Seattle Debates Deep Cuts to Housing Affordability Fees Amidst Development Slowdown

Seattle is grappling with a significant housing crisis, a reality acknowledged by developers, affordable housing advocates, and city officials alike. However, the path forward to address this crisis is a point of contention, particularly concerning the city’s Mandatory Housing Affordability (MHA) program. A coalition of nearly 30 developers, operating under the banner of the Seattle Housing Roundtable, is advocating for substantial reductions to MHA fees. Their proposal calls for a 90% cut this year, tapering to a 75% reduction over three years, with the ultimate goal of permanent reform.

The developers’ argument centres on the idea that current fees render new projects financially unviable in a challenging market, thereby exacerbating Seattle’s permitting slowdown. Last year, permit applications reportedly fell by nearly 90% from their 2020 peak, a statistic that has raised alarms across the city.

Why it matters

However, a comprehensive analysis by BERK Consulting in March 2025 challenges this assertion. The study found that cities without MHA-style programs experienced similar declines in housing production during the same period. The report suggests that factors such as rising interest rates, increased construction costs, labour shortages, and tariffs are broader, regional, and national forces beyond Seattle’s direct control. MHA fees are presented as just one component within a complex financial model for development.

Furthermore, the analysis notes that the market is already adapting to the existing MHA framework. An increasing number of developers are opting for the “on-site performance” option, which involves building affordable units directly within their market-rate projects, rather than paying into the MHA fund. This option is proving more financially feasible in the current climate. In 2024 alone, developers committed to constructing 101 affordable homes through this performance option, the second-highest total since the MHA program’s inception. This indicates that the program is not entirely freezing development, with parts of the market actively finding ways to work within its parameters.

Contexto

The core of the debate lies in the potential impact of the proposed fee reductions on affordable housing. From 2017 through 2024, the MHA program has been instrumental in the creation of 4,595 affordable homes in Seattle. These are not projections but tangible units that exist today. According to the Seattle Office of Housing’s 2025 annual report, MHA contributes approximately $60,000 per unit towards affordable housing production. At current collection rates of $22 million annually, this funding supports an estimated 365 new affordable homes each year. A drastic 90% reduction in fees would slash this annual collection to roughly $2.2 million, sufficient to fund only about 36 homes. This would represent a collapse in the affordable housing pipeline, rather than a recalibration.

The developers’ counter-argument is that without fee relief, development could stall entirely, rendering the current $22 million baseline irrelevant and making the annual production of 365 affordable homes unattainable regardless. This point is acknowledged as a fair concern. However, the proposed 90% fee reduction is viewed as a speculative gamble that lower fees will stimulate enough development volume to compensate for the lost funding. This assumption, the analysis suggests, remains uncertain, even among some within the development community itself.

The MHA program is also reported to be 85% of the way towards its original 10-year goal of facilitating 6,000 affordable homes, a commitment made by Seattle to its residents as part of a “grand bargain” with developers in 2017. The current proposal, critics argue, would not only slow this pipeline but effectively halt progress on a tangible solution to the city’s housing affordability crisis.

Habitat for Humanity Seattle-King & Kittitas Counties, a key partner in the MHA program, has built 86 of the 105 MHA-funded homeownership units in the city, including developments like Olympic Ridge, Yarrow Townhomes, Yarrow Cottages, and Capitol View. These projects are highlighted as examples of communities where residents, like an individual named Becaley who overcame homelessness to secure housing through MHA, can establish roots.

While acknowledging the genuine challenges faced by developers, Ryan Donohue, chief advocacy officer at Habitat for Humanity Seattle-King & Kittitas Counties, emphasizes that relief should not come at the expense of the affordable housing pipeline. He states that the organization is not inherently opposed to reform and is open to discussions about targeted adjustments that could boost production without undermining funding for affordable housing. Ideas regarding fee structures and collection timings are being explored as potentially fruitful areas for collaboration between the city and the development community.

The proposal for a 90% fee reduction is seen as a direct trade-off: financial relief for market-rate development comes at the direct cost of the affordable housing pipeline and the individuals who depend on it. This is a compromise that critics argue the city should not make, especially for those already failed by the housing system.

Mayor Katie Wilson’s vision of a “taller, denser, faster” city is supported as the right instinct, with a shared sense of urgency for more housing at all income levels. However, the argument is made that density achieved without affordability does not solve the housing crisis but rather reshapes who can afford to live in the city. The ultimate goal, as articulated, is not merely to increase unit numbers but to create a city where all residents, regardless of their profession, have access to safe, decent, and affordable housing.

Key facts

The proposed cuts to MHA fees directly impact the city’s capacity to fund affordable housing projects, potentially halting progress on a critical component of Seattle’s housing strategy. The debate highlights the tension between stimulating market-rate development and ensuring that new housing supply includes deeply affordable options for a diverse range of residents.

Source: The Urbanist – Op-Ed: The Case Against Slashing Seattle’s Housing Affordability Fees (https://www.theurbanist.org/op-ed-the-case-against-slashing-seattles-housing-affordability-fees/)