City Needs To Get Serious About Housing

BY JIM POTTER
Kauri Investments, Ltd.

The Puget Sound region is slated to see growth of 100,000 jobs over the next few years as well as significant immigration. We also are in the early stages of massive increases in both rents and prices for housing because of the lack of supply of housing units.

Apartment vacancies are at four percent, their lowest levels in memory. If we are to provide housing and keep this area attractive to business growth, it is time for the City of Seattle to take immediate action to allow more housing to be built.

As chairman of the Multifamily Council of the Master Builders of King and Snohomish Counties, owner of a company that has been and continues to be a significant creator of housing in Seattle, and a native of Seattle, I continue to have very real concerns that the city is not truly addressing the housing needs of the community.

The developer contends that delays and city requirements increased the cost of this Queen Anne condo project by $100,000 without making it better.

City policies state their support for market rate (unsubsidized) housing, but there are no strategies to support these policies. Nor has the city implemented legislation or directed its departments to help reduce the cost of creating new housing.

A vivid illustration of how little the City of Seattle deals with housing costs is the way it assigns implementation of housing policy to the Department of Housing and Human Services. Yet that department does not even deal with housing issues other than low income (subsidized) housing. Subsidized housing comprises less than 10 percent of the housing stock. The city does nothing to support market-rate housing -- the other 90 percent.

In 1993, under its comprehensive plan, the city committed to build approximately 60,000 new housing units over the following 20 years. Since that time, fewer than 1,500 units per year have been constructed -- less than half of what is needed to meet the city's commitment, not to mention the growing need.

The South Lake Union Area was to have received 9,000 units of housing (or 15 percent of the total projected) over the next 20 years, yet virtually no new units have been built there. With the voters' rejection of the Seattle Commons Park, those units are unlikely to ever be constructed.

Various city departments including the Fire Department, the Department of Construction and Land Use (DCLU), City Light, Water Department and the Engineering Department have increased their fees and added requirements, both of which increase the cost and delay construction of new housing. These departments are more motivated to raise revenues for themselves and are not concerned about housing costs nor about supply. Granted, they each have their own agendas, but as city departments, they should be consistent with the overall city goal of increasing housing stock.

The following are three examples from our experience of increased costs to housing that have no public benefit:

In the fall of 1995, Kauri and the Central Area Development Authority (CADA) proposed a project in the Central Area, at 23rd Avenue and South Main Street, that would be the first private multifamily housing built in this area in almost 30 years. It is hard enough to make a project "pencil" in other parts of the city, but the Central Area is particularly challenging. We asked DCLU for several design modifications and received an openly hostile response.

For example, we proposed having a small number of our parking stalls, 12 (out of a total of 74), across the street from the project and the DCLU denied our request. This denial will add approximately $120,000 to the project, because on-site parking needs to be underground and the cost per stall is about $10,000. In order to make the project more affordable, we could lease 12 existing stalls across the street and meet the parking needs of tenants by using under-utilized space.

We also requested a reduction in the 10,000-square-foot requirement for open space that would be on the roof. The required amount, at least twice the amount necessary to meet resident usage, would need to be landscaped and irrigated according to the DCLU permit requirements, again, adding costs that will probably make the project unfeasible.

In addition, the DCLU reduced the size of the project on the north side of the building, citing their edge zone policy under SEPA, even though the project is across the street from the next nearest property, approximately 100 feet away.

Reducing the size of the proposed building would reduce income needed to support the project. This type of code application not only goes against the city's policy to create housing, it also alters the project for no beneficial reason.

The second example is the Elliott Bay Condominiums, a project just completed on Queen Anne. After we received a building permit and started construction, the DCLU decided that we needed to sprinkle the concrete parking garage under the buildings. This increased our construction costs approximately $40,000, including $17,000 for a 4-inch water meter that was required from the Water Department.

In addition, we applied in the spring of 1995 for a permit to build the street in front of the project from the Seattle Engineering Department. We did not receive approval from Engineering until December of 1996, and the department's requirements were far greater than first approved under the Master Use Permit. The increased requirements, delays and added work have cost an additional $100,000. Neither of these two requirements make the project better.

Finally, we are hoping to build a project in the Northgate Urban Center (one of five urban centers in the city specifically designated for increased housing density). We are proposing to add additional units to an existing 130-unit building. The property, zoned for 240 units, is next door to a Park and Ride and one-half block north of the Northgate Mall, a major transit hub.

The DCLU has told us that they require 1.5 parking stalls per unit on site with no consideration given to the location. The additional cost of creating that many parking stalls will make the project economically unfeasible, and we will not be able to build the additional residential units. Providing an additional 165 parking stalls for 110 units in that location just doesn't make sense.

If we are to retain existing affordable housing units on the site and help meet the city's goals of increased housing stock and reduced traffic, city departments need to be flexible.

But how can we get the city departments working together to support the stated goals of the overall community while addressing their individual department revenue needs? If the administration truly supports the goals of the GMA and the city's comprehensive plan, then action needs to be taken now.

The city should select one department or group that has a passion for housing -- a department that has the direction and the power to understand the costs of housing and one that can make the necessary variances in regulations on individual projects so that more projects are viable.

The appointed group should not be involved in the day-to-day activity of approving projects so that it can have a better perspective. This will not necessarily be popular with the "system" but it will show that the city of Seattle really cares about standing behind its commitments to housing.

Jim Potter is chairman of Kauri Investments, Ltd., a company providing moderately-priced housing in the Puget Sound region. He is also chairman of the Multifamily Council for the Master Builders of King and Snohomish Counties.