Archive for the ‘Politics’ Category

Will Council Raise Rents for Everyone?

Thursday, September 18th, 2014

It’s a repeated movie scene: soccer player dribbles down the field, overcoming all opposition and ignoring the shouting onlookers….and scores in the wrong goal.

City Council members say they want Seattle to be affordable, but the Land Use Committee is blindly heading the wrong way. They’re going to increase residential and commercial rents via massive development fees and new restrictions on the best way the market can provide cheap housing.

“Massive” is the right term. Basically, all multifamily and commercial developments would be subject to fees ranging from $7 to $22 per square foot (or alternatively $5 to $16), depending on neighborhood. Averaging out the higher version, that might be a 5% increase in development cost. Or development onsite, which tends to be much more expensive. The fees would apply to the whole building, vs. the current method of fees only above the old height limits. Houses would have no fees of course.

Micro project on East John, by DPD

The result is obvious. Higher rents won’t apply to just new buildings, but to every person or company that rents in Seattle. In a growing city, rents tend to follow replacement cost, plus a premium if vacancies get too tight. Replacement cost for all types of space would go much higher, even with a likely dampening of land prices. The fees would reduce construction until demand pushed rents up enough, then we’d start building again. It would be another “great reset” to higher rents. Some people counter that incomes are flat, but that’s not very relevant; in high-demand cities, people tend to pay a larger percentage of their income. The question of “what will the market bear” for a necessary product is based on customers’ pain thresholds, and prices rise until enough people let go.

Fee proponents seem to think the projects will keep flowing and costs don’t translate to prices. This is pure ignorance. Even without fees, the average project is on the edge of happening or not happening even in the weeks before it breaks ground. What will interest rates be? Will the market soften in the next two years? Is someone at DPD going to require an expensive change? Will the equity partner take the leap necessary to build offices on spec? We contractors hear about many projects that never even make the DJC because the pro forma doesn’t work. Once projects are public, or even permitted, a great many still never happen. There’s good reason behind that, and not just that returns might be disappointing – sometimes developers and financiers lose their shirts, as many did a few years ago.

Owners of existing buildings and homes would celebrate the fees of course (seriously, does the Land Use Committee know this?). Less competition means higher rents and higher building values. My condo would be worth more too. Commercial building investors love to buy buildings in areas with “high barriers to entry” for this reason.

So, rents would go up substantially for 130,000 renting households in Seattle (my guesstimate) and any business that rents space. That’s quite a price for a relatively small number of subsidized units.

We can do much better. There are methods that don’t restrict housing supply or punish companies for locating in Seattle. The existing housing levy is part of that; can it be expanded? How about making it easier for homeowners to build accessory units? How about micros? Or expanding the zones where townhouses can be built, even a little? Each can help fill part of the affordability gap for different types of people.

But most of those things are too scary for the Land Use Committee. The loudest voters want free, empty parking in front of their houses, and no “renters” (sometimes a euphemism) living nearby. Now micros, despite their popularity, have been slapped down already, and the Committee (motto: “You’re out of LUC”) wants to all but destroy the model entirely, with added parking, sinks, square footage, and entitlement process.

Some of that is understandable in the context of negotiating tradeoffs, like parking in certain zones, or even the design review process that adds costs, duration, and uncertainty to every project in Seattle. Other parts make no sense at all. Who does it help to outlaw the smallest micros, which are basically the size of a dorm room, minus the snoring roommate? If someone can afford 150 square feet but not 220, it’s off to the friend’s couch? (PS, as a donor to some of our outstanding nonprofits, I’d like to see money spread further with smaller units, like micro sizes for single people and micro+bedroom for families, with a focus on temporary rather than lifetime housing.)

About micro prices: Some say $700 isn’t really affordable (I’ve heard numbers from $600 to $1,000 for bigger units). It’s not low enough for everyone, and many people aren’t suited for micros. But it’s definitely a gap in our housing supply, and these units are popular. It’s notable that rents often include utilities, internet, and significant shared space. And don’t forget that the market is otherwise averaging over $1,400 for apartments. All things considered, $700 is a great price to live in a core Seattle neighborhood.

Hopefully the LUC and full council will listen to people beyond its own echo chamber and the consultants who want us to emulate the nation’s most expensive cities. The Mayor has shown signs of being reasonable. Let’s not look back on 2014 as the year we flubbed ourselves into higher rents for all.

IZ and Inclusion: Time to Find Better Ideas

Wednesday, August 20th, 2014
Alcyone Apartments in South Lake Union. Photo by author.

Recently the Capitol Hill Housing Improvement Program (CHHIP) decided they are no longer endorsing incentive and inclusionary policy to create affordable housing. Is it possible that even non-profit housing agencies are seeing the light on these bad policies?

Over the course of the first half of this year we’ve spent a lot of time informing the press and public why Incentive Zoning (IZ) and inclusionary zoning are tools that won’t work and the problem they are intended to fix is one we don’t have.

Here’s a summary.

Incentive Zoning

Wrong Tool

Wrong Problem

  • There is no housing crisis for people earning 60 to 80 percent of Area Median Income
  • The real problem is for people who are poor, earning 50 percent or less of Area Median income and families

Inclusionary Zoning

Wrong Tool

Wrong Problem

The evidence against the continued use of Incentive Zoning is overwhelming; it is a policy that will neither lower prices nor help poor people. Instead it adds costs and risks to market rate housing that is currently meeting the demand for housing for people earning 60 to 80 percent Area Median Income.

It’s time to stop and come up with a better analysis of our housing challenge as we plan for coming growth. Smart Growth Seattle has gathered 250 signers for our petition calling for a comprehensive housing plan.

Let’s stop policies that would reverse microhousing development, building in our low-rise zones, and increases in fees on new growth and let’s come up with a plan!


 

Should you mix affordable and upscale housing?

Wednesday, October 16th, 2013
Outdoor seating and landscaped areas would surround the ground floor of the R.C. Hedreen Co. project. Image courtesyof LMN Architects

Should “affordable” housing be mixed with high-income housing within the same building? That’s the subject of a short video by the Council on Tall Buildings and Urban Habitat at http://tiny.cc/o5r04w/.

Addressing the question are Nigel Biggs of CBRE, Harry Handelsman of Manhattan Loft Corp., Christoph Ingenhoven of ingenhoven architects, Ian Simpson of Ian Simpson Architects, and Rafael Viñoly of Rafael Viñoly Architects. The video is part of a monthly series by the CTBUH.

In Seattle, R.C. Hedreen Co. has proposed including affordable units in a project that will not have upscale apartments or condos, but will have a hotel.
The project is a 40-story convention hotel complex at Ninth and Stewart that will have a five-story podium with a 35-story, 1,680-room hotel on the south end and 154 units of housing on the north end, reserved for people making 80 percent or less of area median income. Hedreen is building the north end units to get higher density through a city incentive program.

New bilingual signs in Chinatown-International District

Tuesday, July 16th, 2013

Bilingual street name signs will be installed this summer at more than 30 intersections in Seattle’s Chinatown and Japantown neighborhood through a partnership of the city and the Chinatown-International District Business Improvement Area.
Mayor Mike McGinn said in a press release that the translated signs in English and Chinese, or English and Japanese “will help us celebrate the ongoing diversity of the Chinatown-International District, as well as help people navigate the neighborhood.”

Photo by Jen Nance, Office of the Mayor

The CIDBIA worked with neighborhood stakeholders, family associations, local ethnic media, the University of Washington and translators from the Seattle Municipal Court to translate the existing street names into traditional Chinese and Japanese.
Don Blakeney, executive director of the CIDBIA, said “Not only is it a wonderful reflection of the neighborhood’s rich cultural history, but a reflection of the international hub that Seattle has become.”
Translated street names will be in white lettering on a brown background below the current legal name. The first sign is at Sixth Avenue South and South King Street.
Funding was provided by a $20,000 Small and Simple Matching Fund Grant through the Seattle Department of Neighborhoods.
The Seattle Department of Transportation also contributed $6,000 from the voter approved Bridging the Gap ballot measure.

Two steps back on affordability?

Wednesday, April 24th, 2013

If Seattle aligns on anything, it’s affordable housing. We pass our levies by wide margins, and seem to agree that our city should be available for all income levels, whether for empathy, worker availability, or other reasons. We might also agree that the SHA and non-profits do a good job leveraging our money, and the levies aren’t enough.

Triad Capital Partners project on Capitol Hill. Rendering courtesy of grouparchitect.
Beyond that things get sketchy. In classic Seattle fashion we mix steps forward with steps back. The council is working on two major issues currently – regulation for micro housing projects, and the South Lake Union rezone. In both cases we risk shooting our feet.

The South Lake Union rezone, which got committee approval this week, involves fees of $21.68 to $29.27 per square foot (plus inflation) for space above the original height limits. Let’s look at that. Ideally a tax system should put less burden on things you want to encourage, and more burden on the rest. So where do we put the maximum burden? On new construction projects, and the homes and jobs they’ll contain. On the housing side we’re addressing affordability by directly making this housing more expensive for most people, and disincentivizing new supply, which is our greatest weapon to avoid San Francisco’s fate. On the commercial side, we’re disincentivizing the job creation that supports our overall tax base, and the job centralization that’s crucial to maximize walkability and leverage public transportation. We also risk pushing construction outside the neighborhood, perhaps to other municipalities, losing that sales tax revenue.

Outside the A/E/C/RE industry, people seem to think the added heights are an easy windfall, and sometimes they are. But going tall also has downsides – substantially higher cost per square foot (even before the fees), more space to fill, longer construction duration, etc. On top of that the fees add perhaps 6-8% to total development cost above the old height limit. Taking advantage of the new heights therefore assumes high-rents, and requires a bigger bet. The math will work in some cases, such as a big eager tenant wanting to expand across the street, or apartments with permanent water views. Other projects will likely find that six stories with woodframe pencils more easily, and limits risk. Maybe this is why developers continue to advance new plans to build lowrises in South Lake Union.

So what’s a better solution? If we can expand the housing levy, let’s do that. The voters will support it. And maybe we should be less reticent with one-off deals like Vulcan’s Valley Street swap, or similar versions. And then there are micro units.

Miraculously, a chunk of the affordability puzzle is taking care of itself. Micro units of various types are proliferating and filling up with renters eager to pay rates otherwise unheard of for centrally-located homes in good repair. This includes typical units that are simply very small, as well as the “rooming house” concept, where one “unit” might include eight bedrooms rented separately, with a shared kitchen to augment in-room kitchenettes.

Typically, rooming houses stay below a certain unit count to avoid the design review process and fit perhaps 40 homes into what would otherwise be a fraction of that, in multifamily zones. They often take advantage of what has been called a loophole, but it’s also an essential part of building at the most affordable rents. Seattle’s process costs a lot of money, with design review being part of that. First there’s the added time between tying up land and breaking ground, which involves carrying costs in the tens of thousands of dollars. Second, process means uncertainty about going forward at all, in part due to reduced flexibility in market timing. Third, design review means a choppier, less efficient design process, with higher fees. Of course with more units, the land cost is spread among more homes. Much of this relates directly to development cost. The rest affects cost indirectly – if we reduce supply, we cause scarcity, which will cause higher rents.

Basic unit sizes might become a debate topic. Homes are often in the 200 square foot range (similar to a typical hotel room), and some down to 100 square feet or so. But why is that controversial? Wealthy suburbs have often mandated square footage minimums to keep the poor folks out and protect property values. Many people seem offended at the idea that some renters would live in places they themselves wouldn’t. But surely Seattle isn’t an exclusionary, authoritarian city in those ways. Others talk about humane living conditions, forgetting that $10 per hour might otherwise mean mom’s basement, three roommates, and/or spending two hours a day commuting. Still others complain that their public street parking will get tougher, as the new buildings generally have little or no parking. The last point is at least understandable human nature, though the existing residents have no more claim than anyone else. What’s left? Is there a valid reason to not allow even a 200 square foot home, or even 100 square feet? Why aren’t we celebrating these as a choice for people to live independently, and with less energy and stuff?

(Disclosure: I work for a contractor that builds highrises, but have no connections to the micro trend.)

Making strides on affordability

Monday, March 18th, 2013

Today’s DJC has a good story by Patrick L. Phillips of the ULI about housing affordability, particularly the importance of housing near jobs for people with moderate incomes. This needs to be a priority for Seattle, not because everyone is automatically entitled to live in their favorite neighborhood, but for limiting stress on our transportation system, giving low-wage workers an easier route up the ladder (minus the absurd commute), invigorating neighborhoods, and essentially making the city function for people and as an economic engine.

Terrazza aPodment (rendering courtesy of Kauri Investments)

Thankfully Seattle is doing a lot of things well.

Voters keep approving housing levies.  In 2009 we passed a $145,000,000, seven-year measure, which averages over $20,000,000 per year, most of which goes to rental construction and preservation. This is big reason Seattle always has low-income units under construction. A host of outstanding non-profits, such as LIHI and Plymouth Housing Group,  do an excellent job building and owning housing that both helps people and improves neighborhoods.

Seattle’s reduced/zero parking requirements for new housing are a big reason behind our current housing boom. The economics of 200 one-bedroom homes are much easier with a 0.6 parking ratio vs. a 1.0 or 1.2. The units that get built are cheaper, and more units are getting built, helping keep housing supply/demand in check.

We allow smaller units than most cities. New York and San Francisco have been wringing their hands about allowing 220 square foot units. Seattle already allows much smaller units than that, both with traditional apartments and in rooming houses. These are proliferating on Capitol Hill, in the U District, etc. What a phenomenal idea…the private market providing workforce housing without subsidy! Of course having little or no parking is a necessary precondition for these units.

Most importantly, we’re letting housing get built in sizeable numbers. Our biggest affordability weapon is to avoid undersupply, the bane of the most expensive cities. With decent supply, everyone avoids the worst price war scenario, and the less desirable units tend to be substantially cheaper. This is why the average building from 1920 or 1970 is relatively affordable today. Increasingly, units from 1988 play that role, and someday units from 2013 will as well.

Unfortunately we’re moving backwards in other ways. We’re attaching more bonus fees to taller buildings in some areas. This is counterproductive because it disincentivizes supply, and also makes the units in these building more expensive. (Disclosure: I work for a contractor that builds highrises.) We’re putting the burden on a relatively small number of residents and developers, apparently a politically expedient way to avoid paying it ourselves. It would be better to expand the levy.

And of course we need transit. Seattle is doing moderately ok, but clouds are on the horizon for big cutbacks to Metro.

So, while more needs to be done, we can pat ourselves on the back for doing some good things.

Don’t Know What You’ve Got ‘til it’s Gone

Sunday, February 10th, 2013
Photo by Tim Rice Architectural Photography

One would think that moving to the Bay Area would afford great advantages for a mid-career urban planner/designer. What with all of the cutting edge parking management and parklets, there is so much to learn. After 10 months I’m beginning to understand the ins and outs of planning in California. Though there are things that I miss about Washington besides the rain. The one thing I never thought I would reminisce about; I find myself mentioning in even non-planner company, the Growth Management Act.

That delightful piece of state policy borne of the exponential growth of the 80’s and 90’s (and often blamed on Californians) is the one key legislation that is so obviously non-existent in the Golden State, that I find myself quoting it endlessly. While the recession has stemmed the tide of suburban growth, and California has in many places adopted smart growth policies and embraced new urbanism for what it’s worth.  The fact remains that most California policy and legislation does not have the teeth or the checks and balances of the Washington GMA. Though the State has recently worked to tie Green House Gas emissions to Vehicle Miles Traveled, it’s not strong enough to define a minimum density to limit suburban or exurban growth in a meaningful way. California continues to grapple with its love for the automobile- even while proposing to tear down freeways.  While the ex-urbs continue to expand and demand all of the public transit, freeways and other services that support urban areas. I try restrain myself from asking, “What about your urban growth boundary?”.
For all its idiosyncrasies, the GMA is a valuable tool for the urban planner and I for one, miss it greatly.

LA OKs key financing for downtown streetcar

Thursday, December 6th, 2012

Voters in downtown Los Angeles have approved key financing for a $125-million streetcar project, according to an article in the Los Angeles Times.

The streetcar would run mainly along Broadway, and Hill and Figueroa streets, three of downtown’s main arteries, connecting various neighbors, including the old banking district, South Park, Civic Center and the fashion district.

Seattle’s 2.5-mile First Hill streetcar line  is  slated to be complete in the spring of 2014.  It will go  from Pioneer Square to Broadway and Denny on Capitol Hill.

 

10 ways to make cities more walkable

Monday, December 3rd, 2012

Seattle has a number of walkable neighborhoods, from Capitol Hill to Belltown. An article in The Atlantic Cities offers 10 tips for making cities more walkable

Ballard is an urban village and a fun place to walk. Photo by Clair Enlow.
. The suggestions come from Jeff Speck’s new book, Walkable City.

Challenge your inner pedestrian

Friday, September 21st, 2012

HBB Landscape Architecture has created the Palletable Plants Park, a temporary installation in a parking space in front of the firm’s Seattle office at 215 Westlake Ave. N.

Photo courtesy of HBB Landscape Architecture

The “park” highlights edible and ornamental plants while showing what can be done with little more than an open parking space, recycled materials and versatile plants. It also has furnishings constructed from recycled pallets.

The installation is part of PARK(ing) Day, an annual one-day-a-year worldwide event designed to show what cities would look like if more public space was allocated for parks, recreation and social interaction rather than for cars.

Locally the event is sponsored this year by the Seattle Department of Transportation. A total of 14 parking spaces, almost all downtown, have been temporarily converted by groups and firms into everything from a photo booth to a Bocce ball court to a place where you can challenge your inner pedestrian by getting a Transportation Tarot Reading.

As part of Park(ing) Day, a number of local organizations, including Feet First, are sponsoring an event in Pioneer Square, which turns Occidental Park, Nord Alley and  parking spots on Main Street into a summer lawn party. It ends at 2 p.m. today.