October 13, 2008

Opinion: Incentive zoning: Good PR but bad public policy

The Puget Sound Regional Council projects nearly half a million new residents in the coming decade. Where will they live? Seattle's housing supply is at new risk from the combination of population growth, a slowing economy and a growing array of rapidly changing bureaucratic processes that increase building costs. Fees, professional services and interest due to delays now add thousands of dollars to the cost of every new home, apartment or condominium. When housing is in short supply, why are we making it more complex and expensive to build?

Cities once understood that development generates community wealth through sales and property taxes, construction wages and new economic activity. Permit fees were low, impact fees unknown and cities funded their planning and building departments from general revenues. Municipalities considered streets, sidewalks, utilities and public services investments that would generate community wealth over time.

In contrast, we make developers pay-to-play rather than waiting for the taxes that flow in development's wake. There are problems with this approach. First, additional fees and processes increase the initial project risk and costs (which are marked up and passed on to the buyer or renter). Second, the higher risk and costs inhibit development and reduce market supply. Third, pay-to-play results in policy gimmicks, such as incentive zoning.

Incentive zoning is just one of many flawed gimmicks fostered by the pay-to-play policy approach. Incentive zoning creates new bureaucracy, is boom-dependent and hinders housing development by increasing costs. Seattle residents have overwhelmingly supported housing levies. There is no justification for an end-run around voters in expanding public support for affordable housing to include workforce housing.

New homes are not the most economical path to increased workforce housing. Almost all workforce housing has been and will be provided by older homes and apartments in the private sector. To expand the pool of older homes, we need to remove barriers to housing development and build the large numbers of new housing units required to moderate rents and housing prices. Seattle can dramatically increase the supply of housing with increased zoning capacity, clear stable codes and funding infrastructure through broad-based taxes.

We need to shift our strategy for creating broadly affordable housing. We must build as many quality housing units as possible to increase supply and moderate prices. Incentive zoning may be good public relations, good politics or both — but good public policy it is not.

David Schraer is a Seattle architect with in-plain-air architects and was the first executive director of the White Center Community Development Association.

The Daily Journal of Commerce welcomes your comments.

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Previous columns:

• Letter to the Editor: Speculation drives up home prices, 10-06-2008
• Letter to the Editor: We need more well designed multifamily housing in Seattle, 10-06-2008
• Opinion: Does Seattle have too much single-family zoning?, 09-29-2008
• Opinion: Land use laws should reflect today's reality, 09-15-2008
• Opinion: There's no magic formula to get affordable housing, 08-11-2008
• Letter to the Editor: Large users have options in keeping steel costs down, 08-04-2008
• Opinion: Rail on I-90 bridge must be considered, 06-30-2008
• Opinion: Should we change the Multifamily Tax Exemption?, 06-26-2008