MIZ, Building Heights, and a Connection to Homelessness

As Seattle grapples with the affordability crisis – which is intrinsically linked to the homelessness crisis – one of the recommendations from the Housing Affordability and Livability Agenda (HALA) report that the City Council is considering is a little nugget called Mandatory Inclusionary Zoning (MIZ). As it works through Council, the proposal as it currently stands would require all new development in certain areas set-aside 5-8% of their total units for folks making 60% and below Area Median Income (AMI). In exchange, height limits will be increased throughout the city, allowing for more units of housing to be built.

Watching the debate about MIZ, one complaint from a certain developer lobbyist and their supporters is that MIZ is bad because it is taking away from developers without giving enough back. We hear that it isn’t fair, that this will just make other units cost more in rent, that the height increases aren’t enough, that it is unconstitutional, etc. etc.

Of course, complaints from non-developers exist, too. The total percentage is not enough, the height increases are too much, it’s not fair that some areas can buy-out of building the units on-site.

In my professional world, the attorneys I work with sometimes are appointed as arbitrators. We joke that we know they did a good job when both sides are unhappy. Just throwing that out there.

Anyway, as we look toward permanent solutions to address the homelessness crisis in Seattle, one area that we must address is the lack of housing options – particularly for lower-wage workers. When looking to the triggers of homelessness, 15% of people experience homelessness due to an inability, with their wages, to pay all of their bills. 35% plunge into homelessness due to job loss (which leads to inability to pay rent). We see more and more impoverished families paying upwards of 50% of their income in rent, which is no wonder the slightest change in their economic situation – increase in cost of living or loss of a job or hours – can trigger losing housing

MIZ will be a piece that helps address the affordability crisis and, by extension, the homelessness crisis. The current proposal is not perfect, but it is definitely a start. It remains incumbent upon our elected officials to determine as time goes on whether the promised amount of affordable units are actually being built and, if not, make adjustments to fit the needs of the city. The needs of the city must be the highest priority.

About the arguments against…

• ·It isn’t fair! – You know what isn’t fair? Sleeping in the rain because all new construction is focused on building the most expensive units. Take the Pladhus building in Roosevelt. Studios are starting at $1,045 for 202 square feet. Or AVA in University District where studios start at $1,515 for 463 square feet. These are super-duper nice on the inside, but are not exactly contributing to the need for lower-rent units. I know – trickle down. Older buildings will get cheaper!

Well, I went ahead and checked, and it looks like most of the older units in the neighborhood – for studio apartments – were in excess of $1,000 per month. I don’t believe that, directly, building more housing causes housing costs to increase. But I do believe that building only high-end housing causes housing costs in older buildings to increase at a faster clip. Why rent for $750 and make a profit when you can rent at $1,000 and make an even bigger profit, but still be a few hundred below the brand new?

Of course, that gets to a separate question – the cost:

• It will just make other units cost more! For one, that is a choice to be made by the owner of the new building. How much profit do we need, after all? But this is a choice that is made by the people developing a parcel. What other costs go into increasing the rents for tenants, and how necessary are those? But the other part that I think is worth considering: does every individual unit need to be luxury? I view the world as one of need. People I speak with experiencing homelessness or housing insecurity don’t give a shit if they have stainless steel appliances or hardwood floors.

This very issue was contemplated in Justice Ming Chin’s Concurrence in California Building Industry Association v. City of San Jose, a California Supreme Court case upholding San Jose’s MIZ ordinance as constitutional (which the U.S. Supreme Court ultimately declined to reconsider following an appeal by developers in California). First, Justice Chin noted that the requirement might “cause the developer to make a smaller profit on [MIZ] units than on other units…[but does not], at least on a facial challenge…require the developer to provide subsidized housing.”

From here, Justice Chin – a Republican appointee – notes that there is nothing that prohibits a developer from building the affordable units in a less expensive way. While MIZ units have to be of similar size to non-MIZ units, and the exterior has to be the same, as of now there is nothing in the legislation that is snaking through the Seattle City Council that would require hardwoods, stainless steel, and a bidet in every MIZ unit if other units have those amenities. Rather, MIZ units can be made on the interior to have wall-to-wall, low-cost Albert Lee appliances, plain light fixtures, linoleum floors and inexpensive countertops.

So there remains opportunity to not only construct the interiors cheaper, but also have them setup in a way that will cost less to maintain over the years. It’s a choice that is in the hands of developers at that point of whether to make all units the same and jack up rents more for non-MIZ units, or live with a smaller profit from some units, but cheaper costs associated to help balance things out.

• The height increases are too much!!! On this, I disagree (and agree with developers). While height changes for each neighborhood are going to be different, many of the urban villages – particularly near light rail stations – are probably zoned too short, and an extra 10 feet isn’t going to add much in the way of more housing. Plus, while some developers are greedy bastards, there are a lot (particularly local ones) that are pretty rad.

What the East Howe Steps project will look like when it's done

Take Daly Partners, for instance. They are the developer behind the redevelopment of the old Azteca site in Eastlake. They proactively reached out to the community, made modifications to the design of their building (now buildings), and the community is benefiting greatly from a more walkable Eastlake on the south end of the neighborhood, the extension of the E. Howe Steps, and (IMO) a better looking project. My one complaint – the project could have added another two stories, and the units of housing that would come along with that – except there is that pesky height limit that kept it to four.

We have significant need for more housing, and more housing types. We are not going to be able to meet that need unless we are welcoming in the most obvious places of more people. That means taller buildings. They can be thinner – but then they need to be even taller. Part of ensuring no net loss of affordable units (frankly, I prefer 2 for 1 replacement) is MIZ.  

I do agree with some concerns raised by both sides. As noted, I think that the height increases are not enough in many areas. I would rather 15-20% of units be MIZ units – with varying AMI levels for sub-percentages. I don’t think paying into a fund should get people out of building on-site. These are all options that the city should look to change moving forward if the promised number of units constructed don’t actually happen. That also means that the Council has to provide meaningful oversight. My guess is that a majority of the Seattle City Council is interested in this part of their job, and will do so with gusto.

As we discuss homelessness in Seattle, it is imperative to remember that we are also talking about the affordability crisis as a major contributing factor. We cannot address one without addressing the other. And while I wholeheartedly support price controls, those alone will not work in a sustainable fashion, and there is not the political will to actually enact rent stabilization for residential and commercial spaces.

But there is the political will to do MIZ. The quicker we get this policy through, and the quicker we allow for more units of housing to be built in conjunction with the implementation of the policy, the quicker we will make a more immediate, positive impact on the affordability crisis in Seattle.