OH News

June 2011

The Seattle Times Takes on the Multifamily Property Tax Exemption Program

 

A Response from the Director:

 

Seattle's Office of Housing has administered the Multifamily Property Tax Exemption (MFTE) Program since 1998. Set to expire at the end of 2010, City Council renewed the program in February 2011 with a reduced affordable rent requirement. Following the renewal, a Seattle Times reporter began investigating the program, focusing on the for-profit projects. His story, published on May 31, suggested the program has become a developer giveaway, and a June 8 Seattle Times editorial says the program has "gone too far."

 

As those familiar with the Seattle Housing Levy and most of OH's affordable housing programs know, we primarily serve extremely or very low-income households. Over half of the nearly 11,000 rental units the City of Seattle has funded over the years serve households with incomes below 30% area median income (AMI), about $18,250 for an individual or $23,450 for a family of three. Deep subsidies need deep financial contributions.

 

The MFTE program provides a relatively shallow tax break to project developers for up to 12 years in return for lower rents for at least 20% of the rental units. MFTE is one of the few tools available to help produce units affordable to moderate-wage workers with incomes between 65% and 85% AMI ($39,520-$51,680 for an individual) in new construction projects often in "vogue" neighborhoods (to repeat a Seattle Times term).

 

Why should we care about affordability in desirable neighborhoods? There are reasons why they are popular: access to transit, which provides easier access to jobs, plus neighborhood amenities like parks, libraries, retail, grocery stores and restaurants are all within walking distance. Households with modest incomes should be able to live there too! Too many moderate-wage workers are finding themselves priced out of Seattle's rental market, having to move out of the city.

 

Let's not forget:

  • MFTE helps private developers get projects underway in transitional (i.e., not necessarily vogue) neighborhoods, especially in bad economic times. It's no surprise we've had significantly more interest from developers over the past two years. The Great Recession found construction grinding to a fast halt, resulting in many jobs lost. MFTE has helped get projects underway again, employing architects, engineers, construction workers and building management staff.
  • MFTE means lower rents, especially for one- and two-bedroom units. At $1,295 for a one-bedroom, the Seattle Times article questioned the "affordability" of the set-aside units in a new MFTE-approved project in lower Queen Anne. The reporter doesn't point out that the average rent for the 203 one-bedroom units in that project is projected at $1,560, with over half to rent for north of $1,700. For the 17 MFTE projects approved in 2010, the estimated rent differential between the restricted units and market-rate units is as follows: studios, $170; one bedrooms, $300; two+ bedrooms $500. Is the tax exemption worth these rent differentials? We think so.
  • MFTE helps nonprofit projects as well. Many nonprofit developers have participated in MFTE to access the tax exemption for units serving tenants with incomes above 50% AMI.

 

The MFTE program's affordable rent requirements have been frequently adjusted over the life of the program. There are good arguments that suggest that the program has successfully met many of its goals and that it will look more valuable as the economy continues to improve and rents escalate again. And that is happening -- the Dupre+Scott Apartment Advisors Spring 2011 survey shows a 3% increase in average rents over the last year, as Seattle's vacancy rate drops to 3.38%. This low vacancy rate means demand is rising and renters are increasingly being left with fewer options.

 

It is tricky to find the right balance between providing developers with an incentive to increase affordability through reduced rents and achieving the affordability we want and need. Meeting our low-income and moderate-wage worker affordability goals will continue to require support for housing levies as well as utilizing tax incentives when we can. As Seattle grows, we need all the tools we can get to meet an increasing need.  

 

Sincerely,
Rick Hooper, Director

IN THIS ISSUE
OH Awards Portfolio Preservation Planning Grants
Crime Prevention Through Environmental Design
2011 Incomes & Rents Published
King County Funders Group Recognized
Reminder: Multifamily NOFA Applications due July 29
Hard Hat Zone - 12th & Jefferson Workforce Housing
DON Survey: Outreach & Engagement
Free Summer Food Program for Kids
Upcoming Events
OH Awards Portfolio Preservation Planning Grants

In May, OH awarded the last round of Portfolio Preservation Planning grants to Plymouth Housing Group and Southeast Effective Development (SEED) who will spend the next year planning and implementing goals associated with their housing portfolios. The grant is part of the MacArthur Foundation's Window of Opportunity Affordable Housing Preservation Initiative.

Portfolio Preservation Planning

Portfolio Preservation Planning in a nutshell

 

In 2009, OH and the Washington State Department of Commerce received a joint three-year grant from the John D. and Catherine T. MacArthur Foundation to support preservation efforts aimed at assuring the long-term viability of our affordable rental housing. OH is using its portion of the grant to extend the life of existing properties by improving performance through strong property and asset management practices. Grant activities include development of operational (performance) tracking systems; capital needs assessments and recapitalization strategies which are incorporated into portfolio preservation plans developed by nonprofit housing owners.

 

To date, eight non-profit agencies that collectively own 90 OH-funded properties with over 4,300 units have received grant awards. Each agency has the same goal: to analyze the physical, financial and operational needs of their portfolios and produce a portfolio preservation plan that achieves long-term viability for their portfolio. 

 

The 2009 and 2010 recipients of this grant have shared their work products and strategies with other affordable housing owners. The collective analysis, tools and best practices from  grantees are contributing to a Housing Preservation Guide due to be available in July this year. The guide is intended as a resource for the 70+ agencies that own and operate OH-funded projects (273 developments with over 11,000 units).

 

For more information, please contact Cindy Erickson at cindy.erickson@seattle.gov.

Crime Prevention Through Environmental Design

Sunset House lobbyAffordable housing developers in the city of Seattle strive to design and construct buildings that not only provide critically needed affordable housing but also embrace principals of

sustainability while meshing with the fabric of the surrounding neighborhood. The physical design of that neighborhood, along with the layout, lighting, and individual building design and maintenance can affect the levels of safety in our communities.

 

In 1995, then Secretary of Housing and Urban Development, Henry G. Cisneros authored an explanation of the "broken window" theory. Published in a series of essays titled "Defensible Space: Deterring Crime and Building Community," the theory describes how the quick response to the small problems of broken windows, graffiti, trash, etc., can stop the escalation toward bigger crime problems occurring.

 

The Seattle Police Department takes this theory a step further with Crime Prevention Through Environmental Design (CPTED). CPTED looks at the entire neighborhood to identify areas or elements that may have the potential to attract crime. Knowing simple CPTED design principals can lead to solutions that can be undertaken to reduce fear and prevent crime, which makes a neighborhood safer for everyone, including homeowners, residents of affordable housing, and businesses. CPTED can also help you plan ahead for future development in your neighborhood.

 

More info about CPTED can be found online at http://www.seattle.gov/police/prevention/Neighborhood/CPTED.htm.

2011 Rental Housing Incomes and Rents Published

Last week OH published the 2011 income and rent limits for OH's Multifamily Rental Housing, Downpayment Assistance and Multifamily Property Tax Exemption (MFTE) programs. Limits for Seattle programs are based on area income limits published annually by the U.S. Department of Housing and Urban Development (HUD).

 

Borrowers should refer to their OH regulatory agreement when determining what limits apply to their building. The FY2011 income and rent limits are effective immediately and can be downloaded from the OH website.

King County Funders Group Recognized by Harvard's Kennedy School of Government

A unique collaboration of key funders of homelessness housing and supportive services that sets regional priorities and coordinates support has been named one of the Top 25 "Innovations in American Government" by the Ash Center for Democratic Governance and Innovation at Harvard's prestigious Kennedy School of Government. The Funders Group of the Committee to End Homelessness in King County, of which OH is a member, was chosen for recognition from a pool of more than 500 applicants.

 

The Funders Group members include the department directors and executive directors from King County, the City of Seattle, United Way of King County, the Bill & Melinda Gates Foundation, King County Housing Authority, Seattle Housing Authority, Building Changes and representation from the suburban cities.

 

As a group, members identify and establish funding priorities for each year and collaborate on an annual joint Notice of Funding Availability (NOFA) for housing and supportive service awards. The 2010 Combined NOFA totaled $55 million from seven funders and 22 different fund sources.

 

To read more about the recognition and the group, visit http://www.kingcounty.gov/exec/news/release/2011/May/06Funding.aspx.

Multifamily NOFA Applications due July 29

In May, OH published the 2011 Multifamily Rental Housing Program Notice of Funding Availability (NOFA). With this NOFA we announced the availability of approximately $22 million in capital funds to support the production and preservation of long-term affordable rental housing.

 

Nonprofit and private developers are invited to submit proposals for acquisition, rehabilitation and/or new construction of affordable rental housing for low-income households. More information and application materials are available now on the OH website. Applications are due to OH by noon on July 29, 2011, and funding decisions are expected to be announced in October.

Hard Hat Zone logo 

Welcome to the Hard Hat Zone, where we provide updates on the construction of affordable housing developments that receive Office of Housing funding. This month we're highlighting Capitol Hill Housing's 12th & Jefferson workforce housing development, which recently began construction.

 

12th & Jefferson Workforce Housing

This month Capitol Hill Housing (CHH) began construction on the 12th & Jefferson workforce housing project, located at 12th Avenue and East Jefferson Street in Capitol Hill. When complete, the development will consist of 40 one- and two-bedroom affordable rental units at 60% of area median income (about $35,000 to $40,000/year for a one- to two-person household) and approximately 5,000 square feet of ground-floor neighborhood commercial space.12th & Jefferson Workforce Housing

 

Located on a formerly City-owned site, the property was awarded to CHH in 2008 after a competitive Request for Proposal process that prioritized workforce housing for a neighborhood that has witnessed dramatic increases in rent and property values over the last decade. In 2010, OH awarded Housing Levy dollars to CHH for development of the housing.

 

The site is centrally located, walkable and well-served by bus transit and connections to the future Link Light Rail station and the First Hill Streetcar. Many amenities are within walking distance or a short bus ride, including Seattle University, Seattle Central Community College, several large hospitals, Cal Anderson Park, plus restaurants, drugstores and other retail options.

 

CHH intends to design and market the commercial space(s) to neighborhood and local businesses as part of its 12th Avenue Initiative. The initiative is a three-year-old community development effort focused on the mile-long newly invigorated business district along 12th Avenue, stretching from East John Street to East Yesler Way through Capitol Hill and the Central District. Goals of the initiative include ensuring diversity and affordability of residential and commercial space, encouraging a vibrant and healthy business district that includes support for small businesses, and improving the pedestrian environment.

 

For more information, visit www.capitolhillhousing.org.

DON Survey: How Can the City Best Reach You?

Seattle Department of Neighborhoods seeks your input on its community outreach and engagement activities. In line with its mission of civic participation, the department is asking community members for their feedback and ideas on how it can most effectively provide support to the community. To participate in the survey, click here or visit http://www.surveymonkey.com/s/YQLJ82V. The survey will close on June 30, 2011.

 

Following the adoption of the city's 2011-2012 budget, Seattle City Council provided a Statement of Legislative Intent with the directive to evaluate, refocus, and prioritize Seattle Department of Neighborhoods' community outreach and engagement functions to maximize limited resources. Results from this survey will provide much needed information on the department's present strategies and inform activities going forward.

Free Summer Food Program for Kids Begins June 27

Join Mayor McGinn at a community celebration of the start of the Seattle Human Services Department's Summer Food Service Program on Saturday, June 25, 10 a.m.-noon at the NewHolly Gathering Center in southeast Seattle. The Mayor will be on hand along with program partners and neighborhood families.

 

Open from June 27 to Aug. 26, the Summer Food Service Program provides free breakfasts, lunches and snacks for children and youth ages 1-18. The meals are served to children at approved sites where at least half the children are eligible for free or reduced-price school lunches.

 

Funded by the United States Department of Agriculture (USDA), the program was established in 1968 to respond to growing research that correlated a child's nutrition with academic success and concerns about the lack of nutrition resources for children during the summer months.

 

For more information, please contact Javier Pulido, Program Coordinator, Human Services Department, at (206) 386-1140 or javier.pulido@seattle.gov or visit the City's website to find meal program locations and schedules. For a Seattle Channel video of the program, please click here.

Upcoming Events of Interest

Jackson Street Music History Project/Showcase at Lavizzo Park

Saturday, June 25, 2 p.m.

Blanche Lavizzo Park, 2100 S Jackson St

 

All ages are welcome at this free event that will combine the opening celebration of the Jackson Street Music History Project with the Langston Hughes Performing Arts Center's "Showcase at Lavizzo Park" music series. Located on the east half of a vacant lot owned by the Low Income Housing Institute, the Jackson Street Music History Project is a temporary public art installation that honors musicians from the Central District's rich history of jazz, funk, soul and hip hop. The lot eventually will be developed into affordable housing.

 

The opening ceremony will begin with the art installation's unveiling at 2 p.m., followed by special guest speakers including Seattle City Councilmember Nick Licata. The afternoon will feature performances by funk/soul artists from the Wheedle's Groove collective, a hip hop showcase from 206 Zulu Nation, DJ Seabefore and jazz groove band Gravity.

 

For more information visit www.jacksonplace.org/history or https://www.facebook.com/pages/Jackson-Street-Music-History-

Seattle Office of Housing logo
  
Home Base is published monthly by the City of Seattle Office of Housing. OH funds affordable workforce housing, both rental and ownership, as well as supportive housing that helps vulnerable people achieve stability and move along a path toward self-sufficiency. Office of Housing initiatives also help stimulate housing development, allowing families to thrive and neighborhoods to provide a full range of housing choice and opportunity. The mission of the Seattle Office of Housing is to build strong healthy communities and increase opportunities for people of all income levels to live in our city.
  
For more information on our programs, visit our website. If you have questions about this newsletter, please contact Julie Moore via email or at (206) 684-0604.