The Lens – September 2017
Even as building industry leaders in the Seattle metro area are highlighting the need for land-use reform to reduce housing costs, many small builders say regulations and extended permitting may drive them out of the city if those issues aren’t addressed.
“There is a calamity coming to the city of Seattle,” said Erich Armbruster, a licensed civil engineer and owner of Ashworth Homes, speaking about the red tape and project delays many small builders encounter. “I truly believe the city of Seattle is broken.”
Small builders are those who build 25 or fewer homes per year.
Despite the perception by some that private developers have borne little of the costs associated with regional growth, the reality is quite the opposite. Seattle Times Columnist Jon Talton recently noted that they “already pay a variety of taxes and fees, including new construction sales taxes, excise taxes, increased property taxes from turning a parking lot to a hotel or apartment building, and affordable housing fees in HALA rezoning. Office building developers pay a per-square-foot fee to fund child-care, preschools and day care centers, as well as a similar fee to create public open spaces downtown.”
Also eating into their business profits are delayed projects, such as when they wade through the city’s permit review process, Armbruster said. “We used to be able to get a project from inception to permit in four-and-a-half months, with the city review being three months of that. Right now, we’re at least nine months, and in some cases 12, so we’re double the time frame.”
Although Seattle is one of the hottest real estate markets in the nation, his most profitable year was in 2013, he said. “It’s gone down every year since then.”
It wasn’t always this way, writes Gary Cobb, owner of GNC LLC. In a recent blog post, he said that during previous mayoral administrations, “we had to wait 4 months for a permit, far, far less time than we are facing today. With Mayor Nickels, I was able to see permits in 2 weeks for 2 multifamily projects. Yes, it can be done in 2 weeks, believe it or not.”
“I think this administration wants us gone, leaving only the very big builders that focus on high-rise apartments,” he added. “This is the future that the city wants for generations to come, or so it seems.”
Data from the U.S. Department of Housing and Urban Development show a sharp drop in the number of single-family home permits issued in Seattle metro between 2014-15, albeit the trend first started in 2005.
Small builders such as Anthony Maschmedt with Dwell Development LLC cite more practical reasons that may be causing the longer permit process. The city’s Department of Construction and Inspection derives most of its budget from permit fees. When the Great Recession hit and the number of permit applications plummeted, the staff was reduced.