Sunday, September 22, 2019

Olympia housing post in two parts: Answering a question on Ron Rants and asking a question on Samuel Stein


Both of these came up at the same time, so I'm doing them in one post.

1. Answering Steve Salmi's question here first:
...Dan Leahy was right to “follow the money” regarding tax breaks for developers – including Ron Rants. Olympia would do well to display greater transparency in its decision making if it wishes to build the credibility of Missing Middle initiatives. 
For the sake of historical honesty, it would also be helpful to know if Ron Rants is now being subsidized to undo the very problems he helped to create – both as an elected official and a development industry leader.
On the first go around on this post, I actually noticed a few places where Ron Rants, in fact, sounded like a 2010s era urbanist.

First from May 1980:
Fellow commissioner Ron Rants said the existing policy didn't mesh with his personal view. The city should be encouraging mixed housing, he remarked. Mix housing includes having duplexes in single-family neighborhoods.
Then in September 1980:
Rants said the city, in fact, should encourage denser living patterns within city limits, to put an end to what he called rapid leap-frog growth to the county.
I will say that Steve's point that the city commission, which was on its way out in the early 80s, was certainly the body that laid the groundwork for a series of downzoning in the 80s and 90s, they didn't seem to be enthusiastic about putting on the density brakes. In fact, to me, it seems like the same populist dynamics that put in the city council form of government where the same dynamics that were also arguing for exclusive single-family zoning throughout the city.

2. In the past few months, the opponents of denser and less expensive housing in Olympia have started using Sam Stein's "Capital City" like a cudgel. Without really explaining how Stein's arguments about how the modern real estate industry works in regards to single-family zoning, they simply state that more options for buildings (for-profit, non-profit or government) would just allow for more building and builders are bad.

While this behavior does fall into the broader "why NIMBYs just hate developers" thing, it doesn't really center Stein's arguments in Olympia's history of downzoning. I poked around Stein's book for discussion on downzoning on a broader scale, like what happened in Olympia or Los Angeles in the last 50 years. 

A historic district, a contextual rezoning––which means changing the zoning rules to match what’s there right now––or a downzoning, which means in the future people will only be able to build smaller than what’s here right now. So it wasn’t even, I said neighborhood before, but it’s really block by block, block by block by race, so white blocks––predominantly white blocks––got protected, predominantly African American, Latino, and Asian blocks were subject to big, new development. And so, the result of that ends up looking like integration. If you look at those prior, mostly Black, Latino, and Asian blocks, and you see there was this luxury development that was built and suddenly all these white people moved in, now something else is happening. But at the same time, they cut off the ability to build out low-income and mixed-race development on those white blocks. And so, they were channeling integration in one way and cutting it off in the other. It’s like a one-way street that’s going––there’s a one way street and you’re moving in the wrong direction. If we want to do integration, we need to unsegregate those white spaces. The problem is not the concentration of people of color in neighborhoods that they built up over a long period of segregation and disinvestment. So that in many cities the integration that’s happening is the exact wrong way to do it.
In context to Olympia and the Northwest, this brings up a few things for me.

One, we've seen how the debate over changing single-family neighborhoods into "ghettos" has affected the course of Olympia housing policy. Calling people racists in historic terms is not fun, but I'm just going to leave that there.

Two, people who trot out Stein are also unironically talking about "nodes" of high-density growth in Olympia. There are places where added density that could take place in single-family neighborhoods should more appropriately go. And, unsurprisingly, when you poke around a block group map of white distribution around Olympia, places with a lot of apartments (existing "nodes") also have the fewest white people.

So, to my question: how is Stein's discussion of protecting white neighborhoods not like what happened and is happening in Olympia?

Tuesday, September 03, 2019

How much did cutting the middle out of our housing stock cost Olympia in the last forty years?

Or, Olympia's spreading tax-subsidized single-family neighborhoods. 

I've pointed to this chart oftentimes as an illustration of how we changed directions back in the 1980s.

I've recently been rethinking this graph, mostly due to new perspectives on a fairly old policy tool to encourage apartment construction in downtown Olympia. Dan Leahy has been writing in Works in Progress about the multi-family tax exemption and how the rest of us are subsidizing new construction downtown.

While the discussion around the multi-family exemption does not reveal anything new (someone pays taxes if someone else is exempt), it does give a new ax to grind to people who would rather stay the course with how Olympia has been developing in the last forty years. Car-dominated suburban developments get a pass, while any sort of development downtown that is not a parking lot is given a side-eye or actually challenged legally.

But, the discussion did open an opportunity to examine how exactly our spreading suburban development pattern has cost the city's bottom line.

As a background, I used the Thurston County Assessor's parcel data provided by Geodata. This dataset gave me locations and construction dates (important for that chart), but also lot sizes and total values.

Also, I wanted to point out that only in the broadest sense am I talking about "denser" housing. Leahy is mostly discussing downtown Olympia apartment buildings, while I'm discussing anything from a duplex to a quadplex. While we oftentimes conflate these when we discuss housing and zoning, I want to make sure we know I'm talking about different types of housing. 

Now, let's get to the data!

At some point in the early 1980s, the construction of duplex to quadplex sized homes became disconnected from population. I chose 1981 as my splitting point because it seemed to make sense to me.

Between 1960 and 1981 Olympia averaged 6.2 two to four-unit buildings per thousand of population increase.

After 1981, that rate fell to 1.23 units per thousand new residents. Building non-apartment/non-single family home dwellings went through the floor after the early 80s.

What happened in the early 1980s? Go back and see the policy changes we made to favor single-family homes and the hateful political ecosystem that created it.

And because we know how many people have either been born or moved here, we can calculate how many du/tri/quadplexes we lost because we changed the rules. If we built at the same rate we did before 1981, we would have built 723 more du/tri/quadplexes. We currently have 786.

That on its own is shocking. That means we outlawed between 1,500 and 3,000 living spaces since the early 80s. If we continued building duplexes, triplexes, and quadplexes in Olympia, we would have nearly doubled the number of these more affordable units.

But, let us not stop there, this is about the public subsidy, not affordable homes removed from the market by bad laws. Because we know how much single-family home properties are worth and how much du/tri/quadplexes are also worth, we can calculate roughly how much each type pays per acre.

It should surprise no one, but the more dense housing types subsidize single-family homes.

Du/tri/quadplexes cover just over 216 acres of Olympia and they are valued at an average of $1,159,413 per acre.

Single-family homes cover over 4,528 acres of the city and those are valued at an average of $1,035,155 per acre.

This is not taking into consideration the added value du/tri/quadplexes would have brought to single-family homes.

So, when you lay out what we lost (at least 1,446 affordable units) against their higher value, you can get an idea of what our historic single-family home favoring policies has cost our city.

Doing a back of the napkin calculation based on last year's levy rate, the lost taxes (not just to the city, but to everyone who collects property tax in the city) was $3 million per year.

To put this into perspective, in his post that I linked to above, Dan Leahy points out that across of all the multi-family exemption projects, the loss in total government revenue is $3.4 million over eight years.

What we lose per year because we made a decision forty years ago to favor single-family homes is the same amount we lose over eight years for encouraging more dense development. This calculus also ignores the higher tax receipts that an apartment building will produce as opposed to a parking lot once the exemption is over. And, also (obviously) that the tax exemption is temporary, while single-family zoning is a bit harder to budge.