Downtown Residents Deserve a "Real Deal"...Not a "Grand Bargain"

To give you a little background, basically the City sells land use rights to developers through bonuses and incentives. This system allows developers to build larger and taller buildings than the standard zoning privileges allow. For example, the Douglaston proposal at 5th & Virginia could only be a maximum of 14 stories tall if it were strictly a commercial building, and a max of only 300’ as a residential building without the bonuses/incentives, instead of the 500’ as currently proposed. It’s not likely that this project would pencil out for the developer at only 300’.

Last October [2015], Seattle attorney Jack McCullough, on behalf of his developer clients, several affordable housing advocates, and the Mayor reached an agreement that Mayor Murray called the “Grand Bargain” As Bob Young reported in The Seattle Times, “the city would pull back some of its mandatory fees on development while still moving toward its goal; McCullough would holster his lawsuit challenging the city’s system of collecting fees from developers for affordable housing and another one in the works.” Notably absent from any involvement in this deal were representatives from the downtown residents community; the group potentially most adversely affected by the agreement. Was that a fair and just process?

Among other things, the“Grand Bargain” gives developers an extra 1000 sq. ft. per floor of development capacity in a high-rise residential structure. Obviously McCullough believes this basic idea of selling of land use rights by the City probably wouldn’t stand up under a court challenge or he wouldn’t have threatened to sue; but what would prevent someone else from making the same threat to the City?

Seattle is the only City in Washington State that we can find that has this system of funding affordable housing. Virtually all other cities, like Bellevue, charge developer fees (“X” dollars per residential unit), which we understand must be earmarked for infrastructure such as roads, bridges, etc. McCullough would probably prefer developer fees, too, unless the City makes the bonuses and incentives program for affordable housing more attractive for his clients… which the Mayor has done through the HALA deal.

We haven’t seen a detailed study of the financial implications of HALA, so we calculated some rough numbers on a hypothetical example to give you an idea what this deal means for the various parties that are impacted:

Developer: 1000 sq. ft./floor X 50 floors X $500/ sq. ft. (probably conservative) = $25,000,000.

Affordable Housing: $17.50/sq. ft. X 13,700 sq. ft. (up from 12,700) X 50 floors = $11,987,500.

Net gain for developer per building from HALA “Grand Bargain” = $13,012,500.

Net gain for the neighborhood and existing residents = $-0- (and reduced standard of living).

If the City is projecting $196,000,000 for affordable housing, our calculations say that means over $400, 000,000 extra for developers, all at the expense of the local community and its residents. That doesn’t sound so “grand” from where we sit.

Funding HALA on the backs of downtown residents is neither a fair nor a livable solution for the future of downtown Seattle. Downtown residents want and deserve a “Real Deal”, one that puts the “L” in HALA.


* See the post “Putting the ‘L’ in HALA” from March 8, 2016.”