Winslow density bonuses reviewedAre developers getting too sweet of a deal?
June 9, 2008 · Updated 3:36 PM
"Has the city has been virtually giving away valuable development rights?Some city council members think so, as the council considers an resolution that would dramatically increase the price the city charges for the right to increase building density in downtown Winslow.But others say that since the city wants to encourage development in Winslow, it makes no sense to charge anything for the so-called density bonus.I don't agree with charging more to use your property in a way that implements the comprehensive plan, said architect and Planning Commission member Peter Brachvogel.The council will consider the issue at its Feb. 14 meeting. The question involves the way building density is calculated in much of downtown Winslow. Instead of zoning on the basis of units per acre, density limits are expressed in terms of the percentage of the building lot that can be used for building. That so-called base density, though, can be increased in any of three ways through a floor area ratio bonus.Builders can add affordable housing units; they can buy development rights from more rural areas of the island; or they can simply pay money to the city, with the funds to be used for affordable housing or the purchase of farmland for preservation.Acquiring additional density through one of those mechanisms effectively makes a building lot bigger, in that more square footage of building can be put on the land than would be the case otherwise.In the Winslow core, for example, the base residential density is 0.4, meaning square footage can equal 40 percent of the lot size. Under that zoning, a builder could put roughly 16,000 square feet of housing on a one-acre parcel.The bonus program allows the builder to increase the permitted density to a ratio of 1, meaning he could build about 40,000 square feet of housing on that same parcel.Under an ordinance in effect since 1999, bonus density can be purchased for $8 per square foot for residential uses, $10 per foot for mixed use, and $12 per foot for commercial use. The proposed change would boost those prices to $17, $24 and $32 respectively.Michael Pollock, one of the council members who favors the higher fee schedule, says the concept is to charge an amount for development rights roughly equal to the market value of land.The idea is that without the density bonus, the developer would have to buy more land. In fact, it's much cheaper to build with added density because it's a lot easier to put another story on a building than to build next door, Pollock said.Effect on costsOne problem, though, is that if the bonus density costs more, the rents or sales prices may go up.People have to understand that developers don't pay the cost, said Winslow developer Jim Laughlin. We're middlemen. Either we pass the cost along to the buyer, or we don't do it.Under a common rule of thumb, Laughlin said, each dollar in acquisition costs is translated to a penny per month in rental costs. So if the density-bonus price increases $20 per foot, as is proposed for commercial development, a retail tenant would pay an additional $200 per month for a 1,000 square foot store.I can't think of very many businesses in town that could stand rent increases of that magnitude, said Jack MacArthur, executive director of the Bainbridge Island Chamber of Commerce. The chamber board has not yet taken a position on the new bonus-density fees.But if because of market conditions, builders cannot pass on those higher costs, they might not buy the additional density. That's the outcome predicted by Rod McKenzie, the only developer who has actually purchased additional density rights under the current program for his Courtyards on Madison project.I think this will defeat what they are really trying to do, McKenzie said. These prices won't produce any money for affordable housing or for agriculture.Pollock conceded that the council has had no indication developers would pay the higher prices.The bonus densities in downtown Winslow appear necessary to carry out one oft-stated objective of the city's comprehensive plan, namely, to channel half of the island's growth into Winslow. A consultants' study showing that Winslow could accommodate half the island's projected growth suggested that density bonuses would be required to reach that goal. Pollock reads the comprehensive plan differently.The comprehensive plan's goal wasn't to densify Winslow, but was to preserve the outlying areas by directing building into Winslow, he said. Since the density-bonus program is not limiting growth in the outlying area, why do it.Brachvogel disagrees with that interpretation.Encouraging good development in downtown Winslow preserves the outlying areas by making people want to live downtown, he said. If you make it more expensive to build downtown, though, developers will build in the woods because it's cheaper. "