Downtown Seattle is among the areas of the city where, beginning next year, developers will have to pay fees to fund affordable housing.
Downtown Seattle is among the areas of the city where, beginning next year, developers will have to pay fees to fund affordable housing. West Coast Scapes/Shutterstock

With time running out before an brand new Seattle City Council takes office, the current council today set the stage for two major housing affordability policies that will come to fruition next year.

You may remember the so-called "Grand Bargain"—a truce of sorts between developers and the city about how to require developers to build more affordable housing. That agreement was the centerpiece of the recommendations that came out of the mayor's housing affordability task force, known as HALA. Today's votes begin the process of enacting that bargain.

As a refresher, the bargain was essentially a group of developers agreeing not to sue the city over fees charged on developers to fund affordable housing if the city only applied those fees to commercial development. Those fees are known as "linkage fees" and that was a compromise from the council's original intention to pass linkage fees on all development, commercial and residential.

In exchange, to try to get some affordability out of residential projects, too, the bargain spelled out the city's plans to create a mandatory inclusionary zoning program. That program will give developers an extra floor of height on multifamily projects but will require them to set aside some of the rental units in those projects as affordable for people making 60 percent of the area median income or less. (That's $37,680 for a single person and $53,760 for a family of four.)

Today, the council approved a bill to create the first piece—the commercial linkage fee scheme—and a resolution laying out a plan for the second piece, the mandatory inclusionary zoning.

First, let's look at the commercial linkage fee program: This policy won't take effect until next year, when the council is expected to approve upzones allowing more density in certain parts of the city.

They'll start with downtown, South Lake Union, the University District, and some small areas of Broadview, Bitter Lake, and Haller Lake. Those upzones come first because they were already in progress before the HALA process began, according to Council Member Mike O'Brien, who's led much of the council's work on these policies. (Upzones take a lot of time and bureaucratic process to become reality.) Once those first upzones take effect, the city will start charging the linkage fees on commercial development in those areas. In 2017, the council will take up even more upzones in other parts of the city and the linkage fee will then apply in those newly dense areas.

Once the upzones are in place, the program will charge developers between $8 and $17.50 per square foot on projects in downtown and South Lake Union. Those fees will go toward nonprofit organizations that build affordable housing. If developers don't want to pay the fee, they could set aside between 5 and 10.6 percent of that square footage as affordable housing instead, but since these are commercial projects, they're expected to more often opt for the fee. Outside of downtown and South Lake Union, commercial developers would have to pay a little less—between $5 and $10 per square foot—or set aside between 5 and 6.1 percent. (Specifics about how much they pay or set aside are based on what type of zone they're building in.)

Then there's the inclusionary zoning piece. Again, mandatory inclusionary zoning requires developers to include affordable rental units when they build new multifamily housing projects. In exchange, they get to build taller buildings. Today's resolution is the council reiterating its plans to create an inclusionary zoning policy, but it's non-binding. The actual law will come early next year.

During public comment at today's council vote, most of the speakers praised the linkage fee and inclusionary zoning as ways to create more affordable housing in the city. (This has been the trend at most of these HALA-related meetings, where the pro side is actively mobilizing to get people to show up.) Most council members also lauded the two pieces of legislation as the first steps in what promises to be a lengthy process of approving HALA's long list of recommendations.

But, like always, not everyone is happy.

Shortly before the meeting, developer lobbyist Roger Valdez, who has criticized the "Grand Bargain," sent council members an(other) e-mail questioning the plan. In that, Valdez argued that inclusionary zoning requirements could make neighborhood housing projects too expensive to build. If that's true, Valdez argues, it could actually slow housing production and undermine HALA's goal of creating 50,000 new housing units over the next decade. As Ansel has explained before, Valdez says the smaller-scale developers he represents weren't in on agreeing to the bargain. And it only takes one developer who's not on board to sue the city and fuck the whole thing up.

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In response to Valdez's e-mail, Council Member Kshama Sawant—who has called for higher linkage fees on all types of building projects in the city—brought up doubts about whether developers will stick to the plan.

“Our goal has to be affordable housing for all, not what is big business happy with," Sawant said at today's meeting, drawing a parallel to business interests that sued Seattle over its minimum wage increase despite the business-labor compromise struck on that issue. "We will see [developers] wriggling out of the bargain the first chance they get.”

So, there you have two doomsday predictions from opposite ends of the political spectrum and a bunch of pretty happy people in the middle. The next big step will start early next year, when council members will consider the upzones necessary to translate today's votes into actual affordable housing.