What is MHA?
In 2019 Seattle instituted Mandatory Housing Affordability (MHA). The aim of this program is to provide desperately needed affordable housing in the city. The program applies to all commercial and multifamily residential zones across Seattle, as well as all Urban Villages and Urban Centers. For those of you who are not familiar with MHA, there are two options to meet the requirement: performance or payment.
A. Performance. The performance option for MHA involves providing affordable housing as part of the development. The number of units ranges between 5% and 11% based on a calculation found in section 23.58C of the Seattle municipal code. Sales prices for MHA performance units are limited to 60% Area Median Income (AMI). Rental units are also generally limited to 60% AMI but are required to be available for 75 years. The minimum number of units to be provided under the performance option is one unit.
B. Payment Option. The payment option allows developers to pay a fee in-lieu of providing affordable units within the project. The fee is based on project square footage and currently ranges between$8.47 to $50.47 per square foot, depending on the project location. More information about the MHA payment calculation is available in Section 23.58B of the Seattle Municipal Code and SDCI Tip 257.
Example of an MHA calculation from a central district project. The original project was to have 4 units and 2 accessory dwelling units. Due to the burden of the MHA fees, the permit was never issued and our client has since sold the property. The new owner is remodeling the existing house and plans on constructing a detached accessory dwelling unit. Note the current MHA fee is $31.97 which would result in an MHA fee of $236,542.83!
How has MHA Worked?
Questions exist as to whether MHA revenue is being used efficiently, and if the MHA program has contributed to a reduction in housing permits. Prior to 2019, 90%-95% of Christopher Jones Architects’ projects were small infill LR zoned townhouse projects ranging from 3 units to 11 units. Currently that is less than 5% of our work. Though market rate housing does not directly benefit low-income households, any increase in housing supply benefits home prices across the board. This ultimately does benefit lower income buyers/renters.
Despite the noble mission of MHA, in practice it has led to a series of unfortunate consequences. MHA compliance, either by providing affordable housing or payment, increases the cost of projects, often substantially. This extra cost ultimately makes housing less attainable for middle class buyers. We are not eliminating a problem, it is just being passed on to another group of potential buyers/renters.
One of our many pre-MHA projects.
How Can it be Fixed?
This summer, the Mayor and City Council finally heard our cries and proposed the MHA Housing Accelerator. Its goal is to restart stalled housing projects and move shovel-ready developments forward to help alleviate our housing shortage. The initial plan is to cut MHA fees by 90% in LR zones and 80% elsewhere in the city for a period of 2 years. During that time, the city would determine a new path forward for MHA. When so many projects are on the razor’s edge of penciling out, a reduction in MHA fees could have an enormous impact on making projects feasible.
The city was scheduled to vote on the MHA Housing Accelerator this month, with the MHA fee reductions going into effect this fall. Unfortunately, there has been a hiccup, and the plan is currently stalled in what looks like the “Seattle process” we’re all too familiar with. One of the non-profit housing entities that negotiated the terms of the MHA Accelerator with the mayor’s office has now come out against it. While this is disappointing, our Mayor, Katie Wilson, remains committed to housing and the MHA Housing Accelerator. I recommend showing your support by contacting the mayor and city council members. Below is a link to an e-mail prepared by the Master Builders of King and Snohomish County. This includes e-mail text and pertinent e-mails addresses. It will only take a couple minutes to copy it into your browser and send it away.