Sound Progress

Research and insights from Puget Sound Sage.

Seattle’s Incentive Zoning Policies Require Less from Developers than Other Major Cities

Last week we posted about Seattle City Council’s decision to raise “in-lieu” fees for developers designed to ensure that Seattle keeps up an affordable housing stock to meet the city’s growing need.  Publicola picked up our post.  Passing an increase in the fee to bring it into line with recently approved fees for South Lake Union development, is a step in the right direction.

Yet more needs to be done. When you compare Seattle to other cities’ inclusionary policies, Seattle requires considerably less affordable units to be built (less than 5 percent of the total building).  All the cities* in our analysis have Set Aside requirements two to five times that of Seattle’s.

That means that when Seattle collects fees from developers, even those cities with “in-lieu” fee rates similar to ours, the city is bringing in one half to one fifth less money to put toward building affordable housing stock.

Here is a comparison to other cities’ inclusionary housing policies:

A Comparison of Inclusionary Housing in U.S. Cities – 2013

Below is a summary of inclusionary housing policies from cities throughout the U.S.  Although most of the policies represent mandatory programs, nearly all cities provide value in return to developers through density bonuses, fee waivers, expedited review or subsidies.  The policies all underwent feasibility analysis in their respective markets and some have been in place for a decade or more.

Jurisdiction Set Aside (of total bldg) Income Targets Incentive
SEATTLE  5% For rent:  80%For sale:  100%
  • Bonus density depending on difference between base and max height
Boston, MA 15% For rent:  70% AMI[i]For sale:  80% AMI[ii] (half of units)

100% AMI (half of units)

  • None, only required for projects that need zoning relief
Boulder, CO 20% For rent:  60% AMI[iii]For sale:  70% AMI
  • None
Cambridge, MA 15% 65% AMI 
  • 30% density bonus
Davis, CA 25-35% if rental25% if sale For rent: 50% AMI (half of units)80% AMI (half of units)[iv]

For sale: 80% AMI (half of units)

120% AMI (half of units)

  • 25% density bonus
Denver, CO 10% For rent:  65% AMIFor sale:          80% AMI  (< 3 stories)

95% AMI  (4+ stories)

 

  • $5,500/unit cash subsidy
  • Expedited review
  • Additional incentive for lower affordability or more units (10% density bonus, reduced parking requirements, more cash)

 

New York, NY 20% 80% AMI
  • 33% density bonus
Sacramento, CA 15% 50% AMI  (2/3 of units)80% AMI  (1/3 of units)

 

  • 25% density bonus
  • Fee waivers or deferrals
  • Expedited review
  • Reduced land use limits
  • Less expensive finishes allowed
  • Gap financing
San Diego, CA 10% in most neighborhoods20% in other neighborhoods[v] For rent:  65% AMIFor sale:  100% AMI
  • Expedited review
  • Reduced water and sewer fees
San Francisco, CA[vi] 15% (20% if off-site) For rent (onsite): 55% AMIFor sale (onsite):  90% AMI

For rent (offsite): 55% AMI

For sale (offsite): 70% AMI

 

  • None
Santa Fe, NM 15% if rental20% if sale[vii] For rent: 40% AMI (1/3 of units)50% AMI (1/3 of units)

65% AMI (1/3 of units)

For sale:          65% AMI (1/2 of units)

80% AMI (1/2 of units)

  • 15% density bonus
  • Fee waivers
  • Reduced water fees for affordable units only
Washington, DC 8-10% or as high as 15% in some neighborhoods if density bonus is used 50-80% AMI depending on construction type and zone
  • 20% density (FAR) bonus
  • Expedited review

[i] Based on 100-120% of Boston median income in 2008.

[ii] Based on 130-160% of Boston median income in 2008.

[iii] Boulder targets based on actual AMI not HUD AMI.

[iv] Davis set aside based on size of development.

[v] San Diego’s ordinance is structured with the default option being a fee and the inclusionary requirements being an                                           alternative.

[vi] San Francisco varies slightly with neighborhood, in some neighborhoods that were up zoned, set asides went higher at the same time.

[vii] Santa Fe scheduled to revert to 30% in 2014 unless it is extended.

*The mix of cities we highlighted above is a cross section of the estimated 400 municipalities[1] that have some form of inclusionary zoning.  This list was selected in an effort to demonstrate the diversity in population size and real estate development climate of U.S. cities with inclusionary policies.


[1] Hickey, Robert, “After the Downturn: New Challenges and Opportunities for Inclusionary Housing,” Center for Housing Policy, February 2013, http://www.nhc.org/media/files/InclusionaryReport201302.pdf .

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