Branding itself as Seattle for Everyone, a coalition of various supporters of the so-called “Grand Bargain” sent a very interesting letter to Councilmember Mike O’Brien. The Grand Bargain, you’ll remember, is an agreement that was struck between some developers, non-profits, and the City to impose mandatory inclusion of rent restricted housing in all new housing built in the city in exchange for some additional development capacity. Unlike other schemes developed by City Hall, the Bargain is mandatory: builders must create the rent-restricted units whether they want or need the additional development capacity. The letter touts the diverse supporters of the Bargain over whether it will actually work, practically, politically, or legally. Mostly it will raise housing prices, exactly what we’re supposed to be fighting.

The letter relies heavily on the unusual nature of the groups and people supporting the bargain.

We are writing on behalf of a broad coalition of affordable housing developers and advocates, for-profit developers and businesses, labor and social justice advocates, environmentalists and urbanists, united together to build an equitable, prosperous, thriving, and inclusive Seattle by ensuring that the benefits of the city’s growth are shared by all current and future residents – from those struggling with homelessness to wage-earners and families. Under the banner Seattle for Everyone, we urge your strong support for the Housing Affordability and Livability Agenda (HALA) and the “Grand Bargain” provisions to produce and preserve critically needed affordable and market-rate housing in the City of Seattle.

Sure. The group of signatories spans the affiliations the text of the letter claims. But will the Bargain work? It’s hard to say whether, as the letter states, “The proposal is a smart balance of developer requirements and additional building capacity.” I’ve pointed out that our measures of the problem, often called a crisis, are at best broad and clumsy and at worst down right wrong. Apartment prices are cooling off and the measure of affordability we use assumes that if everyone in Seattle paid exactly 30 percent of their gross monthly income for housing, we’d have no problem at all. As a person at 50 percent of Area Median Income (AMI) struggling to make rent that is 25 percent of their monthly income whether their life is “affordable.” Ask a couple earing 120 percent of AMI living modestly to save money and paying 20 percent of their income whether they should give up their apartment for someone earning less.

And remember that every additional floor or square foot comes at a cost to a builder. Even if I give a producer of housing more capacity it adds costs to the project. So will the rent restrictions imposed by the Bargain. It’s still unclear, especially in the low rise zones, and how this will meet the basic standards set in State law that any program of inclusion creates a fair exchange of value. If the costs associated with the extra floor and rent restrictions in Low Rise 3 zones, for example, exceed the value created by the upzone there is clearly a fairness problem. I’ll say more on that later. But in the end the only way to make up for the additional costs of the Grand Bargain is to raise rents to pay for the those costs, something completely antithetical to the intention of the signers of the letter (I think).

And politically? The letter says this:

Collectively, these recommendations represent a sea-change in affordable housing politics in Seattle. Now, a new alliance forged by common interests and shared objectives has put forth HALA and the Grand Bargain. We are excited to continue this game-changing alliance to build a diverse, equitable, and prosperous Seattle where the benefits of growth are shared by all. It is only fitting then that we have chosen to name our effort “Seattle for Everyone.”

The problem is that there are some critical groups and people missing from the bottom of the letter: NIMBYs. Across Seattle over the last 5 years, angry single-family neighbors have been tirelessly organizing against small-lot single-family infill development, microhousing, new housing in low-rise zones, parking exemptions, and for impact fees, linkage, more and more design review, and rent control. Why would these same people suddenly shift their resistance to growth and their political agitation simply because a few dozen groups and people signed a letter.

The letter asks Councilmember O’Brien “to minimize changes that would pit one faction against another, leading to more uncertainty, wasteful delay, less affordability and less housing supply.” But Councilmembers have already stated clearly their intent to hold hearings in every single neighborhood to get comments and approval from these same angry neighbors. Looks like Seattle for Everyone needs to gather a few hundred signatures. They could start by seeing who signed the various petitions against growth and housing that have been sent to Council.

And legally? As I pointed out, mandatory programs to require affordable housing in exchange for upzones are legal. But the legal standard in RCW 82.02.020 requires that there be a fair exchange of value that offsets costs. Legislation clarifying this passed (HB 2984) almost a decade ago and informs policies around the region. A paper outlining the laws and policies states,

One safeguard that is conspicuously missing from HB 2984, however, is any requirement to demonstrate that an incentive package will fully offset the cost of including affordable units. If the incentives do not cover costs of the affordable units, one of the two key criteria for a successful program will suffer. In a voluntary program, effectiveness will suffer, since few developers will undertake a program that costs them money (as seems to be the case currently with the many underused programs in the state). In a mandatory situation, fairness will suffer, since developers will be compelled to pay more in costs then they get back in incentives, thereby leading developers and their market-rate customers to subsidize the affordable units.

That last point about mandatory programs could provoke a swarm of law suits from smaller builders in the city who see the value created by the extra square footage in Grand Bargain upzones consumed by costs of construction, other regulatory requirements, and lost rent revenue. At some point rent increases in unrestricted units won’t pencil anymore to offset this loss and the project will be infeasible. And wasn’t the point of the Grand Bargain to lower housing prices, not raise them on every other unit not part of the inclusion? Worse, the provision of the Bargain could discourage new housing production meaning less market rate and affordable units.

Nobody likes to be a Negative Nancy or Cassandra or Norman Stansfield. And yes, lots of interesting and ideologically diverse people signed a letter. But a letter doesn’t make housing more affordable. Neither do schemes that add costs to housing. What makes housing more affordable are fewer costs and more supply. That’s why we’re skeptical of the Grand Bargain no matter how many names are at the bottom of a letter.