. But if they won’t listen to me, economists, our members, and people in the environmental community, maybe the Council will sit down with Sal Kahn’s simple and elegant explanation of supply and demand using the apple market. One of my critics calls me Roger “Housing is Bananas” Valdez. Apples will do just fine. No matter what you call it, more housing supply will lead to lower prices.

Experts to Council: Make a New Plan, Stan!

This morning the consultants the the City Council hired to work through workforce housing issues earlier this year will deliver a report to a joint meeting of the Planning, Land Use, and Sustainability (PLUS) Committee, and the Housing Committee. They will present a report which is rather extensive. The problem with the report is that it is all about a problem that we already have pointed out doesn’t really exist, a crisis in “workforce” housing; housing that is priced so that a person earning 60 to 80 percent of Area Median Income (AMI) can spend 30 percent or less on that housing.

The idea that there are people earning 80 percent of AMI searching desperately for housing and not finding any has been largely discredited by the data and by anecdotal evidence. Yet the City Council continues to ask how much more can we tax new growth to subsidize those very people who have options, while poorer people at 50, 40 and 30 percent of AMI can’t find a place to live. The good news, however, is that the report points out that the City Council doesn’t even have a plan for how many units we need of new housing at any price. Here’s the first recommendation:

Articulate a More Specific Workforce Housing Policy

The City of Seattle should set a quantitative Workforce Housing Goal in the planned 2015 Major Update of the Comprehensive Plan and periodically measure City progress towards the goal in the context of the Comprehensive Plan.

City debate will likely be pushed by Councilmember Licata and his staff and will center on how much to increase incentive fees. Notwithstanding the fact that Licata’s desire to impose punitive measures against doing a good thing–building housing–make no sense and will further drive up prices, neither he nor anyone else on Council have even the vaguest notion of how many of these rent controlled units should be created.

We’ll be watching to see whether Council asks the question, “how many units of housing do we need for coming growth,” or whether they will ask, “how much can we increase feea, taxes, and regulations on efforts to build new housing?” The consultants agree that the Council has yet to come up with any numbers or a plan to create those units of housing. And they have already confirmed that when fees go up, people won’t pay them, choosing less density or not building at all; something we’ve confirmed with data.

If the Council does what’s best for the community, the principles of the Growth Management Act, and it’s own Comprehensive Plan, it would ask first whether workforce housing is the problem. Then it would decide what kind of housing and how much is needed most to accommodate coming growth and then develop a plan to supply coming demand (120,000 people over coming decades). That would mean allowing more housing, not limiting it with roll backs and downzones. The consultants are advising Council to ask, “how many homes,” not “how many fees.” If they don’t listen to the consultants maybe they’ll listen to Paul Simon; there are way more than 50 ways to improve Seattle’s housing future.

 

Value Capture: DPD, Councilmember Clark Hang Out “No Vacancy” Sign

In her post describing Smart Growth Seattle’s appeal of a proposed downzone of Seattle’s LR3, Erica Barnett explains that opponents of growth say that proposals to create more housing are

Being rationalized [because] the added densities are needed to . . . get people out of their cars, curb sprawl and save the planet from global warming.

The difference between the views of urbanists like Valdez and density opponents like [John] Fox is that the former group thinks that’s a good thing.

Our efforts to support more growth and housing in the city, and the work to stop growth by its opponents, is really about values; what is best for the future of the city, a vibrant place with lots of housing and jobs, or an expensive city with scarce housing that consumes the incomes of poor and moderate income people? Do we value the opportunities and diversity that come with growth, or is growth a fundamental threat to the good life we, already here, have?

It makes sense to be worried about the change that will come with 120,000 new people in coming decades. There will be challenges, but what isn’t as easy to understand is how those worries transform themselves into a values system that holds that growth is bad and that we should use zoning to stop it. Zoning has gone from a way to make life in the city better, to a way to force uses and people apart, to a tool to thwart change.

In a comprehensive and articulate study of contemporary land use law and economics, David Schleicher, makes an extensive case against zoning—or at least zoning as we do it today. It should come as no surprise that Schleicher isn’t a planner, but an Associate Professor, at George Mason University School of Law. His article called appropriately titled, City Unplanning, provides a solid intellectual grounding for our appeal. At the heart of DPDs proposal is a planner driven effort, urged by Councilmember Clark and her NIMBY supporters, to limit what we’re afraid of rather than encouraging what we want.

Schleicher points out that zoning became transformed from a way of dealing with nuisances—pigs in the parlor to quote the Euclid decision—to becoming a tool for planners to control the future.

Zoning regimes did far more than reduce traditionally-adjudicable nuisances. Particularly after World War II, zoning policy expanded from traditional height limits and “cumulative zoning” — which barred higher intensity uses like heavy manufacturing from single-family areas but not vice versa — to more aggressive techniques that gave planners both more flexibility to condition approvals on meeting conditions set by the city and more ways to restrict building, including non-cumulative zoning rules that specifically assigned uses to specific areas.

But this shift is running against a growing realization that agglomeration—the pushing of people and uses together—is not only better for the environment, but a huge benefit economically and socially for a community. And zoning, particular punitive and restrictive zoning, undermines agglomeration economies.

Further, certain agglomerative factors, particularly information spillovers between highly-educated residents, have become increasingly important in the modern economy. As zoning regimes reduce density and separate individuals and businesses that would like to be near one another, the increasing empirical validation of the importance of agglomeration economics has helped explain how strict zoning regimes harm the efficiency of property markets and regional economies.

What is best, if we value change and diversity, is less strict zoning that promotes not just zoning that is less strict, but also agglomeration of uses and people. But that isn’t what’s happening today in Seattle.

While economic thought has moved substantially against increased stringentness in zoning (and intellectual movements inside city planning have pushed for increased density and mixed use development), practice has moved in the other direction. Zoning policy has gotten much, much stricter over the last 30 or so years, and has done so in ways not predicted by those who study the political economy of urban development.

Schleicher connects this strictness with housing prices. More zoning means higher prices. It just does. And why that would be the case is obvious: add more rules to the production of anything and the price will go up. The point is not to eliminate the rules, but to make the right ones. But the latest proposal instigated by Councilmember Sally Clark and promulgated by the DPD isn’t a wise set of rules, but a response to what a few dozen neighbors are afraid of over and against the growth of a region. The reduction of development capacity and more rules contributes to the gap between the costs of housing and the price of housing.

Now, such gaps have emerged in virtually every metropolitan area on both coasts of the United States and a large number of inland regions as well. And where such gaps have emerged, they have grown substantially. In the most regulated regions, legal restrictions on the supply of housing are likely responsible for as much as half of the cost of any given housing unit.

So Councilmember Clark and DPD’s proposal to make housing harder to build in the LR3 doesn’t fulfill the original charge of zoning to protect people from harm, but it also codifies the idea that the LR3 isn’t a place new people coming to the reason should look for housing because supply there will be suppressed. Councilmember Clark and DPD are hanging a “No Vacancy Sign” outside our neighborhoods best equipped to welcome new businesses, ideas, and most importantly, people.

That’s the basis of our appeal on environmental grounds, because Councilmember Clark and DPD have set the City against the principles of the Growth Management Act. Here’s Schleicher:

These changes in the strictness of land use policy have caused massive shifts in population across the country. Rich, restrictive regions like San Francisco and Boston have seen massive increases in housing prices but only small increases (or decreases) in population. At the same time, there were huge population inflows into less productive but unrestrictive regions like Houston.

What values will prevail in Seattle? Will we grow where it makes the most sense, provide the best opportunities for agglomeration, and increase housing supply to lower price, or will we tell new people to go somewhere else? Let’s see what the hearing examiner says next month.

LR3 Rollback: SEPA Appeal Filed

Today Smart Growth Seattle filed an appeal of the City’s Determination of Non-Significance for legislation that would roll back a decade of progress toward welcoming growth in transit oriented neighborhoods. 

Am I on Candid Camera?

Last week we featured the comments of Jack McCullough, outgoing Chair of the Downtown Seattle Association. He wondered whether we have lost the progress in our progressivism. This week Bill Hinkle, Executive Director of the Rental Housing Association of Washington asks, “Am I on Candid Camera?” This post is a version of a article Hinkle wrote for the Association’s newsletter.

Sometimes I sit in one of the multiple meetings I attend throughout the week and ask myself, “am I on Candid Camera?” I mean really? It’s hard to take in all the crazy things going on right now. In response to  a concerted nationwide labor campaign, Seattle City Council just passed a minimum wage law that will eventually require employers to pay a $15 hour minimum wage, but there is still a heated debate over this issue that will bring who knows how many initiatives on the ballot this fall or next.

And the Council seems to ignore its own growth management plan when enough neighbors show up protesting density. Traffic is terrible in Seattle and throughout the Puget Sound-region, with no regional leadership in sight.

And Seattle Councilmembers Sawant and Licata’s answer to help fix a budget problem with King County Metro is to raise the existing parking tax, and implement an $18-per-head employee tax on businesses.

Thankfully, we have major employers still interested in coming to Seattle, thank you Amazon, and wait, Boeing – are we still dating?  I guess for a while we are.

At some point we’re going to be squeezing blood out of a turnip. And when will we see a stop to the high pitch shrill of class envy?  This is such a beautiful state, but for some reason turmoil seems unending.

To repeat one of my favorite political quotes “can’t we just all get along?” Unfortunately the answer is no, not without real leadership in the city and the state.

Politicians need to quit trying to find the scapegoat and commit to principled leadership. All too often, they respond to the last person in their office, fearing colored t-shirts with picket signs in front of their office if they don’t take heed.

Why spend months of citizen and staff time developing a comprehensive plan that directs high density into certain areas and then ignore the plan when local citizens show up en masse with the cry “NOT IN MY BACK YARD!”?

Where were the NIMBY’s when the comprehensive plan was being developed? Between local process, and a State Environmental Policy – ignored by the city during its planning processes, but used by activists to stop the exact types of development city leaders claim to desire – investors are faced with a market of uncertainty and added costs which end up passed on to consumers.

It has been said we get the government we deserve. In other words, we vote these people in, but then complain about them as though we never had anything to do with their ineptness.

We must hold our elected officials accountable.

We need people in office who have vision and a proven record of problem solving. Electing single-minded, activist candidates to office only leads to more division.

In the next two years the voters will have huge opportunities to affect change and bring problem solvers in to position to be leaders for our region.

State elections in 2014 will determine whether we have a split legislature where compromise has to take place, or one party rule where political agendas take precedence.

And in Seattle in 2015 there will be district elections for all of 9 council positions for the first time since 1911 giving areas of the city a chance to hold their elected councilmember directly responsible for the direction Seattle is headed.

I encourage all to get active in the process, learn about the issues, and become engaged with policymakers. Your bottom line depends upon good leadership in government.

Bill Hinkle, Executive Director of the Rental Housing Association of Washington, is a former Republican member of the Washington State House of Representatives, representing District 13 from 2003 to 2013. He served as Minority Whip. Hinkle previously served as Commissioner for Kittitaas County. He also has received Paramedic Training from the University of Washington, and attended Tacoma Community College and South Puget Sound Community College. Hinkle’s experience includes Paramedic/Firefighter for King County Medic One Service, Journeyman Stone and Brick Mason, and Internet Service Provider.