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June 12, 2015
No one wants Seattle's housing market to go the way of San Francisco's.
Despite spiraling rents, housing here remains relatively affordable compared to the Bay Area and some other big cities, but it may not stay that way.
A panel of housing experts at a Commercial Real Estate Women Seattle & Sound event on Thursday said holding down housing costs will require everyone to sacrifice something.
Seattle Mayor Ed Murray has set a goal of building 50,000 housing units over the next 10 years, with 20,000 of them income-restricted. He formed the Housing Affordability and Livability Advisory Committee to figure out how to get it done.
The committee's plan is due at the end of the month.
Faith Pettis, bond counsel at Pacifica Law Group and co-chair of Murray's committee, said many have likened the committee to the minimum wage task force but she says that's not a fair comparison. Minimum wage is a single issue, Pettis said, but creating affordable housing is much more complex.
“If we come up with a solution that doesn't hurt every single interest group around the table, we've failed,” Pettis said.
The solution might include linkage fees for new development. Pettis said fees are on the table, but they could be tied to incentives or set at levels that are different from what the City Council proposed.
Pettis mentioned other policies that might come out of the committee such as expanding the Multifamily Property Tax Exemption program to include existing buildings, simplifying permits, re-authorizing or expanding the housing levy, and looking at zoning changes all over — perhaps even in single-family zones that cover much of this geographically constrained city.
There was a handout at the meeting from the Coalition for Housing Solutions, which is a group of developers, property owners, architects and business associations, that offered a proposal for how to get 20,000 affordable units, without linkage fees. The group calls for changes to the MFTE program, such as extending it to existing buildings; expanding the places where it can be applied; and giving property owners who are already in the program a chance to extend beyond its 12-year timeframe.
The group says those changes to the MFTE would produce nearly 15,000 affordable units over the next 10 years.
The group recommends asking voters to approve a larger housing levy when the current one expires next year, and says that would produce another 6,600 units.
Other methods the group recommends are refining the program that allows developers more height and density in exchange for building affordable housing, and dedicating part of construction-driven tax revenue toward affordable housing.
All these changes, the group says, would produce nearly 23,000 affordable units over 10 years.
Producing that many new units is a lofty goal, but many affordable housing advocates say they are just trying to preserve the units that already exist.
“To not lose ground is going to be very difficult,” said M.A. Leonard, Pacific Northwest vice president at Enterprise Community Partners. “The market forces are not with us right now. The tide is moving against us.”
Affordable housing developers face an uphill battle. They have the same costs for land and construction as for-profit developers, but lack any financial cushion.
Leonard said most workforce housing units — those serving people making about 60 percent of area median income — don't make much money. Tax credits and other funding helps developers cover the cost, but it's hard to attract investors without a big return.
Units for the lowest-income people are even harder to build, Leonard said. Rents don't cover expenses, and the tax credits for these units are extremely competitive.
There are talks at the national level about increasing funding for tax credits, and affordable housing developers also are looking at social impact bonds. This sometimes is referred to as “pay for success” financing, where a project gets upfront funding from private investors. If the project meets a specific goal, the investors are paid back by a government agency.
Bellwether Housing's Sarah Lewontin said Bellwether is using social impact bonds to fill a funding gap on a property it recently acquired.
A government agency might invest in these types of bonds because it could save money elsewhere. Panelists said it costs more to deal with the impacts of homelessness on people — such as their medical costs — than it does to provide them with housing.
Leonard said all of these ideas must be explored. Government, residents, developers, and nonprofits all have a part to play in creating more affordable housing.
“It's not going to be a silver bullet. I think it's going to be a series of many things.” Leonard said. “Affordable housing production is complicated, and I think it's going to be a series of small wins. Everyone knows we need the money; it's a matter of who pays for it.”
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