Housing fees don't damp building boom

Requiring developers to pay into an affordable-housing fund in exchange for allowing them to build taller residential buildings has not put a damper on the downtown development boom, say city officials and real-estate executives.

Nine of 10 residential projects seeking development approval under the new regulations are expected to pay into the affordable-housing fund and build to the maximum or near-maximum allowed heights, according to the city's Planning and Development Department.

Those regulations, which took effect in spring 2006, allow residential developers to build to 400 feet, or about 40 floors, in parts of downtown's Denny Triangle, an area now dominated by parking lots and low-rise buildings.

Elsewhere downtown, residential developers are allowed to build to 45 stories or more.

In one Denny Triangle section, for example, developers pay nothing for affordable housing if they stay below the designated base height limit of 290 feet.

For every floor above that, they pay $15 to $25 a square foot up to the maximum height limit of 400 feet. The higher the floor, the higher the rate, since the views tend to be better and worth more to developers.

At the same time, new buildings may not be as wide as the old, in the belief that tall-but-skinny buildings create an elegant skyline and allow more sunlight onto the streets.

Mayor Greg Nickels initially proposed a single rate of $10 a square foot for floors above the base height limit.

When rates set by the City Council turned out to be twice as much, developers warned that the vision of a bustling downtown with lots of gleaming new skyscrapers might not happen.

Those warnings have not been borne out so far, though.

City planners said they're sensitive to developers' concerns but also want to ensure that people of all income levels can afford to live downtown.

"We have to balance getting something back and stifling development," said Department of Planning and Development Director Diane Sugimura. "If we start asking for too much, do they say, 'Forget it, We're going to Redmond'? We don't want that, but obviously, we think we can do both."

Blaine Weber, principal of the Seattle-based architecture firm Weber + Thompson, is involved with a dozen residential projects downtown. "I don't think the fees are so onerous that they prevent projects from being economically viable," he said.

For the high-end 1521 Second Ave. condominium project going up near Pike Place Market, the new regulations mean it can rise 38 stories, versus 24 stories previously. The project's required contribution to affordable housing: $1.75 million.

The average sales price of a unit in the project is $1.8 million, said William Justen of The Justen Co., which is helping manage the development.

He said paying the fees and taking advantage of the new height limits make economic sense "because we're doing really high-end homes" and buyers can afford to foot the bill through a surcharge of about $12,000 each.

But he added: "Everything gets passed on."

"If you have a more typical condominium building where the average price is $700,000 or $800,000, it would have more of an impact, and it definitely drives up prices," Justen said.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com