In the heat of ongoing debates over the Housing Affordability and Livability Agenda (HALA) recommendations, single family zoning, and rent control, it sometimes seems like there is little consensus on clear next steps for affordable housing policy. Yet one progressive solution has been gaining steam while largely flying under the radar: enhanced public financing of affordable housing.

Housing Now Seattle has been meeting for months with councilmember, candidates, advisers, and experts. There is a clear and growing consensus supporting public financing for affordable housing, yet the trend has slipped under the radar. It’s time that public finance receives the attention it deserves. We need to elevate attention to this idea so we can turn this growing consensus into more affordable housing.

Why public finance?

Public finance has long been a tool to enable publicly subsidized projects. When the project is built, rents and subsidies are used to repay loans. Meanwhile, for-profit projects use private finance tools to get the project built, then pay off the loans out of rents or unit sales. Housing Now Seattle is proposing a third type of finance: “self sufficient” publicly financed housing that pays off loans out of rents.



This can be used both for preserving existing “naturally affordable” housing and also for new construction. In some cases, the private owners of existing naturally affordable housing would prefer a public subsidy to continue their current rental business, rather than selling to a private buyer, who may raise rents. Many of these “naturally” affordable housing developments are at risk of being demolished for new construction. This is a problem because even if the new construction has affordable units, the demolition of the “naturally” affordable housing could mean a net loss in affordable units.

For new construction, David Goldstein (Goldy) explained the basics: “… The city sells bonds to purchase and develop a piece of property, pledging revenue from that development (not taxes!) to pay off the bonds. You know, just like private developers borrow money. But cheaper. We then hire the same private architects and private contractors that private developers hire, because that’s how you build stuff. No need to reinvent the wheel.” We agree, and we’ve been working to crunch the numbers on how the City can do this in a low cost manner.

We’ll be rolling out a more detailed policy paper in the near future, looking at potential cost savings in land, construction, finance, and unit design. Each of these cost savings are in themselves modest, and the overall unit costs are comparable to many lower cost market rate and subsidized units. The primary difference is one of scale: we propose a massive program that will build lots of these units so as to make a major benefit for thousands of families. We also propose minimizing our use of subsidies as much as possible so we can build more of these units and focus our subsidies on those in greatest need.

Support for the public finance of affordable housing has come from a highly heterogeneous group of people, who put charitably, can described as disagreeing on many issues. These number politicians, advocates, and development professionals, including but not limited to: writer David Goldstein, Roger Valdez of Smart Growth Seattle, architect Mike Eliason, Councilmembers Kshama Sawant and Nick Licata, and many candidates for city council including Jon Grant, Bill Bradburd, Michael Maddux, Pamela Banks, and Tammy Morales.** Indeed, while many candidates on the ballot in November unequivocally support public finance; to date, none have come out against it. Furthermore, both the Mayor’s Housing Affordability and Livability Agenda (HALA) Committee and the left leaning Community Housing Caucus support pursuing public finance.

HALA and Community Housing Caucus recommendations

In its earliest stages, Housing Now Seattle participated in a public meeting held by the HALA committee and directed committee members to our website. Several months later, the Community Housing Caucus (CHC) suggested in their report that the City should find $500 million for financing housing for “families and individuals, at 0-30% and 30%-50% of the area median income”.*** (CHC report, pg 7) Six months later, the HALA report included a recommendation for public finance, saying: “…the City should expand its loan offerings to accommodate a range of project types, such as large projects that can support debt service on a subordinate permanent loan, or projects that only need short- to medium-term financing to reduce upfront equity investment. The City should explore a bond issue to seed capital to the loan fund, which could revolve and provide new loans as old loans mature or refinance.” (HALA report, pg 20)

HALA’s language about “supporting debt service” is key: this means paying back interest and principal on the loan. Housing Now Seattle is in the process of refining our Family Housing Cost Model (FHCM) and will release it publicly in the near future. The cost model looks at household costs, developer costs, and under what circumstances workers making $15 an hour* can afford to live in newly constructed dwellings within Seattle. For workers presently making $15 an hour, household income scenarios we’re looking at range from $22,000 to $60,000 per year.

Support by both of these groups for a major finance program to fund affordable housing is very encouraging. It shows that this finance approach has support from experts and leaders from a variety of backgrounds and ideological positions. Nevertheless, if we are to realize the full potential for a public finance program we must organize to build support for a program big enough to have meaningful impact.

What you can do

If we want everyone who works in Seattle to be able to live in Seattle, we need your help. Housing Now Seattle is committed to promoting public finance for affordable housing. We’re bringing together housing experts, community leaders, and unlikely political allies. But we can’t do it alone. We need people to sign this petition asking the Seattle City Council and Mayor Ed Murray to initiate an official study of this approach, as recommended by the CHC and HALA. We also need people to volunteer and to spread the word by liking our Facebook page and sharing it with their friends. With your help, we can turn this growing political consensus into housing affordable to Seattle’s many families.

Full disclosure: Owen Pickford, Executive Director of The Urbanist, is an adviser to the Housing Now campaign.

* In “Area Median Income” terms, $30,000 a year is around 50% of median income.

**We are in the process of reaching out to other candidates and sitting city council members regarding their stance on enhanced public finance of affordable housing.

***By our calculations, “0-30%” of area median income range will be very hard to achieve out of a straight bonding program with little to no subsidies. If it achievable at all, it’ll be with buying up existing construction that already has very low rents. This has the dual advantages of preserving existing naturally affordable housing and ensuring that low income people have access to it.

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Housing Now Seattle (Guest Contributor)