A coalition of several developers filed a lawsuit in King County Superior Court on January 15 that would make Seattle, already booming with construction cranes, more friendly for developers. Their issue? One of the city's affordable-housing programs.
Since 2006, the city has struck a deal with developers in the downtown core: In exchange for setting aside a few modestly affordable units or paying fees toward a city housing fund, developers get to build taller buildings. For example, developers could build a 400-foot tower where they'd otherwise have to keep it under 300 feet. The Seattle City Council raised those fees by about one-third in December 2013. In their lawsuit, which cites three Supreme Court decisions, the developers claim that fee hike is "an out-and-out extortion."
So they're asking a judge to invalidate that higher fee, making it cheaper and easier to build the tallest buildings allowed downtown—while throwing even fewer scraps to the city's growing affordable-housing needs.
"This just shows developers are not willing to do their fair share," says Rebecca Saldaña of Puget Sound Sage, an affordable-housing advocacy group. She says Seattle's taxpayers fund a housing levy, and politicians have eased other development requirements. This latest uptick in fees, Saldaña says, is "really just asking developers to come up to speed."
In many ways, this complaint represents the city's worst housing fears. For years, there have been whispers that this kind of program may not withstand a legal challenge. Washington State law is stacked heavily in favor of property owners. If the city loses, it could send lawmakers back to the drawing board to figure out how to keep building rentals that working-class people can afford.
A victory by developers could also change the landscape of who can live in Seattle, according to lawmakers at city hall. This program is intended to incentivize what's called "workforce" housing, for people who make around 80 percent of the area's median income, or about $49,000 a year. Lose this tool, says city council land-use chair Mike O'Brien, and you could see a dramatic shift. While other programs fund low-income housing and the market continues to produce high-rent units, the workforce in the middle could get squeezed out, "creating a city of really low-income and wealthy folks," says O'Brien.
When this goes to court, the judge will be considering a law passed last December. After the city council dramatically raised heights in South Lake Union with new affordable-housing regulations, the council extended those rules downtown, too. Now developers can build extra-tall towers if they either toss in a few affordable units or pay into the city's housing fund so the city can build some later. But in the hopes of making it more appealing to developers to include affordable units in their own buildings, the council raised the fees from $15.15 fee per square foot of the extra floors to $21.68.
This group of unnamed downtown developers, calling themselves the "Koontz Coalition," says in their lawsuit that the city is charging them an unnecessary fee to exercise their constitutional right to develop their land. They claim that excessive fees for affordable housing are not directly related to housing demands that their projects create. Developer Greg Smith, whose Second and Pike project is named in the suit, did not respond to requests for comment by press time.
The city, meanwhile, has always said this is just an optional program for extra height, which can be avoided by building to the base height—still hundreds of feet in these neighborhoods.
For example, Smith's Second and Pike project is a proposed 400-foot tower, with 290 residential units above retail and restaurant space. Normally, the height limit there is 290 feet. Under the new fee regulations, in exchange for that extra height, Smith would have to pay a one-time fee of around $2.5 million into the city's housing fund. The lawsuit says the city should revert to the former requirements, which require paying only $1.8 million. (In an odd twist, Smith will pay the $1.8 million either way, because he applied for a permit under the old rules.)
"My hope is that most people won't actually pay the fees," says O'Brien. "They'll just provide the housing" inside the new construction. In Smith's building, that would mean setting aside 20 or so moderately affordable units—around $1,300 a month for a one-bedroom apartment.
Clearly, even that isn't particularly affordable, and 20 apartments don't amount to much housing. And the city knows its program isn't good enough. Which is why housing advocates, developers, and lawmakers have been meeting since last summer to overhaul the program.
But if the developers challenging these rules opposed the higher fees, they certainly didn't tell the city last year—no one spoke against the rules at the numerous public meetings and hearings, and O'Brien said the one person who contacted him in opposition declined his offer to meet and discuss it.
Now the city is going to court, which O'Brien calls "maddening."
"Litigation is an ineffective way to make policy," he says. "Especially in a city that really prides itself on having an open and transparent process."