Seattle Property Owners Challenge Program That Charges ‘Affordable Housing’ Fees for Building New Homes

Seattle property owners are once again suing the city over affordable housing fees they’re required to pay just for adding an additional home on their properties.

Married couple Mehrit Teshome and Rocco Volker want to redevelop their single-family home into a smaller duplex and accessory dwelling unit. Local builder James Vert would like to construct four townhomes on his property.

The city’s zoning code allows them to do this. But its Mandatory Housing Affordability (MHA) program would require them either to make two of their new units rent-restricted affordable housing or otherwise pay hefty affordable housing fees—roughly $36,000 in the Volkers’ case and $126,000 in Vert’s.

The MHA was created as a “grand bargain” between large developers, affordable housing groups, trade unions, and other stakeholders. Its “dual-approach” to housing supply allowed developers to construct larger residential projects across dozens of city neighborhoods. In exchange, projects in these upzoned neighborhoods would have to include rent-restricted affordable housing units or pay into an affordable housing fund.

Like other “inclusionary zoning” policies, Seattle’s MHA program acts as a tax on new housing supply. Builders must absorb the costs of money-losing below-market-rate units into their projects.

A recent city-commissioned report found that the MHA’s affordability mandates were acting as a “small but important” headwind on housing supply in Seattle’s challenging building environment.

The Volkers and Vert assert in a new federal lawsuit that these mandates are not only financially burdensome but also unconstitutional.

“Seattle is taking the land use permitting process as an opportunity to extort land owners,” says Suranjan Sen, an attorney with the Institute for Justice, which is representing the property owners. “Land use permitting demands are supposed to represent a public impact or harm mitigation. It’s not supposed to represent the city’s attempt to get something out of the land owner.”

Their complaint, filed in the U.S. District Court for the Western District of Washington, asks that the court strike down the MHA’s affordable housing mandates as an “unconstitutional condition” on the use of their property.

For decades, Seattle has had “incentive zoning,” whereby developers could get permission to construct more units than what the zoning code allowed in exchange for providing affordable units—i.e., units reserved for lower-income residents where rents or sale prices were capped at below-market rates.

In the face of quickly rising housing prices, the city o

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Article from Reason.com

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