Walmart, SEPA, and Neighborhoods

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A Walmart store
Walmart (photo from Wikipedia)

The Council is working on changes to the way the City implements the State Environmental Policy Act (SEPA) in the regulatory reform legislation now under consideration.  The goal of this component of the legislation is to encourage development in areas that the City has identified for future growth by eliminating redundant regulations.  That means not putting these projects through two reviews covering the same issues.  The changes, which follow guidelines set by the State Legislature, will ensure that review of proposed projects under SEPA is targeted to developments of a large enough scale that potential issues may not be covered by other regulations.  We are proceeding carefully with this to ensure that there are no loopholes or unintended consequences.

Under current Seattle law, projects in Urban Centers or Station Area Overlay Districts are exempted from SEPA review if they are below a certain size, generally 30 to 80 housing units and up to 12,000 square feet of commercial space, with some variation depending on the zoning.  The proposed legislation increases the size limits for exemption to 200 to 250 residential units or up to 30,000 square feet of commercial space when that space is located in a mixed use project.   This only applies to residential or mixed use projects within the 6 Urban Centers and 6 Urban Villages with light rail stations, and only in areas that have not yet met adopted Comprehensive Plan Growth Targets for jobs and density.

All such projects will be required to comply with environmental regulations, which cover most of the issues included in SEPA.  Many of Seattle’s environmental regulations were adopted or strengthened since SEPA was first adopted, which is why SEPA has become somewhat redundant.  For example, Seattle now has a Shoreline Master Program that regulates development on the shoreline, and an Environmentally Critical Areas program that limits and regulates development on steep slopes and in other environmentally sensitive areas.  Council has reviewed the areas that SEPA covers, and identified transportation impacts and historic preservation as areas that might not be adequately covered if these changes are adopted.  The legislation now adds provisions covering transportation issues, and the Council is preparing another ordinance that will cover the issues around historical preservation (which are currently covered for projects exempt from SEPA through an interdepartmental agreement between DPD and the Historic Preservation office).  The Council will also require DPD to make an annual determination as to whether each area has met its growth target and thus is no longer subject to this exemption. 

In addition, the Council will amend the legislation to define “mixed use” to mean a building with at least 50% of the gross floor area in residential use.  This will eliminate a loophole that could have provided an incentive for a developer to avoid SEPA for a commercial project by providing a code-compliant dwelling unit that may never have been occupied.

Our assessment is that the exemption of SEPA review will only apply to the Downtown, South Lake Union, Northgate, and University Urban Centers, and the North Beacon Hill, North Rainier, Rainier Beach, and Roosevelt Station Areas.  That list could shrink as the pace of economic recovery and development increases.  Analysis of permits applied for and appealed over the last few years suggests that the exemptions will apply to perhaps about 15% of projects per year, and will reduce the number of legal appeals by less than 10%.  This will save paperwork and staff time, but continue to encourage the use of SEPA for the larger projects where it is most useful (and that are most likely to be appealed).

The initial proposed legislation raised the threshold for mixed-use commercial projects from 12,000 square feet to 75,000 square feet.  The United Food and Commercial Workers Union (UFCW) raised concerns that this change could limit opportunities to challenge the development of Wal-Mart stores (or other retailers they see as irresponsible and harmful to local businesses) that might be sited in Seattle.  After reviewing the legislation, we agreed with UFCW that lowering the proposed commercial threshold from 75,000 square feet to the now recommended 30,000 square feet would still capture much of the benefits of changing the thresholds without potentially limiting the appeal opportunities where those are important.