Seattle wants more affordable housing. Is its own policy getting in the way?

Seattle’s Mandatory Housing Affordability (MHA) program requires most new multifamily and commercial office projects in designated areas to contribute to income‑restricted housing – either by including affordable units or paying a fee. The City’s Office of Housing then distributes those payments to nonprofit/Non‑Governmental Organization (NGO) developers to build affordable homes in Seattle.

Created through the 2015 Housing Affordability and Livability Agenda (HALA) process and the “Grand Bargain,” MHA paired modest increases in development capacity/floor area ratio – often working out to be about one additional floor of height – with new affordability requirements. The goal was to generate affordable housing without slowing overall housing production. MHA has produced meaningful funding, but it also adds substantial cost to new housing. In 2026, residential MHA fees range from roughly $11 to $50 per square foot, often amounting to millions of dollars per project paid by developers. For example, the stalled redevelopment at the Capitol Hill Safeway site would owe over $8.5M in MHA fees when construction begins, an 8% increase in construction costs.

It’s important to view MHA within Seattle’s broader affordable housing system. MHA is not the City’s primary funding source for affordable housing. The voter‑approved Housing Levy – described by the city as the “cornerstone” of Seattle’s strategy – now provides $970 million over seven years. Additional funding comes from JumpStart payroll tax revenue, federal and state programs, and other sources. As these have grown, MHA represents only about 7% of the Office of Housing’s total revenue distributed to NGOs.

A common understanding in the real estate industry is that affordable housing NGOs spend 10%-15% more to build a similar building than a market-rate private developer would. This is mostly due to regulatory requirements, labor costs, financing, extended timelines, higher developer fees paid to NGOs running the project, and accounting requirements.

Seattle’s independent five‑year evaluation found that while removing MHA alone wouldn’t make most infeasible projects viable, MHA costs can prevent projects near the financial feasibility threshold from moving forward. This creates a clear tradeoff: MHA generates affordable‑housing dollars, but it does so by increasing the cost of building new housing at a time when MHA is a relatively small portion of Seattle’s overall affordable‑housing resources. As evidence of MHA’s drag on housing production, several institutional investors – the source of capital for large-scale developments required to begin construction – have said they will not invest in Seattle projects until MHA fees are reduced or removed.

The core question is whether MHA’s benefits outweigh any reduction or delay in housing production – and whether placing this cost specifically on new housing remains the most effective strategy for meeting Seattle’s affordability goals.

Change Washington is tracking this issue closely. The recently introduced Mandatory Housing Affordability Accelerator Draft Ordinance offers a real opportunity: a council bill designed to increase housing supply by temporarily reducing MHA obligations for eligible projects. This could help unlock stalled development and bring more homes online.

More to come soon, including opportunities for you to act before the council votes on this ordinance, which is currently expected to take place on December 15.