Seattle should keep affordable housing fund for conversion projects

With dozens of commercial buildings unused or underused in Seattle, city officials are right to explore ways to fill those spaces and bring people back into the city, mainly downtown.

Converting some commercial buildings into residential spaces could make sense. That’s the plan Mayor Bruce Harrell proposed to the City Council as part of his Downtown Activation Plan. 

Many commercial spaces emptied during the pandemic when workers began working remotely, leaving downtown retailers and commercial landlords in need of help. The result is a downtown vacancy rate of about 20% with fewer workers patronizing businesses aside from tourists.

Housing advocates see the glut of vacant office space as part of a solution to the national housing crisis. And it could be that for Seattle.

Such conversions can be rare and challenging because some large buildings are not designed in ways conducive to residential units.

The other consideration for the city is to go carefully in giving up a major tool in creating affordable housing just to lure developers to convert buildings.

Harrell is proposing to exempt developers from participating in the city’s Mandatory Housing Affordability program, which potentially would forfeit millions of dollars for affordable housing. He also proposes offering exemptions to building design rules, allowing rezones of certain areas of downtown to accommodate taller buildings and other incentives.

Under MHA, developers who build apartments and condos in certain areas are required to include affordable units or pay into a fund dedicated to building affordable housing. 

The fund has been successful for the city, which needs more than 10,000 units of affordable housing. In 2021, it generated $75 million and funded 990 apartments.

In 2022, Seattle used $77.5 million in MHA dollars to help fund 902 affordable apartments and 30 homes.

If the city can help developers cut through red tape and bureaucracy, it should. Harrell’s plan builds off the state Legislature’s approval of Senate Bill 6175, which will allow the city to establish a sales and use tax deferral for conversion of a commercial building to affordable housing.

Converting commercial buildings into private dwellings will change the look and feel of neighborhoods, which in some areas might be a welcomed transformation. And, more people will help downtown continue its recovery.

That is laudable goal, but the stream of funding that has successfully built hundreds of affordable homes helping those in need of housing should not be forfeited lightly.