A new proposal from the Department of Planning and Development, quietly released via DPD’s Land Use Bulletin today, would allow linkage fees (square-footage taxes on development to fund affordable housing) of up to $28 a square foot for all new residential development–the equivalent of about a 10 percent tax on new housing, or about. That includes (importantly, and for the first time during the long linkage fee discussion) not just multi-family but single-family housing, which could be subject to the same linkage fees as the “yuppie condos” some linkage fee proponents have said deserve to be targeted by the tax. A 4,000-square-foot house, for example, would require a payment of $112,000 if the council adopted both the maximum fee and applied it to single-family development.
In addition, a new review of the proposal under the State Environmental Policy Act (SEPA) affirms an earlier finding by DPD called a Determination of Non-Significance (DNS), meaning that the proposal has no major environmental impacts and will not have to go through a full environmental impact statement. (See the full SEPA checklist for the proposal here). Two months ago, under pressure from pro-density linkage fee opponents, DPD withdrew its initial DNS for further review.
The proposal is only a framework for future discussions about the linkage fee, intended to allow the city council and Mayor Ed Murray’s Housing Affordability and Livability Agenda committee the broadest possible range of options, including the maximum linkage fee. (Council member Kshama Sawant, who’s running in the Third District, which includes rapidly gentrifying areas like the Central District and Capitol Hill, has said repeatedly that she supports the maximum possible linkage fee). The options now also include taxing new single-family housing instead of exempting standalone houses from the tax, which could help mollify linkage fee opponents, who protested the seeming unfairness of taxing one class of development (condos and apartments) while exempting another (houses).
The logic behind the linkage fee goes like this: New development has a negative impact on affordability, because it drives up housing prices (rents are higher in new buildings) and displaces existing residents whose current housing is more affordable. The opposing argument is that a tax on new development will inevitably reduce the number of developers building in Seattle, which will reduce overall housing supply, which will drive up rents in a landlocked, mostly single-family-zoned city that’s expecting 120,000 new residents in the next 20 years.
DPD says they don’t intend the proposal to be a recommendation, and expect that HALA and the council will come up with a joint proposal (likely somewhere below $28 a square foot, and potentially taking single-family houses out of the mix) when HALA makes its recommendations. Those recommendations have been delayed one month past their original deadline, until the end of July, to give the committee more time to discuss affordable-housing options.