Seattle’s Silent Epidemic: The Ferris Firefighter Fantasy

06_1224_ferrisHal Ferris, a local developer, has achieved some notoriety of late with his report on incentive zoning, completed at the behest of Mayoral candidate and current City Councilmember Tim Burgess. But maybe Ferris should be known as the inventor of the now famous firefighter fantasy, concocted six years ago the first time incentive and inclusionary zoning was seriously brought before the Seattle City Council.

Here is Ferris on so called work force housing back in 2007 in an article in the Daily Journal of Commerce:

Imagine you are a schoolteacher, firefighter, police officer, health-care worker, retail clerk or any other median-income worker whose job is essential to the economic vitality of our cities. If you work in Seattle, chances are you don’t live there. And in cities across our state, this is becoming an all-too-common scenario, one with major environmental and social impacts, including lengthy and pollution-inducing commutes, sprawl development and the disenfranchisement of people from the communities in which they work.

Imagine walking around Seattle with your axe over your shoulder and your helmet under your arm desperately looking for that apartment unit in Seattle that’s affordably priced. No wonder there are so many firefighter calendars — you just don’t make enough money to live in the city that you risk your life every day to protect. Now you have no choice but to move to Bellevue, where housing is cheaper, and you’ll end up contributing to global warming.

It’s a great story, great visual, and politically expedient, but it’s simply not true. Even a cursory scan of data available on the internet should extinguish the sad firefighter story. While there are certainly firefighters and other workers in Seattle who can’t find housing here in Seattle, for firefighters it isn’t because of low wages.

The [2012] starting salary for a Fire Recruit is $64,884 per year with scheduled pay increases per union contract. Specialty and administrative premium pay can add an additional 5-20% depending on the specialty.

The Real Area Median Income (RAMI) in Seattle in 2011 was $64,085, slightly less than what a firefighter in Seattle would make as a recruit. The typical normative standard for affordable housing –what you should be paying for housing– is 30 percent of monthly income. That means a beginning firefighter could afford about $1,621 for housing per month. How does that compare to average rents in Seattle versus a place like Bellevue. The Seattle Times reported that in 2012

The average third-quarter rent in downtown Seattle, Belltown and South Lake Union in August was $1,628, Apartment Insights said, second only to downtown Bellevue’s $1,756.

So our firefighter could settle down in an affordable apartment in Belltown and still be paying an affordable 30 percent of her monthly income. Why move to Bellevue and pay more when she could walk to her firetruck in Belltown?

Still, the narrative of the firefighter, teacher, or healthcare worker earning $51,268 (80 percent of RAMI and thousands less than what the City says an actual firefighter earns) a year but unable to find a place to live in Seattle is influencing public policy.

City Councilmember Tim Burgess has decided that the public would benefit by taking Ferris’ advice, charging developers who are building new housing in Seattle’s South Lake Union neighborhood a tax to fund the development of more housing, and then making them put that housing priced the way he wants it in their buildings. Burgess is pursuing this policy even when market studies say that without more housing supply, price will go up.

The Dupre + Scott study quoted in the Seattle Times found last year that

73 percent of landlords responding to that company’s survey said they plan to increase rents over the next six months.

The average projected bump: nearly 4 percent.

Renters pay more and must look harder for vacant apartments in close-in Seattle neighborhoods, according to both research firms.

The vacancy rate is just 2 percent on First Hill, 2.2 percent in the University District and 2.3 percent on Capitol Hill

If we’re worried about affecting housing price the obvious solution is to increase the supply of housing. More housing means more competition between landlords and developers and lower prices for firefighters and everyone else. However, the paradoxical view that we should tax new housing (a tax that will add to the cost of housing and increase its price) in order to achieve fairness, equity, and affordability persists.

In his 2007 article Ferris said that the “shortage of workforce housing is a silent epidemic.” The real epidemic is an intellectual one; the stubborn insistence in the face of basic economics that the way to lower perceived high housing prices is to increase costs and limit supply. Let’s hope we find a cure for this epidemic in the deliberations about zoning in South Lake Union before it spreads elsewhere.

firefighter burgess

Fear of high prices: Councilmember Burgess as firefighter

Posted in Uncategorized | 3 Comments

Bismarck to Burgess: Do Affordable Units Mean Fairness, Equity, and Public Benefit?

Bismark To Burgess

The basis of social policy is to ensure the welfare and health of a population, specifically the population of a political unit like a country, state, or city. Housing and shelter are commonly accepted as important elements of basic welfare and health, but the issue of how to ensure that everyone is at least sheltered, if not housed, has been a source of controversy.

In Seattle, well intentioned efforts to address housing issues have lead to a strange, self-defeating spiral in which elected officials and others are arguing for policies like inclusionary zoning that actually make housing prices higher by adding costs to new housing. Policy makers need to better define what problem they are trying to solve when they impose schemes like inclusionary zoning. If the problem is housing price, the obvious solution is to increase housing supply.

If the problem is defeating developer “greed,” redistributing wealth, or increasing wages, perhaps policy makers should widen their scope. The problem with Seattle’s approach to housing affordability is that it is attempting to address a scattering of social issues with a very blunt tool: price controls on monthly rents in new buildings.

Social welfare efforts have many origins, but almost every survey begins with the social reforms instituted by Prussian leader Otto Von Bismarck in the late 19th century. At that time, the conservative government of Prussia wanted to positively affect wages to offset pressures to immigrate to the United States—it was also a political move to staunch growing social unrest. The Prussian programs also included comprehensive health insurance. In the United Kingdom in the early part of the last century, the government passed a similar set of programs to ensure social welfare.

In the 1930s, the United States followed, passing lots of similar programs like Social Security Insurance. Eventually, when it came to housing, the normative standard of affordability was pegged at one week of wages or 25 percent of a workers monthly income. Later, in 1981, that figure was adjusted up to 30 percent of monthly income. Additional adjustments were made to discount the Housing Cost Income Ratio (HCIR) for a percentage of Area Median Income (AMI). So today you’ll hear policy makers and housing advocates talk about 30, 40, 50, or 60 percent of AMI since that’s the basis of subsidies for non-profit housing developers.

What has emerged in the United States is a measure of affordability that does not correspond to the hopes of advocates. A measure of income relative to monthly cost of housing is a pretty weak basis upon which to correct social inequity. Equity and fairness, the latest buzzwords associated with the efforts to impose inclusionary housing schemes, are not likely to be achieved by adjusting people’s rents in new developments or taxing developers for the subsidies necessary for the adjustments.

Everyone has a different sense of what “affordability” means or should mean. One Seattle City Councilmember, Tim Burgess, has a view about what dealing with monthly price of housing is all about:

“We are not currently balancing public and private benefits,” said Burgess, who prodded the council to hire experts to review the mayor’s proposal to allow taller building heights in South Lake Union, with some as high as 400 feet. “We must craft a better deal for the people of Seattle.”

Burgess in a recent story in the Seattle Times also described currently policies requiring some developers to contribute cash to subsidy programs for housing priced at a certain level an “escape hatch.” Why is it an escape hatch if it actually creates subsidized housing? Where is the case that including subsidized units in market rate buildings solve the public benefit problem if there even is one?

Burgess’ latest foray into the housing affordability discussion is only the latest of many efforts to affect social policy—to achieve equity or fairness—by bargaining for lower monthly prices for rental units in new developments. How lowering the rent of a few hundred one-bedroom apartments in South Lake Union from $1150 a month to $900 a month is going to achieve social equity is beyond my comprehension. And does it solve the perceived problem of not taking enough public benefits at the expense of private businesses? How?

Additionally, if the problem is developer greed, then why not shut down all new development everywhere? Would that be “a better deal” for the people of Seattle? Or perhaps we should simply try imposing rent control (deemed unconstitutional up to this point) on all new housing, allowing the City Council to determine what prices can be charged for monthly rents in the City. Would that be a better deal? Ask people who live in cities with rent control.

Perhaps Councilmembers and all people discussing the issue of “affordable housing” should get together and decide what their point really is: affecting the price of a few hundred units of apartment housing or something greater.

Then they should consider the words of Otto Von Bismarck who endeavored to use social welfare programs to squash political dissent, but ended up building a system that, arguably, lead to many of the good ideas we have to day about broad social justice and equity.

The real grievance of the worker is the insecurity of his existence; he is not sure that he will always have work, he is not sure that he will always be healthy, and he foresees that he will one day be old and unfit to work. If he falls into poverty, even if only through a prolonged illness, he is then completely helpless, left to his own devices, and society does not currently recognize any real obligation towards him beyond the usual help for the poor, even if he has been working all the time ever so faithfully and diligently. The usual help for the poor, however, leaves a lot to be desired, especially in large cities, where it is very much worse than in the country.

The “usual help,” taxing developers to build a few hundred apartment units priced at 30 percent of the pre-tax income of a worker who earns 60 percent of Area Median Income, isn’t likely to lead to fairness, equity, or increasing benefit to the public. On the contrary, by penalizing the development of more housing supply by making it more expensive, policy makers would be having a deleterious affect on the very thing they seek to fix: housing price.

Posted in 4. I don't understand, Uncategorized | Leave a comment

‘Tis All in Pieces: The Confusing Cost-Price-Ideology Housing Debate

Save Old Buildings

‘Tis all in pieces, all coherence gone,
All just supply, and all relation;
Prince, subject, father, son, are things forgot,
For every man alone thinks he hath got
To be a phoenix, and that then can be
None of that kind, of which he is, but he.

From An Anatomy of the World by John Donne

Recently someone sent me a link to University of Washington Professor Theo Eicher’s 2008 study on how land use and other regulation affects housing price. Eicher’s thesis is that cities, and Seattle in particular, are overregulated, with rules that add measurable costs to housing construction that in turn result in higher prices. The study was seen, at the time, as salvo against Washington’s Growth Management Act, and proponents of the GMA rallied against Eicher’s study and the Seattle Times article about the study. It’s worth taking a quick look back at the discussion then about affordability and where it is now.

Eicher’s study concluded that, “statewide regulations and growth management are associated with increases in housing prices.” He went on further, adding

When statewide regulations negate sprawl or limit building heights, they exacerbate agglomeration pressures at the city centers. Ultimately these dynamics are reflected in the increase in housing prices

Supporters of the GMA pounced. My former colleague Eric de Place at Sightline wrote a three part series blasting the Seattle Times article on the study, and one on the study itself heavily based on a paper refuting Eicher written by the Washington Chapter of the American Planners Association.

De Place’s work flattening the Seattle Times piece demonstrated the folly of the idea that growth management in general and the GMA in particular are the cause of all sorts of bad things, including high housing prices and even, in a bizarre twist of data and credulity, sprawl itself.

There are plenty of good financial reasons single-family housing developers who are building outside the Urban Growth Area have to blast the GMA, and forces aligned against more growth in cities like Seattle, would rather see growth go somewhere else, something limited by the GMA. But their attacks on growth management are usually blunted by credible arguments on the other side.

So in 2008, right before the collapse of the housing market and the economy with it, that’s where the discussion stood. On the one side progressive, liberal supporters of the GMA and, on the other, developer advocates who opposing the limits imposed by the GMA. Increased costs associated with regulation were downplayed by greens and builders argued that if you were mad about housing price, you had regulation to blame.

But even back then de Place was wise to point out the distinction between the GMA and other regulations limiting the use of land in our cities in the region.

It’s too easy to conflate “regulation” with “the growth management act.” In fact, that sort of conflation happened in the press coverage, and it’s been happening since in political circles.

This conflation is important, because it is the source of a major hang up in the discussion of land use regulation and affordability.

The truth is that the Growth Management Act is a way of pushing future growth into cities like Seattle. But what happens when the growth gets here? Too often it runs into opposition from people who are already here. And oddly, it’s becoming affordability advocates who are now criticizing the Growth Management Act. Here’s Kate de la Garza (a non-profit housing developer and all around smart person) writing in the comments section of a post I wrote for Publicola on prices and the Growth Management Act:

I think when you really look at it, what density has done has pushed rental housing affordability further and further out of Seattle, making Seattle urban villages almost exclusively enclaves for the rich and well off. (So on a macro-level, I may agree with your argument, if you concede that said affordability is located in Renton or Tukwila.) I am working on a study of this, by looking at historical date related to cost of rental housing in urban villages. My aim is to demonstrate with hard data that the average cost of rental housing has steadily risen within urban villages since the GMA was enacted.

Post housing boom it’s now the social justice set that is seeing the GMA as a problem when it comes to housing price.

And, in something of a reversal, Sightline’s Alan Durning is now pushing for less regulation, acknowledging that too many rules push up housing costs. Here’s Durning on occupancy limits in a long series on housing rules and regulations that he thinks should be abolished:

These two stories hint at what turns out to be a giant opportunity hiding in plain sight. Across the Pacific Northwest, occupancy limits constrain access to the cheapest, most profitable, most abundant, and most sustainable housing option currently available: bedrooms in existing buildings. They criminalize the simplest and perhaps the oldest solution to housing affordability: roommates.

Allowing Durning’s wealthy friends to have lots of roomers isn’t going to put a dent in housing supply, but his point is pretty clear: fewer rules could help reduce housing price by allowing more options for people looking for housing.

What’s going on here? Progressive Urbanists like Dan Bertolet have landed on the supply side shores in Seattle, finally realizing that making more rules about housing—even well intentioned rules like incentive zoning—actually make housing more scarce by making it harder to build. That reduced supply means higher prices. Thoughtful environmentalists like Durning are pushing for fewer rules and more flexibility. But social justice advocates and NIMBYs are banding together to add more rules in the name of affordability or just simply slowing growth.

I think what’s happening is an ideological realignment on growth that is painfully pulling apart an old coalition of urban planners, environmentalists, and progressives who, generally, have been in alignment on social and political issues. But if we want to tackle sustainability and reduce the effects of climate change we have to build more housing in a smaller footprint: it’s called density. The harder we make it to do that by imposing taxes, fees, and fines on people creating housing the more expensive we make it.

Regardless of ideology the facts are pretty simple. When government limits housing inventory with zoning and adds cost with regulation prices for housing goes up. While these facts might create ideological whiplash for liberal Seattle, we need to get over that quick and make it easier to create more housing.

Posted in Uncategorized | 1 Comment

“We aren’t just NIMBYs”


Goldilocks and the three NIMBYs: Waiting to get it just right.

The story posted last night on the Seattle times was headlined “South Lake Union neighborhood advocates oppose taller, fatter buildings.” And South Lake Union NIMBYs are actually calling themselves NIMBYs and saying “it isn’t just the views, but yes the private views matter.”

What is breathtaking about the story is the complete paucity of any substantial argument by neighbors against more housing.

“It’s too fat!”

“It’s too tall!”

And they were so civilized, these Goldilocks of South Lake Union, considering their whole way of life is being put at risk by proposed changes outside their windows.

While opponents of change might be patting themselves on the back this morning, they really have outed themselves as opposed to change because its change. If it doesn’t look like they want to look they want it stopped.

In the end this is better for the debate on land use in Seattle. Change opponents can keep opposing density until it’s “just right,” and those of us who argue basic economics (more supply of housing means lower price) can make our case without resorting to plannerese. What’s better for the future of the city, waiting for the perfect urban form or building more housing for new families trying to make ends meet in our city?

In the end it’s up to City Council. Will they give in to the Goldilocks approach to urban form or will they support vibrant growth in South Lake Union and welcome new people to our city? Only time will tell, although the issue has already been debated for years. Isn’t it time for a decision? Which bed will we sleep in; the past, the future, or the status quo?

Posted in Uncategorized | 1 Comment

Risky Business: Sharing the Wealth Means Sharing the Risks


Pay to play: Why should the City get access to private profit when they won’t take any risks?

Proposals for incentive and inclusionary zoning in South Lake Union seems like Seattle City government playing politics with the balance sheets of private businesses. Upzones create private value, the argument goes, so the City should share some of that value and use it for affordable housing. More profit is possible with additional building, but what about the risks? Profit is a reward for successfully taking risk. Is the City willing to share the risks too? If it wants to tap into the profit stream created by new development, the City should put up some cash like other investors rather than fining developers for success.

Don’t get me wrong; I love taxes! Taxes pay for public goods, redistribute wealth, and create disincentives for stuff we shouldn’t be doing, like sprawl (this last point is a central point of Dan Bertolet’s latest post). Taxes are one thing, but when the City tries to create public benefit from private investment without taking any of the risk, it’s not fair. If the City wants to “extract value” from private development at South Lake Union then they should put some money into projects being proposed there.

Instead of having City Council staff standing on the sidelines speculating about just how much money is going to be made from increases in development capacity being sought by developers in South Lake Union, how about getting in the game by buying a share of the projects. I can’t think of a better way to get more control over what happens with the upzones than if the City itself was an owner or shareholder.

As an investor the City would have to take on some risk. If there is too much housing built with additional zoning, then the City would lose it’s shirt along with other private investors — but the price for units would be cheap. But if demand for new housing stays high, the City would make it’s money back. And guess what, it could contribute its share of profits to reducing rents in the project. It’s a win-win!

The City has lots of power when it comes to land use, but trying to squash private profits from private investment to make political points doesn’t make sense. It also doesn’t make sense to tax something that’s good for the public, like additional housing. If the City really wants to influence housing price they should allow as much housing construction as private investors think would be profitable, then let those investors make a profit.

Imagine if the “incentive zoning” concept was applied to other businesses in the city. Since the City gives out a business permit should it share in the profits of a restauranteur, in addition to other taxes and fees, and require an affordable menu? Should a pet shop have to create a certain number of affordable pets for children? How about affordable hot dogs? If the City wanted to accomplish these things they’d regulate them or create a tax or fee structure, but they wouldn’t game the profits of local businesses. Housing is different and more important, but is 80 percent of Area Median Income (AMI) really the income band in the city that needs help with housing costs?

One last point that I made in a comment on Bertolet’s post at Citytank:

The longer we try to suppress developer profits to prevent them from “laughing all the way to bank” we’re simply preventing new housing, attenuating supply which drives up prices and keeps them high, and, in the end, transferring wealth to the people who got here first at the expense of future residents of the city.

The real value extraction — and social injustice — is making things more expensive for families who want to live with us by keeping housing supply low and fining developers for trying to build more of it. Increasing costs of housing and limiting how much gets built siphons money out of the pockets of newcomers into the pockets of homeowners already here by increasing the value of existing homes and developable land. That doesn’t seem fair either, does it?

Posted in Uncategorized | 1 Comment

Hemingway, South Lake Union, and Views

I’ve decided to read the entirety of The First 49 Stories by Ernest Hemingway. In order to make it interesting (and keep me reading), I’ve decided to post each night to Facebook the story I have read and a quote from that story. Tonight I chose, randomly, “The Gambler, the Nun, and the Radio.” It is a rather long story for Hemingway, but one rich in experience. Here’s what caught my eye:

From the other window, if the bed was turned, you could see the town, with a little smoke above it, and the Dawson mountains looking like real mountains with the winter snow on them. Those were the two views since the wheeled chair had proved to be premature. It is really best to be in bed if you are in a hospital; since two views, with time to observe them, from a room the temperature of which you control, are much better than any number of views seen for a few minutes from hot, empty rooms that are waiting for someone else, or just abandoned, which you are wheeled in and out of.

Hemingway’s prose is poetic. Reading Hemingway, I believe, is like eating Escoffier’s cooking. The difference, of course, is that one can today read Hemingway, while it is impossible to eat Escoffier’s culinary creations, made by him in his kitchen. But I digress. Ernest+Hemingway++11

The issue isn’t food, it’s views. Hemingway’s narrator goes on to describe what views can do.

If you stay long enough in a room, the view, whatever it is, acquires a great value and becomes very important and you would not change it, not even by a different angle. Just as, with the radio, there are certain things that you become fond of, and you welcome them and resent the new things.

Hemingway describes the issue of views in South Lake Union perfectly. Change is scary. Why change things now, especially when what has been has worked? True, the city is about many more rooms in a smaller foot print. But if one does not leave ones room, then the view becomes everything, no matter what that view might be.

I have a beautiful vision:  Everyone at Mirabella takes a fishing trip.


Posted in Uncategorized | Leave a comment

You’re Blocking My View — of the Future!

view 3
In a crowded city having a view is an important and valuable thing; and things of value have a price. One of the charges being leveled at proposed changes in zoning in South Lake Union is that they would result in blocked views of the Space Needle and the lake. How should the City Council weigh the impact on views of new development on private property owners against the manifold public benefits of new development in South Lake Union?  Views are like parking spots, something of value that can be sold at a price when they are in demand, but not something government should require and subsidize so they’re “free.” View protection is really a subsidy of a private benefit at public expense.

In the middle of this debate is my former boss and longtime friend Peter Steinbrueck. I’ve known Peter long enough that we can disagree, I think, in public about these sorts of things. I don’t find it all that odd that he would oppose new development on the grounds that it doesn’t create enough affordable housing, however it gets defined. But views from private homes? That’s what makes his point of view a bit strange:

There are multiple negative impacts as a result of planning, or lack of it, that is driven more by property interests and development goals than a form of growth that respects the established neighborhood, respects the existing residents, and respect the neighborhood’s wider territorial views.

Steinbrueck admits that this is a battle of property owners over a thing of quantifiable value, views. One set of private property owners is outraged because another set of property owners is going to so something to change the value of their private property. View battles are usually about the financial interests of existing property owners. That’s why the law and the courts are not silent on view protection.

The State Court of Appeals found in Anderson v. Issaquah that, “the issue of whether a community can exert control over design issues based solely on accepted community aesthetic values is far from ‘settled,'” but they also concluded that, “aesthetic standards are an appropriate component of land use governance.” That’s why the City of Seattle has gone out of it’s way to legislate to protect views and views of the Space Needle specifically.

I’ve had some fun poking at Steinbrueck’s views on views on my Facebook page, pointing out that when compared to the benefits, the loss of my own view of the iconic remnant from the 1962 World’s Fair is a small price to pay. The World’s Fair was about the future, and the future of Seattle should be to play an active role in teaching the region and the world how to grow smart and sustainably. That view of the future is important.

Let’s see. I might lose my view but we’ll get more people moving into our city, we’ll increase housing supply which will actually put a downward pressure on price, we’ll prevent some sprawl, we’ll use energy more efficiently, we’ll create a bunch of jobs as well, we’ll generate a bunch of sales tax revenue, and we’ll make a 100 year decision in favor of more growth in our city.

Oh, and last but not least, we can help take a bite out of climate change.

That seems like an easy decision. Look at some buildings rather than the Space Needle and get a huge amount of civic benefit for the next several decades. From here, that sure looks like the right thing to do.

Take my view, please!

Views do help make a great city, but someone has to pay for them; like parking spots in the right of way, they aren’t free. When we distort our planning agenda and the free market to preserve private views (even private views from public places) we’re favoring the financial position of the few over the well being of the many. I have my qualms with the way we address problems of affordability in the city, but that, at base, can arguably be a social justice issue. People need shelter from the elements. But should we stop the future to save the views of some relatively well off people?

As Seattle grows the City Council has to make some tough decisions that will inconvenience those of use who are already here to make room for new people moving here in the future. Locking up valuable land that can produce lots of new housing in order to protect an existing view is short sighted; it’s like being against gay marriage because the lines will be too long at the licensing desk. Not liking new development at South Lake Union because it blocks views is a legitimate position. Legally and aesthetically views are something the Council can factor into their decision; but they shouldn’t.

View 2

Posted in Uncategorized | 4 Comments