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Seattle struck a 'grand bargain' on housing. Initial results are coming into view

Daniel Beekman, The Seattle Times on

Published in Business News

Whether on-site or elsewhere, affordable units created through MHA must have rents pegged to income levels well below the area median. Last year, Seattle invested in six projects, ranging from Lake City to Mount Baker, including projects for seniors and families by Mount Zion Baptist Church and First African Methodist Episcopal Church.

"The MHA program is on track," said Emily Alvarado, director of the city's housing office. "We don't know what will happen with the real estate cycle over the coming years, but our early production has been consistent with the overall vision."

By another metric, the program is less on track, because the program was supposed to create a healthy mix of affordable units on-site. Initially, City Hall projected that 1,500 could be created that way over 10 years.

MHA requires developers to dedicate 2% to 11% of their projects to affordable units when they choose the on-site option, depending on the location. The city didn't expect downtown developers to do that, and developers of small-scale projects like town houses warned they wouldn't either, so the 2020 results aren't a complete surprise. Most projects subject to MHA last year were under 10 units.

Still, 21 on-site units in 2020 is less than former Councilmember Mike O'Brien expected when he helped pass the program, he said. The on-site option yields mixed-income buildings "where development is happening," he said. "Maybe others had a more cynical view, but I genuinely hoped we would get a mix."

That doesn't mean O'Brien thinks MHA has failed. The ultimate mission is to create affordable housing, and the fees will do that, he said. "This is a success," he said.

 

The on-site option can be important politically, illustrating how development and affordable housing can work hand-in-hand, said Rick Jacobus, a consultant who worked with Seattle leading up to MHA's adoption. Yet there are significant advantages to the fees option, Alvarado said. Fees can be combined with non-city financing, yielding two or three times more bang for the buck, she said.

The city can distribute the fees to affordable-housing projects in strategic spots, like near transit stations, Alvarado added. The city also can help fund projects with units large enough to accommodate children and grandparents, whereas most market-rate buildings have small units, she said.

The fees option can cause problems when the affordable projects that receive the dollars are all sited in low-income neighborhoods, exacerbating economic segregation. But Seattle has a track record for distributing dollars across many urban villages, and research indicates that mixed-income neighborhoods matter more than mixed-income buildings, Jacobus said.

The scant on-site construction indicates City Hall set MHA's fees too low, said Leslie Morishita, the real estate director at InterIm Community Development Association. On the other hand, nonprofits like InterIm can use the fees to construct housing for residents with even lower incomes than the on-site units are required to serve, Morishita added.

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