City must address affordable housing shortage rationally

by Carolee Colter and John V. Fox, Seattle Displacement Coalition – February 26, 2016

“The Mayor’s ‘HALA’ Upzone Plan is not a solution”

We’ve said it before in this column: The city could double rates of new residential construction in Seattle and that still would not bring rents down. We warned it would only serve to accelerate the loss of our existing stock of affordable units to demolition and speculation, drive up rents for poor and working people and cause more homelessness, displacement and gentrification.

It gives us no joy to say, “We told you so.” In the last three years, new construction has reached record levels. We’ve averaged 7,500 units since 2013, and there are projects in the pipeline now for construction of another 15,000 units. Over the same period, vacancy rates remained low and rents rose annually 7 to 8 percent per year, the highest in the country among larger cities in 2014.

According to the recent annual One Night Count, homelessness has jumped by 19 percent. Despite nearly doubling what we spend on homelessness and the 11th year of a 10-year plan to end it, there now are more than 4,500 sleeping on our streets countywide each night after all the 4,000 or so shelter beds are full.

How can this be? Why hasn’t the “supply side” approach of more upzones, more tax breaks and more development freed up supply for those at the lower end of the income scale? Why is it just the opposite?

First, ever since we started tracking the housing market back in the ‘70s, during the boom times in Seattle, demand has always exceeded supply. Good economic times always bring a dramatic influx of new residents, mostly young professionals attracted to the new jobs. Also, there’s a significant increase in ‘‘internal” household formation: More young people living with parents and those living in group settings now can afford to get their own place.

Second, new construction often requires demolition and removal of existing housing. Permits are pending for removal of about 2,200 units right now in Seattle. Most of these units are older, lower-cost rentals, including many single-family rentals that housed families or as many as eight unrelated individuals.

Third, land values and taxes tend to rise in now-“hot” areas where new construction is occurring, driving up rents on older, lower-priced surrounding properties, a phenomenon called “price leadership.” Many longtime owners of older affordable rentals choose to sell under these conditions, and financing costs for new owners require large rent increases. Speculators also jump in, acquiring and reselling existing housing, pushing rents even higher.

Can’t build any faster

To meet Seattle’s targets under the Growth Management Act, we need a zoned capacity for another 70,000 units through 2035. Seattle has more than three times this zoned capacity right now. As one city planner recently said, it’s enough capacity to accommodate development under any circumstance through 2090!

As a practical matter, it would be difficult to build residential units at a faster rate even if Seattle were like Houston, with no zoning code at all. Right now in Seattle, there are literally not enough contractors, construction workers, developers, architects, planners and permit specialists to build faster.

We could upzone more and build more, but that would not bring prices down. It simply would displace many more from their homes and out of our city — not to mention the price taxpayers now pay for the new infrastructure demanded by more growth.

We’re not speculating about what might happen; we’re talking about what has already happened. We’ve already upzoned the heck out of our communities, nearly doubling our zoned capacity since 2005, and building at record rates. But rather than bringing prices down, this new supply actually has contributed to higher prices and the loss of existing older, affordable rentals.

The city must commit

So what can be done? The rational way to address our “affordable housing shortage” is through more regulation of the market, not less. It means moderating and managing growth (and suspending the Mayor’s HALA upzone agenda) so that when more growth occurs we’ll first have in place mechanisms to prevent displacement.

For example, requiring developers to replace, one-for-one, the low-cost units they remove, inclusionary zoning, impact fees and steering when and where it occurs. In effect, those cashing in on growth should be required to pay their fair share of the social and physical costs of that growth on our communities.   (The Grand Bargain that gives developers still more upzones provided they set aside a few affordable units, or pay a fee to the city to produce those units, is no bargain but a grand giveaway.  The affordable units we’ll get from this deal would replace only a fraction of low cost units we’ll lose due to those upzones. )

Furthermore, local electeds must commit more public dollars to buy up older, privately owned buildings before they’re torn down or sold to speculators so they can be turned into tenant-ownership options. There’s now a right of first-notice, requiring sellers to first offer these buildings to the city, but no pot of money and no commitment from local government to do this. And don’t tell us the funds aren’t there: Tens of millions from the city budget are wasted each year on downtown boondoggles serving special interests.

Relying almost entirely on developers and pro-density acolytes, our mayor’s Housing Affordability and Livability Agenda housing plan calls for massive, across-the-board upzones and still more runaway growth in our neighborhoods — as if that will relieve our housing shortage. They’re like Pentagon generals: When the bombing doesn’t work, their only solution is “let’s bomb some more.”

– JOHN V. FOX and CAROLEE COLTER are coordinators for the Seattle Displacement Coalition, a low-income housing organization.

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