A Baby Step toward Revamping Single-Family Zoning

Over the past two decades, Cascadia’s biggest city has planned for growth according to the so-called “urban village strategy” that steers new housing, mostly in the form of apartment buildings, to mixed-used commercial centers with good transit. At the same time, the policy conspires to leave untouched Seattle’s neighborhoods of detached houses—“single-family zones,” in planner-speak.

The proposed rezone across the city would likely yield the equivalent of only two typical mid-rise apartment buildings.

When Seattle embarked on the urban village strategy in the mid-1990s, some residents fought the changes, and city leaders compromised by subverting the core principle that within designated growth centers much more housing would be allowed. Instead, the city left swaths of urban village land—places benefiting from public investment in transit, parks, community centers, and other amenities—under the tight constraints of single-family zoning.  

Recognizing the barrier to housing choices left by this legacy, Seattle’s 2015 Housing Affordability and Livability Agenda (HALA) recommended completing the unfinished business of the 1990s. It called for changing all single-family zones located within urban villages to zoning that is actually urban—that is, that allows plenty of homes. The Seattle City Council is currently considering a proposal that purports to make that happen. It would “upzone” 6 percent of the city’s abundant single-family land.  (Single-family zoning currently covers more than half of the city.)

Ending single-family zoning in Seattle’s designated growth nodes is long overdue. The justification for doing so is particularly acute today, when the city is absorbing more newcomers than ever in its history, when it is crippled with an intense and worsening shortage of housing, and when it is trying to get off fossil fuels by clustering its growth around transit and walking hubs. Unfortunately, the city’s proposed plan for realizing that vision is a disappointing half-measure, arguably not worth the intense political effort now underway to win adoption.

Overall, the proposed rezone would yield a trivial number of new homes: likely no more across the whole city annually than come in two typical mid-rise apartment buildings. Nearly two-thirds of the upzoned single-family land would be converted to “residential small lot” (RSL) zoning, a classification that barely loosens the status-quo prohibition of homes appropriate for a mixed-use, transit-rich urban neighborhood. Consider:

• RSL allows two primary homes on a typical size lot—that is, a duplex—rather than one. But in many cases, you can’t actually build two. In any event, duplexes do not make an “urban village.”
• On smaller lots, it would drastically reduce the allowed square footage of housing from what is allowed in single-family zones.
• The proposed limit on accessory dwelling units in RSL could end up making the RSL “upzones” reduce not only square footage but also the number of homes allowed.
• Homebuilding in RSL would be subject to Mandatory Housing Affordability (MHA) fees that would undermine the city’s intent for RSL to yield “homes that may be more affordable than available housing in single-family zones.”
• Because RSL may reduce the allowed size—and therefore the value—of housing that can be built, it would create a morass of legal ambiguity around the city’s MHA program, inviting lawsuits and hamstringing homebuilding.

In short, Seattle’s proposed single-family upzones are a good idea, but badly implemented by the current draft before the city council. In this article I’ll explore why the strategy may be counter-productive, with special attention to RSL zoning, and suggest ways to improve the proposal—potential lessons for prosperous cities throughout Cascadia and North America.

Single-family sea change

My colleague Margaret Morales documented how the extent of single-family zoning has expanded steadily since Seattle first adopted it in 1923. The city’s urban village strategy, implemented in the 1990s, further cemented the primacy of single-family by confining most multifamily zoning to designated centers. The city’s consistent intent couldn’t be clearer: Seattle’s 2005 Comprehensive Plan, for example, enshrined the goal to “preserve and protect low-density, single-family neighborhoods.”

And it has worked: in 2017, some 88 percent of new homes constructed in Seattle went into the 16 percent of the city’s land that is situated in designated urban centers and villages. The dearth of new homes in single-family zones helps to explain why much of Seattle’s single-family land has actually lost population since 1970.

The 2015 HALA plan signified a sea change for land-use policy in Seattle. The plan’s most far-reaching proposition—to allow multiple dwellings on single-family lots as long as the overall building envelope was no bigger than already permitted—would have yielded a return to the earlier pattern of duplexes, triplexes, and other small multifamily homes. That proposal did not survive the controversy that its announcement sparked. But the city is moving ahead with a less ambitious HALA recommendation: to upzone all land zoned single-family that lies within designated growth areas (officially called either urban centers or urban villages, depending on their size).

Map of Seattle’s Crown Hill urban village, outlined in the solid black line. Pale yellow = single-family zoning; dark yellow = midrise mixed-use; brown = lowrise; red = commercial; dashed black line indicates a 10-minute walk from the transit stop. Map source: City of Seattle.

Completing the urban village strategy

In the mid-1990s, when establishing the new urban villages and their zoning, city leaders buckled in the face of opposition from residents who didn’t want more housing choices in their neighborhoods. The resulting watered-down plan left many urban villages with strips and patches frozen in single-family zoning, contradicting the city’s strategy to focus new housing near new public amenities such as improved transit, parks, and community centers.  

For example, the map above shows the urban village of Crown Hill, about eight miles northwest of downtown Seattle. The solid black line marks the urban village boundary. Pale yellow indicates single-family zoning, and the dark yellow, brown, and red areas are multifamily zones. As shown in the interactive map here (click on “preferred alternative map” and navigate to Crown Hill), the city’s plan would upzone all of the single-family zoning inside the Crown Hill urban village.

The proposed single-family upzone

Seattle planners included the single-family upzones as part of the city’s Mandatory Housing Affordability (MHA) scheme to couple affordability requirements with multifamily upzones throughout the city. The proposal would upzone 1,248 acres of single-family lots in and near urban villages and centers, about 6 percent of the city’s total 21,000 acres of single-family land.

Of this sliver of single-family land to be rezoned, 62 percent (768 acres) would change to “Residential Small Lot” (RSL) zoning, which will bring surprisingly little increase in housing options, as I explain below. Some 38 percent (471 acres) would become “lowrise” zones, a more-robust increase in housing options that allows townhouses, rowhouses, and small apartments but is still rather modest considering that all the areas in question are in designated urban villages and centers where mid-rise buildings are often the norm. The remaining 0.7 percent (9 acres) would convert to midrise zoning and permit apartments in the four- to eight-story range.

Sketches of housing types allowed in Seattle’s proposed RSL zone. Image by ZGF Architects for City of Seattle.

The new RSL zone

Seattle defined RSL zoning more than 20 years ago, but it has so far only assigned seven acres to the category. By the city’s definition, RSL “allows for the development of smaller detached homes that may be more affordable than available housing in single-family zones.” RSL is like a half-step between single-family and lowrise zoning.

Modified for the MHA program, the proposed new RSL zoning allows detached houses, cottages, attached townhouses, and stacked flats. The most common outcome in RSL would likely be a new smallish, for-sale house built behind an existing house. Parameters governing homebuilding in RSL and single-family zones are given in the appendix. Homebuilding in Seattle’s new RSL zones would be subject to MHA requirements—either inclusion of below-market rate units or payment of an in-lieu fee that goes to a city affordable housing fund.

The city’s proposal to upzone single-family to RSL—with its numerous variations, minutia, and myriad possible scenarios on the ground—is a lot to digest. Let’s cut to the chase and explain the major problems with the RSL proposal, and provide a list of suggestions for how to fix them.

The 768 acres of RSL upzone would likely yield about 1,202 homes over 20 years, a mere 60 per year.

In theory, upzoning single-family to RSL raises the allowed density of primary homes by a factor of 2.5, on average. Seattle planners estimated that in the real world, however, the RSL rezone would increase the “capacity for housing growth” by about half that. For the full package of MHA rezones they projected that over 20 years about one fourth of the capacity for growth would be used for new homes. I applied that same ratio to arrive at a net gain of 1,202 homes over 20 years for the proposed RSL rezone, equivalent to 60 new homes per year. (For details on this estimate, see the appendix.)

For the entire proposed single-family rezone, applying those same city assumptions yields 5,634 homes built over 20 years, or 282 per year. Compared with RSL, the portion of the land rezoned to lowrise would yield about 3.5 times more capacity for homes (roughly six times more homes per acre).

To put these numbers in perspective, two typical midrise apartment buildings provide about the same number of homes as the estimated annual gain from the entire single-family rezone. In Seattle since 2013, homebuilders have completed more than 6,000 new apartments annually, with a record 8,753 in 2017. In other words, the single-family rezone growth projections are nearly negligible in the big picture.

Rezoning from single-family to RSL would in many cases reduce the legal square footage of housing.

In Seattle, a typical building lot in single-family neighborhoods is 5,000 square feet (ft²), but sizes vary. On parcels of less than 3,700 ft², RSL zoning allows only one house, limited in size to 2,200 ft² of floor space. On the same lot, single-family zoning currently allows a three-story house up to 3,885 ft², so a rezone from single-family to RSL would reduce the indoor living space by 43 percent. Roughly 900 of the 6,100 lots that the city has proposed to upzone from single-family to RSL are 3,700 ft² or less.

On a 5,000 ft² lot, RSL restricts total floor space to 3,750 ft², divided between two separate units. On the same lot in the existing single-family zone, a three-story house could max out to 5,250 ft² (though in practice it’s rare for new homes to approach that maximum). Clearly, the RSL “upzone” is in many instances actually a downzone, and this fact has troublesome implications for the MHA program, as I’ll get to shortly.

Further squeezing capacity, RSL’s 2,200 ft² size limit also applies to additions to homes. That means owners of houses 2,200 ft² or more that get rezoned from single-family to RSL would lose the chance to construct additions. (Relatedly, additions are exempt from MHA requirements, which creates an incentive for owners to add onto dilapidated old houses rather than demolishing them and starting fresh, impairing design flexibility and raising the cost of construction, and likely producing less energy-efficient homes.)

Mandatory Housing Affordability fees would undermine the city’s intent for RSL zoning to yield “homes that may be more affordable than available housing in single-family zones.”

Imagine you own a single-family house in an area rezoned to RSL and want to subdivide your lot and build a second house to sell. For a 2,000 ft² home, to get your building permit you’d have to pay an MHA fee of up to $41,500 depending on the location, adding up to 8 percent to the cost of construction (assuming a cost of $250 per ft²). That’s tens of thousands more dollars of your own money that you have to put at risk, because you have no guarantee on what the selling price of the home may end up by the time it’s finished. If you’re not feeling confident enough that the payback from the sale will cover your time, effort, and risk, the MHA fee could tip the scales, convincing you not to bother.  

Professionals make decisions the same way. Let’s say a homebuilder needs a 15 percent return on investment to win funds from her banker and investors. A duplex project that would yield 15 percent without MHA yields perhaps less than 10 percent with it, killing that project. Small-scale builders likely to work in RSL zones are usually more vulnerable to this kind of added expense, as compared with deep-pocketed firms that develop big projects. Whether by directly accelerating rent increases, or by sacrificing new homes that would have helped alleviate Seattle’s housing shortage, MHA fees that exceed the real-estate value awarded by upzones work against affordability.

Seattle’s plan for upzoning single-family areas within urban villages underscores the political concession that is rarely spoken by city officials but is jarring in its inequity once exposed: MHA fees don’t apply to the form of housing that’s the worst for affordability—single-family houses. MHA instead places the burden on the construction of smaller, more land-efficient, and less expensive forms of housing. In other words, in the name of improving affordability, MHA punishes housing options that are part of the solution, while letting the worst offenders off the hook. It’s like an income tax that exempts millionaires.

In many instances, an RSL rezone would reduce the value of those lots.

The core principle of MHA is that the value added by allowing more development should offset the cost of the affordability requirements, so that the policy doesn’t discourage homebuilding. Assessing that value exchange entails comparing what can be built before and after the MHA rezone (as I’ve analyzed for other zones here, here, here, here, and here).

Analysis of the real-estate economics of RSL (detailed in the appendix) indicates that in financial terms, converting single-family to RSL would in many cases amount to a downzone. For the above-described case of a 3,700 ft² lot on which RSL would only allow a single 2,200 ft² house, by my estimate the rezone would reduce the value a builder could derive from redeveloping the property by a whopping $350,000. For a 5,000 ft² lot on which RSL would allow two homes, the loss of value would be less extreme, in the range of about $25,000 to $200,000, depending on the house sizes. Similarly, Seattle’s MHA study found that for construction of a 4,500 ft², three-unit, stacked flat apartment building, the decrease in value caused by the rezone to RSL would make it a money loser.

The primary cause of these financial downzones is RSL’s physical size restrictions, and piling on MHA charges makes it that much worse. Many owners of single-family properties would take a substantial hit to their property values if rezoned to RSL. In such cases, redevelopment would happen at a slower pace than it would under the original single-family zoning.

Including the RSL ‘upzone’ in Seattle’s MHA program will create a legal morass.

Washington state law requires jurisdictions to provide an offsetting “incentive” in exchange for any affordable housing mandates they impose. As discussed above, in some cases a rezone from single-family to RSL actually reduces the square footage of housing that can be built—in the worst case, by over 40 percent.  Other proposed MHA rezones could reduce property values (see here, here, here, and here), but RSL is the only rezone that actually allows construction of less residential space in many instances, obliterating large percentages of some homeowners’ property values. In such cases, the RSL rezone is a “taking” of value, not a “giving” of an incentive, and therefore fails to comply with state law.

RSL with MHA seems like an open invitation for lawsuits against the city—lawsuits with good odds of success. As an escape hatch from this type of legal challenge, city code does allow for waiving MHA’s mandates if they would impose “severe economic hardship.” But the inevitable, bogged-down bureaucratic process to settle claims would introduce toxic delay and uncertainty that inhibit homebuilding in RSL zones and would push the burden of proof, and the legal costs, from the city itself to individual homeowners in RSL zones.

RSL may forgo opportunities for accessory dwelling units.

The proposed RSL zone will permit each house on a lot to have one accessory dwelling unit (ADU), either as part of the main house, or in a separate backyard cottage as long as the lot is at least 4,000 ft². Likewise, Seattle currently restricts ADUs to one per lot in single-family zones. Planners have proposed, and the city council appears inclined to approve, upping the allowance to two ADUs, but the city has not yet determined if that increase will apply to RSL. If it does, a typical 5,000 ft² lot could yield six total dwellings, a big plus for housing choices. If not, the gain in homes yielded by a rezone would be much smaller. In that scenario, for example, homeowners not interested in building a second primary house could build only one ADU under RSL, when they could have built two if the zoning was left as single-family.

Further restricting ADUs: unlike in single-family zoning, in RSL ADU square footage counts against the 2,200 maximum unit size. Owners of houses 2,200 ft² or more that get rezoned from single-family to RSL would lose the chance to construct a backyard cottage. At the same time, ADUs are exempt from MHA charges, which could incentivize builders to trade off larger ADUs for smaller primary dwellings.

Seattle’s RSL rezone is barely worth doing as proposed.

The upshot for Seattle’s plan for single-family zones in urban villages is that RSL zoning, as currently conceived, is far too constraining. It’s as if Seattle leaders, intimidated by the same forces that blocked change in the original urban villages push of the 1990s, are compromising again, proposing an upzone that seems bold on its face but turns out to be so booby trapped with hidden barriers that it will change little on the ground.

In theory, RSL zoning allows two, maybe three, homes instead of one, but in practice, it undermines itself with so many size restrictions and constraints, plus MHA fees, that it would often work out to be not an upzone but a downzone. It will yield a meager stream of additional dwellings: maybe 60 a year across the entire city. Its legal snags with MHA will, at best, inflict delay and uncertainty on homebuilding and at worst induce its own overturning by state courts. Further, it would lock in zoning that undermines city goals: political forces don’t align for changing zoning in any neighborhood more than perhaps once per decade, if not once per generation. And lastly, it’s a terrible precedent for any future upzones of single-family neighborhoods across more of the city.

How can Seattle fix it and yield consequential gains for affordability?

• Upzone more single-family to higher density zones: RSL would lock 768 acres of land near transit and shops into inappropriately low-density housing patterns. Addressing Seattle’s affordability and climate goals demands, at a minimum, lowrise zoning. By the city’s estimate, every acre of lowrise would yield about as many net new homes as six acres of RSL. Boosting all the way to midrise zoning, even if it’s on a smaller area, may be a better prescription for housing choices in neighborhood centers. Typical midrise apartments yield perhaps 20 times more added homes per acre than RSL.

  By the city’s estimate, every acre of lowrise would yield about as many net new homes as six acres of RSL.

  

• Raise the RSL zone’s density limit: RSL imposes too low a limit on home density. For example, RSL’s maximum of one home per 2,000 ft² of lot area precludes triplexes on 5,000 ft² lots—the most common residential lot size in Seattle. A better density target: one unit per 1,000 ft², which would enable a modest, five-unit building on a 5,000 ft² lot. RSL also restricts apartment buildings specifically to a maximum of three units, no matter how large the lot. This restriction (intended to encourage homes with ground level entries) should be removed to maximize homebuilding flexibility.
• Ratchet down the size of single-family houses but not multifamily buildings: In many cases, rezoning single-family to RSL would reduce the total square footage of housing that can be built, even if it’s split into multiple homes. The city’s affordability goals would be better served by zoning that restricts the size of single-family houses but raises that limit for buildings that contain multiple units, incentivizing the construction of more homes on a lot. The main drawback of McMansions is not that they are large, but that they are large and only accommodate one household.
• As an alternative to RSL, model the single-family upzones after HALA recommendation SF.2 to allow more homes on a lot without allowing larger buildings: This scheme raises the number of households that can live inside buildings without changing the scale of the buildings themselves, so it wouldn’t much alter the physical character of a neighborhood. Yet it would allow more homes than RSL does, because it regulates development scale by lot coverage, setbacks, and height, but not by a density limit.
• Allow two ADUs per RSL home: There’s no reason to make RSL more restrictive than the allowance for two ADUs the city has proposed for single-family zones. The owner of an upzoned property with an existing house should have the option of keeping the house and adding two ADUs. Small lot sizes would preclude backyard cottages, as they already do in single-family zones.
• Exempt RSL from MHA: As with all of the city’s multifamily zones, exacting fees from homebuilders in RSL is an exercise in circular logic, undermining the MHA program’s own intent to help affordability by pushing up prices and rents. MHA in RSL is a particularly dubious proposition because of the scenarios in which rezoning from single-family would actually be downzones. The new RSL zone is untested and rife with the risk of unintended consequences. RSL builders would tend to be small-scale and vulnerable to added expenses imposed by MHA, and the rate of homebuilding will likely be so low that MHA would create negligible revenue for Seattle’s affordable housing fund. Coupling MHA to RSL paints a giant legal target on the entire policy. State law allows localities to downzone property, even if doing so reduces property values. (Politics are another matter!) On the other hand, state law explicitly forbids imposing affordability mandates or fees without compensating incentives. All told, MHA in RSL is likely to be more trouble than it’s worth.

Conclusion

Though it would alter only 6 percent of the city’s land zoned for single-family, Seattle’s proposal constitutes the biggest change to single-family since zoning was first put in place almost a century ago. The city’s ambition is commendable: to correct a lamentable political bargain on single-family zoning that continues to sabotage city goals to create diverse, walkable neighborhoods with abundant housing options. Unfortunately, Seattle’s plan falls far short of that ambition.

The simple reason: the upzones wouldn’t allow enough homes. The two key fixes: (1) relax RSL’s limits on density, floor space, and ADUs, and (2) upzone a larger portion of the single-family to lowrise and midrise. Further, to avoid risking unintended consequences and legal snags for a relatively small payoff, the city can exempt RSL from the MHA program. With these improvements, Seattle’s single-family upzone will serve the city’s goals to create neighborhoods that welcome people of all incomes while treading more lightly on the planet.

APPENDIX

How much capacity for new homes would the rezone add?

Assuming an average lot size of 5,000 ft² single-family zoning allows a maximum density of nine primary dwellings per acre. Theoretically, RSL’s density limit of one dwelling per 2,000 ft² of lot would allow 22 dwellings per acre—2.5 times higher than single-family—such that the 768 acres upzoned to RSL could yield a net gain of 10,031 homes.

However, multiple factors pare down that theoretical maximum in the real-world—in particular, many lots already have high-value buildings on them. Accounting for such factors, Seattle planners estimated that rezone to RSL would yield a net gain in “capacity for housing growth” of roughly half the theoretical maximum, or 4,908 homes. For the rest of the proposed single-family upzone, planners estimated that the 471 acres rezoned to lowrise would yield a net capacity increase of 17,410 homes, and the nine acres rezoned to midrise would yield 688.

All that totals to additional capacity for 23,006 homes created by the proposed single-family upzone. That’s about one third of the 69,520 units of new capacity created by the entire “citywide” MHA rezone (the citywide rezone accounts for about half of all the new capacity that will be created by the city’s complete package of MHA rezones). For reference, in 2012 the entire city had an estimated 224,000 units of zoned capacity.

How much of the added capacity would actually get used for new homes?

As defined by the city, the above capacity numbers are a “theoretical calculation of the total amount of development allowed under current zoning over an indefinite time horizon.” To assess how much actual housing production the MHA rezones would cause over 20 years, Seattle planners applied another layer of assumptions based on projections previously done for the city’s Comprehensive Plan. They estimated that the “preferred alternative” MHA rezone would result in 17,026 new homes actually built over 20 years—that is, just 24 percent of the capacity for 69,520 would be consumed for new home construction.

The city’s 20-year projection does not separate growth by zone, but for a rough approximation I applied the same 24 percent ratio to the single-family upzone capacity, which comes out to 5,634 homes built over 20 years, or 282 per year. Under the same assumptions, the RSL portion of the upzone would yield about 1,202 homes over 20 years, or 60 per year.

Residual land value analysis of rezoning from single-family to RSL

One common metric for testing real estate development scenarios is “residual land value” (RLV). The RLV is how much a developer can pay for land on which to build and still achieve a reasonable return on investment (ROI) after paying all the other expenses of development. If a change to zoning reduces the value of redeveloping a parcel of land, the RLV drops by a corresponding amount, and vice-versa.

The table above shows a simplified financial breakdown of constructing a 4,000 ft² house under Seattle’s existing single family zoning, compared with constructing two 1,875 ft² homes on the same lot rezoned to RSL. As shown in the bottom row, the RLV for single-family is about $25,000 more than that for RSL. Translation: for this particular scenario and assumptions, building the homes allowed under RSL zoning would generate marginally less value compared to what could be built under existing single-family zoning.

However, if the house was 5,000 ft² instead of 4,000 ft² (up to 5,250 ft² is allowed), the loss of RLV caused by the rezone to RSL jumps to $217,000. Worse yet, plugging in the above-described case of a 3,700 ft² lot on which RSL would only allow a single 2,200 ft² home, the rezone would reduce the RLV by a whopping $353,000, slashing the original single-family RLV by 40 percent.

RSL also allows small apartments, but because the financials are different for rental housing, RLV analysis is beyond the scope of this article. However, Seattle’s MHA study found that development of a 4500 ft², three-unit, stacked flat apartment building in RSL would have such a low RLV that it would not be financially feasible to construct.

RSL off-street parking requirements

Like single-family zoning, RSL would require one off-street parking space for each dwelling. Seattle exempts parking requirements for lots inside urban villages located within a quarter mile of frequent transit. But as illustrated in this Seattle Times map, some of the proposed RSL will not be exempt (see Crown Hill, for example). A requirement of one stall per unit would create a serious barrier to the construction of multiple RSL homes on a single lot, especially if the density limit is raised, as recommended above. There simply isn’t space on small lots to fit much parking. To enable the RSL zone to better support city goals for affordability, Seattle should consider exempting RSL from off-street parking requirements.