On Monday, June 10, after the Seattle City Council passed the $86 million housing levy, Housing Committee Chair Richard McIver was one of several self-congratulatory council members waxing eloquent about his commitment to low-income housing.
However, less than 48 hours later, at his June 12 committee meeting, McIver proposed an ordinance that critics say shirks low-income housing guidelines in the form of a $6 million giveaway to a local developer. The Housing Committee voted 5-1 (McIver, Jim Compton, Jan Drago, Judy Nicastro, and Heidi Wills versus lone dissenter Nick Licata) to download nearly $6 million worth of square-footage building credits to the R. C. Hedreen Co.--old credits the company wants to use for one of its current projects, at either Eighth Avenue and Olive Way or the Greyhound bus depot site.
Under the "bonus program," the city gives developers the right to develop additional square footage (i.e., credits) in exchange for a promise to fund mitigating public benefits like low-income housing or historic preservation near or related to the expanded development. (For example, if you get the rights to build a bigger hotel, you could be required to build some nearby affordable housing for the low-wage workers who work at the hotel.) The council even amended the program last year to put a greater emphasis on low-income housing [Five to Four, Josh Feit, Aug 23, '01]. At that time, Hedreen had pushed for an amendment of its own, one that would have allowed the company to cash in about $5.8 million in expired building credits. The amendment went nowhere fast.
Last week, however, McIver reintroduced the idea in committee and passed it on for a June 24 final council vote.
Here's the story: Hedreen first got rights to the credits in 1994 when the company entered into a $15 million contract with the state to expand the Washington State Convention & Trade Center downtown. Among other things, the deal stated that Hedreen would get the rights to bonus points (the $5.8 million in credits) to be used at the convention center site, which the state had earned by building 44 units of affordable housing around the corner at Seventh and Union. Hedreen built the Elliott Hotel at the convention center, but never tapped the square-footage credits.
The credits expired in 1998. (Credits related to mitigation projects have a fixed life span.) Now Hedreen wants the council to pass an exemption so the company can apply those old square-footage credits to one of its current projects. Hedreen argues that it still has the right to the credits because unique circumstances prevented expanded development at the Elliott back in '96. "The bonus was earned and promised," says David Thyer, vice president of operations for R. C. Hedreen. "We're just trying to put those credits to use."
There are several problems with Hedreen's wish. First of all, Hedreen's "credits" are based on 44 units of housing that were built with public dollars: $2.7 million from the state and nearly $500,000 from the city. "Hedreen's getting credit for affordable housing that public dollars paid for," dissident council vote Licata says.
Second, there must be a "linkage" between building credits and public benefit projects. Again, the bonus program system allows expanded development only in exchange for providing public benefits that mitigate the impacts of that expanded development. So, critics think the credits shouldn't be transferable. For example, Hedreen should have to build low-income housing near Eighth and Olive to earn building credits at any Eighth and Olive development.
"What we're talking about here is $6 million in housing mitigation that [Hedreen] is not being required to fund," says Sarah Jaynes of Seattle Alliance for Good Jobs and Housing for Everyone. "It's corporate welfare."
Indeed, it's important to remember that the credits in question only came into existence thanks to a publicly funded project--the convention center. As labor activist Dana Wise asks: "Did [Hedreen], who built the Elliott Hotel right on top of the new convention center, already benefit from the publicly funded convention center expansion?"
Funny how on June 10 the council asked average voters to approve a $49 a year property tax hike to build low-income housing, while on June 12 they gave the green light to legislation that may let a developer ignore a $6 million obligation to low-income housing.
