Incentive Zoning: A Good Plan For Affordable Housing?

27914810_71858ff740.jpgThe need for affordable housing in urban areas is one issue that, while linked to climate change and environmental preservation, rarely gets its share of the spotlight. During a conversation I had earlier this year with Gene Duvernoy, president of the Cascade Land Conservancy, in fact, Duvernoy called affordable housing "one of the most unrecognized and most major environmental problems we have."

In a nutshell, when we don’t provide housing in urban areas for all residents, including those who work at or near the minimum wage, we are forcing sprawl, and all of its environmentally destructive consequences. Yet for a variety of reasons -- lack of pure market incentives for developers, limits on federal subsidies, and even NIMBY-ism -- creation of affordable housing doesn't come close to meeting demand.

So how can we take advantage of all of the growth currently happening in our city to provide more affordable units for workers and families? There's been a lot of buzz in the news recently about the City of Seattle's draft incentive zoning code provisions, a piece of legislation attached to House Bill 2984 (PDF) that is designed to promote the creation of affordable housing in Seattle.

The incentive, authorized by the City Council on December 15, works like this: Developers who want to build multi-unit dwellings that are taller or more densely populated than current zoning allows – a move that increases the value of their property by increasing residential space – can get the City's permission to do so by agreeing to sell or rent 20 percent of the new housing units at affordable rates. "Affordable rents" are defined by the City of Seattle as 30 percent of the income of Seattleites earning up to 80 percent of median income for their household size; "affordable ownership" is 30 percent of the income of Seattleites earning up to 100 percent of the median.

Of course many workers, it's worth noting, earn well below the median. The City reasons, however, that government-subsidized affordable housing is created often for people earning below 60 percent of the median. Affordable "workforce housing" is needed to fill in the gap between those who are eligible for subsidized housing and those workers who still cannot afford to buy a home in Seattle at market value, and that gap seems to be where the incentive is pointed.

The program has been critiqued as a "hazardous" tax on new development by the Seattle Times, a position that was promptly thrashed by Dominic Holden at The Stranger. I set out to learn more about the incentive and the controversy.

Calling it a tax, says urban planner and Columbia City resident Ashely DeForest (who's also a Worldchanging contributor), is a little ridiculous, given that the incentive is entirely optional to developers.

And, she adds, there's significant benefit: currently, developers who want to build beyond the maximum height and density of the underlying zone need to petition separately for a site specific zone change, which involves a lengthy bureaucratic process with no guarantees for approval. The incentive would allow developers to effectively bypass this lengthy process by providing agreed-upon city amenities in exchange for permission to increase the height of the building.

Developers can also choose to pay a fee in some cases, in lieu of providing units, to earn the right to special building permits. The money will be directed toward a fund the City can use to build affordable housing itself, in designated areas. Because many studies and recent cases suggest that affordable housing becomes a more socially sustainable resource when it is mixed in with market-rate housing, however, it is preferable that developers incorporate the units into their own buildings or in the nearby neighborhood. City-funded affordable housing developments tend to be, out of necessity, segregated from market-rate residential development.

Finally, for all the heated discussion it has stirred up, the incentive system won't actually affect that much of Seattle, at least not yet. The ordinance, designed as a "general tool" for encouraging affordable housing, is currently limited only to the Seattle Mixed zoning district. In the future, the City may elect to expand the use of the tool to other zoning districts. At that point, the incentive may need to be redesigned so that it will, ideally, encourage appropriate neighborhood amenities (for example, First Hill, where there are already a disproportionately high number of affordable units, might benefit more from the creation of a public park).

The incentive zoning system is not, however, a catch-all method for generating affordable housing at the scale Seattle needs, nor is it without flaws. For one, the extent to which this incentive could really benefit low-income residents who need the housing is currently pretty constrained. The ordinance is so complex that it seems unlikely that it will be taken advantage of by as many developers as could really benefit from it, and thereby contribute to the community. And the current limits on the ordinance means that only a few specific areas -- one being South Lake Union, for example -- fall under its jurisdiction. It's also worth noting that the definition of "affordable" linked to the incentive is well above what most people in the market for "low-income" housing can reasonably pay.

The incentive zoning will not provide all of the affordable housing that Seattle will need in the years to come, as the region's population continues to grow, and energy expenses make it financially as well as environmentally unsustainable to live in the suburbs. City Councilmember Sally Clark, who supports the bill, acknowledged in an interview with KUOW's Ruby de Luna earlier this week that it's only "one modest answer" to the complex problem of providing housing with dignity for all Seattle residents.

Photo credit: flickr/Chas Redmond, Creative Commons license.

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