Developers Vow to Sue Over City’s Affordable Housing Mandate. Will They Still Get Their Upzones If they Win?

A have-their-cake-and-eat-it-too scenario in the U-District.

A central selling point the city has used when pitching its plan to upzone in the University District has been the so-called “grand bargain” reached between developers and affordable-housing advocates in 2015.

Simply put, through stricter requirements on new developments, any onslaught of new market-rate or luxury apartments in Seattle would require the creation of new below-market units as well. The Mandatory Housing Affordability program has been presented as a way to create 6,000 affordable homes in Seattle as the city allows developers to build more densely. The new MHA program is expected to get its first run with the U-District upzone, which could be voted on by City Council as early as this month.

The upzone would allow buildings in the U-District to reach 320 feet, about the height of the beige University Plaza building that now towers over the rest of the neighborhood. Some affordable housing advocates have argued the upzone will displace poor people, since it will cause developers to buy up old buildings with cheap apartments and tear them down. City officials have countered that new mandatory housing requirements will prevent such displacement; MHA could created as many as 910 affordable units in the U-District, city planners say.

“Requiring developers to build affordable housing or contribute to its construction helps us slow the rate of displacement caused by our city’s growth, making MHA a critical tool for ensuring our city remains affordable for everyone,” Mayor Ed Murray said in a press release last October.

However, anti-upzone forces have been raising the alarm on a potential situation in which developers essentially have their cake and eat it too by getting the affordable housing requirements thrown out in court, while keeping the upzones on the books.

Here’s how such a scenario would go down: Since the affordable housing requirements were put into place, developers have contended they are an illegal tax on their business and vowed an expensive lawsuit. However, they can’t challenge the rules in court until a developer is granted a building permit that triggers the affordable housing rules. A successful legal challenge could, conceivably, eliminate the affordable housing requirements but not the underlying zoning permit.

“As the mayor has articulated, the point of these upzones has been to be able to work in some sort of supply of affordable units,” says John Fox of the Seattle Displacement Coalition. Removing the mandatory housing would “defeat the entire purpose, or rationale, of the upzone itself.”

Roger Valdez, executive director of Smart Growth Seattle, which represents developers and generally advocates for the least restrictive building policy possible, is Fox’s intellectual foe on all things development in Seattle. However, on this point, Valdez agrees that the scenario Fox is envisioning could transpire with the U-District upzone.

Valdez says of the mandatory housing requirement, “It’s unfeasible, it’s inflationary, and it’s also illegal. What it amounts to is the city is coming and saying you have to do this because there’s housing prices that are getting higher and your building project is why it’s getting higher. It’s a faulty logic, but that’s the basis of this. … That’s what’s going provoke the lawsuit, inevitably.”

Were that lawsuit successful, Valdez argues, the building permits issued to developers would still be valid.

“We’re not going to challenge the legislative upzone. We’ll challenge the (affordable housing) framework. And when the framework fails…(the city council) could go back and vote to repeal the upzone. But it’s not going to be automatic” and would not invalidate permits issued under the previous rules.

Speaking to Fox’s news blog, Outside City Hall, which first raised the possibility of developers’ legal maneuvering, Councilmember Lisa Herbold agreed that there was nothing on the books tying the upzone to MHA. “My understanding is that there is nothing in the proposed [U District upzoning]…that will require that if the… affordable-housing obligations are struck down the zoning changes are also repealed.”

Councilmember Rob Johnson, who chairs the Planning, Land Use & Zoning Committee and whose district includes the U-District, said in a statement to Seattle Weekly that the mandatory housing rules are clearly legal, downplaying the chance of a successful legal challenge to them.

“Mandatory affordable housing requirements are authorized under state law and have been successfully enacted in several Washington cities, including Shoreline, Kirkland and Redmond,” he said. “As with any legislation passed by Council, there is the chance that there may be legal challenges to the program at some time in the future. City Council continues to work closely with their counsel to ensure that the Mandatory Housing Affordability framework and implementation is within the authority provided by state law and that it will withstand any potential challenge.”

Still, while Fox and other affordability advocates oppose the upzone in general, they hope to get the City Council to add language to the upzone legislation now before them that would automatically rescind it were the affordable housing rules struck down.

Councilmembers Herbold and Mike O’Brien have expressed interest in doing so.

“Those two things should be tied together so if one is removed, the other is removed,” O’Brien told Outside City Hall. An aide to Herbold told Seattle Weekly that the next time the council will take up the upzone will be next week, but said there was not more information on what kind of language might be added to tie MHA to the new zoning.

Valdez says he’d need to see exactly what the council came up with before he could say whether his clients would oppose the new language. But in general, he says, he considers the city’s approach to development so flawed that he’s happy to watch the Seattle Displacement Coalition find ways to knock it off the rails.

“John Fox wants to blow the whole thing up, and we wouldn’t mind seeing it go away as well,” he says.