A few years ago I got a call (as I often do) from a housing builder who had some issues with his project. We talked through them then and he kept going. More than three years later he got in touch to let me know the project is done and leased up. But think about that for a minute: three years. Why? Because while a recent Seattle Times article showed that supply is starting to catch up in the race against demand, people who build housing are still facing a gauntlet of regulatory overreach that provides no public benefit but adds costs with delays and forced increases to the size of units. As this builder points out, the project he as able to bring on line wouldn’t even be possible today. We need the Mayor to help reduce delays and for the Council to stop with more rules, regulations, fees, fines, taxes on the production of a good thing many people need and can afford if we just could get it to them. 

We finally finished our Small Efficiency Dwelling Unit (SEDU) building in Seattle 3.5 years after acquisition. Admittedly, some of that delay was our own doing, but some of it was attributed to Seattle Department of Construction and Inspection’s (SDCI) definitions of “¼ mile frequent transit.” There were a couple times during permitting that we thought we might lose the project altogether and had to pause due to SDCI making it difficult on us.

Our building is very popular. Residents’ professions range from tech, culinary / restaurant, healthcare, accounting, and beyond. Most of our residents either wanted to live on their own and didn’t want to pay 1BR prices, or it is all they could afford. Some can afford more, but chose to minimalize their lives and live with less. Some are there for the eco-friendly aspect. Some are just trying to get out on their own. Most enjoy the central location and love how connected it is to the city.

The “transient” population that was a concern about a lot of people in this sort of housing just doesn’t exist here. Our residents are very respectful and love this building. They love the location and they appreciate that our product is actually affordable and nice.

Here is the bad news: If we had this same lot and wanted to build this exact building today, based on current City of Seattle code, we would not be able to replicate it. If we were to acquire the exact same lot today with identical zoning, units would have to be larger, per new code. We would also require an upper-level setback, which would all result in fewer units. This would reduce unit count by 25-30%, which means less of these inexpensive units on the market to meet the very high demand.

The only way to make a project pencil for a developer in this scenario is to build larger units out to the building footprint limits and charge rent prices commensurate with the larger unit sizes. Because the units are bigger and there are less of them, you have to charge more to cover development costs. Odds are that we would probably just not build if we had to work under the new and “improved” land use and zoning code, and would either develop spec town homes that sell for $800 – $900K each, or sell, which would surely be purchased by a town home developer.

It might even make sense to go try this product in a different, more welcoming city to actual density.

This is what the city government forces developers like us into with these code changes – to either build a more expensive end-user product to cover the higher costs, or to not build at all. Either way, it is the government forcing the private market into a corner, then it turns around and blames the developers for high rents.

We have another project on a small lot that is required to have the larger-sized SEDUs. That alone is pushing feasibility to the brink. If we weren’t grandfathered in the pre-upper-level setbacks and elimination of free exterior walkway Floor Area Ratio (FAR) code, we for sure wouldn’t be able to develop this into SEDUs. We aren’t sure what we will do with it at this point, as we are forced into larger units. But the point is that the city might lose actual affordable housing if we end up selling this to a town home developer or don’t build at all on this lot. They are making it very hard for us. Let the free market take the risk instead of the law forcing a product in the market. If we fail, that’s our problem. If we succeed, then everyone succeeds and actual affordable housing can be created.

I’m sure you’ve heard it over and over, but I wanted to show you the real-life consequences.