Seattle City Wire

Andre and Erika Cherry dreamed of owning their own home.

But a Seattle city code turned that vision into a nightmare of fees, paperwork and headaches. The Cherrys want people to wake up to the reality that the city’s housing affordability law is keeping people from fulfilling a basic American desire: To have their own home.

“Seattle’s ‘housing affordability’ law has made it completely unaffordable for people like us to own a home in this city,” Erika Cherry said in an online study of their problem. “We dreamt of turning a fixer-upper into our dream home. But the city’s law has turned that dream into a nightmare. The amount of emotional and financial stress this ordeal has caused is immeasurable.”

The Cherrys closed on a two-bedroom house in the Highland Park neighborhood in early 2019. It was built in 1916 but after more than a century, it needed extensive work, and they were prepared to provide that.

What they weren’t ready for was an $11,000 building permit fee required by Mandatory Housing Affordability Ordinance, which took effect in April 2019 and placed the Cherrys’ home and into an “MHA” zone. The law states that any new structures or buildings where additional “dwelling units” are added are subject to the fee.

The Cherrys’ plan did call for a large amount of work but the home would have remained a two-bedroom unit. The couple decided to fight City Hall, and have been joined by the Institute of Justice, a national law firm that focuses on individual and property rights.

“No one should have to pay thousands of dollars in extra government fees just to renovate their home,” said William Maurer, managing attorney of the Institute for Justice’s Washington office. “It is a measure of the city’s lack of understanding of how economics works that a law claiming to lower the cost of housing actually makes this affordable housing prohibitively expensive.”

Maurer argues that the city code was not intended to prevent people from renovating their homes. In addition, he said, Seattle has violated the couple's constitutional rights by applying it to them.

It is, he argues, extortion. The U.S. Supreme Court has prohibited governments from using such authority against citizens.

If this can happen to the Cherrys, no homeowner [or would-be homeowner] in America is safe from these kinds of extortionate demands, the institute states in an online summary of the case.

“The city is not charging the Cherrys to bring their building up to code. They are essentially extorting the money from the Cherrys for reasons completely unrelated to the condition of their home or the effect the home will have on city services,” Maurer told Seattle City Wire. “This is not only not reasonable, it is unconstitutional. According to the U.S. Supreme Court, exaction fees have to be reasonable and have a nexus to the government interest at issue. Here the fee is exorbitant and the Cherrys’ renovations will have no influence on the cost of housing one way or the other.”

He said the city’s own words make the case against this fee.

“The city’s website states the following about the purpose of the law: “Mandatory Housing Affordability (MHA) ensures that new commercial and multifamily residential development contributes to affordable housing. This is done by requiring new developments to include affordable housing [performance option] or contribute to the Seattle Office of Housing fund to support the development of affordable housing [payment option].” 

Maurer said it simply makes no sense. The city is defeating the very concept it claims to support.

“The law seeks to increase the amount of affordable housing by forcing people who are building new housing to either pay a fee to the city, which it will use to build ‘rent-restricted, income-restricted homes for low-income people,’ or to build such housing themselves,” he said. “In other words, it is attempting to achieve the creation of more affordable housing by exacting the cost of such housing from people building other kinds of housing.”

The high cost of the permit forced the couple to adjust their plans.

“The Cherrys cannot afford to pay an $11,000 fee on top of the renovations,” Maurer said. “They had to rent an apartment for over a year while they dealt with the city’s demand for the fee. That became too expensive to continue, and so they are living in the house now without performing the renovations needed.”

He said he cannot discern if the law has impacted housing costs, but said it likely will have a detrimental effect on the housing stock in Seattle. There already is a tight market, with a June report showing a short supply of homes and a high demand.

“The law is relatively new, so there is no data of which I am aware that it has affected the price of housing one way or the other, except, of course, for increasing the cost of the Cherrys' housing by $11,000,” Maurer said. “However, it is difficult to see how imposing a significant fee or a costly construction requirement on something will make that thing cheaper. What makes housing affordable is that there is plenty of it.

“The fees and costs associated with the MHA will almost certainly be yet another disincentive for builders to construct new housing units in the city and thus decrease the available stock of housing and increase its cost.”