Developers are investors. Did you know that? They build buildings to make money. I know this is nothing new to you, the reader, but I wanted to bring it to top of mind.
An investor attempts to make as much money as quickly as possible within legal and hopefully moral constraints, while reducing their risk of financial loss.
When an investor (let’s just call them what they are) comes to town (often they do not live in Bellingham) they buy a piece of property, and go through the City’s permitting process. At the time they buy and begin permitting, a certain type of building can be built on the land. A house, an apartment, a mall and so on. If the property does not fully suit their needs they will ask for a variance or even request a rezone of the property. This recently happened in Bellingham’s Old Town, and in Fairhaven, and is happening now (May ‘24) on Lake Whatcom at Old Mill Village.
Although this is a standard practice, and our city code is built to handle these requests, at times these requests add value to the property. Value that wasn’t there, in the market price, when they bought the property. This value thus comes from the requested rezone, and thus the City; which, officially, is you the tax payer.
The investor has every right to ask for this rezone, or variance, that will increase the value of the property or their end profit, but the city does not have the obligation, nor even possibly the right, to give it.
Although investors in Old Town property bought land at market rate, they found that it would be a difficult ‘go’ without some ‘help’ from the city. Did I mention that investment often includes considerable risk? Should the City ‘bailout’ the investor? Within this help, parking requirements were asked to be waived, as to allow for less cost to the investor and allow for more land to be made available for housing units, instead of parking stalls.
If the City were to allow the change (which it did), to require less or no parking for the new housing units, it would increase the profitability of the property two ways. Less parking stall costs and more units to rent or sell. This is a one sided transaction. Added value for the investor, from the City, while the City gained nothing in return.
A gift.
This article is not long enough to discuss the merits of parking minimums. We are simply using it as a transactional example. The investor received an increase in end profits from its original market rate transaction. The City made that possible, and no value was given in reciprocation. If value was given in return, the decision by the City would be an incentive (good), instead of a gift (bad). Obtaining this reciprocation is the responsibility of the Planning Department, and City Leaders.
What could that added value be?
As noted in our article on needed Housing types, we proved that for a solution to the housing crisis, middle housing, and housing for >120% AMI residents, is minutely important in comparison to the need for affordable housing for residents who make 0-50% AMI. Every opportunity to create this housing must be taken.
Also, as the City recognizes that the only way this housing will come to reality is through subsidy, tax incentives or zoning reform, the value the city must require of investors is a percent of the units be permanently affordable housing, aka zoning reform.
What's Next?
This idea of reducing parking requirements to zero through out the city is making its way through the City’s processes. It is being heralded as a housing supply solution by building advocates. How can it be a housing solution, when it is supply that does not require government involvement.
So far it seems proponents of zero parking requirements are asking for nothing in return for the gift they are asking to be given. A mind boggling decision when most of these proponents such as the Whatcom Housing Alliance, say they are advocates for affordability for all. It’s time they stop asking for gifts, at the expense of the working class.
Any value added to a developer’s investment by the City must not be a gift. It may be legal but it is not moral.
