Seattle approves new affordable housing initiative

Dive Brief:

The Seattle City Council has passed "historic" affordable housing regulations that will require condo and apartment developers to either include more affordable units in their projects or contribute to an affordable housing building fund, according to the Puget Sound Business Journal.
The council also plans to expand developer construction limits so that they can build projects with more overall units.
According to city officials, the new rule, which should go into effect during the first quarter of 2017, will result in either 1,500 more affordable city units in the next 10 years or $176 million to build 2,200 units somewhere else.

Dive Insight:

Seattle also passed regulations last year that will require commercial builders to contribute to the affordable housing fund once those developer capacities are increased. The cost to developers will be $5 per square foot to $17.50 per square foot, depending on the location. This is expected to raise $196 million toward the construction of 2,400 affordable units.

According to Seattle Mayor Ed Murray, the city is in the throes of "the worst affordability crisis in decades," with annual double-digit increases in home prices and rents as pay stays relatively the same. Officials said that 38% of households spend more than 30% of income on rent, and 40,000 spend more than 50%. A June Harvard University Joint Center for Housing Studies report found that the number of U.S. families paying more than one-third of their income on rent in 2014 rose to 40 million.

To ease the burden of low-income families, Julian Castro, secretary of Housing and Urban Development, said U.S. builders need to step up production in order to meet the 7.2-million-unit shortfall. Castro said it is imperative that the government use subsidies and incentives to entice the private sector, which will not build affordable housing otherwise.

Other cities are also passing regulations that require builders to help with affordable housing shortages. For example, Portland, OR, passed a 1% construction excise tax last month, which officials said will raise $8 million a year for affordable housing construction. San Francisco voters also recently approved a ballot measure that requires all residential developments of 25 units or more to include 25% affordable units. The new regulations also allow for an alternative 33% fee.