September 21, 2000

Affordable housing to be studied at conference

A statewide gathering of affordable housing experts will meet in Spokane next week to discuss new ideas and solutions to a problem that has hit the state and King County, in particular, hard.

Rendering by Kovalenko Hale Architects Capitol Hill Housing Improvement Program is planning 19 affordable apartments in this building along 15th Avenue East on Capitol Hill.

The three-day conference, "Housing Washington 2000," will be held Sept. 25-27 at Spokane's convention center. The event is being sponsored by the Washington State Housing Finance Commission, the Washington State Office of Community Development, and the Washington Low Income Housing Network.

Keynote speakers include David Riley of the University of Washington's Construction Management Department, who will discuss innovative construction methods in affordable housing, such as straw bale homes. Other speakers include William Jones, of CityLink Investment Corp., which developed a $65 million "urban village" to revitalize San Diego's inner city neighborhood of City Heights.

Perhaps the most unusual speaker for the event will be David Pearce Snyder, the lifestyles editor of The Futurist magazine. His message will be different from what affordable housing experts usually hear, he said. Snyder claims that affordable housing will become a reality within the next decade -- not by government subsides but because the gaps between the haves and have-nots will close as the information economy becomes "hyper-productive."

John Bohm, director of public affairs of the Center of Housing Policy, a nonprofit advocacy group, will be discussing his organization's recent report, which states that 14 million people in the country are facing "critical housing needs" -- meaning they're paying more than 50 percent of their incomes for housing costs. Of those 14 million, about 3 million are moderate-income working families, he said.

Bohm said the discussion about affordable housing tends to be limited to those earning below 80 percent of the median income, the federal definition of low income. The people often left out of the discussion, he said, are working families, who typically earn 120 percent of median income. "There needs to be higher visibility and consensus that housing availability is at a crisis stage for these people," he said.

He said even though home ownership is at an all-time high, the country still lacks sufficient new, affordable housing units.

One of the organizers of the conference is Kim Herman, executive director of the state Housing Finance Commission. According to Herman, one reason for the housing crunch in the Puget Sound is the old supply and demand problem -- there simply isn't enough available stock of housing to meet the demand driven by huge population increases, particularly in the last decade. The state, he said, is one of about 12 in the country that has experienced large-scale population growth.

The Housing Finance Commission was created by the state Legislature to issue tax-exempt revenue bonds and provide tax credits to developers of affordable housing projects. Herman said that through the commission borrowers can save .75 to 1 percent on interest payments made on loans for affordable housing projects.

So what exactly is "affordable housing?" It means you should be paying no more than 30-35 percent of your income for housing, according to most government benchmarks.

Herman said the Puget Sound's economic boom in the last few years has been a mixed blessing. It's not only attracted more people to come to the area but it has also driven up the cost of housing. "We're creating a thousand millionaires a year," he said. Those with expendable incomes drive up the cost of housing because they can afford to pay more.

Plus, the region's economic growth has not been equitably distributed, he said. Income increases are occurring primarily in the high-tech sector, while other workers' incomes have remained relatively flat.

Can the middle class afford a home in the region? "It's tough," he said, noting that income is not increasing as fast as housing costs, which in some parts of King County have skyrocketed to 9-10 percent over one year.

A study released Wednesday by the Washington Low Income Housing Network, a Seattle-based group, affirms Herman's observations. According to the study, called "Out of Reach," 35 percent of renters in Washington state are unable to afford rent for a two-bedroom unit. In King County, the figure is worse -- the study says that 45 percent of renters are unable to afford a two-bedroom unit. To afford a two-bedroom unit, renters must earn an hourly wage of $15.56 -- more than twice Washington's minimum hourly wage of $6.50.

Despite the tough housing market, there's reason for hope, said Herman. Referring to the array of lenders, builders and government agencies involved in affordable housing, he said, "We have tremendous productive capacity in this state." The commission and the not-for-profit housing developers it works with have created thousands of units across the state, he said. But, he admitted, "We can't do it fast enough to catch up with demand."

The state Legislature has also developed initiatives to encourage more affordable housing, he said. About $72 million has been directed to the state Housing Trust Fund to provide developers of affordable housing a break on business and occupation taxes. The goal of affordable-housing advocates is to persuade the Legislature to increase the trust's budget to $100 million.

Herman said the state should also devote resources to provide operating subsidies to not-for-profit developers of affordable housing. "A lot of people think once you build an affordable housing project, that's it. They don't realize that not-for-profits need money to maintain the property." Such developers, he said, don't collect enough in rent to keep up the property and stay viable.

The state may also consider adopting an Indiana law that grants property tax exemptions to any developer of affordable housing projects. Under the Indiana plan, payments are made in lieu of taxes, with the money directed to state and local governments.

Some roadblocks to making affordable housing a reality have to do with a lack of subsidy resources and people's fear of increased residential density, Herman said. Also, some developers have called for regulatory reform to speed up the permitting process for affordable housing projects.

The conference will also announce the winners of the annual "Friend of Housing" competition, which honors individuals and organizations throughout Washington for their contributions in providing affordable housing to lower- and moderate-income residents.

For more information about Housing Washington 2000, go to the Web site www.wshfc.org/conf.

Previous columns:

• County trying to curb construction waste, 09-14-2000
• Nuprecon expanding its services and markets, 09-07-2000
• KJM rides transit boom, 08-24-2000
• Seattle Iron & Metal streamlines its operations, 08-17-2000
• More than meets the eye at 505 Union Station, 08-10-2000
• A frothy solution to fend off earthquakes, 08-03-2000
• Paint additive really beats the heat, 07-27-2000
• A revolution in home building?, 07-20-2000