More on Seattle’s proposed taxes to fund homelessness services. And how regulation affects affordability in the city.

While it’s an issue rife with complexity, the problems of homelessness and housing affordability intersect, as a 2014 report from the United States Conference of Mayors found.

The 2014 report shows that 48% of the cities experienced an increase in homelessness. It identifies a lack of affordable housing as the leading cause of homelessness among families with children, followed by unemployment, poverty, and low-wage jobs.

We mention this as part of a follow-up to our post yesterday on the internal debate in Seattle city government about how to fund homelessness programs in the city. Mayor Tim Burgess announced his opposition to a per-employee tax to pay for the services, indicating a preference for a tax on short-term rentals. The Seattle Times reports the mayor’s idea has drawn more opposition.

Here’s the catch: Money from the short-term rental tax — which the council may approve as early as this month — is supposed to help immigrant communities and communities of color develop housing, jobs and community centers.

Howard Greenwich, a Puget Sound Sage policy adviser, said Burgess’ plan would rob Peter to pay Paul to kill the head tax…

Burgess said Wednesday the “robbing Peter to pay Paul” critique is valid. He said he’s merely pointing the council to an option.

We’ll not join that debate here; though we likely continue to follow the issue. What drew our interest today was a story in The Lens on micro-housing, which could alleviate the city’s housing affordability crisis. And, if the US Conference of Mayors report is to be believed, provide some relief for families facing homelessness. With respect to micro-housing, the city has created a regulatory problem, according to The Lens.

Micro-housing and tiny homes are two possible ways state lawmakers could address the region’s homeless population…Yet, housing industry members say more micro-housing could also lower the city’s astronomical rent prices by increasing the residential supply…

According to the Seattle Times, Seattle apartment rents are up 64 percent since 2010, around the time Seattle became the birthplace of the “apodments” trend, offering 140 square-foot living quarters.

What made this possible at the time was the lack of a minimum unit size in the city code. Also, a unit was defined as a kitchen with rooms. This allowed the micro-housing builders to design and construct six or seven buildings of five units per floor with a communal kitchen, all without triggering the city’s design review board process. So rather than a duplex or triplex on a 3,000-square-foot-lot, builders could provide apartments with 32 units.

But then came the resistance.

David Neiman, a Seattle-based architect that created microhomes, documented the rise and fall of Seattle’s micro-housing industry in a piece for Sightline Institute. He reported that in 2013, 1,800 microhomes were built, “nearly one-quarter of all new dwellings built in that year.”

It was then that opposition to the homes grew.

And opposition led to regulation.

The beginning of the end for micro-house construction came when a King County Superior Court ruling stipulated that apodment-style projects had to go through the design review process. Neiman writes: “To avoid the expense, most existing projects switch over from pod-style to SEDUs (small efficiency dwelling units),” which must have a minimum 220 square feet of floor space.

In 2014, the city banned apodments or “congregate housing.” That same year, the city council also lowered rent restrictions for the multi-family tax exemption (MFTE), a voluntary city property tax-exemption program for developers who offer units for a 12-year-period to residents that make below a certain income level. This lower threshold made the program financially problematic for existing microhome developers to participate in.

There’s more. And we encourage you to read David Neiman’s piece in Sightline, both for the insight into the regulatory timelines and implications, and for more understanding of the potential of micro-housing. It’s pretty cool.

The Lens points out Seattle policymakers seem to have doubled down on the regulations.

Among the recommendations made in the city’s 2015 Seattle Housing Affordability and Livability Agenda (HALA) report was to loosen restrictions on microhouses. The HALA Advisory Committee included Neiman, who noted that the city council chose to ignore the recommendation when it crafted its HALA work plan.

We written before on the costs of excessive regulation, on how regulation and delay increase housing costs, how land-use policies restrict supply,  and the cost-boosting consequences of impact fees

Perhaps unsurprisingly, a new proposal offered by a Seattle City Council member would make landlords responsible for paying “relocation assistance” for tenants who cannot afford to pay rent. The linked Crosscut story reports,

Under the proposed legislation, if a landlord raises rent by 10 percent or more within a one year period and the tenant then moves out, the landlord must pay three months’ worth of rent to help the tenant, a number that’s loosely based on what it costs to pay a security deposit and first and last month’s rent.

Portland attorney John DiLorenzo challenged a similar law in Portland. Crosscut quotes him on the unintended-but-clearly-foreseeable consequences.

Portland’s DiLorenzo argues that, while the intentions of the Portland ordinance were well-meaning, the result will be counter-productive.

Some landlords, he says, may keep rental prices perfectly in-line with market rate. But those he calls the “mom and pop” landlords have not. “They just don’t want the hassle of having to show units and re-rent them, and those units tend to lag,” he says. “…When the ordinance passed here in Portland, many of those landlords woke up and started to panic, because in some cases rents were 20-30 percent below market. The first thing they did was raise rents 9.9 percent, and they will do it again next year.”

He also argues those same landlords are going to be more likely to sell their rentals to people looking to own, decreasing supply in the rental market. “As far as housing available for people in low to moderate income levels, I think the effect was to actually take units off the market,” he says.

Not the desired effect, but a common consequence of overregulation.