Thoughts for Tonight’s Microhousing Hearing: 5:30PM at City Hall

Tonight’s hearing on microhousing is likely to be a free for all of microhousing hate and hopefully some microhousing love. But what are the basics on the issue to take with you to the meeting if you support the product as a solution? Let’s use the City’s own assumptions. Here’s what the Department of Planning and Development (DPD) says about microhousing:

We’re using the following guiding principles to shape our recommendations:

• Preserve affordability — continue to support micro-housing and congregate residences as a housing option in Seattle
• Ensure basic health and safety of all housing
• Provide consistent treatment and classification of micro-housing and congregate residences across all City departments and programs
• Improve tracking and awareness of micro-housing development
• Regulate micro-housing and congregate residences in a way that correlates to that of other types of new development

On the face of it, these are pretty good principles. The truth is that microhousing is doing a great job of providing housing options for people in the city who want less space in neighborhoods that have lots of transit access and walkability. Keeping microhousing costs low, ensuring safety, and providing more certainty when it comes to how the product is regulated all are good things.

But how does DPD plan to fulfill these principles?

Some highlights of the proposed new rules include:

• Establishing a definition of micro-housing
• Requiring Design Review for micro-housing and congregate residences based on square footage rather than number of dwelling units
• Setting a minimum size for common areas in micro-housing and congregate residences
• Increasing bicycle and car parking requirements for micro-housing
• Clarifying affordable housing program requirements for micro-housing and congregate residences

Establishing a Defintion: Keep it simple with no size limits! 

Establishing a definition of microhousing isn’t a terrible idea, and it could actually help everyone have a common language when we use the term. However, the definition should capture what is rather than trying to limit microhousing. Much of what DPD proposes in the details ends up imposing commons space requirements and other limits and requirements that would add costs; something they say, as a principle, they don’t want to do. The more requirements on how microhousing buildings are programed just means fewer potential units. More common space ends up getting absorbed in the rent structure. Remember, microhousing customers are buying a smaller unit because they want less space; why make them buy more. As I’ve suggested, it’s like making people shop at Costco for toothpaste when all they want is one tube of toothpaste, not a six pack. 

Design review will make microhousing more expensive and add to rent costs 

Requiring design review is probably the biggest item on the list that is completely antithetical to DPDs stated principles. As we’ve pointed out, design review is a process nobody in the city is really happy with right now, including neighborhoods. Why subject microhousing to something that needs reform. The process is complicated and can often devolve into an unprofessional, unhelpful, and time consuming process that just costs more time and money; and there is no place to recover those costs except from rent. We’ve figured on a 40 unit project rents could go up as much as $100 a month, so much for keeping the product affordable.

Read My Lips: No new parking!

This is the most nettlesome of the arguments against microhousing. First of all, microhousing residents self select: why would a person with a car move into a building with no assigned parking? It doesn’t mean it doesn’t happen, but part of the charm and advantage of microhousing for customers is that parking isn’t an issue for them and that’s one reason why microhousing is less expensive. Why rent an apartment with a parking spot you wouldn’t use, and why rent a unit with no parking when that’s something you really want and need? Adding more parking will really add more costs to microhousing, in fact it would cost tens of thousands per space. Angry neighbors know this is a deal breaker and that the City has already determined that the zones where microhousing can be built are not going to require parking because transit and other modes will be favored. That’s not about microhouisng, that’s about a broad agenda the City is already pursuing. Why remake that decision because neighbors are angry.

Multifamily Tax Exemption: Level the Playing Field 

The Multifamily Tax Exemption (MFTE) was already changed last year because angry neighbors were claiming, bizarrely, that the program was being used as a “free lunch” for developers. What the MFTE program does is lower operating costs by granting a tax break to a building if it restricts rents to 80 percent of Area Median Income (AMI) or less. The program makes keeping the units lower priced more feasible. The whole point of the program is about keeping rents low, exactly the principle espoused by DPD. But what the Office of Housing did last year was limit the MFTE program to units not rooms. This means less MFTE benefit for microhousing, and oddly, a step back from subsidizing “workforce” housing. That makes no sense and if the City defines microhousing then the MFTE ought to reset to cover all living spaces in the projects.

The hearing is tonight at 5:30 at City Hall. You can find all the details in a previous post. 

Smart Growth Seattle: Op Ed in The Times

This morning the Seattle Times has a guest opinion article by yours truly. The headline says it all: Build more to drive down Seattle housing costs. Here’s a key paragraph:

The Seattle City Council has a choice: Allow more housing to be built so everyone has more options or make things worse by clamping down on new housing with more rules, regulations and fees. That would mean more costs, less competition and higher rents. Seattle needs more housing, not less.

Join in on the comments section for the article or share it with your colleagues. And let Councilmembers know that we need more housing, even 250 units of single family, not more costly rules and regulations that drive up the price of housing for the customers.

Regulation, Inflation, and Innovation: The Airline Example

After several months of tangling with advocates of price controls on housing and those who argue that more housing means higher housing prices, I had to watch this video from a PBS series called Commanding Heights. Commanding Heights is a series worth watching. You can’t watch this segment or any other part of the series without thinking, “why do we regulate, fee, and limit what we want more of, housing.”

Yes, this is about the airlines, but it’s hard not to see the late, great Jim Potter and Dan Duffus as the Freddie Lakers of housing; always making the case for more affordable, customer friendly product. I recommend making some time to watch this video. If you deal with the good people at the Department of Planning and Development (DPD) you’ll find an analog to the Civil Aeronautics Board (CAB); an agency in need of innovation. Pay attention to the way the CAB regulated sandwiches; it will remind you about the way the DPD regulates housing.

The analogies are obvious. The number of routes is the number of houses, the size of sandwiches is the size of microhousing units, and Pan Am is entrenched, single-family homeowners. You’ll get the point when you watch.

When you’re done watching the video, and you’re inspired, you may want to attend the City Builders event at Black Bottle this evening at 5:30. The speaker will be innovation chief Robert Feldstein who is leading the charge on innovation for Mayor Ed Murray. Will he do for DPD what Fred Khan did for the CAB?

Here’s the details:

City Builders
Thursday at 5:30pm – 7:30pm
Black Bottle
2600 1st Ave, Seattle, Washington 98121

Public Hearing on Microhousing on Monday

When: Monday, May 19, 2014, 5:30 – 6:30pm

Location: City Council Chambers, Seattle City Hall, Floor 2, 600 Fourth Avenue, SeattleWebsiteMicro-HousingEvent ContactGeoffrey WentlandtEvent Contact Emailgeoffrey.wentlandt@seattle.govEvent Contact Phone206-684-3586  What

The Department of Planning and Development (DPD) is proposing to amend the Land Use Code (Title 23 of the Seattle Municipal Code) to adopt new regulations for micro-housing and congregate residences.  The proposal is found under Council Bill 118067.  The ordinance would make the following changes to the Land Use Code:

• Establish definitions for “micro-housing unit” and “micro”
• Prohibit micro-housing development in single-family zones
• Apply design review thresholds for micro-housing and congregate residences that are triggered by a building’s size (square feet of gross floor area) rather than the number of dwelling units it contains
• Establish minimum size requirements for shared kitchens and common areas in micro-housing and congregate residence projects
• Limit the permitted kitchen components in individual micros and congregate residence sleeping rooms in order to more clearly differentiate them from dwelling units
• Provide the DPD Director with the discretion to increase the amount of solid waste storage space required for residential structures that include micro-housing units on a project-by-project basis;
• Establish new vehicle and bicycle parking requirements for micro-housing and congregate residence projects;
• Deepen the required affordability levels for micros, sleeping rooms, and very small studio apartments located in residential buildings that participate in the City’s incentive zoning program
• Apply green factor landscaping requirements to micro-housing and congregate residence projects

The City Council will hold a public hearing to take comments on the proposal on Monday, May 19, 2014, in City Council Chambers, Seattle City Hall, 600 Fourth Avenue, Floor 2.  The hearing is scheduled to begin at 5:30 p.m.  The entrances to City Hall are located on the west side of Fifth Avenue and the east side of Fourth Avenue, between James and Cherry Streets.  For those who wish to testify, a sign-up sheet will be available outside Council Chambers at 5:00 p.m. on the day of the hearing.

Questions concerning the public hearing may be directed to Esther Handy in Councilmember O’Brien’s office at 206.684.5323 or esther.handy@seattle.gov.

Council Chambers are accessible.  Directions to City Hall, and information about transit access and parking, are available atwww.seattle.gov/council/city_hall_parking.pdf.  Print and communications access is provided on prior request.  To request accommodations for a disability, please contact Esther Handy as soon as possible at 206.684.5323 or esther.handy@seattle.gov.

The 100 Percent Rule: A Year of Preschool for 800 Kids

In my last post about the importance of the 100 percent rule staying in small-lot legislation I talked about the impact of creating 250 new homes, including jobs and tax revenue. Councilmember Tim Burgess has suggested that this number of homes is not “meaningful.” But based on methodology developed by the National Association of Home Builders, the construction of those 250 new homes would create as much as $70 million in public benefits, including, over $7 million in taxes and fees. The NAHB study looks at 100 new homes, but we can multiply these benefits by 2.5. The City always needs funding for important public benefits, and lately they’ve been taking a look at funding universal preschool in the city.

Let’s look at where the money comes from first, then how much public benefit, including preschool, it can buy.

The estimated one-year metro area impacts of building 100 single-family homes in Seattle include

$28.3 million in local income, $4.3 million in taxes and other revenue for local governments, and 317 local jobs.

These are local impacts, representing income and jobs for residents of the Seattle Metropolitan Division and taxes (and other sources of revenue, including permit fees) for all local jurisdictions within this metro area. They are also one-year impacts that include both the direct and indirect impact of the construction activity itself, and the impact of local residents who earn money from the construction activity spending part of it within the local area. Local jobs are measured in full time equivalents—i.e., one reported job represents enough work to keep one worker employed full-time for a year, based on average hours worked per week by full-time employees in the industry.

Here’s the additional tax revenue and fees that would come in for 100 homes.

Take that figure in chart B above, $3,082,000, and multiply it by a factor of 2.5 and you get $7,705,000 in fees and taxes. All 250 homes wouldn’t be built at the same time, but that’s a lot of money.

In a study commissioned by the Seattle City Council the costs of preschool was, on average, about $796 per month.

Now you just have to do that math to find out that a year of preschool would cost about $9,552 and $7.7 million dollars would cover that annual cost for about 800 children. The Council found that

Several long-term evaluations show that children who attend high-quality preschools are better prepared to enter kindergarten and learn. They have better high-school and college graduation rates. They have much lower levels of criminal behavior. They are healthier. And, they do better economically as adults.

The one time economic benefit from the building of 250 new homes is significant, but these numbers don’t even take into consideration the ongoing benefits to the City and the community from those new houses.

The NAHB  study finds that  the additional, annually recurring impacts of building 100 single-family homes in Seattle include,

$4.0 million in local income, $1.1 million in taxes and other revenue for local governments, and 50 local jobs.

These are ongoing, annual local impacts that result from the new homes being occupied and the occupants paying taxes and otherwise participating in the local economy year after year. The ongoing impacts also include the effect of increased property taxes, based on the difference between the value of raw land and the value of a completed housing unit on a finished lot, assuming that raw land would be taxed at the same rate as the completed housing unit.

Now does the money generated from new home construction become available for preschool? Of course not. The City’s budget is complicated and funding for preschool will require a much bigger budget and a sustainable way of generating revenue. But why would the City turn any new revenue away at a time when it is considering a big investment in its children? Some might question these numbers and argue the benefits are far fewer. But even if the methodology is overestimating revenue by a factor of 10, that is still the equivalent of 80 kids getting preschool for a year. That seems pretty meaningful.