Ep 77: Upzoning With Strings Attached with Jacob Krimmel and Maxence Valentin
Aug 21, 2024
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Jacob Krimmel, a zoning researcher, and economist Maxence Valentin dive into the complexities of upzoning and its effects on affordable housing. They discuss Seattle's Mandatory Housing Affordability program, revealing unintended consequences like rising land values and imbalanced community benefits. The pair highlights the 'grand bargain' concept, emphasizing the need for collaborative housing policies that align developer incentives with public needs. With insights from urban planning, they illustrate the delicate balance required in navigating the dynamics of housing reform.
The concept of upzoning with strings attached aims to balance increased building densities with the requirement for affordable housing contributions from developers.
Seattle's Mandatory Housing Affordability program intended to alleviate housing crises but led to developers circumventing regulations, decreasing multifamily residence construction.
Political dynamics shaped the MHA program, revealing the challenges of reconciling varying stakeholder interests while ensuring effective housing policy outcomes.
Deep dives
Understanding Upzoning with Strings Attached
Upzoning refers to changes in land use regulations that allow for increased building densities in exchange for community benefits. The concept of 'upzoning with strings attached' involves developers providing certain contributions like affordable housing in return for the opportunities granted by the upzoning. This practice has become widespread in North America, particularly with the Seattle Mandatory Housing Affordability (MHA) program. While it aims to generate more affordable housing, it has revealed complex dynamics and unintended consequences that warrant closer examination.
Seattle's Mandatory Housing Affordability Program
Seattle's MHA program was designed to address simultaneous crises of housing shortage and affordability by implementing citywide upzoning, particularly in urban centers. Developers were required to either include affordable units in their projects or pay into a centralized fund. Despite good intentions, the program led to developers avoiding construction in the upzoned areas, resulting in a shift towards building more expensive single-family homes instead. This outcome has raised questions about the effectiveness and consequences of the MHA policy.
Developer Behavior and Strategic Avoidance
Research indicated that after the implementation of the MHA, there was a notable decrease in the permitting of multifamily residences in designated areas. Instead, developers shifted towards building in nearby parcels not subject to MHA's affordability requirements, exemplifying a strategic avoidance of these mandates. Smaller developments, which were more negatively impacted by the inclusionary requirements, saw significant declines in construction activity. This suggests that the upzoning policy failed to stimulate sufficient affordable housing production as intended.
The Political Landscape and Its Challenges
Seattle's political environment significantly influenced the formulation of the MHA program, emphasizing the need for a compromise to gain support from various stakeholders. As a result, the policy combined strict affordability mandates with the aim of increasing housing supply. However, due to the inherent complexities and competing interests, this 'grand bargain' often left many involved parties unsatisfied. The political realities of power dynamics in housing, particularly the influence of affluent homeowners, contributed to the limitations and framing of the MHA outcomes.
Lessons for Future Housing Policies
The Seattle MHA case highlights the importance of understanding the trade-offs involved in upzoning with strings attached. Effective housing policies need to balance the incentives for developers while ensuring that community benefits, such as affordable units, are genuinely achieved. Policymakers are encouraged to adopt flexible and adaptive approaches that learn from the successes and failures of programs like MHA. Future reforms should also consider the broader political landscape, developer incentives, and average market conditions to create more effective housing solutions.
Changing zoning rules to allow taller and denser buildings may cause land values to go up, and public officials may try to “capture” this added value by requiring affordable units in new developments. But what happens when costs and benefits are out of balance? Seattle offers a cautionary tale.