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Tuesday, October 7, 2008

Developer Balks at Affordable Housing Requirements

posted by on October 7 at 15:45 PM

While the country obsesses over tonight’s presidential debate, some developers and local residents will have another debate. At a public meeting in City Hall at 5:30 p.m., they will oppose and advocate for a proposal to add “workforce” housing around the city. Here is how it would work: As the city increases height limits in neighborhood centers, developers could build taller buildings (thereby making more money) as long as they include a set amount of affordable housing in the additional space. Sounds like a winner for everybody, right? Not so fast.

Led by City Council Member Sally Clark, the council is attempting to push through two ambitious plans before the end of the year. The first is related to the affordable housing package described above; the other would increase the height limits and allow residential development in the Interbay neighborhood. Both jibe with the city’s vision for a denser city. But some people say that Interbay—a hodgepodge of industrial and big-box retail between Queen Anne and Magnolia—cannot support the affordable housing requirement.

The map to the lower right is a proposal for height increases and changes from commercial to mixed-use development on certain blocks of Interbay.

interbay_upzone_map.jpg “It becomes counter productive,” says Jeff Thomson, a partner of the Freehold Group, which owns two acres in Interbay. Bruce Wynn, director Interbay Neighborhood Association, agrees. Under the affordable housing program being considered by the council, rents for 10 to 20 percent of the new floors gained from an upzone would be affordable to those making 80 percent of the King County median income. More info, and the pro-affordable housing side, is here. That means a one-bedroom “workforce” apartment would rent for $1,153 a month.

“When you rent below 80 percent, rents are so low relative to costs of creating the building that it loses money,” says Thomson. If the council does push an affordable housing requirement on Interbay, he says, “I think you are going to find that it develops out with one- and two-story retail.” In other words, a Target or a Fred Meyer. “We want them to approve the upzone without the incentive housing tax on top of it.”

A second opinion after the jump

Of course, developers often claim additional costs or fewer units will prevent them from building housing. But when a similar program was applied downtown in 2006, construction continued. The affordable housing program has worked in towers downtown because those high rises charged exorbitant rents that, in essence, subsidize the lower-income rents.

Can this affordable housing program work in Interbay and other neighborhoods with lower land values?

Dan Rosenfeld, co-owner of the QFC and Rite Aid site on Rainier Avenue South, says, “I just don’t know yet. Talk to us in a year.” He is working with the city to bump up heights limits and density around the light-rail station in the Rainier Valley. “It is easier to [build affordable housing under the incentive program] in a wealthy neighborhood, no question,” he says. “The affordable housing requirement coming down the road creates some new challenges.”

The city council’s public hearing on the Workforce Housing Incentive Program is tonight, October 7, starting at 5:30 p.m. The Planning, Land Use & Neighborhoods Committee will consider the legislation for workforce housing and the Interbay rezone at committee meetings on October 8, 9 a.m. and through the fall. More info here.

RSS icon Comments


This * is the world's tiniest violin, playing "My Heart Bleeds For You."

If you can't afford to build on the space with the affordable housing requirement, get out of the way and let someone else in the market do it.

Posted by Greg | October 7, 2008 3:58 PM

I am trying to find a place to live in Seattle with easy bus access to where I work (the UW). I am currently in a wheelchair, and though optimistic I will be walking again, there is no guarantee when or if that will happen.

I only have about $1700 net pay each month, and that's before prescriptions and food.

I was hoping with the economy turning south, MAYBE, apartments would become more affordable.

It's getting so scary I am wishing I hadn't survived my illness.

Posted by elswinger | October 7, 2008 3:58 PM

realistically speaking, how much should a person be making in Seattle if they wanted to buy a decent 1-bedroom condo within 6 miles of downtown?

Posted by stinkbug | October 7, 2008 3:58 PM

Wait till that median income starts dragging downward and we're laughing about affordable housing legislation. People will be talking about unemployment housing.

Posted by Bellevue Ave | October 7, 2008 3:58 PM

Calling housing priced for 80% of median "affordable" illustrates just how out-of-touch the Seattle City Council is with the lives of working people in this area.

The market is already producing this stuff without any subsidies whatsoever, so why the public gift of value for increased height (ie - revenue)?

Two words - campaign contributions.

Posted by Mr. X | October 7, 2008 4:01 PM

They should build low income housing like Mexico City's:

Posted by Fnarf | October 7, 2008 4:03 PM

Interbay is very White and affluent. Of course they don't want affordable housing coming to their area. You know what THOSE people are like in THOSE affordable housing developments.

Posted by Sargon Bighorn | October 7, 2008 4:06 PM
“When you rent below 80 percent, rents are so low relative to costs of creating the building that it loses money,” says Thomson. If the council does push an affordable housing requirement on Interbay, he says, “I think you are going to find that it develops out with one- and two-story retail.”

OK, then how about they not increase the limits at all? How would that suit developers?

What a jackass.

Posted by keshmeshi | October 7, 2008 4:07 PM

I've read that the big apartment REITs are now having trouble retaining tenants when demanding their usual rent increases. Apparently this fucks with their whole model of ever-expansion, from which base they've been able until now to seek financing for additional construction and acquisition, and so on. That's probably the basis upon which the Interbay folks are operating. Not a rosy outlook for them.

Posted by tomasyalba | October 7, 2008 4:16 PM

Here is a crazy concept -- market rate housing in the city is a good thing because it allows people to live closer to jobs and services. Close enough to walk, bike and use transit instead of automobiles.

If we want the market to supply it, they will expect a profit.

As for affordable housing, that's a good thing too. Such a good thing that maybe all of us should help make it happen by supporting the housing levy, and supporting garage apartments, cottage housing, lower parking requirements, rezones, and other things that would increase housing choices and supply.

Posted by michael | October 7, 2008 4:28 PM

@7 The specific area of Interbay that's looking to be re-zoned is all light industrial and commercial. There aren't any affluent, white households in the area that they're trying to rezone. There aren't any households there, period. Your implication of racism/classism doesn't fit in this discussion. Learn how to read a map.

Posted by Hernandez | October 7, 2008 4:32 PM

When I think of Interbay I don't picture housing, just a inner-city golf course and a lot of industrial buildings.

Posted by elswinger | October 7, 2008 4:41 PM


What's your income and household size? If it's under $43,050 and 1 (just you), or better yet, under $34,200 and 1, you should qualify for affordable housing.

Try They target people making $10-20/hour. They don't have waiting lists; you can check them every day for new vacancies.

Posted by Hey wait | October 7, 2008 5:37 PM

keshmeshi, I think he's just saying: "You've upped the height but added a cost so it'll just get built to the old height... as if there was no height increase at all."

So he'd probably say to you: "It makes no difference, jackass. I'll just be making money building 1-story Walgreens and Subway and nail salon strip malls that will be there for 30+ years. Like that?"

Posted by Hey wait | October 7, 2008 5:41 PM

Let me just add... I don't know if he's right or wrong. I'm just doing some reading comprehension exercise.

Posted by Hey Wait | October 7, 2008 5:43 PM

I don't think many people get it here.

The point is that when you try to do this in low-income or (relatively) low valued land areas it doesn't make sense because you can't make the rents high enough on the market rate apartments to subsidize the "affordable" ones. The point that the developer is making is that if you force this through then no one will build residential here anyway and big-box commercial will just fill there area up.

I'm going to have to agree here with the developer. I think we should just allow a residential rezone here without asking for "affordable" housing because this area will be relatively affordable anyway since its not really in that desired of an area. We should work on affordable in areas like Cap. Hill, SLU, and Fremont. What we should do is force some sustainable features on Interbay development and limit parking requirements, OR have the developers sell parking SEPERATE from the apartments, that will certainly help make these places more affordable.

Posted by JoshMahar | October 7, 2008 5:47 PM

@13 My new raise pushed me out of affordable housing qualifications. Thats nuts!

@14 This is where the micro economic theory of production being at the margin. People won't increase their marginal costs beyond the point where it reduces their marginal revenue.

Posted by Bellevue Ave | October 7, 2008 5:49 PM

If they mess with the Interbay Golf Course, someone's getting a one-iron to the side of the head!

Posted by Arnold Palmer | October 7, 2008 9:21 PM

Developers target the working class. They have started to destroy the character of Seattle. People need to demand they respect this city's livability for all.

Posted by Vince | October 8, 2008 7:38 AM

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