January 7, 2022
Housing pressures spark new look at inclusionary zoning
Lauren Gallup
Facing an extremely low affordable housing inventory, Bellingham is looking at options including inclusionary zoning — an option dismissed previously and now back on the table for another look. (‘Essence of Bellingham’ photo by Lauren McClanahan, courtesy of the City of Bellingham)
January 7, 2022
Housing pressures spark new look at inclusionary zoning
Lauren Gallup

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The City of Bellingham is ready to revisit the concept of inclusionary zoning, as a step towards solving its shortage of affordable housing.

Creating inclusionary zoning policies for the city — wherein private developers would either be incentivized or required to have a certain number of units in a construction project qualify as affordable housing — is something that city leaders decided wouldn’t work, in the past.

A 2008 study on adopting such policies determined that developers would need to make “10% return on investment” for the program to be utilized, said Kurt Nabbefeld, Development Services Manager in the city’s Planning and Community Development Department. Otherwise, the zoning wouldn’t meet its objectives.

“Essentially, the developer won’t reach the return needed to invest in the project, which means no development and greater impacts on affordability,” Nabbefeld said of the study, So, the city didn’t move ahead.

Now, however, as the housing crisis looms heavily, the city plans this year to explore whether inclusionary zoning is a viable solution.      

More housing insecurity — and houselessness

“It is becoming nearly impossible for lower- and middle-income earners to purchase or rent housing in Bellingham or nearby communities,” noted the Whatcom County Health Department’s  COVID-19 Community Health Impact Assessment in July 2021. 

“Affordable rental housing vacancies are extremely low, creating competition for available units. In spring of this year, the overall rental vacancy rate was 0.8%, and average rent was $1,245/month,” the assessment reported. Projections are that affordable units will continue to be in short supply and that home prices will continue to rise in the area; and that the low inventory of affordable housing will continue to be a barrier for people to get out of houselessness.

In fact, the assessment asserts that population growth on top of an existing housing shortage and affordable housing deficit means that housing insecurity and homelessness will increase.

In Bellingham, those who make 80% or less than the area’s median income qualify for affordable housing as provided by the city, explained Nabbefeld. For a family of four, this would be about $65,000 or less, per the U.S. Department of Housing and Urban Development.

Back on the table

Affordable housing was a major discussion topic during the recent Bellingham city council race. Skip Williams, who was elected in Ward 4, said the city should explore inclusionary zoning as one aspect of a solution to the issue. 

During Whatcom Housing Week last October, the Whatcom Housing Alliance hosted discussions on inclusionary zoning, discussing other cities’ implementations of these policies. The alliance “sees inclusionary zoning as one method to ensuring affordable homes are developed in Whatcom County,” said Taylor Webb, program coordinator with the alliance’s Housing and Smart Growth Program.

With these factors at play, the city is reexamining inclusionary zoning. Nabbefeld said Bellingham will hire a consultant this year to evaluate whether the policy would be a feasible option for the city. 

The scope of the work is yet to be determined, but Nabbefeld said the consultant will likely study market factors such as land and construction costs as well as different inclusionary zoning options to determine its feasibility for the city. 

Affordability tool

“Inclusionary zoning is a tool to help with affordability,” Nabbefeld said. 

Policies that require or incentivize developers to have a certain number of affordable housing units in construction projects already exist in some cities across the state. 

There’s no plan for what inclusionary zoning might look like in Bellingham, but Nabbefeld said other jurisdictions have requirements for developments in certain zones to provide a certain percentage of affordable housing. Bonuses to developers, such as allowing higher density, requiring less parking and loosening height restrictions, can provide incentives to build affordable housing, Nabbefeld said.

In some jurisdictions, Nabbefeld said developers can choose to pay a fee instead of following affordable housing requirements. This fee then goes toward city affordable housing programs.

Seattle has a program like this. The city implemented a form of inclusionary zoning called Mandatory Housing Affordability, said Jason Kelly, communications director with the City of Seattle Office of Planning and Community Development. This program requires that new commercial and multifamily residential developments include affordable housing, or developers must make payments to the Office of Housing. 

The homes that come from this are income-restricted and rent-restricted for low-income families and individuals for at least 75 years, Kelly said. The program uses 60% of area median income for the income threshold. Seattle began implementing the program in some neighborhoods as early as 2017, and citywide in 2019, Kelly said.

Bainbridge Island has a voluntary inclusionary zoning program, said Kristen Drew, the communications coordinator for the city. The program grants density bonuses, whereby developers can build more housing when developments include affordable housing.

Will it work here?

Brien Thane, executive director of the Bellingham and Whatcom County Housing Authorities, is hesitant about inclusionary zoning. For one thing, he thinks allowing a developer to pay a fee instead of including affordable housing units misses the mark. That building project won’t further affordable housing and economic integration in that zone by opting out, he said.

While Thane said he likes the concept, he’s not convinced that in actuality it is always effective.

Beyond his concern with developers getting out by paying a fee, he said he’s concerned that private developers won’t have adequate monitoring to ensure units stay affordable.

“Private developers aren’t generally set up for such compliance. It will be an additional on-going expense for the developer and the local jurisdiction,” he said. 

Steve Butler of the Municipal Research and Services Center talked about some of the pros and cons of inclusionary zoning during the Whatcom Housing Alliance’s October event. 

Butler said some of the pros are creating affordable units, long-term affordability, more diverse neighborhoods and equity; while some of the cons are difficulty in administering the program, local opposition that can come from regulatory changes to increase development and, if the real estate market is not strong, the hampering of new development.

Matthei Place in Bellingham, a Kulshan Community Land Trust project, is the city’s first 100% affordable housing project. (Photo courtesy Kulshan CLT)

Not a quick fix

Ultimately, whether the city decides to pursue inclusionary zoning or not, solving the issue of affordable housing isn’t going to be a quick fix, emphasized Webb of the Whatcom Housing Alliance.

“There is no silver bullet to creating affordable housing in Whatcom County. It will take many solutions to ensure that all families have safe, healthy and affordable homes. Inclusionary zoning is just one of many solutions that could be implemented,” Webb said.

Webb noted the work the alliance has done to increase affordability in Bellingham and the county, including advocating for the Residential Multi-Family project in the city and state HB 1590 funding.

HB 1590 enabled Bellingham and Whatcom County to impose a 0.01% sales tax to pay for low-income affordable housing in March 2021. The new tax is expected to raise $3 million a year for the city and $2 million a year for the county.

This year, the alliance will be focusing on a research project on the creation of affordable workforce housing, which Webb said would be for families earning 60-120% of the area median income. 

Thane said the housing authority is working to develop more housing “as aggressively as possible,” with 171 units on North Samish Way in construction now and two additional developments in the pipeline, one in the county and one in downtown.

The housing authority’s approach is to develop rental housing with affordable units available to a variety of incomes, including for those at or below 30% of the area median income, as well as those at 50% and 60%.

Limited land, growing population

Zoning changes could help these efforts, Thane said.

“I also am a proponent of allowing more housing types in single-family [zones],” Thane said. “There’s a limited amount of land. And as long as our population keeps growing, we’re going to have to develop more densely.”

Thane said that developing more densely would look different depending on the location, but gave the example of duplexes to fourplexes instead of detached single-family homes.

Bellingham began requiring minimum densities in some zones in 2021, Nabbefeld said, noting that, so far, this is only in residential multifamily zones. 

At this point, Nabbefeld said, the consultant will just be looking at inclusionary zoning, but “may also look at other programs [or] incentives that would encourage private developers to include affordable housing in their projects.”

“Minimum densities could be explored as a part of the affordability / inclusionary zoning study but that will need to be determined when we scope the project in 2022,” Nabbefeld said.

Bellingham has some incentives worked into city code to try to boost affordable housing, such as a 50% density bonus for developers when at least 51% of units in a development are for affordable housing.

Nonprofit Kulshan Community Land Trust “is the only entity that has taken advantage of the innovative affordable homeownership program (BMC 20.29) that requires the 51% and density bonus. Their projects go beyond the 51% and provide 100% of the units. A good example and the first in the city is Matthei Place on Harris Avenue,” Nabbefeld said.

Ultimately, Nabbefeld said the city wants to determine whether the current market provides the right environment for inclusionary zoning. More will be determined about the scope of the consultant’s work when the city’s new planning director takes office this March, he said.

— Reporting by Lauren Gallup

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