New Construction Archives » Larry & Kathy Reichle

How Seattle spent its boom money

June 19, 2018 by Kathy Reichle Leave a Comment

Now that the construction boom that made the city of Seattle rich is starting to decline—and putting newfound pressure on homelessness spending—it’s time to ask where the money went.

After analyzing the city’s budgets over the last eight years, we found some answers.

How rich were we? Are we still rich?

The year 2013 was a clear turning point. Seattle’s general fund started ramping up from $800 million then to $1.1 billion now. That’s 30 percent growth. Overall city revenue grew, too, from $4 billion to $5.6 billion. But overall revenue also contains the money gushing through Seattle’s utilities. The general fund is where the political action is, and where the tough decisions are made. And yes, Seattle is still loaded compared to the way it was during the recession. But the city is spending pretty much all of it.

Which taxes made Seattle this money?

Business taxes, and sales taxes and new property taxes, in that order, all related to construction. These were the taxes that led the way. Forty million dollars-worth of tax revenues from construction in 2010 ballooned to more than $100 million this year, according to the City Budget Office.

So how did the city spend this dough?

Infrastructure: buttressing the Seawall, roads, and other growth-related investments.

Police officers: Mayor Ed Murray wanted 100 new cops on the beat. He got those cops, and then he wanted 100 more. That didn’t happen. But permanent funding happened: In 2016, the city hiked business taxes, largely pay for this ongoing expense. With the Chamber of Commerce’s blessing.

Homelessness: It is very hard to follow homelessness spending through every annual budget process. But the Budget Office’s 2018 budget proposal reports that Seattle’s spending on homelessness rose from $39 million four years ago to $63 million in 2018. That’s an increase of 60 percent. Until the head tax, many of the commitments already made for homelessness were not secured by their own revenue source, meaning they were paid for by construction boom money. Meaning they could be at risk when the boom stops. The head tax did pass, but it only lasts five years before it must be renewed. And now the tax faces stiff opposition from people who want it repealed.

How did the politics of spending change over the boom?

The politics of spending changed a lot.

After several hard years of killing jobs – 294 in 2011 alone – and snipping away at expenses, in the 2012 budget year the Seattle City Council pushed back. It said no to more cuts and pulled money out of the city’s Rainy Day fund to cover the $18 million crater in its budget.

If council members were gambling on a turnaround, they were right. In 2013 the money rolled in. Cash was back in the Rainy Day fund and spending resumed. Mayor Mike McGinn had a “new approach to address street disorder,” including money to address homelessness, and the council added more money for homelessness on top of that.

It was the start of a new pattern. Each year mayors put forward their own spending proposals, and the City Council usually added more spending on top of that.

In 2015, Mayor Ed Murray and the City Council allowed a $26.4 million budget gap. “Surprise” boom money arrived to cover it.

The following year, the city spent big on everything, including homelessness. The council added $7 million in social services spending. And then Mayor Murray declared a homelessness state of emergency, throwing an additional $7.6 million at the problem. At first, the goal was emergency housing, but last year the focus turned to permanent housing, leading to deeper investments, like $29 million in affordable housing bonds.

But today, with revenue from construction in decline, the Budget Office is telling the city it’s risky to spend on faith that more boom money will cover budget gaps. “A shift to slower growth could happen very quickly,” the director of the Budget Office wrote in a 2018 proposed budget summary. The same document acknowledges that homelessness is “the most significant policy challenge that the City is currently facing.”

Fate of Cougar Mountain development still unknown

April 25, 2018 by Kathy Reichle Leave a Comment

The fate of a 57-unit housing complex on Cougar Mountain is still being decided by the city of Issaquah as the project makes its way through the city’s review process.

The Bergsma Development was proposed last year by Windward Real Estate Services. Its initial proposal was for 78 new homes to be built on a portion of a 45 acre lot on the side of Cougar Mountain. The City Council unanimously rejected this proposal so the developers went back to the drawing board and submitted a land-use application for a 57 house project.

This proposal has prompted a backlash in Issaquah, as documented in earlier Reporter stories, with the creation of a group called Save Cougar Mountain. Member Susan Neville said they were expecting to hear a decision from the city on March 26, but the deadline was pushed back 30 days.

Comments from the community have been submitted to the city for consideration, including a legal comment drafted by the firm Bricklin and Newman representing Save Cougar Mountain. In it, the firm outlined a list of environmental concerns the group had, which include impacts to soil and slope, air quality stemming from the removal of trees and traffic, stormwater runoff and stream protections, among others.

The firm said 100-foot buffers could be reduced by 27 percent under the proposal. Also included in the firm’s comment were concerns about the aesthetic impacts of a development on the hillside, which is currently undeveloped forest.

Save Cougar Mountain has said around 60 percent of the proposed development includes critical areas with wetlands, streams and steep slopes. For the houses to be developed two wetlands would have to be cut down and 22 acres of trees removed, the comment read.

Landslides are another concern of Save Cougar Mountain, which points to a 2015 study that identified potential landslide risks on slopes greater than 40 percent. Windward has pointed to various other studies that have found no risk of landslides.

Julie Clark, also with the conservation group, said their concerns have basis in reality following a 2015 landslide on a nearby portion of the mountain which cost the city millions of dollars to repair.

Save Cougar Mountain member Kay Haynes said she hopes the city and county will band together to purchase the land and potentially add it to the county’s Cougar Mountain Park, which abuts the property.

Windward President Jim Tosti has previously told the Reporter the development will benefit the city by providing more housing as well as making improvements on Newport Way. The development is located near Interstate 90 with views of the valley.

It is unclear how much the property is worth or how expensive the houses would be, but if real estate trends in Puget Sound are any indication, the houses would likely be near or more than $1 million each.

Tosti said in an email he couldn’t comment on any updates yet.

By Aaron Kunkler

We’re building bigger houses – and they’re swallowing up our yards

October 25, 2017 by Kathy Reichle Leave a Comment

Lot usage is at an all-time high, meaning land devoted to green space is at a low

Houses are packing on the pounds, and yards are paying the price.

Since 2015, the estimated median footprint of a single-family home has grown to a near all-time high of 2,113 square feet, according to an analysis from Trulia, while the average lot size has shrunk to 8,940 square feet.

That makes the “lot usage” measurement — how much land is devoted to house, rather than green space — an all-time high of 25%.

Average lot sizes have shrunk by more than one-third since 1975, Trulia noted, and homes have become 15% bigger during that time.

Part of the increase may be due to the rise in “tear-downs” – a home built on a site where a previous structure existed.

The National Association of Home Builders estimates there were 79,200 tear-downs in 2016, up from 55,200 in 2015, and Chief Economist Robert Dietz told MarketWatch that he expects that trend to continue as the housing stock agesand demand for inner suburban locations swells.

NAHB doesn’t collect data on how big the new homes are in relation to the ones that were torn down, but as Dietz puts it, “anecdotally a tear-down typically involves a smaller, less-energy efficient home being replaced by a large structure that is more resilient and energy-efficient.”

Read: When the dining room turns into a play room, you know the kids are in charge

But another reason is simply that America is aging. In 1802, when Trulia’s records begin, the median lot size was 65,340 square feet, or an acre and a half – huge by today’s standards but logical for an agricultural society with boundless space for the taking.

Over time, lot size fell steadily, to about one-tenth that size a century later. But in the mid-twentieth century, thanks to the automobile, the interstate highway system, and the government’s efforts to boost the housing finance system, Americans fled to outer suburbs, and lot sizes surged once again.

More recently, we’ve been lured closer to densely-populated cities, but, as Trulia notes, “many people like the idea of living in a single-family home and having a yard to call your own along with some space between themselves and their neighbors.” Yes, even millennials.

Read: Millennials are buying homes, and they’re buying them in the suburbs

The rise of McMansions may be another reason, although the large, mass-produced eyesores that mushroomed along with the housing bubble have declined in favor.

As always with real estate, local details tell stories of their own. New England boasts the most housing markets where a home’s footprint takes up less space, even for recently-constructed homes, Trulia’s analysis found.

In metro areas like Worcester, Mass., Hartford, Conn, Bridgeport, Conn., and New Haven Conn., homes built after 2014 take up less than 10% of the lots on which they sit.

But single-family homes in Philadelphia and San Francisco, which Trulia calls “geographically small but dense,” have the highest lot utilization rates.