O’Brien’s audit of City’s incentive zoning program reveals errors, discrepancies amounting to $3.7 million

Seattle City Councilmember Mike O’Brien received a report last week from the City Auditor regarding the City’s Incentive Zoning program, and said that the report shows “clear problems” in the program that date back decades.

“Two years ago, I stood with UNITE HERE Local 8 who raised concerns over missed opportunities for greater affordable housing contributions from hotel developments like the proposed R.C. Hedreen Co. hotel in the Denny Triangle,” said O’Brien.

“The findings shared today by the Auditor demonstrate that the complexities of the Incentive Zoning program have left a lot of room for improvement in administering the policies. Now that we’ve identified the clear problems, it’s time to correct them.”

O’Brien requested the audit in order to identify and measure the public benefit of the incentive program. The program provided Incentive Zoning in Seattle to developers since 1985, which meant if they built affordable housing or paid into an affordable housing fund, they would be allowed to build more square footage.

The audit revealed some discrepancies in accounting and implementation, one of which is that City departments have inaccurate documentation for projects that made – or should make – contributions to affordable housing.

The audit also revealed at least ten projects with developers who did not fully pay all fees associated with affordable housing agreements in earlier stages of the permitting process, which amounted to $3.7 million for affordable housing in November 2016 –- interest included.

Furthermore the audit revealed other discrepancies in basic accounting for developers contributing to the affordable housing fund stemming from the discovering that there is no formal process for the City to revise contributions to the fund when building plans change.

The audit also revealed conflicts and unclear elements in the Land Use Code related to incentive zoning which made the implementation of the programs “difficult.”

Reacting to the audit pointing out the errors, the Planning, Land Use and Zoning Committee plans to revise the program. They met this morning at 9:30 a.m. Seattle City Councilmember Rob Johnson chairs the committee. SDCI and OH representatives, along with the auditor, were at the meeting.

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