Affordability | Build Up, Not Out

The UGA Swap would hurt affordability

Tumwater is poised to make housing less affordable — and put the Deschutes River at risk

At its meeting on Tuesday, February 3, the Tumwater City Council will decide whether to signal support for keeping the BAR Holdings/ Salish Landing urban growth area (UGA) swap on Thurston County’s comprehensive plan docket.

The legal framework does not support this type of swap because it would increase development capacity of the UGA in violation of the swap statute. Nevertheless, the mayor and the Board of County Commissioners are asking the council to support the proposed development, which would pave over 33 acres of forestland on Old Highway 99 and 93rd Avenue, just across the road from the Deschutes River.

The county hydrogeologist reported that the proposal threatens salmon runs in the river, which already has seen declining groundwater inputs over many decades. And there are multiple other problems with the proposal.

This page focuses on two problems: the risk that BAR Holdings poses for low-income people (including nearby residents of two manufactured home parks) and the risk it poses for the City of Tumwater’s budget.

The development would reduce affordability

If you care about affordable housing, please consider giving public comment at Tuesday’s 7pm City Council meeting. Supporters are framing the BAR Holdings proposal as a way to increase housing supply and improve affordability, but that framing is based on a fundamental misunderstanding of Washington’s growth management framework. In reality, the proposal would make housing less affordable.

Under Washington’s Growth Management Act, UGAs are like a belt around a city. Outside is supposed to stay rural and inside is where urban density is supposed to go.

The BAR Holdings proposal would add development capacity to the Tumwater UGA at the far outer fringe. It would do this by altering the UGA boundary by swapping unbuildable parcels out of the UGA in exchange for swapping in a buildable (and forested) parcel.

Data from the Buildable Lands Report indicates that Tumwater already has enough development capacity inside its UGA to accommodate population growth for at least the next 20 years. In fact, it has 20% more than it needs. Adding development capacity when there is already enough capacity will not lead to increased housing supply.

If a bathtub isn’t filling quickly because the faucet is slow, making the tub bigger doesn’t make the faucet run faster. The central constraint in Tumwater is not lack of land—i.e., it has a big enough bathtub. The central constraint is lack of housing production—i.e., a slow faucet. Housing production depends on financing, labor, infrastructure, and market conditions.

Instead of increasing the overall supply of housing, BAR Holdings would simply add unnecessary development capacity to the fringes of the UGA. This would shift where development occurs, spreading it far from the urban core and making future residents of the development auto-dependent. That means 200 apartment units will be full of people who will need a car to get around and who will have to drive farther to get to jobs and schools.

Location determines affordability

While expanding development capacity of a UGA won’t result in more housing supply, what it will do is make housing less affordable. Housing affordability is not just about rent or mortgage payments. Real affordability equals housing cost + transportation + infrastructure + time. Development at the fringe of a UGA may reduce housing construction cost due to cheaper land, but it increases the other three costs.

BAR Holdings is located outside Tumwater’s transit service area. Transit in Tumwater primarily serves the Capitol Way/state office corridor. Numerous studies have shown that residential densities generally need to be in the range of 7 to 12 units per acre along bus routes to support effective transit service. The airport area between the state offices and the BAR Holdings site contains no housing and will not reach densities of 7 to 12 units per acre along a bus route because the airport is in the way.

As a result, it would be impossible to extend effective transit service to the BAR Holdings site for the foreseeable future. Thus, future residents of BAR Holdings would be functionally auto-dependent for the long-term.

That means higher transportation costs, longer commutes, and greater household vulnerability to fuel price spikes. For low-income households—who already spend a disproportionate share of income on transportation—this is decisive.

A unit that appears “affordable” on paper becomes unaffordable once transportation is added.

Manufactured Housing Displacement Risk

There is another affordability impact that has received little attention in the discussion of the BAR Holdings proposal: the future of 90 homes at two manufactured home parks north of the site: Melody Pines and Village Green.

Across the country, manufactured home parks are one of the last remaining sources of unsubsidized affordable housing for low-income seniors and fixed-income households. They are also increasingly targeted by investors because residents typically own their homes but rent the land beneath them, making relocation difficult and expensive. When parks are sold or land values rise, residents often face rent increases or displacement with few realistic alternatives.

Infrastructure upgrades and redevelopment pressure accelerate this dynamic. When sewer service is extended, land values rise. Properties become more attractive to investors. The result is a growing national pattern of low-income seniors losing their housing.

This context matters for Melody Pines and Village Green. The park owner of Melody Pines supports BAR Holdings, suggesting a desire to sell after the land value increases tremendously.

Washington’s new 5% manufactured-home rent cap provides important but limited protections for existing tenants. It does not prevent land values from rising, does not prevent park sales, and does not ensure long-term affordability. Without binding protections such as rent stabilization, long-term affordability covenants, or guaranteed resident purchase rights, sewer service can increase displacement risk for low-income households.

Trading Modest Septic Improvements for Major Aquifer and River Impacts

One of the main justifications for the proposal is deeply flawed. The council has been told that groundwater contamination may be coming from septic systems at the Melody Pines and Village Green manufactured home parks to the north and that extending sewer to BAR Holdings would solve this by allowing those homes to hook up. This idea originated with the BAR Holdings developers, one of whom owns a well-drilling business.

No actual evidence of contamination has been shown. And even if there were septic contamination, largely fixed-income homeowners there have no practical ability to pay for sewer hookups, which often cost tens of thousands of dollars per home. Households are generally not required to connect to sewer unless a septic system fails.

Even more important: sewer service is essentially already at the two manufactured home parks because it was extended to the neighboring Bradbury development. The city does not need BAR Holdings to hook those homes up to sewer.

The city does subsidize sewer hookup for low-income people in certain narrow circumstances. But assisting approximately 90 households would require on the order of several million dollars in public subsidy, with no identified funding source and no established program to deliver that level of assistance. As a result, construction of BAR Holdings does not guarantee meaningful reduction in septic use at the roughly 90 homes in Melody Pines and Village Green.

Even if a small number of septic systems were eventually replaced, the septic-system narrative distracts from the core issue. Any potential septic improvements would be modest and speculative, while the groundwater and river impacts from the proposed development would be large and permanent. And as the county hydrogeologist warned, extending sewer “would potentially encourage further growth along Old Hwy 99,” creating ever more impacts on groundwater and salmon runs.

UGA swaps are expensive and time-consuming

Not only would the BAR Holdings swap hurt low-income people, but it would also hurt Tumwater’s budget. City leaders may not be aware of how expensive and resource-intensive UGA swaps are. The Department of Commerce stated in a UGA swap training that “[a]mending a UGA requires a comprehensive review of city and county growth management needs. It requires extensive studies and coordination of jurisdictions within the county.” This is not a mere annexation.

Futurewise, the state’s growth management watchdog, stated in a comment letter to the county that “[w]e have yet to see a swap that complies with [the law]. . . . [W]e recommend that Thurston County just drop attempts to conduct urban growth area swaps. . . . [T]hey are more work than they are worth.”

According to Chris Jensen, King County’s Comprehensive Planning Manager, that county rejected adding UGA swaps to their toolbox: “Primary concerns with such an allowance included the amount of additional land that would be eligible for UGA expansions and the limited direct public benefit.” They perhaps saw that the only people benefiting would be developers who would be able to flip cheap land.

UGA swaps divert resources away from other local government projects. There are only so many staff hours in a day. A city that decides to do a swap is unintentionally deciding thereby to slow down the progress of infill housing that’s more affordable because it’s closer to the urban core. This is another reason swaps are bad for housing affordability—they clog up the system and slow down the pipeline on infill housing.

Sprawl is expensive for cities

A UGA swap would also be bad for Tumwater’s long-term budget. Low-density, fringe development costs more per household to serve than when cities grow compactly. Cities must still provide and maintain sewer and water systems, stormwater facilities, roads, police and fire coverage, parks, solid waste services, and school capacity.

Impact fees help, but they seldom cover the full lifecycle costs of infrastructure, especially long-term maintenance and replacement. Initial construction produces a one-time influx of development fees. But eventually, those roads and services need maintenance for the long-term. Development fees do not cover long-term expenses.

Most residential development does not fully pay for itself over its lifecycle. When cities expand service areas significantly, this sprawl produces structural budget pressure that shows up as higher utility rates, higher local taxes and fees, deferred maintenance, or reduced services.

By contrast, compact, mixed-use buildings near the urban core generate vastly more property-tax revenue per acre than low-density, car-oriented development. (See Smart Growth America, Building Better Budgets). Compact growth near the urban core can help spur economic development and create a vibrant town center.

A better path for Tumwater

If Tumwater wants to improve affordability and protect its fiscal health, proven strategies exist:

Focus housing growth inside the existing UGA and remove barriers to infill and redevelopment
Encourage higher-density housing near jobs and services
Invest directly in housing affordable to low-income households
Avoid expanding service areas unless a true capacity shortfall exists

Tumwater City Council should not support keeping the BAR Holdings/Salish Landing UGA swap on the County’s docket. The proposal would raise costs for residents, strain the city’s budget, and move Tumwater in the wrong direction.

Additional documents and analysis regarding the proposal’s impacts are available here.