Thursday, August 18, 2016

Seattle Microhousing "Fix" Eliminates 830 Affordable Homes Per Year.

In my last post I illustrated how a succession of poor policy decisions over the last two years have suppressed the production of micro-housing, making it larger, more expensive and less plentiful. In this post I want to explore how many affordable housing units we are losing and how much more people are paying for their housing as a result.

Lets begin with my assumptions: 2013 was the last full year where congregate micro-housing was relatively unrestricted and no major event disrupted production.  Since mid 2014, every few months some new regulation has come along to shake up the playing field.  For lack of a better option, I'm using 2013 as a baseline year.

In 2013 we built out to roughly 576,000 sf of micro-housing. The chart below shows what this scale of development produces today compared to what it would produce if the city were to fix their recent policy mistakes. Built into these numbers is an assumption that a fixed policy scheme would produce about 50% SEDUs and 50% congregate housing. Since we have never enjoyed a year where our policies didn't tip the scales one way or the other, I'm making an educated guess.

Year
Congregate Units
SF per Congregate Unit
Congregate Total SF
SEDUs
SF per SEDU 
SEDU
Total SF
Total SF All Types
2013 Baseline
1804
300
541200
82
425
34850
576050
Today's Rules
183
315
57605
1,110
467
518445
576050
Fixed Policies
960
300
288025
678
425
288025
576050

Under today's rules, about 90% of production is in the form of SEDUs, The remaining 10% is congregate housing.  This skew towards SEDUs is because of a 2014 zoning change that limits congregate housing mostly to zones that are inappropriate for this type of housing.  SEDU projects rarely produce affordable housing because their market rents are too high and their MFTE rent levels are so low that SEDUs rarely participate. Current data suggests a 12% participation rate for SEDU projects, compared to a 50% participation rate for new development in general. Lastly, a new director's rule has made micro-housing units larger and more expensive than they would otherwise be. This in mind, a normal year of production under today's rules would look roughly like this:

Today's Rules
Congregate Units
SEDU Units

Cong
Market Rate
Units
Cong MFTE Units
SEDU
Market Rate
Units
SEDU MFTE Units
Total
Unit Count
160
23
1,077
33
1,293
Rent
$900
$633
$1,300
$850

Average
$866
$1,295
$1,235

For comparison, if we fixed the zoning criteria for congregate housing, we would expect a higher percentage of projects to swing back toward the smaller, more affordable congregate variety.  If we set the rent requirements for the MFTE program at a discount comparable to other housing types, we would expect SEDU participation to normalize at around 50%.  Congregate housing is already set at a reasonable rate for MFTE, so participation for this type would continue to be fairly robust as well. The net effect is a huge rise the number of affordable units created and sharp decrease in average rents.

Fixed Policies
Congregate Units
SEDU Units

Cong Market Rate Units
Cong MFTE Units
SEDU
Units
SEDU MFTE Units
Total
Unit Count
840
120
593
85
1,638
Rent
$875
$633
$1,200
$850

Average
$845
$1,156
$974

 Every year our current micro-housing policies remain in effect:
  • 1300 people pay an average of $253 more per month in rent.
  • 345 fewer units are built, pushing up prices by adding to the city's production shortfall and increasing economic displacement of low income renters within our existing housing stock.
  • 97 units of 40% AMI housing are not created (affordable to someone making $25k/yr).
  • 731 units of 55% AMI are not created (affordable to someone making $34k/yr).
Multiplied over ten years, this represents the loss of 8,300 units of affordable housing, a 25% rent hike for 13,000 people, and 3,450 units of housing production lost.  We could fix this with a couple of administrative actions and a minor change to the zoning code.

Do you agree that we should fix this?  If so, please send a note to the city council, let them know.




*Prior to 2014, SEDUs had a design review threshold of 4 to 8 units depending on the zone, whereas congregate housing was not subject to design review.  This is the primary reason for the strong skew in the 2013 data towards congregate housing development.

1 comment:

  1. Thanks for the analysis. I sent a note via email to Councilmember Johnson, asking him to give serious consideration to offering some relaxation to this counter-productive regulation that frustrates production of smaller housing units.

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