Executive Summary:
Because of the unfunded mandate on Washington Cities and the detrimental effects on Tacoma, the Tacoma City Council has wisely opposed HB 1910. Because HB 1910 would thwart Tacoma’s efforts to provide needed housing stock and revitalize and rebuild downtown Tacoma and Upper Tacoma (Hilltop), the Washington State Legislature should reject HB 1910 as well as SB 5404.
HB 1910 essentially forces Washington cities to require builders using the multi family tax exemption to subsidize 20 percent of their housing units for low income buyers of condominiums and renters in apartments.
The underlying and inaccurate assumption of the bill is that there are such wide financial margins in building housing projects in Tacoma that the potential builders would not be deterred by being forced to subsidize the 20 percent of the units for low income housing.
HB 1910 could possibly work in Bellevue or Seattle where the downtown is thriving and numerous high rise million dollar condominiums are commonplace.
However, investors are very difficult to find to build projects in downtown Tacoma as it is and the bill would hamper the modest amount of redevelopment that is occurring. HB 1910 would also hamper Tacoma’s efforts to restore the dozens of historic buildings downtown which have sat empty for decades as well as the general efforts to revitalize the city. These buildings are very expensive and difficult to restore as it is.
Provisions of HB 1910
HB 1910 essentially forces Washington cities to only permit builders to use the multi family tax exemption if they agree to subsidize 20 percent of their housing units for low income buyers of condominiums and renters in apartments. The bill makes no attempt to determine if the subsidization requirement is economically realistic or feasible for the project to be built or not.
HB 1910 takes state control of many local housing decisions that had previously been determined by cities.
HB 1910 mandates that all Washington cities report to the Washington State Community, Trade and Economic Development different sets of data on the program.
The Washington State Legislature should oppose HB 1910 and SB 5404 for the following reasons:
1. The bill would hamper Tacoma’s efforts to build affordable housing stock, re-vitalize downtown and Upper Tacoma (Hilltop).
Downtown Tacoma has dozens of empty and dilapidated buildings, vacant lots. Most of the residential development in Tacoma during the last 40 years has been on the outskirts of the city. Only in the last 10 years has there been much interest to build downtown and then only in limited areas. Consequently, much of downtown Tacoma is depopulated.
Even without the subsidization requirement of HB 1910, there are whole areas in Tacoma which have had limited interest for builders to invest in and restore buildings or build new structures. There are numerous blocks downtown that are completely abandoned and are referred to as “dead zones.”
In addition, a significant portion of the tax exemptions that have been issued by the Tacoma City Council have failed to result in projects being built because the builder later concluded the sale of the units did not justify the cost of construction.
Still other potential construction projects downtown have been delayed for years because of costs concerns and due to a softening housing market but with a simultaneous increase in material costs.
Thus, imposing a subsidization requirement on potential investors through HB 1910 will make even more proposed projects prohibitive to build.
The Upper Tacoma (Hilltop) area would be perhaps the most severely impacted. Upper Tacoma has made great strides in reducing crime and gang activity in the area but still struggles to have businesses or much housing built in the area. Many of the storefronts remain empty and limited interest exists to build additional housing.
The City of Tacoma has been working hard to find an investor for the former site of Browne’s Star Grill site at 1100 block of Martin Luther King Jr. Way and has yet been unable to do so. The site was conceived to be a mixed use center with housing on the upper floors with retail on the lower floors.
HB 1910 requirement that any potential builder subsidize 20 percent of the units is yet an additional barrier for any potential investor to ever consider the site.
Rather than provide affordable housing, the effect of HB 1910 is to keep all but the most prized locations in downtown Tacoma from being developed and making the monumental efforts to develop and revitalize Upper Tacoma (Hilltop) even more difficult.
Thus, at least for Tacoma, HB 1910 will greatly reduce the amount of housing stock being built, not increase it.
2. HB 1910 Contradicts the Goals of the Growth Management Act
HB 1910 applies only to multi-family units which are invariably located in or around the central part of Washington cities. The Washington Growth Management Act emphasizes the importance of infilling cities, especially the downtown areas.
Yet, HB 1910 places the low income subsidization requirement exclusively on the multi family city developments. Meanwhile subdivisions built at the edge of the city and in the county have no subsidization requirement for low income housing whatsoever.
Thus, HB 1910 will likely shifts housing investments from Tacoma’s downtown and urban centers to single family developments at the edge of the city causing additional sprawl.
Conclusion
Contrary to the intentions of the bill, HB 1910 would further reduce the number of housing projects built in Tacoma. Most negatively impacted would be numerous areas in downtown Tacoma and Upper Tacoma (Hilltop) which now have little interest to develop. The wide margins which may exist in Seattle condominium construction do not exist in Tacoma.
A better alternative is for the Washington State Legislature to fund mixed income housing projects in Tacoma or place an additional impact fee on residential sprawl at the edge of the cities to further the goals of the Growth Management Act.