Killing affordable micro-housing has complicated Seattle housing landscape

Killing affordable micro-housing has complicated Seattle housing landscape
Seattle has some of the most expensive apartments in the nation. Although much of this can be attributed to the influx of new residents driving up demand, city land-use policies are also to blame for eliminating the construction of microhomes – small dwelling units offered at affordable rates. Developers are calling for a roll-back of city code regulations and the lengthy design review process. Photo: Joe Mabel.

One stated objective of the city of Seattle’s hotly contested income tax proposal is to address the regional housing affordability crisis. Not only has the city held the title of hottest real estate market in the nation for an entire year, it is one of the most expensive areas in the nation to rent an apartment.

However, for renters this challenge might have been avoided had a combination of regulations and land-use restrictions not derailed the once-flourishing micro-housing community. That’s a view held by industry experts and architects who say that these dorm-size spaces provided inexpensive opportunities for lower-income individuals to take advantage of Seattle’s economic boom.

“It’s common sense economics,” Smart Growth Seattle Director Roger Valdez said. “If there’s an incentive to do it, people will do it. If it’s not, you’ll see fewer people do it, and we’ve created an environment where it’s hard to build, difficult to produce the product, and so there’s high prices.”

Micro-housing and tiny homes are two possible ways state lawmakers could address the region’s homeless population. The idea was the theme of a House Local Government Committee October 30 work session.

Yet, housing industry members say more micro-housing could also lower the city’s astronomical rent prices by increasing the residential supply. The latest figures provided by Rent Café show that a studio apartment in Seattle may rent for $1,442 a month. According to the Seattle Times, Seattle apartment rents are up 64 percent since 2010, around the time Seattle became the birthplace of the “apodments” trend, offering 140 square-foot living quarters.

What made this possible at the time was the lack of a minimum unit size in the city code. Also, a unit was defined as a kitchen with rooms. This allowed the micro-housing builders to design and construct six or seven buildings of five units per floor with a communal kitchen, all without triggering the city’s design review board process. So rather than a duplex or triplex on a 3,000-square-foot-lot, builders could provide apartments with 32 units.

The result were apodments renting out for around $500 a month in 2011-12. That included all utilities and Internet.

Valdez, who lives in a microhome, said that this arrangement was ideal for young Millennials flocking to the city at the time, and who didn’t earn a lot of money but wanted to live close to Seattle’s amenities.

“There was a big demand for smaller, short-term housing solutions,” he said. “That’s what lit it up. Vacancy rates were zero; people loved it. They were just snatching them up.”

David Neiman, a Seattle-based architect that created microhomes, documented the rise and fall of Seattle’s micro-housing industry in a piece for Sightline Institute. He reported that in 2013, 1,800 microhomes were built, “nearly one-quarter of all new dwellings built in that year.”

It was then that opposition to the homes grew. Some of the criticism centered on the tiny size of the dwelling units, which Valdez called “the classic definition of a red herring.”

“It’s really not about the size at all,” he said. “People didn’t like the change. They didn’t want more people around. They were worried about their parking spots.”

Although the apodments or micro-houses didn’t offer parking spaces, Valdez said this served as a natural deterrent for car owners. Around three quarters of microhome residents don’t own a car, he said.

“That’s called the free market,” he said. “What happens is people would be looking for an apartment, they would see one of these things listed…and they’d show up and say, ‘Oh there’s no place to park around here.’ And they’d go someplace else.”

“It brought a lot of new people into the neighborhood,” he added. “It enabled a lot of new people to find a place to live in the city. It was classic old ‘not in my backyard’ type of stuff. That’s how it ended up getting killed.”

The beginning of the end for micro-house construction came when a King County Superior Court ruling stipulated that apodment-style projects had to go through the design review process. Neiman writes: “To avoid the expense, most existing projects switch over from pod-style to SEDUs (small efficiency dwelling units),” which must have a minimum 220 square feet of floor space.

In 2014, the city banned apodments or “congregate housing.” That same year, the city council also lowered rent restrictions for the multi-family tax exemption (MFTE), a voluntary city property tax-exemption program for developers who offer units for a 12-year-period to residents that make below a certain income level. This lower threshold made the program financially problematic for existing microhome developers to participate in.

However, initially the city banned microhomes from the program entirely and only later added it back in.

Meanwhile, regulatory changes by the Seattle Department of Construction and Inspection (SDCI) continued to increase the minimum clear floor space of a dwelling unit so that the smallest allowable is a regular studio, at around 300 square feet.

By 2015, apodment unit construction was replaced by larger, more expensive living spaces. In September of that year, the average Seattle studio apartment was at roughly $1,300 a month, according to Rent Café.

Valdez says if the city wants to make housing more affordable, it can loosen these restrictions on developers and allow them to create a greater supply. “You either believe that there’s one pie and that every time someone comes to eat the pie you have to cut the slicers thinner and thinner. Or, you believe that you can make five pies instead of four. When you think the pie gets sliced thinner and thinner, it creates a very protectionist economist response.”

That can start with eliminating the design review process, he added. “It doesn’t serve any purpose at all of any value. Just let it happen, and sure, there’s going to be some ugly building, some views are going to get blocked, and you know what? Buildings that are stupid-looking, too small, that nobody wants to live there, they’re going to be cheap. So, you just solved your affordability problem.”

Senior Policy Analyst Allison Butcher at Master Builders Association of King and Snohomish agrees with Valdez. “We need to loosen up those rules. Unless we have the supply and the choice and range of options, affordability is going to be more and more of a challenge.”

“I think it’s incumbent upon our members and planners in the region to be in tune with the market,” she added.

If the past is any indication, city officials are unlikely to heed this advice. Among the recommendations made in the city’s 2015 Seattle Housing Affordability and Livability Agenda (HALA) report was to loosen restrictions on microhouses. The HALA Advisory Committee included Neiman, who noted that the city council chose to ignore the recommendation when it crafted its HALA work plan.

“I don’t know if we’ll see a resurgence with this council and this particular group of people,” Valdez said. “Maybe if we have a downturn in the economy and housing isn’t as hot as before, you might see it slowly come back over time. Once you eliminate a typology of housing it’s very difficult to bring it back.”

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