August 7, 2017 Rob Poole

San Francisco Can Learn A Lot From Seattle

Seattle faces many of the same challenges and opportunities as San Francisco. Both enjoy strong economies driven by the tech sector, bringing in thousands of new jobs and residents every year. But when it comes to managing this growth, particularly with housing policy, the two cities have taken significantly different approaches. Year over year, Seattle regularly creates twice as many homes as San Francisco and funds subsidized affordable housing primarily with property tax revenue as opposed to developer fees. Our friends at SPUR published their takeaways from a recent study trip they made up north and the Puget Sound Business Journal covered a story on a developer’s idea for workforce housing. Here are some brief summaries from those posts.

State-Level Enforcement
The state of Washington has many more tools than California when it comes to enforcing land use policy. Washington’s Growth Management Act (GMA), passed in 1990, requires cities to plan for 20-year growth targets by actually zoning for the anticipated jobs and housing creation, as well as where it will take place, and adopting a comprehensive plan. In Seattle, projects of up to 200 homes in defined urban growth boundaries established under a comprehensive plan are exempt from environmental review, so it’s very difficult to challenge code-compliant projects once a plan has been adopted. As a result, there’s been significantly less sprawl in Seattle since the GWA was adopted.

California has relatively weak state power when it comes to land use. The Regional Housing Needs Assessment (RHNA) targets set forth under Plan Bay Area set only eight-year projections and are unenforceable, so cities cannot be penalized if they don’t plan for the growth. In Washington, cities that fail to comply with the GMA are liable to lose tax revenue. However, there is promise of enforcing RHNA targets if SB 35 passes this year in Sacramento.

Read SPUR’s blog for more information on the GMA.

More Homes Without Much Height
While Seattle is adding numerous high-rises downtown, that’s not all that’s being built. According to SPUR, “between 2006 and 2016, Seattle built nearly 16,000 new units below the magical 40-foot height limit. This is in comparison to San Francisco’s production of only 1,900 new units in 1 to 9-unit buildings from 2006–2015.” This is largely a result of the comprehensive plans required under the GMA. Outside the dense urban core, Seattle applies an “urban villages” planning strategy that concentrates compact housing around transit hubs. Much of the housing in these locations includes accessory dwelling units (ADUs), duplexes and 5-9 unit apartment buildings. Such projects are generally cheaper to build than high-rises and single-family homes and blend in more with the physical context of the surrounding neighborhood.

San Francisco has made progress in the past three years in this area by passing legislation that enables the creation of new ADUs. But much more can be done to encourage the construction of small-scale projects throughout the city, not just near downtown, that are naturally more affordable.

Tying Land Use Policy to Environmental Outcomes
In Seattle and throughout much of Washington, there appears to be a great cultural and political acceptance that enabling growth in already developed areas is favorable to the alternative, sprawl. Lawmakers recognize building homes on infill sites is essential to promote conservation and preserve the surrounding open space. Unlike the California Environmental Quality Act (CEQA), Washington’s environmental review process does not allow residents to constantly appeal and delay proposed housing.  

Because more Seattle residents recognize the benefits of increased density, such as more walkable neighborhoods and proximity to shops, they have a more optimistic outlook for their City. They also view San Francisco as a cautionary tale and why they should take an alternative approach. SPUR references a quote from a Seattle Councilmember who called San Francisco’s methodology of consistently exacting fees from developers in response to high housing costs as the “San Francisco death spiral.”

If the residents and decision makers in the Bay Area actually want to exercise their progressive values and concern for the environment, they should support policies that promote home creation near transit and jobs.

Solving Housing for the “Missing Middle”
Like San Francisco, Seattle also struggles to provide housing options for its middle-income workforce. But some Seattle-based developers are pursuing a solution that they believe can create new homes affordable to this income group, without using subsidies. The Puget Sound Business Journal reports that Spectrum Development Solutions, a mission-driven for-profit company, plans to create 1,000 homes affordable to residents earning between $40,000 and $80,000 per year, 60 to 120 percent of the Area Median Income.

They will use “cash-on-cash” returns, a more old-school style of real estate investment that requires patient capital and investors willing to wait longer to get their returns. This differs from typical institutional investors that invest in cities with strong markets and expect big, quick returns. In order to makes this approach work, Spectrum plans to partner with like-minded landowners who want to provide affordable homes for the middle-class and probably wouldn’t develop their properties otherwise.

It would be far more challenging to use this investment approach in San Francisco because the entitlement process is so risky and costly. Our complex process actually cuts out the smaller companies and skews it towards those with more money who can afford to work here. Seattle’s more “as-of-right” approach enables developers to pursue innovative solutions that provide housing opportunities for the middle-class that is being squeezed out. If we want to create more affordable options for people without using limited public subsidies, we have to support policies that make it easier to build homes.

Image: King County Parks Your Big Backyard

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Rob Poole

Rob is the former Development and Communications Manager at SFHAC.

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