As affordable housing shrinks in Seattle, permitting delays keep apartment projects in limbo for months

On a scorching August day, curious neighbors watched a crane hoist an entire studio apartment including microwave, fridge and toilet-paper holder off a flatbed truck. Rising into the air, the unit swayed close to the windows of the building next door, then settled into place on the third story of the newest midrise apartment building in Seattle’s Othello neighborhood.

“Is this the fastest way to do it?” a neighbor asked. “I don’t know any way faster,” said architect John Morefield.

The five-story, 85-unit building, Cubix Othello, topped out in 10 days.

Each unit was prefabricated in a Vancouver, B.C., factory and then stacked atop others. It’s a construction technique called modular design that proponents say can shave six to 10 months off construction timelines.

But delays at city agencies that give the go-ahead for most aspects of new construction set the project back almost a year.

Data from the city show the time to acquire a land-use permit for a typical multifamily building outside of downtown has risen by roughly 60% since 2014.

Originally, developer NexGen Housing Partners expected to break ground in October 2018. After Cubix Othello submitted its permitting application in November 2015, 1,015 days passed before the project received its landuse permit in September 2018.

Meanwhile, the greater Seattle area is short an estimated 156,000 units of affordable housing, according to a King County task force.

City officials, urbanists and developers all agree that streamlining permitting for multifamily housing could help alleviate Seattle’s affordability crunch by bringing more units online faster.

Yet in the years since that consensus emerged, it’s also started to take longer to build an apartment than ever before.

That doesn’t mean growth has slowed on the contrary. Seattle has seen booming multifamily construction that added nearly 100,000 rental units this decade, most of them since 2014, according to Fannie Mae. True to predictions, the apartment oversupply has been accompanied by a virtual rent freeze, though rents are starting to rise again.

That spurt of new construction, builders and the city agree, is the ultimate cause of the permitting backlog.

But each camp claims the other has been overwhelmed by the building glut. Developers say the permitting office hasn’t staffed up quickly enough. And the city says developers are taking longer to make required corrections.

In the University District, a 24-story residential project underway at 1200 45th Street has been waiting 17 months for its land-use permit.

The reason: Inability to schedule required meetings with overburdened permitting officials, according to developer Maria Barrientos.

Barrientos was on the committee that wrote the city’s Housing Affordability and Livability Agenda, 65 recommendations designed to spur the production of more affordable housing.

The agenda estimated that for every two-month improvement in permit processing time, developers could save $4,000 per unit in accrued interest on borrowed capital, consultancy charges and the cost of construction. In theory, at least, that could make lower rents possible.

But since the city committed to the agenda in 2015, developers and architects say they’ve started to budget more time than ever before for permitting as many as 10 extra months adding to the eventual cost of every unit built.

Consumers could eventually absorb some of those cost hikes in the form of higher rent. And permitting delays mean additional risk for developers, said Dan Bertolet, senior researcher at the Sightline Institute, which advocates for increased density.

“There’s definitely a chilling effect,” he said. “But it’s really hard to quantify. How do you quantify the developers who decided not to build?”

Last year, delays were attributed to what the city acknowledged was a “rocky launch” of a new software system for permitting. When that system went online 18 months ago, as many as 200 projects were held up.

But since then, builders say the software has improved. In their telling, the principle source of delays now appears to be a lack of capacity at the Seattle Department of Construction and Inspections (SDCI).

“I think city staff is overwhelmed,” said Daniel Stoner, CEO of NexGen Housing Partners, which in addition to Cubix Othello is the developer of a handful of other modular and traditional multifamily developments around Seattle. “I feel for them because they have a lot of work to do.”

Stoner said his firm generally expects to receive feedback from the city two months later than the city’s stated timeline for reviewing documents. NexGen has started planning for a permitting process that lasts 18-24 months, up from 14-18 months three years ago, he said.

The city, though, says that at least part of the responsibility for delays rests with developers.

Even though the permitting timeline has lengthened, the proportion of time application documents are sitting with the permitting office has decreased since 2014.

In other words, developers and consultants, too, may have trouble adhering to deadlines, said Bryan Stevens, an SDCI spokesperson, in an email.

“Anecdotally, the industry as a whole is swamped,” Stevens said. “Design professionals have a backlog of their own which can add time to prepare plans and respond to corrections from SDCI.”

But architects said that part of the problem is the city is sending new feedback late in the game, after they’ve already responded to a series of city corrections.

“We had an entire correction cycle minimum six weeks because I rounded a number wrong,” Morefield said. “And that’s really, really frustrating. Ten years ago, I could have walked in and fixed that with a red pen and some white-out.”

Morefield, who is no longer affiliated with Cubix Othello, is working with the nonprofit Housing Development Consortium to advocate for permitting rule changes to benefit modular construction.

Frustration with new permitting timelines was a common sentiment among building professionals. But most added they empathized with the city.

“They totally acknowledge the problem and are committed to trying to solve it,” Barrientos said. “They’re very positive, very cognizant of the problem.”

Other building professionals say NexGen’s plan to speed through permitting with a modular project may have been too optimistic.

Modular construction is overseen by both the city and by the state. That’s caused snafus and delays on previous modular projects.

“Our experience permitting a modular project was zero cooperation between the local jurisdiction and the state,” said Dale Sperling, whose company OneBuild was behind a Columbia City modular development supported in part by a $1 million grant from Microsoft co-founder Paul Allen.

That project was put “on hold indefinitely” after running into a slew of permitting issues.

Cubix Othello is scheduled to open in the spring of 2020.

Neighbors watching the project stack back in August said they had mixed feelings about the development. Studios and one-bedrooms at Cubix Othello are slated to rent for between $995 and 1,495. They’re not exactly large: Units start at 285 square feet, about the size of two parking spots.

Shamicia Jones lives next door in a 744-square-foot duplex unit owned by the Low Income Housing Institute, where she pays about $200 a month after federal subsidies, she said.

“For that little box, $1,200?” she said, gazing up at the swaying unit with raised eyebrows.