Leveraging New Development for Affordable Housing in Seattle

Leveraging New Development for Affordable Housing in Seattle

Seattle’s Mandatory Housing Affordability package implements a crucial recommendation in the city’s 2015 Housing Affordability and Livability Agenda.

In response to escalating concerns about housing affordability, homelessness, and equity, the city of Seattle convened a working group that produced the 2015 Housing Affordability and Livability Agenda (HALA). The HALA report set a goal of creating 50,000 housing units, including 20,000 units of affordable housing, over a 10-year period — a significant increase from the approximately 800 new affordable units the city created annually before HALA's launch. The report also seeks to realize longstanding livability and equity goals through increased affordable housing production and housing choice in areas well served by transit, areas near employment opportunities, and neighborhoods with a high risk of resident displacement. The report's 65 strategies for achieving these goals involve allocating more resources to affordable housing, increasing housing production through market mechanisms, strengthening support for communities through housing preservation and protections for vulnerable renters and homeowners, and streamlining processes that increase the costs of housing development.

The HALA report presents several recommendations to generate more resources for affordable housing. One recommendation, which the report calls crucial, has two parts: adopting zoning provisions that allow more intensive market development and a mandate for developers to provide affordable housing. To implement this approach, Seattle adopted a package of Mandatory Housing Affordability (MHA) policies in 2019 that includes new zoning provisions for zoning districts throughout the city. These provisions increase allowable development intensities and require multifamily and commercial developers to either incorporate affordable housing into their projects (the performance option) or pay a fee into the city's affordable housing fund (the payment option). MHA gives the city a powerful new funding mechanism for affordable housing creation and preservation, joining existing funding tools that include incentive zoning, the Seattle Housing Levy, and the JumpStart payroll tax. MHA is similar to the city's incentive zoning initiative but differs from the earlier regulations in two important ways that make MHA more productive. As the name suggests, incentive zoning is a voluntary inclusionary zoning program for developers, whereas MHA is a mandatory program. And unlike incentive zoning, which bases a developer's affordable housing contribution solely on the portion of their development that exceeds the zoning district's density limit, MHA bases the amount of required affordable housing on the size of the entire development.

MHA has become a major source of city funding for affordable housing development in Seattle, generating a significant number of affordable housing units. The city's 2022 annual report on MHA and inclusionary zoning found that between MHA's adoption in 2019 and the end of 2022, the city issued permits for 41 projects by developers choosing the performance option. These projects consist of 3,604 units, 246 of which have affordability restrictions. Most developers chose the payment option to fulfill their MHA obligations during MHA's first year in full effect. According to another 2022 report on the city's housing investments, approximately one-third of city-awarded funding for affordable rental housing ($52.8 million out of $154.3 million) came from MHA payments. This figure represents a significant increase in city outlays for affordable housing; the 2017 housing investment report — the last report issued before the implementation of MHA — records that Seattle spent $93.44 million on affordable rental housing. The city's total investment in affordable housing in 2022 supported the building, acquisition, and preservation of 990 affordable rental dwellings, including supportive housing units for people experiencing homelessness and apartments serving low-income individuals and families. Through the end of 2022, the city received MHA payments totaling $246.1 million, of which $245.4 million has supported the creation or preservation of 902 affordable rental units and 30 houses for low-income, first-time homebuyers.

Click here to access the Mandatory Housing Affordability package and information about how it addresses regulatory barriers. Find more plans, regulations, and research that state and local governments can use to reduce impediments to affordable housing at HUD USER's Regulatory Barriers Clearinghouse.

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