Looking for an encore to the $15 minimum-wage law they approved last year, Seattle officials may settle on linkage fees from developers, a tool that could be used to finance more affordable housing.
Seattle started a national trend last year when it set its minimum wage on a path to $15 an hour in an effort to reduce income inequality.
Now that minimum-wage hikes have spread to Chicago and Los Angeles, Seattle has a new hot-button issue. With some of the highest rents and home prices anywhere, officials are again under pressure to innovate.
But the housing-cost problem is more complex, and there are divergent views on how to achieve affordability — from rent control to ramped-up construction aided by deregulation.
At this point, the most likely shot for Mayor Ed Murray and the City Council to make a splash in 2015 could be Councilmember Mike O’Brien’s solution, linkage fees.
Most Read Business Stories
- Canada's answer to Tesla is a $15,500 electric three-wheeler
- Forget Marie Kondo: There's a better, high-tech method to tidying up
- Property taxes dropping in half of King County cities after years of big increases
- REI CEO Jerry Stritzke resigns, saying he failed to disclose a 'personal' relationship
- California utility PG&E shares rise as regulator calms investors VIEW
O’Brien wants to charge builders of new construction in Seattle’s densest neighborhoods and then use the money to create or preserve affordable housing.
“To come close to hitting the targets the mayor has set, linkage fees or something like them are the only tool under discussion that can get us there,” he said.
In March, the mayor set an overall goal of Seattle — in the next 10 years — adding 30,000 new market-rate housing units and 20,000 new or newly rent-restricted units affordable to households making no more than 80 percent of the area’s median income.
Not even O’Brien says linkage fees are the only way the city should tackle the problem. But they could take top billing by process of elimination.
Murray last September promised that his new task force on housing affordability would hammer out a compromise the same way his minimum-wage panel did in 2014.
Yet insiders are worried that the Housing Affordability and Livability Advisory (HALA) Committee has been building consensus only on baby steps. Murray recently pushed the panel’s deadline back a month to June 30.
“The HALA Committee, in my opinion, is not going to come up with anything dramatic,” Councilmember Nick Licata said.
Licata and Councilmember Kshama Sawant introduced a resolution Monday calling on the state Legislature to repeal its 1981 law banning cities from enacting rent control. They rallied hundreds of people to a meeting on the issue in April.
“Rent control is the new $15,” David Goldstein, a blogger who works for political financier Nick Hanauer and is a supporter of Sawant, posted on Twitter after that gathering.
State Republicans, however, stand between Seattle and the authority to cap rents like in New York City and San Francisco. The city may gain the ability to enact rent control at some point, building on the Licata-Sawant bill, but it’s not going to happen right away.
“There’s no hope of passing this at the state level unless we first generate momentum on the ground,” Sawant said Monday.
Most parties agree that officials must encourage construction to increase Seattle’s housing supply, and cutting red tape is one way to do that.
But sheer numbers won’t solve the housing-affordability crisis if too many of the units built are luxury apartments.
The average rent for a new one-bedroom unit last year — $1,780 — was unaffordable for an elementary-school teacher, according to HALA Committee data.
“I don’t know what the answer is. That’s the million-dollar question. But some consideration is needed,” said Thelma Norwood, 61, who works two jobs to make rent at her Columbia City building.
Norwood said her rent has increased from about $700 to about $850 a month in the last two years. She’s thinking of moving to Tacoma if it continues to climb.
Range of ideas
The HALA Committee is expected to recommend various solutions, from more tax exemptions for developers who set aside new units for low-income households, to a larger housing levy, zoning changes and renter protections.
But the mayor and the council crave a new headline initiative.
Linkage fees are based on the concept that development drives up rents and creates low-wage jobs, which increases the need for cheap housing. O’Brien has talked about applying them to residential and commercial projects.
A developer would choose to pay the fees or build a certain number of affordable-housing units as part of a project.
There was enough political will behind linkage fees last October for the council to approve an O’Brien-initiated resolution directing the Murray administration to prepare legislation by June 1. While that date has come and gone, the mayor remains open to the idea, said Robert Feldstein, a Murray adviser.
The fees are a bone of contention for the HALA Committee because they have serious opponents, including a group of property owners, developers, business associations and architects called the Coalition on Housing Solutions.
The group claims that O’Brien’s proposed framework would be illegal under state law because builders wouldn’t receive any benefits in exchange for the fees.
Furthermore, the group says, developers would pass the fees along to tenants by jacking up market-rate rents. That would render the city even more expensive.
Jon Scholes, president of the Downtown Seattle Association, is on the HALA Committee. The association flatly opposes linkage fees.
Opponents argue the fees would discourage new housing production.
“The council passed a resolution last year because it’s fun to put developers in the dunk tank,” group spokesman Ryan Bayne said. “But what looks good on paper isn’t necessarily going to work.”
The push to raise Seattle’s minimum wage also had opponents — and overcame them. But some elements key to the success of that movement are missing this year.
Sawant in 2014 was a new council member who had beaten an incumbent by campaigning on $15 an hour. Her election propelled the movement forward.
The wage push also benefited from the threat of a citizen initiative, which made legislative compromise a more attractive option for business owners.
Finally, $15 an hour was powered by labor unions with the resources and political juice to organize actions like strikes and to make elected officials play ball.
Since then, circumstances have changed. Sawant is running for re-election in a new neighborhood district. She supports linkage fees but has made rent control more central to her campaign. There’s no citizen initiative.
Many unions already have endorsed council members for re-election, surrendering some leverage, and the local most responsible for the wage hike, SEIU 775, is hanging back.
“No particular group has stepped up to play the investor role the way we did with the fight for $15,” noted David Rolf, president of SEIU 775. “Now if we could find the right entry point, maybe we could step up. But we haven’t found it yet.”
What Rolf is looking for is a policy able to unite progressives. Many anti-poverty activists who are concerned about displacement have found themselves at odds with urbanists and environmentalists who want the city to become more dense.
“The coalition of a Seattle for all is a promising idea, but it doesn’t exist yet,” he said.
Lauren Craig, policy counsel for Puget Sound Sage, may beg to differ. Sage leads the Growing Together Coalition, which includes unions like SEIU 775, social-justice and community organizations and some nonprofit developers.
The group has made strides advocating for linkage fees — without the rallies and rhetoric employed last year, Craig said.
“This is a wonky policy,” she said. “It doesn’t have the same populist appeal as $15. So we’re doing our best, and some of the moderate environmentalists and urbanists are getting behind it now.”
O’Brien agreed. “The work to get to the successful political outcome is the work we’ve been doing — just talking to people,” he said.
Calling for action
Owen Pickford is one convert. Executive director of The Urbanist blog, he wrote a post last month asking others to get on board with the regulatory tool.
Were Seattle to charge linkage fees, developers would pass the additional costs along not to renters but to property owners, according to Pickford. “Developers seeing additional costs will bid less on land,” which wouldn’t hurt housing production, he said.
Mike Oddo is a Capitol Hill landlord who thinks officials should consider linkage fees, particularly as an alternative to rent control, because wealthy newcomers are causing older, cheaper housing to be torn down.
“People are moving here and the developers are building all high-end stuff,” he said.
The Coalition for Housing Solutions is hoping the HALA Committee will instead recommend that the city adjust its existing incentive-zoning policy, which awards extra floor area to builders when they help pay for affordable housing.
Incentive zoning has been a disappointment thus far, failing to generate a game-changing number of affordable units amid a construction boom.
Whether the HALA Committee recommends linkage fees or not, Murray can pursue it, and whether or not he does, O’Brien can introduce a bill.
The details would then need to be hammered out. Sawant said she’s concerned “the right wing of the council” will pay lip service to the housing crisis by voting for the fees while keeping them as small as possible.
The council’s October resolution passed 7-2, so opponents have a lot of ground to make up.
“Those votes are only going to change if the council members have something better to get behind,” Bayne said. “Because not addressing affordable housing this year isn’t an option.”