GOOD intentions don’t justify bad policy.
That’s why Seattle residents should be concerned about the City Council’s plan for a development fee to fund affordable housing. Forcing developers to pay for a so-called solution could worsen the housing problem by discouraging new construction and making the city’s housing stock even pricier.
The City Council’s resolution, passed in October, plans to fund affordable housing by tapping the builders of apartment and commercial projects in areas zoned for multifamily construction. The city would exact a “linkage fee” ranging from $5 to $22 per square foot of new development. As an alternative, developers could choose a “performance” option, meaning they would have to build a specified number of “affordable” units to be rented out at below-market rates.
Either way, this won’t fix the problem. The linkage fee would increase the cost to develop. For instance, the cost to build a 200-unit rental complex could rise by up to $2.9 million, according to one estimate. Developers facing higher costs would either build less or pass on the costs to consumers. Thus, unsubsidized housing would become more expensive. Even subsidized housing might become more expensive if the city doesn’t raise subsidies as prices rise.
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City officials should listen to California Gov. Jerry Brown. Last year, he vetoed a bill that would have made it easier for governments in the Golden State to force developers to fund low-cost housing. He recounted that, as mayor of Oakland, he had learned “how difficult it can be to attract development to low- and middle-income communities.
“Requiring developers to include below-market units in their projects can exacerbate these challenges, even while not meaningfully increasing the amount of affordable housing in a given community,” Brown said.
As mayor, Brown was even more blunt when he vetoed a similar proposal for his city: “There is no Santa Claus,” he said.
Government can’t shower gifts on the community free of cost. Seattle officials can’t wish away these basic laws of economics.
They also can’t wish away the other kinds of laws — statutes and constitutional provisions — that this plan violates.
First, in Washington, cities cannot impose taxes or fees on development. While exceptions to this rule exist, none would apply to the linkage fee. For example, cities can impose “impact fees” on development to help pay for needed public infrastructure. But the “linkage fee” funds housing, not infrastructure. And state law allows “voluntary agreements” to soften the direct effects of a proposed project. However, the choice between a fee or “performance option” where developers would be forced to build some affordable units is about as voluntary as “your money or your life.”
Seattle’s proposed linkage fee, which appears to be the first of its type to be proposed in Washington, also defies the Constitution. Governments can only place conditions on development that relate to problems created by the development itself. In other words, the government can only make developers fix their own messes; it can’t use their building permit applications as an excuse to demand ransom. The linkage-fee program would force each developer to pay exorbitant fees that have no relationship to any problem the developer may have caused.
Nobody can complain about Seattle’s goodwill toward men. But the city won’t solve its housing woes by playing Santa with developers’ money. Even twinkling eyes and a bundle of toys can’t fix policies that ignore the laws of economics and the laws of the land.
Ethan W. Blevins is an attorney with Pacific Legal Foundation, a nonprofit, public-interest watchdog organization that litigates for limited government and property rights.