Bellingham ranks among the least affordable cities in the nation, comparing housing costs to local incomes. Are local governments’ policies contributing to that?
The median home in Bellingham costs 7.3 times more than the median income here. Nationally, a typical home costs 3.4 times the annual household income (reference: 24/7 Wall St., June 2016). That’s a big reason why Bellingham landed on this financial news organization’s list of 50 worst cities to live in.
Housing (and would-be buyers) suffers needlessly due to local governments’ growth-management policies, contends R. Perry Eskridge, executive officer and government affairs director of Whatcom County Association of Realtors.
One reason is the decision to disallow some land just outside Bellingham into the urban growth areas (UGAs), a first step to getting into the city limits.
“This has prevented a large portion of developable land from being brought into city limits,” Eskridge said. The city does not extend services, such as water and sewer, to areas not marked for annexation into the city.
An example: the South Yew Street area (south of the Whatcom Falls neighborhood and east of Samish Way, around Wade King Elementary School). This area was in the UGA in the 1995 comprehensive plan, but in 2009 the area was taken out—after other entities had made financial inputs. “They’ve gerrymandered our area out of the UGA,” said Cal Leenstra, a developer and realtor who’s been trying to develop that parcel 20 years since it was reclassified in 1997. “Look at the map. There’s a bite out of the apple.”
When South Yew Street was in the UGA, Leenstra and others spent thousands on legal, planning, and engineering preparation work that included wetlands studies. “We even did a study to see if there are any bats around there. Those are upfront costs. You can’t borrow for that. You spend your own cash.”
The County Council removed the South Yew Street area from the UGA, though both city and county planning commissions voted to keep South Yew Street in. The county determines UGAs, Leenstra said, but “the cities have a lot of input into where they want their UGA. We were hosed big-time, along with every potential purchaser of a moderately priced home, by the City Council.”
Before the shift, South Yew Street was zoned for about 4-6 housing units per acre. Now it is one unit per 10 acres.
“It’s ridiculous,” Leenstra said. “You can’t develop land at the low, low density. It’s a designation to prevent development, as far as we’re concerned.”
He said he views the zoning change as government taking property without giving any compensation.
Leenstra, with others, previously developed Samish Highlands, which he termed “arguably one of the finest residential areas in Bellingham.” That South Yew Street area would have offered less expensive houses. “This area is adjacent to city limits and surrounded by public facilities, such as Wade King School and the golf course. There are a hundred lots adjacent to our area. This is an urban area,” Leenstra said.
“We could have built 300 homes there, a good thing for middle-income families. But they’re getting more expensive as the government delays (development).”
Bellingham home prices rose 8 percent from 2014 to 2015, and another 11.4 percent over the last year, with a 2.3 percent rise predicted this year (reference: Zillow). Rents reflect this, too, with Zillow and apartmentlist.com studies reporting that local rents rose 5 percent over the last year.
Among new apartment buildings going up, many are pegged for age 55-plus, students, or low-income, government-assisted renters, Eskridge pointed out. Bellingham’s inventory of single-family homes for sale is painfully low, according to realtor reports, pushing prices ever higher. During March this year, Bellingham had only 95 homes for sale, which translates into two months’ of inventory. A balanced market typically shows six months’ inventory.
In March all of Whatcom County, including Bellingham, had 515 active listings – down 40 percent compared to the same time last year (reference: Northwest Multiple Listing Service). For Whatcom County the median house price was $200,000 five years ago, and $304,000 one year ago, more than a 50 percent rise across just four years.
“(Local governments) are exacerbating the problem,” Leenstra said. “Instead of making more land available for moderate housing, they’re restricting the supply. They tell people to live downtown, but people don’t want to.”
National studies show three out of four potential homebuyers want a single-family house. Local government policies try to route Bellingham’s expected growth into multi-family units. If that’s the only alternative, people will move out of town, which is the current trend according to the Building Industry Association of Whatcom County.
Eskridge agrees local governments’ push toward multi-family units in the city core is forcing single-family housing into rural areas. “This sprawl must be contained through planning based on reality, not hope,” he wrote in an August 2016 document to the city council.
Leenstra pointed out that longer commutes to work requiring more gas, tires, and roads are the antithesis of the Washington State Growth Management Act. The GMA, enacted in 1990, aimed to protect natural lands while designating urban growth areas.
The GMA was a great idea 27 years ago but its implementation today by various counties leaves much to be desired, Eskridge said.
One problem is “concurrency,” the idea that infrastructure and utilities should keep pace where development is to occur. The cost of infrastructure within a development is borne by the developer, but the city must first ensure existing infrastructure can accommodate new additions.
Eskridge said the city is currently facing a deficit between $93 million-$130 million in existing infrastructure. “Before the city could declare that existing water, sewer, streets, etc., were ready to be connected to potential development in South Yew Street and the Caitac property (just north of city limits),” he said, “the city would have to invest that amount in existing systems to even be able to work with anticipated improvements.”
Bellingham can’t meet its population projection under current circumstances with the existing, limited UGAs, Eskridge said.
Hence local government’s reliance on future multi-family units in Bellingham’s “urban villages.” Positive examples are Fairhaven and Barkley Village.
But he said economics don’t support it elsewhere in the city, such as the Fountain District, Sehome, Cordata, or Sunnyland. Older areas won’t command the high rents that make the model work, and too many present landowners make cohesive development problematic.
Urban villages succeed when highly paid, millennial tech workers or affluent retirees pay for proximity to abundant neighborhood amenities. In Bellingham this perceived urban hipster is largely fictional, Eskridge said.
“Bellingham’s potential homebuyers want a single family home,” Leenstra said. “They don’t want what the city says they should have.”
