Tuesday, May 29, 2012

Outside City Hall: density does not bring affordability - only higher housing costs, homelessness and displacement

Outside City Hall: density does not bring affordability - only higher housing costs, homelessness and displacement
There's been a lot of blogging and news articles of late on the topic of density and how much Seattleites are willing to and should accept.  Contrary to the image some are pushing of marauding neighbors with pitchforks stymieing all growth, recent data obtained from City Hall indicates otherwise.  In just seven years, 2005-2011, the city has reached 73 percent of its 20-year (2024) regionally set residential growth target. (More about this report,  click here.) In fact, we are approaching or exceeding record levels of new construction in many of our neighborhoods.  Construction cranes dominate Seattle's skyline like "War of the Worlds" aliens.  And like the movie, those cranes and the bulldozers clawing away in their shadow are altering our landscape just about as effectively. 
Seattle's urban streams, open space, tree canopy, human scale, and diverse physical form is under siege to redevelopment and more is on the way in the wake of the pell-mell push for regulatory reform, master permitting, upzones, and "pedestrian friendly" development (a misnomer if there ever was one).  Somehow though, it's not enough for the pro-density crowd who say we need still more growth in order to "save the environment".  Effectively, they're telling us that we must destroy our urban village (here in Seattle) in order to save the "global village" (everywhere else but Seattle).  This is rank hypocrisy as we've described in several previous columns. Excessive densities concentrated in Seattle (as opposed to a "poly-centered" approach to regional growth) is not sound environmental policy.  More of our views on this are here: http://www.zipcon.net/~jvf4119/outsidetwo.htm#Outside City Hall July 2010:  A response to a recent Publicola column pushing still more highrise office  and here: (scroll down to Feb 2010 article: http://www.zipcon.net/~jvf4119/outsidetwo.htm#Reprinted from Feb 1, 2011 Edition of North  )
For our most recent column however (reprinted below from the last issue of City Living Pacific Publishing neighborhood papers), we're focusing on another canard that pro-density forces have factored into the debate - the claim that by simply unleashing the market, adding unlimited densities, it will produce more affordable housing.  This isn't a new argument. It rears its head every decade or so, and then soon it's dismissed by all but the most zealous developers and freshman economics majors. 
Development interests never could get much traction making this "trickle down" argument by themselves because it's so shamelessly self serving.  But now that density has a "higher purpose"- to save the environment - the affordable housing we're gonna get is the icing on the cake.  Effectively they've teamed up the "pseudo-enviro's" (who some say are really one and the same) and together they're advancing the affordability argument to bolster their pro-density agenda. Our column reprinted below takes aim at this aspect of their case.   (This intro by John V. Fox alone)
Outside City Hall Column Begins here by Carolee Colter and John V. Fox (May 2012 City Living):
Econ 101 textbooks offer a simple equation: More supply drives down prices. The pro-density argument to legitimize runaway growth here in Seattle is that increasing the supply of market-rate units will lower housing prices and guarantee a larger stock of affordable housing. 
That’s the theory. But what does empirical experience in Seattle tell us? 
For the last 35 years, since Seattle came out of its mid-1970s economic bust, periods of accelerated residential development have always directly coincided with more demolition of low-income housing, higher rents, lower vacancy rates, longer waiting lists for subsidized housing, increasing levels of homelessness and higher housing costs for all Seattleites. Each successive wave of growth leaves in its wake a growing divide between rich and poor, white and non-white in our city.
So how does the simple economic maxim of “more supply lowers prices” get turned completely on its ear? In a built-up urban environment, there’s less and less vacant land over time, and the consequence of new development means removal of the existing supply of lower-density housing. Housing that’s older, non-debt-supported and affordable gives way to new, more expensive housing.
 Following the numbers
Here are some real numbers from the Department of Planning and Development (DPD) and updated through March 2012, which highlight our point. Since 2005, more than 5,000 units of housing have been torn down to make way for new residential construction. Conservatively, 3,000 of those 5,000 units that were lost served the city’s poorest renters. (Our surveys over the years of tenants in buildings facing the wrecking ball indicate that anywhere from 60 to 80 percent of these units were low-income rentals.) 
As for the new units that replaced this lost housing, they’re priced hundreds of dollars above what most low-income people could afford — or even what the average wage earner or tenant in Seattle could afford. 
Most new construction might provide, for example, a studio for $1,100 a month or $1,500 for a one-bedroom. The average Seattle wage earner makes about $43,000 a year and, to spend no more than 30 percent of income on housing, needs a rental at $1,075 a month. The average tenant earns around $39,000 and needs a rental below $975.
Those with incomes below 40 percent of the median, who need a rental below $700 to $800 a month, face a conspicuous shortfall. According to the King County Housing Benchmarks report, in Seattle, there are 40,000 households whose income falls below that threshold, but only 10,000 units at rents affordable to this group. In all of King County, there are some 70,000 households whose incomes are below 30 percent of area median but only 300 (you read that right) rentals affordable to that group. Consequently, there’s a long waiting list for subsidized housing. 
More housing development coincides with more demolition of existing low-income housing. The expensive stuff that gets built adds to our total supply. In fact, since 2005, Seattle has built more than 35,000 new units and reached over 70 percent of its 20-year growth targets. 
But even at this level of growth, the increased inventory has not reduced prices — in fact, it’s just the opposite. Prices fall when development rates fall, when the number of demolitions falls. Vacancy rates fall at these times, as well. So does homelessness. So do the waiting lists for public housing
New construction (and upzones designed to stimulate higher rates of new construction) also has the effect of driving up surrounding property values, and the resulting higher taxes get passed on in the form of higher rents. This encourages a more rapid turnover of surrounding properties — buying and selling and refinancing of existing units — which also serves to drive rents up on surrounding properties. 
 Saving lower-priced rentals
No matter how much new construction we see in Seattle, it’s never enough to offset rising demand accompanying the influx of newcomers attracted to work in those shiny, new downtown and South Lake Union office towers. And we only recently upzoned downtown for another 17 million square feet of office space to ensure an influx of new workers who will raise demand even more.
If our concern really is affordable housing, our local government should intervene to slow growth down, rather than stoking the flames of rapid growth through upzones. 
And what growth does occur should be preceded with mechanisms that prevent removal of existing, lower-priced units and that promote in-fill over demolition. 
And when this cannot be done, let’s require developers to replace one-for-one what they remove, at comparable price. 
More proactively, our city should acquire and purchase existing, lower-priced rentals before they are lost to the wrecking ball or before speculation drives rents above low-income thresholds, and transferring these buildings to nonprofit ownership, cooperatives and land trusts. Slowing growth down and reducing speculative pressure on existing units gives government more time to do this.
Simply unleashing the forces of the market by promoting more density through upzoning has only led to more displacement, higher housing costs and more inequality and human suffering in our community. And those — especially elected officials — who promote added density and rely on the myth of supply-and-demand to justify it, are guilty of abetting these trends.
(to reach us, email us at Seattle Displacement CoalitionJ-Fox <jvf4119@zipcon.net>or call 206-632-0668 or check out our website)

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