Mayor Election 2017: Lots of Candidates but Not a Lot of Leadership

Running for office isn’t easy. It’s more or less a gauntlet of trying to make and keep people happy. There is an element of sport to it since it is competitive. But anyone who has been through it will either say they love it or they hate it. Those that love it tend to be elected officials; those that don’t are, well, everyone else. As I said to one of the candidates last week when we interviewed them, whenever someone shows up and asks me for advice because they’re running for office, I generally ask the, “When did you stop taking your medication?” Too many people running for office suffer from a serious and incurable disease, Sally Field Syndrome; the desperate and urgent need to be liked (I came down with the disease in my 20s, but it’s in remission). Some politicians can manage and learn to live with the symptoms of the disease, but, sadly, for most its a terminal condition, and the desire to be liked and appreciated leads to all manner of bad decisions and policies the rest of us have to live with forever.

The latest crop of 21 candidates are a mixed bag of people with multiple disorders (see Alex Tsimmerman), including Sally Field Syndrome and socialism, but there are some candidates who have emerged as more lucid than others. The Master Builder Association’s Political Action Committee, the Affordable Housing Council (AHC) and members of Smart Growth Seattle interviewed 5 candidates, Senator Bob Hasegawa, Libertarian Casey Carlisle, former State Representative Jessyn Farrell, former Mayor Mike McGinn, and former United States Attorney Jenny Durkan. Carlisle is a smart and principled candidate, but he’d admit he is a a big long shot. Endorsements shouldn’t just be about electability, but for this post I want to focus on the 4 candidates that might emerge out of the primary.

I give a general view, then whether I think the candidate would be good for housing, and by that I mean would the candidate stop or pause the disastrous policy of Mandatory Inclusionary Zoning (MIZ) in the form of the City’s Mandatory Housing Affordability (MHA) Program? And does the candidate understand that builders already contribute millions of dollars in taxes and fees to support growth. In fact, builders are doing God’s work, building housing for people who need places to live in our city. It shouldn’t be surprising that none of the candidates expressed a deep appreciation of the work that builders and developers do, although some seemed more persuadable than others. Also I consider whether the candidate would survive the primary, although this is truly a big unknown since there are so many candidates that could gather just enough votes to squeak through the primary. So far, I don’t recommend endorsing anyone, but McGinn and Durkan are getting close.

And by the way, leadership to me means telling the voters they are wrong. That’s the single most important medicine for Sally Field Syndrome. It’s strong medicine, but it really does work wonders. 

Senator Bob Hasegawa

Hasegawa is a long time labor activist, and his campaign reflects this. For the most part, Hasegawa reflects the growth fatigue being experienced by older, more established single-family residents. He said in his questionnaire that, “growth is a regional issue and the responsibility for accepting growth should be shared throughout the region.” This is the ‘taking growth’ school of thought; growth is like radioactive waste, something that should be avoided and put somewhere far away where it can’t hurt anyone. Hasegawa thinks that the establishment of a public bank will solve the housing problem. I think a public bank is a good idea, but for it to back housing it would have to make loans to private developers and the constitution currently won’t allow that.

Good for housing?

Hasegawa would likely take a high inclusion and high fee approach to implementation of Mandatory Inclusionary Zoning (MIZ). Interestingly, after our conversation, it seemed to dawn on him that the vast majority of housing is built by smaller family owned businesses, not corporations. If elected, he might listen to reason on the impact of MIZ on housing production.

Survives the primary?

While Hasegawa has won elections in the Seattle sections of his legislative district, those are low turnout areas and he can’t raise money during the session, meaning he’s running a money free campaign; laudable but unlikely to produce a win.

Endorsement?

No. However, if Hasegawa makes it through the primary and is faced off against Cary Moon or Nikita Oliver, neither of which has any experience in government and who support higher fees and mandates, Hasegawa might be far more appealing.

Jessyn Farrell

You’d think that Farrell would be the ideal housing candidate with her background in transportation policy and extensive knowledge of the political process at the state and regional level. But Farrell has a stubborn urge to talk about developers and builders “making a contribution” to housing. When pressed, she just believes that we should tax new housing to pay for some subsidized housing, something that makes no economic sense. Like many so called “urbanists,” Farrell likes the politics of MIZ because, on the surface, it represents some kind of compromise. But she won’t acknowledge that economically, adding costs to housing will make it more expensive and she didn’t seem to understand that the fire hose of cash created by MIZ and extracted from market rate housing will wind up paying for very, very expensive subsidized housing that will take years to build.

Good for housing? 

Farrell has adopted the language of supply and demand, acknowledging that, indeed, increasing supply would help housing prices. But she has a kind of middle of the road approach to getting there. It was pointed out that Farrell would end up being kind of like the 10th Councilmember, sort of going along with the tide of well meaning but damaging legislation being passed lately by the Council. Like Councilmember Johnson, saying the word “supply” doesn’t mean you’ll do anything about that once elected.

Survives the primary?

Farrell plainly states that 20 percent of the primary vote comes from her 46th legislative district where she was elected and reelected to the legislature. In a crowded field this could make the difference.

Endorsement?

No. Farrell, like her north end colleagues Rob Johnson and Mike O’Brien are enamored of process and policy that addresses political problems rather than actual housing problems. We don’t need fees or taxes on new housing to fuel subsidized housing; if we produced more market rate housing free of restraints, prices would go down, options would increase, and the demand on the subsidized housing system would ease. But this isn’t palatable politically. Maybe Farrell will come around someday, but I’m not betting on it.

Mike McGinn

McGinn seems to be running a somewhat less intense campaign in the past, relying, it would seem, on the fact that some people think he’s still Mayor. This might seem silly, but it’s a real thing. Lots of people in Seattle remember McGinn, and he’s counting on them to give him another shot, and it’s a reasonable strategy. McGinn said he didn’t necessarily want the endorsement of builders; he seems to be building a platform based on the fact that the Grand Bargain was not inclusive. He’s right. But it wasn’t just neighbors that were excluded, but the vast majority of builders and developers who build housing. He seems prepared to stop MIZ in its tracks.

Good for housing?

McGinn gets annoyed when I say it, but he’s playing off the neighborhood opposition to MIZ in the form of Mandatory Housing Affordability. I don’t have a problem with that. The end of the MHA program is good for housing policy, period, whether it dies from wounds inflicted by angry, entitled neighbors or our inevitable lawsuit. As Tommy Lee Jones would say, “I don’t care!” Just kill it or at least slow it down. The problem is that the Council has embraced MHA and would see McGinn’s efforts as an attack on their agenda; I’m not sure he can stop it.

Endorsement?

Hmmm. McGinn would likely be very disruptive to the status quo at City Hall. I think that’s a great thing. Could he make things worse? Possibly. But as it stands now, McGinn would likely create enough disruption that it could buy us some time and a reprieve from MIZ in 2018.

Jenny Durkan

It was notable that of the 5 candidates we talked to, Farrell and Durkan were the only ones with staff accompanying them, and Durkan’s was the only one to sit next to her during our talk. Durkan is well backed by City Hall regulars and by big developers, like Vulcan. When I pointed out my concern about that she pushed back saying, “How do you know I met with Vulcan first?” I said that I read it in the papers. She didn’t deny it but didn’t like the fact that I brought it up. The bad news about Durkan is that she is new to land use and housing policy, and the people she knows and who are supporting her candidacy, have terrible and self serving notions about what to do about housing issues.

Good for housing?

The good news about Durkan is that she is intelligent and experienced and I could see her recognition that MIZ is problematic economically. I think of all the candidates, while the most poorly advised, probably has the greatest potential of renegotiating the Grand Bargain. While this would like be simply figuring out how much more ransom non-profits want paid, I think what could emerge is a voluntary program that was not extortionary. But big developers downtown like Vulcan and the Housing Development Consortium would likely still be the dominant forces, a terrible thing for housing policy.

Endorsement?

We’ll see. Durkan isn’t used to being hassled as evidenced by her evident but low-key annoyance at my pointed questions. The questions are uncomfortable; Vulcan and the people in the room who signed the Grand Bargain support her. But she’s going to have to open the door and listen to the people that actually build housing. I asked her, very explicitly, to stop MIZ, period. I also handed her a copy of RCW 82.02.020 and urged her (she’s a lawyer!) to read it a few times. Durkan is probably the only candidate running that has the ability and smarts to stop Seattle’s slide into liberal, progressive oblivion. But will she?

MHA in the International District is Unfair and Ignores Complexity of the Neighborhood

June 14, 2017

To:                   Councilmember Rob Johnson, Chair, Planning Land Use and Zoning Committee
From:             Roger Valdez, Director, Smart Growth Seattle
Re:                   Implementation of Mandatory Housing Affordability (MHA) in the
                          International District (ID)

We’ve made it abundantly clear through comments in the media, public testimony, and in personal meetings with you and your staff that the Mandatory Housing Affordability (MHA) Program is

  • Infeasible – many projects won’t qualify for financing because of additional construction costs, inclusion requirements or fees;
  • Inflationary – when financing is possible it will be because rents or prices will have risen to rationalize the additional costs and delays created by the mandates or fees; and
  • Illegal – the program is in clear violation of RCW 82.02.020 that limits charging for additional square footage to voluntary programs.

Nevertheless, the Mayor and Council have chosen to press ahead with this proposal in the International District and these are our concerns.

The MHA program as proposed in the International District has the following problems. The MHA proposal

Is unfair – Fees are much higher in the International District than for comparable neighborhoods like South Lake Union and Downtown. For almost identical zones, DMC 85, for example, the charge for in lieu fees in South Lake Union is $12.75 per square foot while in the International District the charge has been set at $20.75. This is inequitable. Is the intent to discourage development in the International District and promote more housing in Downtown and South Lake Union? This is the economic message you are sending to producers of housing with these prices.

South Lake Union and International District Fee Comparison

Ignores the Special Review District (ISRD) – The International District, unlike most of Downtown and all of South Lake Union, is governed by rules implemented and enforced through the ISRD. This adds yet another layer of complexity and costs on the creation of new housing in the neighborhood. Why would the Council further complicate this with additional fees and requirements? If projects go forward, they will certainly be even more expensive for people who need housing.

Ignores existing programs – The International District has a myriad of incentive based options for transfer of development rights and potential, tax credits, special tax valuation for historic buildings, and other programs that are both complex and challenging to implement for housing producers. Will the Council produce a better statement of how these programs might be impacted by the implementation of MHA in the neighborhood? Why wasn’t this work done so that these impacts could be more transparent to housing producers, advocates for preservation, and the neighborhood at large?

The Mayor and Council are charging ahead with a program that is ill advised and counter productive in the first place. The MHA program will boost overall housing prices in the city while generating far fewer units that could be created by market rate builders if freed from the existing limited zoning and a growing thicket of regulations, rules, fees, and mandates being imposed by the City.

We suggest that you consider:

A voluntary program – This makes particular sense in the International District, a is far more complex neighborhood to build in than South Lake Union, for example. This would allow the City to understand what kind of zoning increases would incentivize more housing creation and at what point fees kill projects or make them more expensive for consumers.

The complexity of the neighborhood – The International District is at the heart of Seattle’s long history and the Council has not done enough work to consider how the imposition of yet another set of rules and regulations will work or not work with the many, many other programs that impact housing creation in that neighborhood.

Waiting for a new Mayor – The city will have a new Mayor in less than six months; doesn’t it make sense to hold off on such a complex and possibly dangerous proposal when a new Mayor has yet to have an opportunity to weigh in.

Finally, we would urge you to slow down the movement of legislation to implement the MHA program. The political objective of the Grand Bargain has been achieved: the signers of the deal who build in Downtown and South Lake Union can move ahead with their projects and the non-profits who signed the deal will get the fees. It’s time to take everyone else in the city seriously as they express honest and deep concern about the impact that this program will have on their futures and the production of new housing in the city.

Sincerely,

Roger Valdez
Director

Impact Fees? Increase and Raid REET? Only Poor and People of Color Will Suffer.

Here we go again. The Seattle Times ran a guest editorial titled, “Builders, not residents, should pay for Seattle’s explosive growth.” Now people are buzzing about impact fees on social media. Worse, some candidates for Mayor are talking up the idea. Please stop! We don’t need impact fees. We have other resources like the Real Estate Excise Tax (REET) that pays for many of the things people claim we need impact fees to pay for, and some in Olympia are proposing to take those funds away. It’s vogue for people at the safety of their keyboards or looking for applause lines on the campaign trail to talk up impact fees. And some see REET as a treasure trove for subsidized housing. These measures would just boost housing costs for the people that are most vulnerable to higher housing prices.

And who are the people who are having the hardest time paying rent and getting a foothold in the housing market? Here’s a quote from a Fortune story about a recent Zillow report on housing costs:

“African-American and Hispanic renters find themselves in a catch-22 situation—while owning a home is a great way to build wealth, you need to save up some cash to be able to buy. If you’re spending close to half of your income on rent, saving up that down payment is going to be incredibly difficult,” Zillow’s chief economist Dr. Svenja Gudell said in a press release.

Developers, ultimately, don’t pay fees! Renters and first time home buyers do. Write this down and put it on your refrigerator or on your computer monitor! 

When government sets about to punish market rate developers and make them pay their “fair share” the only people hurt are people with fewer dollars to spend, and most often those are people of color. And these groups are most often touted as the victims of new development. Pretty ironic, isn’t it. Single-family homeowners clamoring for more fees and taxes in the name of the victims of growth, poor people of color who get displaced; but the fees make the problems even  worse.

And, by the way, efforts to drain the one general source of funding for things people want to use impact fees for, the Cumulative Reserve Fund (CRF) are still underway in Olympia (see HB 1797). Seattle’s CRF is funded by REET revenue. Taken together, taking away REET funds and imposing impact fees to replace those lost funds which is almost inevitable, would raise prices for poor people in the name of building them units, maybe, sometime off in the future. It makes no sense. 

Before anyone touches the money from REET or considers impact fees we should get a measure of why housing costs so much to produce; any changes in REET should be tied to the findings of our proposed audit funded by a proviso in the Senate budget.

Anyway, here’s my Facebook rant.

The impact fee notion is harder to put out than an oil slick fire. It keeps coming back over, and over again. First, impact fees (and all fees, taxes, and mandates) boost the price of housing for people who need it, period.

Second, impact fees are narrowly construed; that is they can ONLY be use for “impacts” near by the project. Want impact fees for schools? Then you need to show, using math not stories and bullhorns, just how much that apartment building will increase enrollment. Or demand for a park down the road. Or for intersection improvements.

The fees are prorated, that is the fee doesn’t pay for all the improvement, just the share of the improvement that will benefit the residents (who will pay for the benefit with higher rent).

And the fees are not a freewheeling punitive charge that goes into a fund that can be used to solve the social problems of the day, including for housing. It’s illegal.

Finally, new development and growth DOES pay for needed improvements to infrastructure through collection of the Real Estate Excise Tax (REET). The REET generated about $76 million this year, $26 million of which goes for things like bike and walking paths and other SDOT projects. The Housing Development Consortium and their allies are trying to raid this fund in Olympia for housing. Keep in mind that if they took ALL the money in the sub fund created by REET it could not have paid for the $92 million dollars it cost to build 200 units of housing on Capitol Hill (12th Ave Arts $47 million) and Beacon Hill (El Centro $45 million)

If they get their hands on this cash what will pay for the infrastructure? Yep, impact fees.
So we’ll have MIZ fees, REET fees, then impact fees, all of which will be paid for by renters and new home buyers.

I heard both Jenny Durkan and Jessyn Farrell talk about impact fees. Please don’t do this if you’re elected and don’t promise this on the campaign trail. We’re already lighting an inflationary fire with MIZ. Impact fees aren’t needed. And leave REET as is, a fair widely distributed tax that pays for needed infrastructure.

Oh and that new sidewalk in front of that new housing development? That’s paid for BY THAT DEVELOPMENT!

Let’s deal with the problems we’ve already created with MIZ before we go off looking for more ways to increase housing prices in the name of affordability. Please!

There are two posts I’ve done on REET to argue against more fees, one is older and about the linkage tax proposal and the other is about more recent efforts to raid the REET for housing.

Design Review Update Will Make Housing More Expensive

The City is currently considering changes to the design review process. In short, creating a square footage threshold for design review is a good idea and something we’ve been asking for a long time. In fact, when the fight over microhousing was about whether it ought to go through design review, we argued that since the overall size of a project was the only actual “impact” on a neighborhood in terms of design, square footage made more sense that unit count. The City’s latest proposal makes this shift. But as you’ll see in our letter below, that’s about all that is encouraging here. This was put together with significant help from people who know how to build housing and design review process, especially David Neiman.

———————

June 12, 2017

Dear Mr. Podowski,

We appreciate the opportunity to share our thoughts on the proposed changes to the City’s design review process. It’s important to state up front that we feel that overall, the design review process has ceased to become, as stated on the City’s website, “one of the tools we use to create a better city,” but rather a costly and onerous process that raises the price of housing for consumers. Design review should add value to a project, but too often it adds time and costs while reducing the number of housing units created. We think the proposal needs significant changes to promote more housing production, not less.

The best part of the proposal is using square footage as the threshold for requiring design review. This will put all townhouse and row house projects on equal footing. But, it is critical to note, that while the thresholds for design review change to square footage, SEPA thresholds are still based on unit count, so the overlay of complexity and perverse incentive to reduce housing production and supply will continue.

There are a myriad of problems with the rest of the proposal.

The proposal creates a threshold for “project complexity” which would include those projects outside the Urban Centers or Urban Villages, zone edge conditions, or adjacent to single-family zones.  This complexity threshold would serve to increase the level of design review process required. Why would the City endeavor to enshrine single-family zones by making the process of building near them more expensive and complicated? This favors wealthier single-family home owners over new people who need more affordable multifamily housing.

Additionally, the proposal adds more public process prior to the Early Design Guidance (EDG) meeting.  This step is ill defined in the legislation and the design review process is already an extensive and staff intensive, facilitated community process; this is why there is little incentive now to go through all that process. It is unclear what this additional process would add other than costs, more documentation, and staff work from both the City and the producer. We suggest dispensing with it.

Here are our more specific concerns:

  • We question the wisdom of eliminating Streamlined Design Review (SDR) as an option since it is the one form of design review that actually works reasonably well with regard to housing production.  We should retain SDR and use it for the lowest category of review, and the threshold for that should be raised to 12,000 to 20,000 square feet. Opting in to SDR to get a little bit of design flexibility is a great option for many small projects. The step up from “no process” to “administrative design review” is punitive and would push good and innovative ideas to the back of the line, something SDR was created to avoid. Encouraging innovation is something that the Housing Affordability and Livability Agenda (HALA) Committee encouraged.
  • The thresholds haven’t been raised and in many cases they have been lowered.  The so-called, “hybrid” design review could in fact end up being worse that full design review. With this proposal, anything larger than 10,000 square feet will require a Type II designation that is exposes projects to an appeals process, a big disincentive.
  • As mentioned above, the complexity measure seems designed to protect the residents of single-family homes by enshrining that zone with special considerations, triggering more extensive reviews and an unlimited number of public meetings for projects adjacent or across the street from single-family. Again, the City is favoring stasis on behalf of people who already live here at the expense of new people who are trying to find housing.
  • Projects with 8 units that avoided design review under the old system will now likely be over 10,000 square feet, a threshold that will lead either to Administrative Design Review (ADR) or to the Hybrid system and at least $50,000 in additional expense, up to a year of timeline, and exposure to appeal under the Type II designation. Obviously, and when taken together with the complexity factor added by adjacency to single-family zones, this creates an incentive to create fewer numbers of units on a site.
  • For small apartment producers, those projects less than 20,000 square feet with a significant percentage of Small Efficiency Dwelling Units (SEDUs), would have typically been in ADR or SDR. Now SDR is unavailable, and they may end up in Hybrid design review that is not a benefit for housing production as we pointed out above.
  • The misalignment of SEPA and design review thresholds creates more potential for a Type II process, and that creates an incentive to under-build a site to avoid triggering more expense through a longer process, exactly the opposite of what the City should want.

We suggest thresholds for design review that will be beneficial and encourage more housing production.

  • Less than 12,000 square feet – no design review
  • 12,000 -20,000 – SDR
  • 20,000 – 40,000 – ADR
  • Greater than 40,000sf – Full design review; we don’t see the benefit in process improvement or costs savings with the Hybrid review over full design review.

This approach to thresholds would mean a 12,000 square foot project, most 8-unit townhouse and row house projects, out of the design review process completely.

The 20,000 square foot threshold will keep most small infill apartment projects in SDR, a process that has, as we pointed out, been working pretty well. And, finally, the 40,000 square foot threshold will keep most mid-scale apartment project in an administrative path, out of the public process.

What we’re suggesting is consistent with what people who build and finance housing know will improve overall housing production and provide more supply for burgeoning demand in our city. As city, together, we can make housing production a priority, consistent with the broader recommendations from the HALA Committee, especially Section IV of their recommendations, or we can continue to allow design review to slow and limit production that will contribute to increases in housing prices.

Sincerely,

Roger Valdez
Director

Making the Case for Density in Portland

We’re pleased to have Tim DuBois as a guest here to share his presentation and his experience taking on the task of explaining the benefits of density to his local neighborhood group. Tim got in touch back in March and in an email he said, “I am hoping to start a grassroots movement to end zoning in Portland. I am a board member for a neighborhood association here and am frustrated with the constant desire of residents putting up roadblocks to development that could possibly ease our housing crunch.” 

My neighborhood in Portland (Sellwood, Moreland also known as SMILE for Sellwood Moreland Improvement League) is a classic streetcar suburb filled mainly with small bungalows. If this neighborhood was dropped on the small town in Michigan I grew up in these houses would be close to $150,000. Yet here in Portland they are worth $500,000 or more. I see this as failure of land use policy.

Yet for current homeowners land use policy would not be called a failure but rather very beneficial. The convergence of this disconnect, my move to the world of urban planning, and a trip to Paris all told me I need to do something more active about the problems associated with our restrictive land use policies. I decided to present to my neighborhood. Fortunately our neighborhood association has monthly meetings and are open to differing opinions (also I am on the board). The President was more than happy to get me on the schedule and give me the appropriate time, for which I went over anyways.

Being able to have these conversations can be extremely helpful. I would encourage anyone to try and do a similar thing with their neighborhood group as I did. Although helping to change minds proved to be difficult, at the minimum they were very respectful and clearly appreciated my opinion. By the end you may feel the same rewarding feeling I did.

If you watch the video start at 1:30 and please be patient with me.