By MBAKS Senior Policy Analyst Allison Butcher

June housing data from the Northwest Multiple Listing Service show a growing inventory of homes for sale, with 1.34 months’ supply available in both King and Snohomish counties. This marks the first time the housing measure has exceeded one month’s supply since September 2020 in King County and May 2020 in Snohomish County. While this moves us toward greater balance in the market, many analysts consider a four-to-six-month level as an indicator of a healthy market.

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Contact:
Stephanie Giralmo, Public Relations & Media Manager
Master Builders Association of King and Snohomish Counties
p 425.457.7067

FOR IMMEDIATE RELEASE

Kirkland Tree Ordinance Falls Short on Addressing Housing Crisis

MBAKS, builders and property owners appeal City’s ordinance, seeking balance between tree protection and need for more housing choices

BELLEVUE, Wash., May 18, 2022—Master Builders Association of King and Snohomish Counties (MBAKS) today joined eight builder/developers and property owners in filing an appeal before the Growth Management Hearings Board regarding Kirkland’s recently adopted tree protection ordinance.

On March 15, the Kirkland City Council approved the ordinance governing tree removal and replacement by a vote of 5-2. Public comments opposing the vote observed the final ordinance had abandoned a multi-year collaborative effort between City stakeholders, Kirkland residents, the Houghton Community Council (HCC), MBAKS, and individual developers. According to the comments, these key stakeholders had proposed a balanced approach for trees and growth goals, which the City jettisoned in favor of an entirely staff-drafted ordinance.

The adopted ordinance defines “landmark trees” that must be preserved by private property owners and creates a nearly total ban on their removal from private property. Under the new definitions, these “landmark trees” and “groves” are common throughout the city and are found on countless private properties. The appeal argues this action failed to meet important planning goals of the Growth Management Act (GMA), including those calling for encouraging development in urban areas, affordable housing, and timely, fair and predictable permit processing. Furthermore, the ordinance was adopted without consideration of private property rights, largely placing the burden on private property owners for achieving the city’s goal of a city-wide 40% tree canopy.

“The work to provide more housing choices takes place in a robust regulatory and planning regime that protects the environment and considers a variety of perspectives” said Interim MBAKS Executive Director Jerry Hall. He noted that “Kirkland is doing many things right under the GMA and is one of the better jurisdictions in which MBAKS members develop land and build homes. However, we are concerned that more onerous tree retention and replanting requirements in Kirkland’s tree code will significantly increase review times and construction costs, hampering new home construction at a time when more housing supply is desperately needed. This will make it increasingly difficult for the city to meet its own housing goals and provide a range of affordable housing options for current and future residents.”

MBAKS also maintains that the ordinance improperly treats single trees and small groves of trees as critical areas on par with wetlands or fish and wildlife habitat conservation areas, even though they do not qualify as critical areas or for protection under GMA rules. Nor does the ordinance rely on “best available science” or consideration of the significant tradeoffs involved with this new set of limitations. At the same time, MBAKS asserts that the city did not consider any “best available science” in requiring large buffer areas around tree protection and critical root zones, as required under the GMA for designated critical areas.

Prior to its adoption, MBAKS actively engaged with the city and others in a multi-year stakeholder process, offering input on how to support our shared goals of a vibrant tree canopy—both in the short term and many years into the future— while providing much needed housing. However, the city put the process on hold in 2019. The city then in 2021 suddenly changed course, entirely disregarding the stakeholders’ input and recommendations from 2019, and took a far different approach on tree protection with very limited opportunity for comments from stakeholders.

The HCC, along with MBAKS, were part of the stakeholder process in 2018/2019. The city did not consider the HCC’s input prior to adopting the new regulations but did provide them the right to veto the new regulations as applied to their jurisdiction. The HCC did just that and voted overwhelmingly on April 25th to veto the new regulations. The HCC and MBAKS share many of the same concerns regarding the new regulations including lack of predictability.

The GMA requires fast-growing counties and cities to plan thoughtfully for new housing, transportation, and business centers, while still protecting environmentally critical areas. Encouraging housing near job centers will reduce long commutes and lower greenhouse gas emissions. Additionally, denser housing efficiently uses our limited land supply, and these homes are more affordable and energy efficient.

MBAKS is strongly committed to environmental stewardship, which can be seen in our advocacy work for pro-density housing measures, like accessory dwelling units, fee simple townhouse codes, and state legislation facilitating middle housing and transit-oriented development. MBAKS believes trees are a vital component of our urban environment, whether thoughtfully retained or newly established in harmony with development.

“We stand as a partner in the work to address the current housing affordability crisis and support crafting a plan for maintaining the vibrant tree canopy that we all love in Kirkland,” said Jennifer Anderson, MBAKS Interim Government Affairs Director. “Unfortunately, we believe that the current adopted tree code works against rigorous planning work required by the GMA, which exists to encourage more homes near jobs and schools so that we may protect our most pristine areas and open places that make our region special.” Anderson further stated that MBAKS hopes this appeal will help clarify the authority of local jurisdictions under the GMA to regulate tree retention, particularly outside of critical areas.

MBAKS supports tree protection. However, it is sometimes necessary for homebuilders to remove trees to meet each property’s highest and best use. Trees are also often removed for safety reasons when they could result in dangerous conditions for residents. In addition, trees are often replaced at a higher rate than removal, with new trees established in locations better suited for healthy long-term growth within the developed environment, and with more diverse tree types than what was removed, ensuring a healthy tree canopy is maintained and enhanced over time.

There are numerous other state and local regulatory requirements builders must follow to ensure environmental protection, including shoreline rules, grading and drainage codes, stormwater regulations, building and energy codes, and more. The GMA challenge contends Kirkland’s ordinance upsets the delicate balance of considerations that ensure the responsible growth of our community.

For more information, please email pr@mbaks.com.

About MBAKS

Founded in 1909 and headquartered in Bellevue, Washington, the Master Builders Association of King and Snohomish Counties (MBAKS) is the nation’s oldest and largest local homebuilders association. Like our founders, our members continue to take a leading role in all facets of homebuilding and support the planning for a growing region. From new technology to advances in sustainability, from collaborative public policy efforts to investing in our communities, our commitment to a thriving, inclusive and well-planned region never wavers. We are the professional homebuilders, architects, remodelers, tradespeople (carpenters, framers, roofers, plumbers, electricians), planners and engineers, suppliers, manufacturers, and sales and marketing professionals in your community who believe everyone deserves access to a healthy and productive place to call home.

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By MBAKS Content Strategist James Slone

What happens when inclusionary zoning works against affordability? Just ask Seattle.

Like many urban areas in the United States, the Puget Sound region has become unaffordable for many new and existing residents, especially in Seattle, where high land value, lack of supply, cumbersome permitting, and restrictive zoning have sent prices skyrocketing.

One approach some U.S. cities have pursued to address affordability issues is inclusionary zoning (IZ). IZ policies utilize municipal or county planning ordinances to mandate that a given portion of new construction be affordable for low- to moderate-income households.

These mandated units are generally paid for with subsidies. For example, the builder can subsidize affordable housing by eating the building cost, or the government can subsidize it by providing an incentive to the builder in the form of an offset or by setting up an affordable housing fund.

MBAKS does not advocate for IZ policies, having long argued that the additional costs to the builder will ultimately be passed on to the new homeowner or renter, driving up the cost of market-rate housing. Despite these concerns, inclusionary zoning has become a popular approach in cities across the West Coast—including Los Angeles, Portland, and Auburn, Washington.

In 2006, Washington state passed House Bill 2984, opening the door for jurisdictions to “enact affordable housing incentive programs… for the development of low-income housing units.” This cleared the way for Seattle to pass its own IZ program, Mandatory Housing Affordability (MHA), in spring 2019.

The MHA imposed affordable housing requirements in 27 urban villages—neighborhoods across the city designated to absorb the bulk of Seattle’s population and job growth—with the goal of creating 6,000 homes affordable to households making 60% of area median income (AMI). The MHA is just one part of Seattle’s Housing Affordability and Living Agenda (HALA), which aims to create 20,000 affordable homes by 2025.

Overpromising and Underdelivering

In a 2007 report on inclusionary zoning by the Housing Partnership, the authors point out that IZ is politically attractive because it offers a one-size-fits-all solution to affordability with little up-front cost to voters. But it’s only a partial solution. Subsidies alone are insufficient to build enough housing for everyone, especially in hot markets and space-constrained cities.

Supporters of IZ say these policies can play a useful supplemental role provided they strike the right balance. But when poorly designed, IZ leads to fewer affordable homes. Take Portland. After establishing an IZ program in 2017, housing permits plummeted. By exempting projects with 20 or fewer units, they perversely incentivized smaller projects.

The result was a mind-bending 43% drop-off in new home permitting in 2020, with just 2,000 new units coming online. With so few new homes in the pipeline, Portland is underproducing the housing they need to meet demand.

Portland’s woes are a cautionary tale of what happens when an IZ program is designed without carefully considering how different types of housing may be affected or what kinds of builder incentives can balance out the cost of including affordable units.

Seattle’s own MHA is a case study of both the potential and pitfalls of IZ. Zoning requirements were lifted in all 27 urban villages with the proviso that developers either include affordable units in their own projects or pay in-lieu fees. (It’s worth noting here that the MHA only affects 6% of single-family zones, which still comprise about 75% of residential land in Seattle.)

If developers choose to provide the affordable units onsite, 2% to 11% of their projects’ square footage must meet the AMI criteria. Those who choose not to provide the units must pay a fee—ranging between $5.00 and $32.75 per square foot—to the Seattle Office of Housing’s affordable housing fund.

Thus far, the Urbanist has reported, “developers have overwhelmingly chosen the in-lieu fee option,” netting the program $68 million that could fund 850 affordable units. While these are considerable sums, the MHA’s one-size-fits-all design has discouraged certain types of more affordable “missing middle” housing by constraining supply and driving up costs.

The Trouble With Townhomes

A relatively affordable, market-rate family housing option, townhomes fill a vital niche in healthy housing markets. But the MHA’s square footage requirements and in-lieu fees have added significant costs to townhomes, making them less attractive to homebuilders.

In April 2019, 60 townhome projects were fast-tracked to beat the MHA deadline, a record number of permits in a single month. After the rush, townhome permits dropped to 33 per month. In October 2021, townhomes hit their nadir with just one application for the entire 31-day period.

The problem is that the majority of townhome projects average just three to four units. Because builders can’t subdivide square footage in a single unit, they have to round up to one or two AMI-restricted units to avoid the in-lieu fee—potentially half or more of their total units. The result is an effective 25–66% affordability requirement imposed on townhomes even though the MHA calls for just 2.1–11%.

Faced with this, builders end up paying the fee. According to a member survey conducted by MBAKS in 2021, the average fee per four-unit project is now $130,972, essentially doubling predevelopment costs. And because the fees are due early in development, construction loans won’t cover the added expense.

The MHA does provide development incentives like increased floor area ratio (FAR), modified density limits, or an extra story intended to offset MHA fees, but they don’t pencil out in practice. Townhomes usually have three floors and adding a fourth is a liability for both buyers and builders. An extra floor means higher square footage fees, stricter codes, and a four-story home buyers don’t want.

Because of all this, it’s now simply too expensive to build townhomes, and many developers have pulled back from initiating such projects. In 2018, townhome permit applications were set to accommodate 4,647 residents; in 2021, townhome projects had dropped to accommodating just 1,437.

It’s difficult to make housing more affordable when mandates and fees make it more expensive. As Alan Durning of the Sightline Institute put it, “The very notion of imposing fees on homebuilding to pay for affordable housing is facepalmingly wrongheaded.”

Escaping the Twilight Zone

A poorly designed inclusionary zoning program that doesn’t take all types of housing options into full consideration will not only fail to deliver significant affordable housing but will actively discourage the construction of proven housing types that more families can afford.

While MBAKS would prefer to exempt townhomes from MHA altogether, the association and other housing advocates have proposed a few reforms that could make a significant difference. These include allowing MHA fees to be paid in installments and letting builders of small infill projects pay fees only on floor area that exceeds pre-MHA FAR limits.

For MHA housing in general, there are incentive carrots that would balance out the stick of fees, including multifamily tax exemptions for MHA projects, a 50% waiver in costly off-street parking requirements, and opening the door to micro units that offer naturally affordable market-rate rents.

Of course, the real solution to our housing shortage is building a lot more homes. Most of the city is still restricted to single-family zones.

We must open the door to more housing types, lower construction hurdles like onerous permit timelines, and let homebuilders build. With significant zoning changes, Seattle could encourage more missing middle housing—such as townhomes, rowhouses, duplexes, and fourplexes—across the entire city.

Without incentivizing these housing options, inclusionary zoning will simply become exclusionary zoning by another name. We need a lot less stick, and a lot more carrot.