Inclusionary Housing

Frequently Asked Questions (FAQs)

What is inclusionary housing? Do other cities use inclusionary housing programs?
Inclusionary housing programs leverage the power of the private market to
create affordable homes at no cost to the typical taxpayer. Mandatory
inclusionary housing programs require developers to build affordable housing or
pay a related fee, while voluntary programs provide the developers the option
of contributing to affordable housing in exchange for incentives. Since the
1970s, 482 local jurisdictions across the country have adopted 507 inclusionary
housing programs to address affordable housing needs. Approximately 83% of
these policies are mandatory.1 Often, inclusionary housing programs require
developers to ensure 12-35% of homes in their buildings remain affordable for
low-income households.2
Why does Seattle need inclusionary housing?
In Seattle, half as many affordable homes are available for the number of lowand very low- income households that need them.3 We need to triple current
affordable housing production in order to meet Mayor Murrays goal of creating
20,000 income-restricted homes in the next decade. The citys taxpayers have
contributed to affordable housing for over thirty years through the Seattle
Housing Levy, but we cannot rely on existing tools alone to solve this problem.
No other new resources are available that have the potential to produce as
much affordable housing as inclusionary housing. For instance, many new
revenue sources require a change in state law; inclusionary housing does not.
Development in Seattle is booming4, and every day we wait to increase
affordability, we are worsening our traffic problems, creating conditions that
lead to increased emissions, increasing inequality, and aggravating our crises of
homelessness and displacement, all of which disproportionately impact people
of color. The City Council should act today to adopt a commercial linkage fee
and begin work to implement a mandatory residential inclusionary housing
program. This will help build thousands of homes for our growing population and
align with the race and social justice goals of the current administration.

Robert Hickey, Lisa Stuertevant, and Emily Thaden, Achieving Lasting Affordability Through
Inclusionary Housing,Lincoln Institute for Land Policy Working Paper, 2014, 18-19.
2 Affordable by Choice: Trends in California Inclusionary Housing Programs, Non-Profit Housing
Association of Northern California, California Coalition for Rural Housing, San Diego Housing
Federation, and the Sacramento Housing Alliance, 2007, 26.
3 Housing Needed to Accommodate Growth by Income Level, Housing Affordability and
Livability Agenda, Background Report, City of Seattle.
4 www.seattleinprogress.com
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What is a linkage fee?

A linkage fee is a type of mandatory inclusionary housing program. Charged as
a per-square-foot fee on new residential and/or commercial development, a
linkage fee is used to mitigate the effect this development has on the housing
needs of people with lower incomes (see below: What is a nexus study?). In
October 2014, the Seattle City Council passed a resolution stating its intent to
implement a linkage fee program in Seattle. Some cities use only commercial
linkage fees while other cities use both commercial and residential fees.
There are many types of inclusionary housing being discussed. What are the
differences?
There are many different variations on inclusionary housing. Two of the programs
currently being proposed in Seattle are a linkage fee and mandatory
inclusionary housing. These are both inclusionary housing programs that
national experts consider to be best practice. With a linkage fee, developers
are required to make a payment, but they have the option to build affordable
homes as an opt-out. With mandatory inclusionary housing, developers are
required to build homes, but they can pay a fee as an opt-out. It is just a matter
of which option is the default. Under the Housing Affordability and Livability
Agenda (HALA) proposal, developers will be given an incentive alongside the
mandatory requirement. This incentive means the program can take longer to
implement, but it allows the City to reduce its legal risk while requiring more of
developers.
Why is a mandatory program so important?
Seattle currently has a voluntary incentive zoning program that allows
developers in select neighborhoods to construct higher or bigger buildings in
exchange for contributing to affordable housing.5 However, only 38% of eligible
developers have chosen to participate in the program. According to City
consultants, simply tinkering with this voluntary program will not get us to the
level of affordable housing production we need.6 By requiring all residential and
commercial developers to participate, the HALA proposal will allow us to create
significantly more affordable housing while still allowing developers to profit.
How much housing will inclusionary housing produce and who will it serve?
Per the HALA proposal, the City can create 6,000 affordable homes across
Seattle over ten years at no cost to the typical taxpayer. These 6,000 units will be
affordable to people who earn very modest wages up to $38,000 for an
SMC. 23.58A.
Rick Jacobus and Joshua Abrams, Policy Options for Refining Seattles Incentive Zoning
Program, Cornerstone Partnerships, July 2014, 4-5; Seattle City Council, Resolution 31551, 2014;
Final Report: Seattle Affordable Housing Incentive Program Economic Analysis David Paul
Rosen & Associates, October 10, 2014.
5
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individual and $54,000 for a family of four (below 60%AMI), with many of these
homes affordable to those far below these income levels.7
What is the Citys history with inclusionary housing?
It has been 14 years since the City adopted its first inclusionary housing policy
(voluntary downtown commercial bonus program, 2001). In 2013, the City
Council committed to taking action to improve its voluntary residential and
commercial incentive zoning programs through the passage of Resolution
31444. This resolution outlined that the City would implement consultant
recommendations on inclusionary housing by Spring 2015. Although the City has
made significant progress over the past two years working with consultants and
the public to move toward a mandatory policy, implementation has not
occurred. With all the information it needs to act in hand, and new permits
being issued every day, we expect the City Council to adopt a commercial
linkage fee ordinance this year and complete implementation of the full HALA
proposal by the end of 2017.
Who supports inclusionary housing?
The Growing Together Coalition is a group of over 65 organizations representing
the social justice, labor, housing, environmental, faith, immigrant rights,
architecture, and human services community that support implementing
mandatory inclusionary housing policies in Seattle. 8 These organizations know
that we need to use every tool available to solve Seattles affordable housing
challenges and to meet Mayor Murrays goal of creating 20,000 incomerestricted homes in the next decade. The Growing Together Coalition believes
that growth and public investment are good for our city, but we also know these
things can make housing unaffordable for low-wage workers. We must plan
responsibly and implement effective policy solutions to accommodate the
growth that we are expecting and ensure the benefits of growth are shared
more equitably.
Why should environmental advocates support inclusionary housing?
Its better for society, the environment, and families if people can afford to live
near their work, but three out of five Seattle workers commute from other cities
and places.9 Inclusionary housing will help build housing near jobs in the city,
and as a result, limit pollution, reduce vehicle miles traveled, lessen traffic, and
allow workers to spend more time with families and community. Building
affordable homes in Seattle is critical for achieving fossil fuel reduction,
Seattle Housing Affordability and Livability Agenda, Final Advisory Committee
Recommendations, July 13, 2015, http://murray.seattle.gov/wp-content/uploads/2015/07/HALAReport-.pdf
8 http://www.growingtogetherseattle.org/supporters.html.
9
South Lake Union Workforce and Affordable Housing Demand Study, Draft, Community
Attributes, Submitted to City of Seattle, March 2013, 21.
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preventing sprawl, and protecting open space, waterways, and rural areas.
Research shows that planning for affordable housing near transit is key for
combatting climate change; living close to transit has a significantly greater
impact on lower income households driving patterns than on those of higher
income households.10
Will inclusionary housing increase rents?
No, developers are already charging the highest price the market can bear,
and that price is not dictated by the costs they pay. Developers are rational,
profit-maximizing actors and will always sell and rent their homes for the
maximum price. They will not decrease the price if their costs decrease, and
they cannot charge prices beyond what renters and owners are willing to pay.
Renters and homeowners are equally rational. They will not suddenly start
paying more for housing than the overall market dictates. They will compare
any new development to all the existing homes on the market (including homes
outside the city of Seattle) and make a choice to meet their needs and
preferences.11
Will inclusionary housing harm multifamily housing development?
No. There is overwhelming evidence that inclusionary housing does not
negatively impact multifamily housing production. Research shows that marketrate, multifamily development continues to thriveand has even increasedin
communities across the country after the passage of inclusionary housing
policies much stronger than those being considered in Seattle.12 Ultimately, costs
associated with inclusionary housing are not borne by developers. Due to the
unique nature of land, these costs are absorbed into land values during land
sale negotiations.13

Why Creating and Preserving Affordable Homes Near Transit is a Highly Effective Climate
Protection Strategy, TransForm and California Housing Partnership Corporation, May 2014.
11 David Rosen, Inclusionary Housing and its Impact on Housing and Land Markets, NCH
Affordable Housing Policy Review, Vo. 3 No. 1, February 2004: 38-46; Ann Hollingshead, When
and How Should Cities Implement Inclusionary Housing Policies? Oakland, CA: Cornerstone
Partnership, June 24, 2015.
12 Jenny Schuetz, Rachel Meltzer, and Vicki Been, Silver Bullet or Trojan Horse? The Effects of
Inclusionary Zoning on Local Housing Markets in Greater Boston, Urban Studies 48, February
2011, 297-329; Rosen, Inclusionary Housing and its Impact on Housing and Land Markets; Bento,
et. al., Housing Market Effects of Inclusionary Zoning, Cityscape, Vo. 11 No. 2, 2009:7-26; Vinit
Mukhija, et al., Can Inclusionary Zoning be an Effective and Efficient Housing Policy? Evidence
from Los Angeles and Orange Counties. Journal of Urban Affairs, Vo. 32 No. 2, May 2010: 229252.
13 Jacobus and Abrams, Policy Options for Refining Seattles Incentive Zoning Program,
Cornerstone Partnership, 11.
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What is a nexus study?

During 2014 and 2015, the City commissioned a nexus study which demonstrates
a causal connection, or nexus, between new job growth associated with
development and the need that it creates for affordable housing. In other
words, development creates jobs, and workers need somewhere to live. New
growth makes it harder for low- and moderate-income families to find housing.
The fee is used to mitigate a need that can be linked back to the developer.
The nexus study details the range of fees that the City would need to charge to
fully mitigate the affordable housing need caused by new development and
outlines these fees based on different types of development prototypes.
However, it is common for cities to set inclusionary housing requirements far
below the level justifiable by the nexus study in order to take into account
economic feasibility and development dynamics.14

Administrative Review Draft: Seattle Affordable Housing Nexus Study and Economic Impact
Analysis, David Paul Rosen & Associates, May 13, 2015.
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