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Plan would require developers to create more affordable housing — or pay

Updated map where linkage fees could be implemented.

Updated map where linkage fees could be implemented.

The days of trying to “incentivize” Seattle developers to build more affordable housing could be nearing an end. Under a plan released by the city Thursday, developers building in certain Seattle neighborhoods could be required to make up to 10% of their new units affordable and/or pay a fee that would fund thousands of new affordable apartment units.

It’s one of the first tangible results of the City Council’s effort to force developers to contribute more affordable units amid a boom of residential construction in the city, particularly on Capitol Hill. The policy could also be key in realizing Mayor Ed Murray’s goal to create 20,000 units of affordable housing in the next decade.

The Affordable Housing Mitigation Program calls for developers to pay a linkage fee on new developments, as high as $28 per gross square foot, into an affordable housing fund. Over ten years, DPD estimates the fee could generate around $1.16 billion to create 14,500 new affordable units. The inclusionary zoning part of the plan would require developers to make up to 10% of their new units affordable to create 5,900 affordable units in 10 years, according to DPD models.

According to the plan, drafted by the Office of Housing and the Department of Planning and Development, inclusionary zoning and linkage fees could be implemented together or as a pay-or-play model.

Linkage fee amounts would likely vary depending on location. Pike/Pine and First Hill is being considered for a “high” fee area while the rest of Capitol Hill is being considered for a “medium” fee range.

Under the inclusionary zoning plan, all participating rental units would have to be affordable to those households at 80% of the area median income. However, the plan leaves open the option of dropping the targets as low as 60% of AMI for units with one or more bedrooms and 40% of AMI for small units.

DPD also considered a proposed list of updates to the city’s current voluntary incentive zoning program, which tries to encourage developers to include affordable units in projects by allowing them to build bigger and taller. However, proposed changes would not adjust the building dimensions allowed under the current program.

In October, the City Council voted to have the city develop the linkage fee program. At the time, Seattle had the fastest rising rents among major U.S. cities, causing some officials to say affordable housing had become a full-blown crisis.

Talk of the proposal had previously drawn serious ire from developers and their attorneys, some of whom were present at previous committee meetings. During a committee meeting last year, former City Council member Sally Clark said that it was not lost on her that perhaps dozens of attorneys were listening in, but she said the plan would move forward.

Developers will almost surely take advantage of an opportunity to appeal DPD’s environmental review of the proposal — a common tactic for trying to halt new legislation.

Linkage fees have also become an increasingly talked about topic in this year’s election. During Monday’s Council District 3 forum, candidates were asked in a lightning round if they supported such developer fees. Incumbent Kshama Sawant and Morgan Beach said yes, while Pamela Banks, Rod Hearne, and Lee Morgan waffled on the issue.

The city is now accepting comments on the proposal and the DNS through June 25th. Comments may be sent here:

City of Seattle, Dept. of Planning and Development
Attn: Brennon Staley
PO Box 34019
Seattle WA 98124-4019

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16 thoughts on “Plan would require developers to create more affordable housing — or pay

  1. This proposal could apply to all new development except for manufacturing in MIC zones. This means it could apply to all new single-family projects and the linkage fee charged would be based on square feet of the new house built. This makes sense as anyone who can build a new house in Seattle can afford to help pay into an affordable housing fund.

    • The language implies that, but the current incentives they are talking about the linkage fees replacing are only currently in effect in multifamily zones.

      • People who build $2 million homes can absolutely afford to help pay for affordable housing. I think they should pay even more than people buying $150,000 tiny condos. Fees on single family homes are definitely on the table.

  2. Yes! So glad to see this proposal. I get sick of the argument that we simply “need more supply” in order to lower rents – an argument oblivious to the fact that that there’s actually a housing surplus in Capitol Hill. What we need is better distribution of that supply.

      • See, that’s your problem – I don’t see imaginary things like unicorns in my world, and likewise, I don’t believe in fairytale-economics. I see empirical realities that need to be addressed in smart ways.
        Yes, there is a housing surplus in capitol hill. Almost none of the major new developments since 2008 is near vacancy. For starters, see point 5 here:

      • If there was a surplus rents would be going down. Developers are looking at the future. People are moving here faster than you can spit on them. The city of Seattle is cash strapped. Developers bring big bucks and more taxes in the form of new people and housing. This is what you get in the City of Seattle with over half a Century of one Party Democratic Rule.

      • Nope. Never in a healthy growing city has surplus housing inventory ever driven rents down. Never. At best you get temporary price plateaus.

        Rent decreases only happens during economic contraction and recession.

        And sorry but there is a surplus of rental units on the hill. Because of the high price points. Will they fill? Probably. But building more $2000 dollar a month one bedroom apartments will not and is not ever going to bring rents down.

  3. So we will charge developers linkage fees then give them 12 years of property tax exemption at the same time via the MultiFamily Property Exemption Program (MFTE)? Pretty Silly!

  4. I think the linkage fees are a great idea, and far superior to the “incentivize” approach which has only resulted in ugly/bulky new buildings with high rent. And this was the developers can be left out of the effort to provide affordable housing, since we can’t rely on them to do the right thing anyway.

    But who will actually build the affordable housing using the linkage fees? Will it be public housing, similar to SHA or Seattle Senior Housing?

  5. High fees = higher rents, its a fact! Low income = ugly buildings, fact.
    DPD makes builders jump through so many hoops for so long, it costs real $$$ and gets passed on to tenants. If there’s no financial incentive/profit, there’s no reason to develop. Low income tenants can be (not necessarily) more costly to deal with for less return.

    Just sayin, look in the reality mirror.


  6. That $28 per gross square foot figure seems huge. Even if you only assessed it on net rentable square footage it still adds over $20,000 in costs to build a 700sf one bedroom apartment. Then you may have to set aside ten percent of the units for lower income housing? That really effects the economics of apartment building in a negative way for developers. I am not sure this is the right answer. How will raising the cost of building housing and lowering profitability positively effect the housing crunch in Seattle? I woukd rather see the multi family property tax incentive extended to more areas, like the bulk of Capitol Hill. It currently does not include quite a bit of the Miller Park urban zone, for example.