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AFFORDABLE HOUSING IN SOUTH LAKE UNION: CAREFUL WORK NEEDED

 

Rendering of South Lake Union rezoneSome Councilmembers are talking about modifying the bonus/incentive zoning program in the proposed South Lake Union (SLU) rezone legislation to capture more value from development and increase the amount of money for affordable housing. To be clear, the rezone legislation is ALREADY an increase on the status quo because there is essentially no incentive zoning program in SLU now.  I think there are strong policy reasons not to attempt to create further changes in the affordable housing parameters in the context of this legislation, as well as legal risks that in my opinion are significant.

I am therefore recommending that the Council proceed with a careful process to revise our affordable housing program without holding up the SLU rezone or trying to come up with a number to apply to the SLU rezone without serious public process. There is a clear legal path to adopting new incentive zoning numbers and applying them to South Lake Union even if the numbers are not developed until a few months after approval of the rezone. Our Law Department has provided language to include in the SLU legislation that states that we will modify the affordable housing provisions.

There are good policy reasons not to amend the South Lake Union legislation to increase incentive/bonus program requirements.

  1. Good public policy requires making major changes only after a thorough vetting in a transparent and thorough process. Changes will have enormous implications for many people, and the City should exercise due diligence and carry this out through public deliberations.
  2. The Council does not have adequate information to make an informed decision about the level of incentive requirements that are appropriate, necessary, or reasonable. We have two consultant reports that have divergent conclusions and that have not been peer reviewed, and neither actually recommend a complete set of numbers that should be incorporated into law. The data is simply not there to allow us to pick numbers that can be justified.
  3. If we pick numbers that are too high, we run the risk of having developers deciding to forego participation in the bonus program entirely. That means losing housing and jobs and losing the affordable housing we would have gotten under the current program. In a worst case scenario, it could even jeopardize the vitality of our South Lake Union economic engine. We like to think that Seattle is such a great place that our economy will keep thriving no matter what we do, but that is a very risky assumption. And it could very well be a mistake to rely on the assurance of one of our consultants that there are national and international developers that can bear significantly higher fees who are interested in South Lake Union, because that money could easily be headed somewhere else in a couple of years, while our local developers will still be here and trying to implement the next stages of the rezone.

There are also legal concerns about amending the SLU legislation’s affordable housing provisions. Inserting changes in this legislation could require a new title and likely will trigger additional Growth Management Act requirements for public process, delaying the legislation. There may be other process issues, such as SEPA requirements. It will be difficult to justify numbers chosen to modify the incentive housing program if those are challenged in court, because we do not have adequate data.

Finally, it is important to note that neither the City’s bonus/incentive program nor the legislative authorization has been tested in court, and we do not know where a court would go, since any litigation would likely raise as many issues as possible. While we should take steps to reduce our risk of losing a court case, the larger goal must be to keep us away from litigation. The stakeholder process used in 2001 to develop the affordable housing bonus program and set the initial level was successful in securing acceptance from the development community. If we act without a stakeholder process and take precipitate action to significantly increase even the fee-in-lieu, we are likely to face litigation, and the risks of losing the entire program greatly increase.

Mayor McGinn and I have reached agreement on creating a stakeholder process for formal review of the affordable/incentive housing program, led by an advisory group. The Mayor’s office has asked Tom Tierney, former director of the Seattle Housing Authority, if he would be willing to lead this group. We are preparing a resolution outlining the parameters of this review.

While waiting for the completion of the stakeholder process will mean that some projects will proceed under the proposed rules (essentially the same as those in downtown and the Denny Triangle), this rezone will be in place for many years, and only a small fraction of new development will be vested. DPD, the Office for Housing, and the South Lake Union community told the Council on February 25 that there is a commitment to meeting a goal of 37% affordable housing and that this is attainable under the current code. We have asked them for a road map to validate this; any changes to the affordable housing provisions made through the stakeholder process will make this even more likely.

The Council has the opportunity to move forward with legislation that will keep the boom going in South Lake Union and generate new housing, new jobs, new City revenues, and new affordable housing. We have a clear path to making changes to strengthen our affordable housing programs in a way that works from both a policy and legal perspective, and apply those changes to the vast majority of development in South Lake Union. I hope the Council will hang together and get those things done!

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