Seattle Mayor Bruce Harrell wants the city to cut red tape and costs for developers converting underused office space into housing.
Harrell’s office said Thursday it has submitted new legislation to the Seattle City Council that would exempt conversion projects from certain city fees and regulations, in hopes of enticing more developers to take on those projects.
Among other changes, the proposal would exempt conversion projects from the city’s Mandatory Housing Affordability, or MHA, program, which requires builders to either include affordable homes in new developments or pay toward a fund for affordable housing.
Harrell’s proposal is the latest effort to spur conversions of empty commercial space, particularly office buildings as scores of white-collar workers continue to log in from home. In downtown Seattle, offices are on average about half as full as they were in 2019, according to the Downtown Seattle Association. State lawmakers recently approved a bill allowing cities to give developers a break on sales taxes when they convert buildings if 10% of the new homes are affordable for 10 years.
But converting commercial spaces into housing is difficult and expensive for a variety of reasons, in part because the designs of many large office buildings aren’t conducive to apartments or condos, and conversions are unlikely to put much of a dent in the city’s housing shortage.
Even if Seattle goes ahead with Harrell’s proposal, the city estimates that over seven years developers could undertake a dozen or fewer projects amounting to 1,000 to 2,000 apartments or condos. Seattle needs about 112,000 new homes over the next 20 years, many of them affordable to people with low incomes, according to county projections.
The legislation would exempt conversions from design review and other regulations. The changes would benefit conversions of buildings that were finished by March 1 of this year. (An earlier draft of the bill would have applied to buildings that are at least 3 years old.) Unfinished projects that have received city permits could also benefit.
Wholesale conversions or projects that add housing to existing buildings could qualify, according to the mayor’s office. The policy would apply in downtown and other areas where the city allows commercial and multifamily buildings.
Reducing regulations and costs for those projects would be “another powerful tool to tackle the housing crisis and replace building vacancies with vibrancy,” Harrell said in a statement Thursday.
Developer Marc Angelillo, whose firm plans to convert a 1980s office building near Climate Pledge Arena to apartments, called the proposal “essential in making our conversion and [others] feasible.”
“Conversion projects will provide much needed housing, including affordable housing, create good construction jobs, increase the tax rolls, and lower the carbon footprint of creating new units in our city,” Angelillo said in a statement provided by the mayor’s office.
The proposal could also face resistance, particularly the idea of exempting conversions from MHA, one of the city’s primary sources of funding for affordable housing. Washington Low Income Housing Alliance policy director Michele Thomas previously told The Seattle Times exempting conversion projects from MHA would be “absolutely ridiculous.”
As the city faces a $230 million budget deficit, “not using the MHA tool would be a missed opportunity to leverage funding to build affordable housing that we can’t immediately replace,” Councilmember Tammy Morales, who chairs the council’s land use committee, said in an email Thursday. “If the housing to be built downtown is market rate, then it should help pay for affordable housing elsewhere — or even downtown.”
Still, Morales said she may eventually support the proposal. “If this conversion policy can support increased affordability for families living downtown, I’m eager to understand how that works,” she said. “I might consider the policy as proposed if it includes building social or workforce housing.” Social housing generally refers to developments that house people of various income levels and are owned by the government or a public authority, rather than a private developer.
Researchers have identified dozens of Seattle office buildings that could be good candidates for conversion but say many are unlikely to attract developers without government incentives. Along with Angelillo’s planned project in Uptown, Martin Selig Real Estate plans to convert a portion of a tower at Third Avenue and Lenora from offices into apartments.
