Danny Westneat / Times staff columnist
Little value in planned tax breaks

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Few issues cause more strain on people or alter the character of entire neighborhoods like the high cost of housing.

So it is gratifying that Seattle City Hall is trying to do something about it.

If only they weren't botching it.

Next week, Seattle is planning to give developers tax breaks if they agree to keep the rents down on some of their apartments.

For a studio, the rent cap is $950 per month.

This is keeping rents down? If a single-room, government-subsidized apartment now goes for $950, then it is true what they say: We have become Manhattan. Or at least San Francisco.

It turns out, though, that it doesn't take government assistance to keep rents on the smallest of apartments to less than a grand a month.

For $950, you could have the studio I visited this week — a 700-square-foot loft in Pioneer Square with soaring beamed ceilings, wood floors, exposed brick and 8-foot French windows. And that's without a subsidy.

Even in Belltown, the most expensive studio advertised this week was for $835. And it has a fireplace and a view.

On Monday, the City Council is expected to approve tax breaks for developers who build apartments in 17 targeted neighborhoods. In return, developers agree to cap rents on about a quarter of the units. Rents are pegged each year to the median income.
 
The cost — about $25 million over 10 years — will be made up by higher property taxes on the rest of us. The developer of a $3 million building would save about half a million dollars over 10 years.

Using tax incentives to help keep down rents is a great idea. It's supported in principle by virtually everyone, from advocates for the needy to business lobbyists.

The problem is that these proposed rents are much higher than the market rate, even in the poshest parts of town. There's not much beyond fear of red tape to prevent developers from building whatever they were going to build anyway, charging market rates and pocketing the tax break.

Before they vote, council members should check out the real-estate ads themselves. This week there were 101 studios listed for rent in Seattle. Only two were priced more than $900, with most falling in the $500 to $700 range.

Some new luxury buildings, such as the Alycone Apartments in the South Lake Union area, advertise top-of-the-market studios at around $1,000. But they also offer studios priced from $750 to $900 per month. Again, without a subsidy.

City officials seem to know the rent caps are high, but say they are counting on rents rising faster than incomes.

Any government effort to hold down rents is a delicate deal struck between taxpayers, developers and renters. The taxpayers give something of value to the developers, who pass some of it on to renters. We all get a more livable city.

But this particular deal is rigged. One of the three gets all the benefit. And unless the council lowers these rent caps — or you are building an apartment tower — it's not going to be you.

Danny Westneat's column appears Wednesday and Friday. Reach him at 206-464-2086 or dwestneat@seattletimes.com. More columns at www.seattletimes.com/columnists.

Copyright © 2004 The Seattle Times Company