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Will developers bite at the carrot Seattle has at the end of its stick?

(File, Associated Press)
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The Seattle City Council took one step toward affordable housing Monday, but the city has a few more strides before its affordable housing aims hit the mark.

The city has been working on what Mayor Ed Murray calls a “grand bargain” &#8212 a series of zoning, fees and more with the goal of establishing 20,000 affordable housing units within 10 years. It is the result of collaboration between developers and other interested parties in Seattle. The council unanimously passed one part of that bargain, which focuses on new commercial development in the city.

“With this vote today, Seattle neighborhoods will become more sustainable, socially inclusive and economically diverse,” Seattle Mayor Ed Murray said following the passing of one piece of the bargain. “For the first time, private developers will build or contribute to affordable housing with every new apartment building or office building.”

The council approved part of its grand plan to create affordable housing in Seattle; the portion that focuses on the commercial side of things. The measure sets a fee schedule for new commercial development. Those fees will be paid into an affordable housing fund. It also gives developers an option to build taller structures to create more sellable space and offset their costs. Developers can also forgo the fees if they build affordable housing elsewhere to make up for what they don’t pay.

The fees, however, are not in effect until the council fully passes other portions of the grand plan. That won’t likely happen until after the new year.

The second action taken on Monday speaks to the other portions of the plan the council has yet to approve. The council passed a resolution that equates to a promise; it intends to pass an ordinance for an affordable housing program on residential side. That ordinance is expected to be considered early in 2016. It aims to force developers to make 5-8 percent of their offered housing available to low income residents &#8212 those making 60 percent of the area median income, which is just over $40,000, according to Capitol Hill Seattle.

Is it enough for developers?

For KIRO Radio’s Tom and Curley, whether or not the grand bargain will work depends on if the incentives for developers are attractive enough.

John Curley: What we’re going to do is give some incentives &#8212 carrot and stick &#8212 to the developers in Seattle. We are going to let you build higher, pack some density in, and in return you’re going to charge the rich people even more money to rent the apartments.

Tom Tangney: The idea is they will charge the developers, who will pass on that charge. We are in a building boom here … It’s getting more and more expensive to live in Seattle. So if you want to take advantage of this building boom, we are going to ask you to set aside 5-8 percent of your housing units, and/or pay a fee for offsite affordable housing. In exchange, it’s not all just stick, you can build bigger and larger building projects. When this was first announced, the idea to make developers to pay more, the developers went, “Hey wait a minute! Forget that!” So they came up with this grand bargain.

JC: If you’ve got 100 units to rent, and you want to be able to have some poor folks living in there, you have to have 8 percent affordable, the other 92 percent will carry the load. And you will pass on the additional cost to the other 92 percent … We keep talking about how we are hollowing out the middle class. If the average rent in Seattle for a two bedroom is $2,136 &#8212 more than $25,000 a year &#8212 you’re going to have to have two people making about $100,000 for the average rent. Then you have the poor folks coming in, making what?

TT: For an individual $37,680, and for a family of four it’s $53,760.

JC: So don’t make more money and don’t do better or you’ll lose your apartment. What about the middle class? What do you do for the middle class? The rich folks are going to pay more to support the others.

TT: It depends on how low you want to make the lower-middle class. If you are making almost $40,000, you might consider yourself middle class. But you’re right, this is a classic effort of the government trying to help the poorest. At what point is that cut off? Because at one point, one person is deemed officially poor enough to deserve an affordable housing discount, but above that there is that dilemma.

JC: The carrot has to be big and juicy enough in order for the developers to see it as advantageous for them. The developer is in no moral obligation to build houses. They can go to Normandy Park, who could say they will give all sorts of benefits if they build houses there. They just want a return on their investment. They don’t necessarily have to deal with the bureaucracy of Seattle.

TT: But that’s why they call it a bargain. They are getting something out of this. They would go back to the drawing board if every developer uprooted and went, “this is too restrictive.” It doesn’t look like that’s the case. They expect thousands upon thousands of units to be built over the next 10 years, and because of that, they see profit.

Council members want more

Despite the council’s ultimate approval of the measure, Council member Kshama Sawant said the city should take a stronger stand against large businesses in favor of affordable housing and to not make compromises. She told her fellow council members to be cautious of developers and to hold them to their word.

“The goal has to be making housing affordable for all. The goal is not ‘what is big business happy with,'” Sawant said. “While I completely support the measures we are passing today, I don’t think that we should stop here. Furthermore, if we believe that big developers will stick to their end of this so called Grand Bargain, we are fooling ourselves. Every example from the past shows that they will try to get out of these agreements as soon as they can.”

Sawant said that council members were already receiving emails from developer lobbyists, arguing that the fees were unreasonable and too expensive.

“In other words, we will see them wriggling out of the bargain the first chance they get,” she said. “It would be fool-hearted if we put any reliance on their word. We should be fighting to get this, but a lot more.”

Council member Mike O’Brien echoed Sawant’s call to do more, saying there was a lot more work to do.

“It’s great that we are almost there to take this step; that will require all new development in our commercial and multi-family zones to contribute and provide affordable housing for the first time in the city’s history,” O’Brien said, noting that all; income levels are having trouble affording Seattle.

“For folks that have experienced homeless or are currently experiencing homelessness, to folks that are going to school to working full time jobs, we are all struggling with how we manage to afford the city,” he said.

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