If you think the dozen or so cranes disported around the city are transforming the face of Seattle now, well, as they say, "You ain't seen nothin' yet."
Along with rezones, a multi-family code update, and imminent proposals for buildings as tall as 400 feet in South Lake Union, 125 feet in Interbay, incentive zoning is an important piece of a future that city planners are imagining.
Downtown Seattle has had incentive zoning since at least 2006, and IZ will soon come to South Lake Union, Northgate, and SODO, and very possibly to your own neighborhood, if legislation submitted by Mayor Greg Nickels to the City Council last week is adopted.
Nickels' legislation would give developers additional building height or floor area in return for their dedicating 11 percent of the bonus space to housing deemed affordable. Rental rates for the affordable housing could not exceed 30 percent of a family's gross income. Monthly principal and interest under a purchase could not exceed 35 percent of income.
To qualify for the rental, household income must be under 80 percent of the area's median income. To qualify for a purchase, it must be under 100 percent of median. Median area income for a family of four is $81,400.
IZ has face appeal: Give moderate-income workers, including those who provide city services, the opportunity to live near their workplace, or at least near public transportation that could transport them at a reasonable cost and without a commute that adds to congestion and pollution.
But critics argue that IZ, as Nickels proposed it, is unnecessary and a pro-growth sop to developers. They say the plan will bedevil neighborhoods that are already choking on too rapid growth.
Developers would have another option under Nickels' plan. Instead of providing lower-cost housing, they could pay the city an in-lieu fee - from $15 to $18.94 per square foot of total bonus floor area.
Another sweetener to developers has already got results: a 12-year abatement of property taxes associated with residential units in a development. If the tax abatement were coupled with IZ, it would produce a double incentive, says Rick Hooper of the Seattle Housing Office. The "affordable" portion of residences would jump to 31 percent - the 11 percent from IZ, plus the 20 percent set-aside required by the tax-abatement program.
Would the housing be affordable? Hooper says yes - that the 30 and 35 percent of income for rent or purchase is reasonable. Louise Meier, a mortgage specialist with MetLife Home Loans agrees. "It would work, provided the party's credit rating is good," she says.
But John Fox, of the Seattle Displacement Coalition, argues that there is a major problem in defining the threshold for incentive housing. The difference between 80 percent of median wage and average wage is huge, he says. "The average area wage is $42,000," he notes. "That's only 51.9 percent of the median. Seventy-nine percent of our area workers are below 80 percent of the median."
Defining the threshold as Nickels' plan does means that more families could qualify for the incentive, but also that the prices charged by developers would be vastly higher.
Fox says the city's IZ proposal is a Trojan horse - "a pro-development strategy to penetrate neighborhoods and cram more market-rate housing into areas already reeling" from too much growth. "They're wrapping a pro-density agenda in a package of housing that's pricier than the typical worker can afford."
Fox believes the 80 percent of median income test is much too generous to developers. "We think 50 or 60 percent of median would be more appropriate and very doable by developers," he said. "We need to bring down the price of these set-asides." He would also like a one-for-one replacement of affordable housing that removes existing properties from the market through demolition.
A recent study of incentive zoning programs by New York University's Furman Center for Real Estate and Urban Policy looked at the experience of several cities. Overall, said Vicki Been, director of the center, "[W]e found that IZ policies have produced only a modest number of affordable housing units, suggesting that IZ by itself is not a panacea for a community's affordable housing challenges."[[In-content Ad]]
