Taxing Condos For "Affordable Housing"

Local blogging star Stefan Sharkansky points out an interesting disconnect between the city of Seattle's stated goal of "making housing more affordable" and their actions, which are apparently to give a little and take a lot:

Seattle City Councilman Peter Steinbrueck wants to inspire more people to live downtown by "making housing more affordable"

How will Steinbrueck accomplish this goal? By raising taxes on developers who increase the supply of housing "City seeks cut of profits of high-rises for public"

If the city raises building heights downtown, Seattle developers stand to reap whopping profits on high-rise condos and can afford to contribute more toward expanding affordable housing, a study released Wednesday found.

The study, commissioned by City Councilman Peter Steinbrueck, offers a rare glimpse into the economics of downtown development in today's hot market.

Give the developers a little more (vertical) space to build in—that part sounds like a good idea. Affordable housing comes when there is no shortage of supply. But then charge them out their ears for using that extra space—that just don't make no sense. From the P-I article:

Steinbrueck said the study justifies his proposal to require downtown housing developers who want to build above a minimum height to contribute $20 a square foot toward an affordable-housing fund. Nickels has proposed charging $10 a square foot.
...
Sharon Lee, executive director of the Low Income Housing Institute, said that with private developers selling average condos for $600 a square foot, charging $20 for affordable housing is a drop in the bucket.

"This is a ... giveaway to be talking about adding floors and floors of market rate and luxury housing," she said. "We think $20 is too low."
...
Charging developers $20 a square foot for affordable housing would yield an estimated 32 percent rate of return. That's less than what developers could expect today but well above the 20 percent that many developers require before risking their money on a project.

Yes, more taxes is clearly the answer to the problem of high housing prices in Seattle. As a matter of fact, "more taxes" is the answer to pretty much any problem.

To the man whose only tool is a hammer, every problem looks like a nail.

(Stefan Sharkansky, Sound Politics, 01.13.2006)
(Jennifer Langston, Seattle P-I, 01.12.2006)