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October 21, 2014

City Council OKs resolution on ‘linkage fees' for development

Journal Staff Reporter

Seattle City Council took the next step toward charging fees for new development as a way to get more funds to build affordable housing.

Yesterday the council voted 7-2 in favor of a resolution to implement the policy, which is called a “linkage fee.” Developers of new projects in most commercial and multifamily zones would pay a fee per square foot that would vary depending on the location. The fees would not affect existing projects or those with permit applications submitted prior to starting the program.

A resolution is not a final vote, but it shows the council's support for the new fees.

An ordinance will go before the council next June after Mayor Ed Murray's Housing Affordability and Livability Advisory Committee makes recommendations on increasing affordable housing. That report is due May 30.

The council wants the linkage fee to be a part of that discussion and will not take further action on it until the 28-person committee weighs in.

The current plan is to start charging fees in October 2015. Fees will increase over a two-year period, with the full fees taking effect on Oct. 1, 2017.

The city says the funds will help offset the impact of rising rents on middle and lower-income people.

Three tiers for the fees are being considered, based on location. The numbers could change before the council sets fees in the ordinance.

• In the highest cost neighborhoods — South Lake Union, downtown and First Hill — developers would pay between $16 and $22 per square foot.

• In popular neighborhoods outside of downtown — such as Ballard, Capitol Hill, Fremont, parts of Queen Anne, West Seattle and the University District — developers would pay between $10 and $12 per square foot.

• A third level would apply in northern and southern areas such as Rainier Valley, Northgate, Lake City and along Aurora Avenue North. Developers in these areas would pay $5 to $7 per square foot.

Developers could avoid the fees by having 3 percent to 5 percent of units in their buildings affordable to people making less than 80 percent of area median income.

The idea for linkage fees surfaced earlier this year as part of a broader discussion about affordable housing. An Oakland-based consultant called Cornerstone Partnership suggested this as a way to increase developers' contributions to affordable housing.

The fee has gotten push back from developers, development advocates and land use attorneys, among others, who call it a tax on new development.

Representatives from Vulcan Real Estate, Lake Union Partners and Downtown Seattle Association asked the council for more discussion and to wait for the housing committee recommendations before taking action.

On Monday, DSA and the Washington chapter of NAIOP released a statement critical of the fee and questioning its legality. They referenced an earlier letter from a group of Seattle attorneys that said the fee violates state law barring cities from imposing “taxes, fees, charges, either direct or indirect, on housing development.”

DSA and NAIOP said the program will lead to higher costs and make the problem worse.

“This tax on new development will be passed through to renters and buyers, making housing and commercial space more expensive, and exacerbating the very affordability problem the city is trying to address,” according to the statement.

Representatives from affordable housing developers including Bellwether Housing and InterIm Community Development Association spoke in favor of the fee. They said most new development caters to high income people, and rising rents are pushing lower- and middle-income people out of the city.

“Growth cannot be smart if it divides, if it excludes and if it displaces us,” said Ubax Gardheere, lead coalition organizer at Puget Sound Sage.

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