I’ve decided that my tombstone will have the following latin phrase carved into it: DIXI VOBIS. That roughly (and I was terrible at Latin so I welcome edits) translates to, “I told you so!” Dealing with members of the City Council, City Staff, “urbanists,” and press has taught me to keep careful track of what they say and what they do because often, we have to say, “I told you so.” In fact, from reading history I’ve learned that there really wouldn’t be any history at all if it weren’t for people charging headlong into things they were strenuously advised not to do. The latest example is section 8 of so called Omnibus legislation passed by the Council a few months ago.

8. Design review pursuant to Section 23.41.014 is required for a development proposal on a lot that is contiguous with one or more qualifying lots and the combined size of development proposals on the subject lot and contiguous qualifying lot or lots exceeds thresholds in Table A or Table B to Section 23.41.004. For purposes of the preceding sentence, a “qualifying lot” is a lot for which, at the time a complete application is submitted for a development proposal on the subject lot, a complete Master Use Permit or building permit application for a development proposal has been submitted but a project pursuant to that permit 4 has not received a final certificate of occupancy.

We asked the Council to consider handling concerns of a few of Councilmember O’Brien’s constituents through the City’s process of looking at ways to improve design review. What this section was intended to stop was builders dividing their projects in ways that would avoid design review. We’ve already discussed why this occurs: design review adds costs and hassles to housing that just increase housing prices and reduce supply often with little or no benefit. We said this would lead to unintended consequences, especially killing projects that would be providing needed housing. Here’s an architect on this section:

As an architect specializing in multi-family housing, I do a few townhouse projects each year.  Clients pick our firm because they are willing to spend a little more time and effort on design in order to get better results.  They are more willing than most to accept a little extra time and risk in order to get a better outcome. Almost all of our projects go through the streamlined design review process, but I can tell you for a certainty that my clients will do whatever is necessary to stay out of the full design review process.  The reason is simple.  While the hassle, cost and uncertainty of the process is an annoyance factor, it is not the primary reason for avoiding design review.  The reason is the time.  The DRB process can add over a year to the entitlement timeline of a small process, bumping an 18 month timeline to a 30 month timeline. 

Why is the so important?  The reason is simple.  The for-sale housing market is quite volatile.  Prices can move up or down fairly quickly in a short period of time. Skilled prognosticators feel they can predict market trends a few months out, but not much further.  As the timelines become longer, the element of risk becomes unacceptable to the point where investors will not back the project.  Townhouses are a for-sale product that can be sold at a profit but does not rent for enough to pay for the cost of construction.  If a builder gets to the end of a project and discovers that the housing market has shifted under their feet and they cannot sell for enough to pay back the bank, they do not have the option of hanging on for a better market.  The way to manage this risk is to keep project timelines as short as possible.  This is not a trivial issue for spec developers.  This is the whole shebang.

For the reasons outlined above, it is unlikely this legislation will capture more projects in full Design Review as intended.  Instead, the most likely outcome will be a suppression of builders ability to deliver new homes into a housing market that saw 18% price appreciation last year due to the supply shortfall of new housing.  This is a policy that will almost certainly fail to achieved its intent, but with plenty of collateral damage.  I urge you to reconsider. Please feel free to call me if you would like to discuss [emphasis is mine].

Of course, the Council ignored these concerns passing the Omnibus in spite of our efforts to amend the legislation out of the proposal which failed on a 7 to 2 vote.

Not only will this limit housing production, nobody at the City or within the development community is certain that this provision is legal or how to comply or enforce it. By it’s very nature, the amendment forces some projects to go through full design review simply because another totally unrelated project is next door. City staff are doing the best they can to try and understand how this might impact projects. Some builders might find themselves suddenly dealing with full design review on a project premised on not having to go through full design review. This could likely kill the project and the housing with it, something NIMBYs want anyway.

So this Wednesday, December 9^th at 6pm at University Heights Community Center, Room #209, we’ll gather with staff from the Department of Planning and Development to try and figure out how builders can understand the impact of this legislation and how to work through it to get their projects and much needed housing built. Hopefully, in the coming year, we can get this provision repealed before too much damage is done. Maybe with some examples and support from City staff, “I told you so,” can become, “Thanks for listening.”