Seattle Housing Policy and Affordability Calculator

In Seattle's climate of rapid growth and high rents, housing affordability has become a critical issue for households at all income levels. Local policies can play a large role in affecting rents by changing the supply of housing and the cost of new development. These policies are often designed to achieve public goals, such as expanding opportunities for community input, reducing carbon emissions, or increasing green space. However, the impacts of these policies on housing affordability are not often directly considered.

This calculator is designed to support discussions about how to develop local policies to balance the impact on housing affordability with other public policy goals. The policy toggles are set to reflect current conditions in Seattle. As you toggle the various policy levers below, the calculator will show estimated changes in the rent for a typical new one-bedroom apartment, along with development feasibility, overall estimated citywide housing production, and estimated shifts in citywide rents.

Click here for a white paper detailing the calculator’s methodology, assumptions, and key findings.

Select New Construction Project Type

Click on a building typology to select it. Your selection will affect project-level outcomes as each typology has a different construction cost development profile.

Midrise

High-rise

Please click on the tabs below to view and adjust the policies levers that can
impact housing costs.

Affordable Housing

Cities often use economic incentives or development requirements to increase the supply of housing affordable to lower-income households. In Seattle, these take the form of Mandatory Housing Affordability (MHA) and the Multifamily Tax Exemption (MFTE).

Affordability Set-Aside

Mandatory Housing Affordability (MHA) is a policy in Seattle that intends to increase affordable housing options in the city, in which the City trades additional development rights for more affordable homes. Developers choose between two options: to ensure that 5 to 11% of all homes in a new apartment are affordable (to households at 60% of Area Median Income), or to pay a fee in-lieu (between $5 to $32 per square foot). The exact requirements depend on the location of the project and the zoning allowances received. This calculator assumes that at current conditions, this project is building to their MHA zoning allowance - and are choosing to pay the MHA fee instead of setting aside affordable units.

Affordability Level

The Mandatory Housing Affordability policy requires rent-restricted homes to be affordable to households at 60% of area median income (AMI) levels. These income levels are set by HUD each year, based on the local metro area’s AMI. For example, in 2018, a two-person household at 60% AMI earned $48,150, and a home that is affordable to this household could charge no more than about $1,200 in rent.

60% AMI

Mandatory Housing Affordability (MHA) Fees

MHA fees are fees that developers can choose to pay to support affordable housing, in lieu of setting aside a certain number of affordable homes in the project. The City invests these fees into additional rent-restricted homes that address displacement, create housing in areas of high opportunity, and serve households with the greatest need. If the property meets their requirement with affordable units on-site, no MHA fee is required.

+$22 psf

Tax Abatement

Tax abatements are state or local policies designed to reduce the tax burden on properties in order to support a public policy goal. Typically, a percentage of total taxes owed are exempted in exchange for affordability or to encourage more market-rate development. In Seattle, the Multifamily Tax Exemption provides a full (100%) tax exemption lasting 10 to 12 years for buildings that set aside 20% of homes as income-restricted for a range of low- and moderate-income households. Between 1998 and May 2018, the MFTE program created approximately 4,000 rent-restricted homes in over 190 apartment buildings.

Environmental Impact

Cities are increasingly taking the initiative to address climate change and environmental quality at the municipal scale. As a leader in sustainability practices, Seattle holds both new and existing buildings to a high environmental standard through their Energy Code and Green Factor Requirements.

Energy Code

Seattle's Energy Code is designed to increase the overall efficiency of new and renovated buildings in the city. By regulating features such as the building envelope, exterior glazing, HVAC systems, water heating, lighting, and clean energy, the energy code can have significant effects on the city's emissions and carbon footprint. Adopted in 2015 and in full effect as of January 2018, Seattle's energy code is relatively stringent, especially for HVAC with common glazing. Energy policies can lower long-term operating costs by reducing energy consumption and utility bills, but they can also come with a steep upfront cost premium, which may disincentivize building.

Silver

Green Factor Requirements

Seattle’s Green Factor Requirements are meant to update and improve the city’s landscaping and stormwater management, while promoting the aesthetic and health benefits provided by greenery. At least 30% of a project’s land area is required to be covered with green landscaping, green roofs, vegetated walls, and water features. Each of these features has an impact on both overall construction costs and ongoing maintenance costs, which are then reflected in higher rents. The green factor (GF) score is a weighted composite score that reflects the extent to which the project satisfies various criteria, such as the square feet of landscaped areas and vegetated walls, the number of plants of various kinds, etc. A breakdown of the rubric can be found here. The minimum GF score currently ranges between 0.3 and 0.6, though this these thresholds are updated on an ongoing basis.

0.5 GF Score

Community Impact & Design

Cities often establish touch-points within the development approval process for community members to influence new development. These usually occur during the predevelopment period, which is when projects gain public approval before construction can begin. Predevelopment protocols allow government agencies, local review boards, and community members to determine if proposed buildings comply with local requirements and meet community standards. At the same time, streamlining the predevelopment period makes development less expensive by limiting the ongoing holding costs of property and by decreasing project risk and expensive modifications. Seattle residents also have two additional tools that regulate urban design and form of new midrise and high-rise developments - Open Space Requirements and Floor Plate Restrictions.

Early Community Outreach

Early Community Outreach was established in June 2018 to give residents a greater say in what is developed in their communities. New developments are required to engage community members in conversations about project designs before the designs are complete, which can add three to six months to the permitting process. Community review can amplify the risk that projects are downsized to have fewer homes—or no homes at all—if the project faces strong “NIMBY” (“Not In My Back Yard”) pressures.

3 months

Design Review

Seattle's Design Review process aims to ensure that projects meet local design standards and aesthetic qualities. Most projects are subject to review by a local Design Review Board, consisting of five members representing local neighborhood, business, design, and development interests. The design review process takes about six months if designs are approved on the first iteration. If further iterations are required, the process can last more than 12 months.

7 months

Permitting Timeline

“Permitting” is the process by which a project secures entitlements (permission to build), given that the project complies with local regulations and meets community needs. Shortening and streamlining the entire review process would help lower rents and increase housing production by decreasing risk and ongoing costs, such as from construction delays.

10 months

Floorplate Restriction

As part of its urban design guidelines, Seattle has regulated the size of floorplates, gross floor area above the first several floors, and facade lengths. These guidelines are meant to maximize a visual sense of openness in the neighborhood. However, it is possible to preserve the city’s aesthetic qualities while making small adjustments to relax floorplate restrictions, such that the restrictions do not as severely increase costs and limit the housing supply. Currently, the restrictions either decrease the number of homes built or require the building to be built higher at an added cost. Floorplates are currently restricted to 12,500 SF for midrise buildings, and 10,500 SF for high-rise buildings. Note that the floorplate restriction does not affect midrise development in Seattle: buildings are subject to floorplate restrictions based on their height, and this threshold is higher than most midrise buildings can be built under current height limits.

10,500 SF

Open Space Requirements

Seattle’s Open Space Requirements are designed to increase the amount of open space surrounding and within new developments. While the share depends on the amount of open balcony and terrace space, buildings are required to have between 20% to 30% of open space on their parcels if they are midrise, and 25 to 50% if they are high-rise. This measure both decreases overall development potential and increases landscaping costs. Changes in open space requirements can increase or decrease the total number of units—which affects not only the costs associated with construction, but also shifts timeline costs as the project’s stabilization period changes.

25%

Parking Requirements

Parking requirements aim to ensure that buildings provide enough parking. In many cities, parking requirements are higher than what the market needs, leading to higher development costs and unnecessary parking. In Seattle, however, most multifamily buildings are located in “parking flexibility zones” that do not require large amounts of parking because they are located near public transit. Reducing the amount of parking can significantly affect project development costs. As Seattle continues to transform into a walkable city with a variety of transportation options, the real estate development and lending communities have the opportunity to provide parking-light or -free projects.

0.6 units/space

Public Revenues

New apartments can have a significant impact on a city’s revenue structure and fiscal health. These apartments increase a city’s tax base through property taxes, but they can also increase costs if the city needs to pay for additional infrastructure and amenities for its new residents. Local governments can adjust both the amount of taxes that new apartments pay and the rate at which these taxes escalate over time. Currently, tax abatement in Seattle is used to encourage affordable multifamily development through the MTFE program.

Annual Property Tax Increase

Multifamily property taxes are paid each year as a share of a property’s assessed value. In Seattle, these taxes have been steadily increasing over the last decade as assessed values continue to increase rapidly. In recent years, property taxes have increased by about 4% per year.

State Real Estate Excise Tax

An excise tax based on the value of transacted real estate. As of March 2019, the statewide tax is 1.28% of transacted value. There are currently two bills (Senate Bill 5582 and House Bill 1921) within the state legislature which would increase the statewide tax rate to 2.5% and 3% respectively.

1.3%

Impact Fees

Impact fees are fees that are meant to pay for a portion of the infrastructure that supports a new housing project. These fees, which are currently under consideration in the City of Seattle, are one of several ways to fund important infrastructure projects—along with measures such as sales taxes and user fees. A study in King County, Washington found that a $1 increase in impact fees correlated with a $1.66 increase in sale price, indicating that these fees are passed on to renters and home buyers.

+$0/unit

Additional Public Infrastructure

Housing developments often accrue significant additional costs that result from unique project features and regulatory requirements. This can range from burying cable and electric lines, to establishing sewer connections or making expensive design modifications. Extending sewage lines can often increase costs by more than $500,000, while burying electric lines can cost more than $1.5 million.

+$0

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