This rule can promote affordable housing. But it risks pushback and more segregation | Opinion

The builders of Tehaleh, a development that will include up to 9,700 homes south of Bonney Lake, chose to pay a $768,588 fee instead of building the 711 low-income units that Pierce County regulations would otherwise require, as Becca Most of the News Tribune reported April 26. It’s an option known as “cash in lieu.”

I have some experience with affordable housing and the payment of cash in lieu — where developers pay cash into an affordable housing program rather than build the number of affordable units required by county regulations — so I thought I would provide some context. Like most things, the payment of cash in lieu has both pros and cons and whether a community accepts them is a challenging policy question for our elected leaders. Here are some pros and cons as I see them.

The good: More affordable housing

The payment of cash in lieu can fund the creation of more affordable housing units. In the hands of a government housing authority, cash in lieu can produce more affordable housing units than if the same funds are used by a private developer.

Wait, you ask, “are you claiming that the government can be more efficient than private developers? That’s crazy talk.” Well, it’s true.

Government housing authorities can leverage these funds with federal and state grants and private investment incentivized with low-income housing tax credits. Also, building a project that is 100% affordable provides some economies of scale that are not available to a developer building only a few affordable units.

In Boulder, Colorado, which has had such a program for almost 15 years, staff estimates that cash in lieu produces two to three times as many affordable housing units as would be produced if the developer built the units on site.

A cash in lieu option also makes an affordable housing regulation more legally defensible. Any government regulation that tells a property owner what the owner can and cannot do with the owner’s property will be weighed against the property owner’s right to be free from a government taking of the owner’s property; a right protected by the Fifth and Fourteenth Amendments to the U.S. Constitution. A reasonable cash in lieu option can help protect an affordable housing regulation from being struck down.

It’s not perfect and in fact, Seattle’s program is currently being challenged in federal court.

The bad: Courting NIMBYism

Cash in lieu will generally be deployed in projects where land is cheaper and where there already are existing affordable housing developments. People in these areas will justifiably ask why all of the affordable housing is being built in their neighborhood.

These community members have a point and community opposition can slow down or even stop affordable housing developments. Remember, most people support development of affordable housing but oppose affordable housing in their neighborhood.

I am not being critical; although it may seem hypocritical, it’s a view shared by most Americans. So, accepting cash in lieu can jeopardize affordable housing projects.

The ugly: more segregation

Accepting cash in lieu increases housing segregation. One reason to require on-site affordable housing is to promote housing diversity. That is, as a policy matter, we do not want to encourage exclusive enclaves of the rich and segregation of the poor.

If we do not build on-site affordable housing and use the funds to build separate affordable housing developments we continue our nation’s long tradition of separating the rich from the poor. The ugly part is that because people of color are overrepresented among the poor in America, when we segregate by income, we segregate by race.

Cash in lieu presents really challenging decisions for policymakers. Overall, I think it’s a good thing as long as programs work to avoid unintended consequences and limit segregation by race. As a society, we need to create more affordable housing units. There are too many members of community living on our streets or in substandard conditions. Everyone needs and deserves a roof over their head.

Tom Carr is a retired attorney living in Lakewood. He formerly served as the city attorney for Seattle, Washington and Boulder, Colorado and the County Council in Washington County, Oregon.