Urban Politics #133: Housing Levy Vote


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By City Councilmember Nick Licata.

Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.

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Housing Levy – - CB 114161 / ORD 120823

Passed in Full Council on June 10, 02 (8 to 1, Nicastro against)

The $59.2 million Housing Levy adopted by the voters in 1995 has provided a major source of funding for affordable housing in the City, particularly for low-income households. The 1995 Housing Levy ends this year. The Council had committed to putting a new Housing Levy measure on the ballot in 2002.

The City appointed a Citizens Advisory Committee (CAC) which brought together a wide array of non-profit housing providers as well as advocates for the homeless and low-income. They proposed a levy package that would develop a spectrum of housing types. This included permanent housing for the homeless, transitional housing, rental housing, and low income homebuyer programs. But the main focus was on providing more housing units for the very poor.

I agreed with the basic thrust of CAC’s proposal and I believe the final Council legislation achieved that objective as well. The Council’s legislation was closer on 4 of the 5 main program elements that made up the CAC proposal, than the original proposal offered to the Council by the Mayor.

In the council negotiations that produced some 18 different versions of the legislation, I successfully co-sponsored proposals that targeted no less than 70% of the total levy funds for rental production. I also successfully supported the primary focus of levy funds being reserved for households earning below 60% of median and least half of rental housing funds were limited to serving households below 30% of median. These were the basic goals of the CAC proposal as well.

The Council was also concerned about the size of the tax burden that would fall on homeowners. The Council’s final legislative package had an annual tax of $49 on the median value of a Seattle home. The original proposal by CAC and the Mayor were both higher.

There was also much discussion as to what type of funding assistance should be given to low income homebuyers. The last levy provided such assistance and I wanted to continue that emphasis by allocating 9% of the levy’s funds for that purpose. I supported committing 50% of the levy homeownership dollars to families making 60% or less than median income.

All of the funds used for home buyer assistance go into a pool that is repaid by the borrowers and then is available for assisting future home buyers. Also I considered that homeownership development requires a public subsidy on a one-time basis; whereas some very low-income rental housing will require yearly operation and maintenance subsidies. Consequently, in some cases, homeownership development may be less costly to tax payers.

This homebuyer assistance was a particularly important issue for many low income residents in South Seattle neighborhoods who are being priced out of the city or whose children could no longer afford to purchase homes in the neighborhoods in which they were raised.

The levy ordinance that was finally voted on by the Council represented many compromises. For some it was too much money and for others it was not enough. But in the end it continued our City’s commitment to fund low income housing for our neediest residents. I voted for it because without it, our housing crisis would grow worse and we would see more people homeless and in need of shelter.

Hotel Developer Subsidy – CB 114147 & CB 114183

Both passed out of the Housing, Human Services & Community Development Committee on June 18, 02. CB 114147 passed 4 to 0; Drago, McIver, Nicastro, & Wills for, with Licata abstaining; C.B. 114183 passed 4 to 1, Licata against.

The final vote will be in the Full Council on July first.

This legislation, (the two bills compliment each other so they should be considered as one), allowed an exception to the current law governing the use of housing bonus credits.

Although it is a very technical matter, the bottom line is that the passage of this legislation will result in a single developer being relieved of about a $6 million obligation to provide affordable housing, child care, open space or public amenity features in order to get additional floor area above the base floor area allowed in the Code. Usually developers prefer making a direct contribution to affordable housing because they get more bang for the buck.

Bonus housing credits valued at about $6 million were created with public funds when the State of Washington contributed $2.7 million for renovating the Eagles building next to the Washington State Convention Center (WSCTC). An additional $1.3 million was contributed by the City to the renovation. The WSCTC then gave these housing credits in 1998 to a private developer through a separate agreement to build a hotel next to the convention center. However, it turned out that the housing credits were not needed for the hotel. The City has never ever seen the documents that transferred the credits so we do not know what the developer paid for them, if anything.

Both WSCTC and the private developer, R.C. Hedreen, were aware that under the City regulations (Director’s Rule 20-93) housing bonus credits must be used by a commercial project within three years from the date the building permit for the housing project is issued or the credits no longer exist. And according to the Seattle Municipal Code, the housing bonus credits must be used on the same commercial parcel to which it was originally assigned. R.C. Hedreen, has been trying for the past five years to get the city to change these conditions so they could use these housing credits at another one of their development sites.

I did not support this legislation because the City is under no obligation to observe this third party agreement to revive and transfer the credits to the developer. The city should not be in the practice of changing the rules to allow developers to obtain additional floor area without providing the housing or other bonus amenity required by the Code.

If the Full Council changes the law to allow the developer to move these bonus credits to another development site, the City in essence is giving the developer $6 million. That’s because without the housing credit transfer, he would have to provide that amount of mitigation funds which could have contributed to more affordable housing in the city.

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