Should Seattle Developers Pay More Fees For Affordable Housing? | KUOW News and Information

Should Seattle Developers Pay More Fees For Affordable Housing?

Oct 20, 2014

Low Income Housing Institute Director Sharon Lee shows off a watermelon grown by one of the tenants at the Denny Park Apartments.
Credit Joshua McNichols / KUOW

Sharon Lee of the Low Income Housing Institute stands on the back deck of the Denny Park Apartments in Seattle’s South Lake Union neighborhood.

She counts cranes: "One, two, three, four, five, six." And that's just on this side of the building.

From her vantage point, the neighborhood looks like one big construction site. Most of those projects will fetch high rents. But this building is an island of affordability.

The people who live at the Denny Park Apartments have relatively low-paying jobs. They work as cooks, nurses – there are even a couple janitors who work at Amazon. Placing low-income earners in the center of the city makes financial sense, Lee says.

"We want them to be in a place of opportunity. So that’s why we built this in South Lake Union," Lee says.

This building was paid for, in part, by other developers, like the ones operating the cranes around the Denny Park Apartments. Developers can either produce affordable units in the site they’re building or pay into Seattle’s affordable housing trust fund.  

In exchange for paying money into the fund, they get to build higher. 

But that voluntary "incentive" program has only generated a trickle of money for affordable housing. A new fee would ask developers to further mitigate demand for housing.

But since 2001, the program has only financed about 700 apartment units. In contrast, city officials say they need 28,000 subsidized housing units over the next decade.

That’s why the Seattle City Council will weigh on Monday whether to move forward on a plan that would require developers to pay more into a trust for subsidized housing.

City Councilmember Mike O’Brien says developers can afford to pay higher fees, and he plans to make those fees mandatory.

"Building apartments in Seattle right now is very profitable," O’Brien says. 

The fees would be based on square footage and location. Large projects with hundreds of units could generate fees well over $1 million. A developer-funded group Smart Growth Seattle has criticized the proposed fee, saying it could send Seattle into what it calls “The San Francisco Death Spiral,” in which higher fees push up rents. 

O’Brien says that’s unlikely. He says in other cities, similar fees have become business as usual.

"I just don’t see that that is going to shake up the economics of this kind of hot real estate market we have right now," O'Brien says.

"It’s a modest ask. But when you add up all the development that’s happening in the city, it can produce significant amounts of affordable housing."

Some critics say the fee doesn’t go far enough. Housing advocate John Fox points out that O’Brien’s plan would subsidize rents for people well above the poverty line. He says the focus should be on people with the greatest need.