Housing supply and development contributions: a case study of sidewalks in Seattle

• Date: 03 October 2023
• Pages: 272-290
• DOI: https://doi.org/10.1108/IJHMA-07-2023-0090
• Published date: 03 October 2023
• Subject Matter: Property management & built environment,Real estate & property,Housing markets
• Author: Nestor Garza,Michael Goldman

Housing supply and development

contributions: a case study of

sidewalks in Seattle

Nestor Garza

California State University, Dominguez Hills, Carson, California, USA, and

Michael Goldman

King County Department of Assessments, Seattle, Washington, USA

Abstract

Purpose –This study aims to test the effect of Seattle’sdiscontinuous sidewalk requirement, on the number

of housing unitsper constructionpermit.

Design/methodology/approach –This study uses discontinuitylinear regression (DLR) on a database

of Seattle’s housing construction permits during January-2015 to January-2018, controlled by 51

socioeconomic, planning and geographic variables. The sidewalk requirement is continuous inside the

designated urban villages; however, it is spatially and quantitatively discontinuous in the rest of the city:

certain blocks at certain locations require sidewalks’design and construction in permits with six or more

housing units. DLR detects the effect of the discontinuity while controlling for a vast array of confounding

variables.

Findings –The primary f‌indingis that the discontinuous requirement reduces the number of housing units

in about 75% of a housing unitper permit, which at the aggregate level amounts to around 335 fewer housing

units duringthe period of analysis.

Research limitations/implications –The database is relatively small, which has limited a more

thoroughspecif‌ication process and robustness tests.

Originality/value –Besides directly testing the effect of a discontinuous in-kind development

contribution, the research setup allows to discuss a wider, more structural problem: the possibility of

contributions avoidance due to spatial substitution. In contrast, spatially continuous (i.e. city-level)

contributions cannotbe avoided by performing spatial substitution,and they are internalized by the housing

supply side(market-neutral).

Keywords Spatial economic analysis, Discontinuity linear regression, In-kind contributions,

Development contributions, Sidewalks

Paper type Research paper

1. Introduction

The effect of urban regulation on land and housing markets is a popular scholarly topic,

even though the supply or demand-side causationchannels are still an inconclusive inquiry

(Gyourko et al., 2008;Mittal, 2014;Yan et al.,2014;Garza et al.,2020). In addition, most

articles on the topic have an empirical emphasis while not fully engaging with existing

urban land economics theoreticalframeworks (Gleeson and Low, 2000;Evans, 2008).

The empirical emphasis in the literature about housing markets and development

contributions is one of the reasons why most of the published research routinely pools it

together with land use regulation (Ruming et al., 2011;Lauridsen et al., 2013). However,

development contributions do not have the same market effects and causation

mechanisms as other types of urban regulation. For example, zoning imposes spatial

IJHMA

18,1

272

Received1 July 2023

Revised31 August 2023

Accepted6 September 2023

InternationalJournal of Housing

Marketsand Analysis

Vol.18 No. 1, 2025

pp. 272-290

© Emerald Publishing Limited

1753-8270

DOI 10.1108/IJHMA-07-2023-0090

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1753-8270.htm

limits to the types and amounts of built environment; everything else constant, it directly

decreases the supply of housing, increasing its prices and land rents. In contrast,

development contributions belong in the family of land value capture tools, by decreasing

developers’willingness to offer residual land rent. Depending upon the degree of spatial

substitution between city zones, development contributions can be market-neutral,

leaving untouched the quantities and values of the built environment (Whitehead, 2016;

Garza, 2019;Vejchodsk

a, 2022).

In-kind development contributions are a particular tool for land value capture, because

they are expected to transfer the costs of urban development processes to developers/

landowners. However, this feature (market-neutrality), or lack thereof, has not been

suff‌iciently explored in the literature (Chapman, 2015;Slaev et al., 2022;Berrisford et al.,

2018). In-kind contributionsare planning tools that seemingly offer the best of both land use

regulation and land exactionsbecause:

they are thought to be market-friendly by not being regulations as such. They do

not directly limit housing quantities, while sharing the objective of improving the

quality of the urban environment; and

they are thought to save public revenue by making developers fund public

infrastructure. These assertions have not been subject to systematic analysis

(McAllister et al., 2018;Chen et al., 2022).

In addition, the correspondingconceptual framework remains understudied.This is why we

test the effect of an in-kind development contribution: Seattle’s spatially discontinuous

requirement that developers design and construct sidewalks in construction permits of six

or more housing units while usinga simplif‌ied conceptual framework.

The sidewalks requirement in Seattle offers a vantage point to perform impact

assessment. Building upon an urban land rent theoretical framework, we show that a city-

wide general requirement, where all the housing construction permits are charged for

sidewalks, would be market neutral. Our theoretical discussion shows that Seattle’s

discontinuous and spatially scattered requirement operates as an extra construction cost

that can be avoided by performing spatialsubstitution. Ignoring spatial considerations for a

moment, if the sidewalk requirement is costly enough, building under the unit threshold is

incentivized, which at the aggregate level depresses housing supply. With spatial

considerations, if the interaction of development feasibility and the sidewalk requirement

shift development just across a land use boundary, pedestrian infrastructure fractures

without completing sidewalks within the intended area. The f‌inal aggregate result can

contribute to worsen housingaffordability while still not producing the sidewalks (or, in the

end, they are built using city funds).

We use discontinuity linear regression (DLR) to test whether there is a negative

effect, everything else constant, of the sidewalk’s threshold on the number of housing

units per permit. That is, we use DLR to detect whetherthe number of housing units per

permit increases up until one unit below the threshold. Our approach furthers the

observations made by Schwabb and Oates (2014). They describe the distortionary effect

of a discontinuous tax on the number of windows in 18th-century England. Our

database includes all the housing construction permits in Seattle during January 2015

to January 2018, and a collection of 51 control socioeconomic, planning and geographic

variables.

Our paper is divided into f‌ive sections, beginning with this introduction. Section 2 offers

a conceptual discussion, including graphical arguments as to the effect of development

Sidewalks in

Seattle

273