Upzoning With Strings Attached: Evidence From Seattle’s Affordable Housing Mandate

Jacob Krimmel
Federal Reserve Board

Betty Wang
University of Hong Kong

The views and analysis expressed here do not represent those of the Board of Governors or the Federal Reserve System.

This article analyzes the effects of a major municipal residential land use reform on new home construction and developer behavior. It examines Seattle’s Mandatory Housing Affordability (MHA) program, which relaxed zoning regulations while encouraging affordable housing construction in 33 neighborhoods in 2017 and 2019. The reforms allowed for more dense new development, or “upzoning,” but they also required developers to either reserve some units of each project at below market rates or pay into a citywide affordable housing fund. Using a difference-in-differences estimation comparing areas the reforms affected versus those not affected, the authors show that new construction fell in the upzoned, affordability-mandated census blocks. The quasi-experimental border design finds strong evidence of developers strategically siting projects away from MHA-zoned plots—despite their upzoning—and instead to nearby blocks and parcels not subject to the program’s affordability requirements. Lowrise multifamily and mixed-use development drive these effects. The findings speak to the mixed results of allowing for more density while simultaneously mandating affordable housing for the same project.