-Welcome to "City Inside Out."
I'm your host, Brian Callanan.
Seattle continues to struggle
with rising homelessness numbers.
So why are so many affordable housing units sitting empty?
Reports show vacancy rates at publicly subsidized units
in Seattle have increased five-fold over the last decade.
-If you're experiencing housing instability, it's challenging.
-Market changes have increased rents in Seattle's
so-called affordable units, pushing low-income renters out
and pushing affordable housing providers
towards selling their buildings.
-I'm sharing an executive order.
-Seattle Mayor Katie Wilson wants solutions
and has floated the idea of using vacant affordable units
as homeless shelter spaces.
-We want to look at a diversity of strategies.
-What's it going to take
to get affordable housing providers back on solid ground?
And are Seattle's eviction bans part of the problem?
-People that are working full-time,
that have the funds to pay it and are not paying their rent.
-We're talking to affordable housing providers
to see what their plans are to keep their programs sustainable.
-The mayor can make meaningful policy change.
-Learn the latest about this affordable housing dilemma.
You can't afford not to.
Next on "City Inside Out."
♪♪
And joining us to discuss this issue,
we have Jon Grant,
senior policy advisor on housing and homelessness
for the Seattle mayor's office.
Welcome, Jon. -Thank you.
-We also have with us Patience Malaba,
executive director for the Housing Development Consortium,
an association of 215 organizations
advocating for affordable housing.
Patience, thanks for joining us.
-Thank you. Glad to be here.
-We also have with us John Torrence,
who is director of housing development for LIHI,
the Low Income Housing Institute,
an affordable housing developer.
And until very recently John was actually working
with Jon at LIHI.
Thank you very much for bringing
those pencils he left in his desk.
That was very, very kind of you.
Thank you very much for being here, John.
And let me start with you, if I could.
I want to talk about what the average person is seeing here,
because what's happening in Seattle
might not make a lot of sense.
We have a serious homelessness crisis.
Everybody knows that. But then we have many,
many affordable housing units that are vacant.
Can you give us a big picture of what's happening here?
-Yeah, I think one of the things we're seeing is that
the rental market over the last few years has been --
let's say we've seen a big influx in studio
and one-bedroom units,
which has really driven down
the costs of market-rate units to the point where,
if you are trying to rent an affordable unit,
for $100 more, $200 more a month,
you can go live in a luxury housing building
with all the amenities, the gym, the meditation room.
And you also don't have to do the kind of
yearly income certifications
that are required of affordable housing.
And so we're seeing more people pushed away
from affordable housing,
especially for those smaller units,
towards market-rate housing. -Got it.
Patients, I want to get your take on this,
because I know there are a lot of providers over this past year
that actually sold off their buildings.
Affordable housing providers got out of the business
essentially in some ways.
What have you been hearing from the organizations
that you represent? -Yeah, well,
I think it's important to set the baseline understanding
that we've made incredible progress in King County
as a region throughout all 39 cities and in Seattle
to produce housing at scale over the last few years.
And that is both net income,
new rent-restricted units that have been produced,
as well as market-rate housing.
There's a great report that King County released in December
that actually shows these numbers across the spectrum.
On the income-restricted front between 2019 and 2023,
we were able to produce 6,400 units --
new affordable housing that came into the market.
With that reality,
we were faced over the last few months
with a small glut of oversupply,
particularly because we've produced the small units,
studio, one-unit apartments.
-And people need bigger places sometimes.
-People do need bigger places, and as a result,
rents have plateaued for a little bit now.
But income-restricted rent is set by a system that is older.
It's set by HUD at the federal level.
It uses area median income.
And across the board,
homeowners and renters across the city
have seen their incomes go.
So AMI has continued to go up.
-Area median income. Keep going.
-Yes. And as a result,
folks who live in affordable housing
find themselves sometimes not able to afford the rents
that are being set
and hence having an option to even go with
the market-level rent,
because it's now slightly lower than the regulated rents.
So it is a product of success that we've had.
-Success in building. I see what you're saying.
-Success in producing housing.
And I do believe with the right market absorption,
we're going to see a right sizing of the market overall.
-Okay.
-Do we hear affordable housing providers begin to sell assets?
I do think on that front,
it's important to understand
that affordable housing providers have
a fiduciary responsibility for asset management.
It's purely asset management, assessing areas
where buildings are performing well
and there is sufficient cash flow.
Assessing buildings
where they are old and maintenance costs are higher
and therefore they are going forward to sell.
But there are also instances where,
because of the great work that our members have done,
we have seen an increase in physical occupancy
in quite a number of those buildings.
-Okay. -So there's a plateauing
of some of the sales that we were seeing earlier.
There's still some challenges, of course,
against some odds in areas
where people are still lagging behind in rents.
And there's a lot of work to do on that.
-And we are going to talk about that piece
in just a little bit.
Jon Grant, let me talk to you about this.
You've been on the job with the mayor's office
for a few weeks here,
but I know you've been in the affordable housing
and tenant rights space for about two decades here.
What's your assessment of this problem
Seattle is facing right now with these vacant
affordable housing units?
-Well, I really want to echo
what the other panelists are saying.
I mean, there is an affordability crisis
in the city of Seattle.
That's no mystery to folks.
And just for some stats out there, you know,
you're considered,
cost burden if over half of your income
is going towards your housing costs, and 77% of Seattleites
who are extremely low income are considered cost burden.
So we know that there is a tremendous need
of affordable housing.
And just like John and Patience mentioned,
there is a bit of a gap right now in terms
of what units are affordable to who.
So if folks are thinking it's kind of crazy, right,
that we'd have vacant units and a homelessness crisis,
we agree.
And this is one of the things that Mayor Wilson campaigned on,
that we want to try to make these units more affordable
for very low-income folks.
And it should be noted that the units that are largely vacant
are way unaffordable for somebody who's homeless.
So what are ways that we can provide rental subsidies
or other types of strategies
to bring those rents down to be affordable for folks
at that lower income band?
-Got it. And we'll dive into that piece,
too, in just a second here.
Patience, let me go back to you,
because you worked with the previous mayoral administration
to get $170 million in funding over this past year
to preserve and stabilize the affordable housing market.
That was the largest investment in affordable housing
in city history, according to the city of Seattle.
Can you talk to us about where that money is going?
Will this help prevent affordable housing providers
from selling off their buildings?
What's going on? -Yeah.
No, the city has been strategic in their investments
for affordable housing.
The $170 million was actually just awarded last week
with dedicated funds that are moving forward new productions.
So there's a dedicated bucket
that is helping us move new construction and new homes
that will come online.
And then there's a dedicated bucket
that is looking at preservation proactively.
We have an opportunity across the nation
to establish a clear strategy on preservation.
And the third bucket is really dedicated to stabilization.
-Okay.
-So right sizing the debt structure for some
of the providers and existing buildings
so we have a sustainable path
to address some of the operational gaps
that are showing up.
-Do you need to put more in that third bucket
at this point just in looking at the gap
that's happening right now?
-Well, we dedicated $58 million
with an award just last week.
I think that's a significant support.
Is there a need for more resources?
Absolutely. -Okay.
-There is still another award that will be released
in the next few weeks
that's continuously supporting stabilization,
addressing the increase in cost for insurance.
The increase in cost for operating business
across the board in affordable housing.
-Got it. Thank you for that. Please.
-And on to the question of stabilization,
I think this presents the mayor with an opportunity
through the Office of Housing to rethink how awards are made.
And so typically the city wants to give no more
than they have to.
And so the city Office of Housing
has pushed for higher incomes, higher rents,
so that you can maximize the amount
of private debt on projects.
And so you end up with a situation
where, to go back to everyone's comments,
that you are trying to meet this very narrow band.
So like a 60% AMI person earns --
That perfect person earns $66,000 a year.
That is about, what, $32 an hour full-time, that person.
So if you are a lower-income individual earning minimum wage,
you're not going to be able to afford that 60% or 50% rent.
And so you end up with a situation
where you're trying to find low-income individuals
at a very narrow band, and you're really unable to.
And so we've had to come in with these stabilization funds
to pay down the amount of permanent debt.
And so the city has an opportunity to increase --
So increase the number of low-income units.
Somebody earning 30% AMI is still earning $33,000 a year,
which is, you know,
at minimum wage, that's up to 30 hours a week,
which is like a good job.
That is like a good amount of money.
And they are considered in the city extremely low income.
-Right.
-And so by bringing in more 30% and 40% units
and sizing the debt on these projects to those lower amounts,
you have this opportunity to really take the burden
off of these affordable buildings,
to find these individuals that, you know,
these "magic individuals" who can afford those rents.
-And Jon Grant, let me talk to you about this,
and we'll try to move past the magic as best we can here.
But I hear what you're saying,
that it's rare to find these people in that way.
You've heard about some of these opportunities here.
Does more focus need to be on these people
making 30% area median income
or what's the general thinking here?
-Well, I think that's what we're seeing in the market right now,
that if you have the choice between moving
into a rent-regulated unit and a market-rate unit,
and the rents are more or less the same,
you're not getting the --
you're seeing increases in the vacancies
in the affordable housing units as a result of that.
And just to kind of make it clear to viewers,
just so people are clear what we're talking about,
debt restructuring and things like that,
just so folks know, the bigger a loan
that a property has to build the building
means the higher the rents are going to be.
So this stabilization fund
prioritized funding for 855 units
to make sure that those rents can be stable in the long run,
because what it did is it restructured that debt
and kind of released a lot of affordable housing providers
from having to service that debt with those rents.
So what I think we need to see
is rents more affordable for minimum-wage earners,
folks who are less than that 60% area median income.
And that is one of the things
that the mayor's office is looking at.
What are ways that we can make sure
that affordable housing is truly affordable to the folks
that need it most?
-Did you -- Please.
-I do think it's important for the mayor to take a full view.
There was a fault in our strategy.
We focused on unit count for a long time.
We focused on over-leveraging the debt
that we had available, and therefore we produced
a significant amount of small units.
Now, do we overcorrect and just focus on,
"Oh, today the market is identifying a need
at the lowest income level"?
There's absolutely a clear need
and we need to focus on that section.
We also need larger family-sized housing,
two-bedroom apartments plus,
across the board to be produced as part of the market,
but we also cannot ignore the reality
that we need housing across the income spectrum.
So as we set the recourse,
we've got to continue to produce in those AMI trenches
while we are creating a new,
dedicated focus to the lower income
and larger family-size units.
-She was building those units right in front of you.
-Yeah, I know.
And we need them desperately.
So I think one thing that is also worth noting
is that very soon, the city is going to be finalizing
its interlocal agreement
with the Seattle Social Housing Developer.
-Very important.
-Which is an exciting new opportunity
to build more mixed-income affordable housing.
And I think that gets to what Patience is talking about.
-For people of those higher area median incomes.
-Not just higher, but a diversity of income ranges,
that higher-income folks are kind of subsidizing
the lower-income folks that are in these properties.
-That's the point of social housing.
-That is kind of the vision for the Seattle
Social Housing Developer.
And, you know, we're very excited
by the new leadership there.
And this is going to be yet another tool
in the city's toolbox to address the affordability crisis,
and this is the year
that we're going to see it really take flight.
-Could those empty units be used
by the Social Housing Developer?
I know there's a lot of moving parts,
but would that be a possibility?
-Not unless the Seattle Social Housing Developer were
to outright purchase the property.
But I do think that there are other opportunities
to find ways to leverage those vacant units
to support the needs of our community.
-Thank you very much.
I want to move on to another thorny topic here,
and that would be evictions.
John Torrence, let me start with you.
Seattle has a number of protections in place
for renters, like many cities, including a ban on evictions
in the winter and during the school year.
The concept behind the bans
is to protect renters from becoming homeless,
but at the same time,
this is costing affordable housing providers millions
in lost rent each year.
Let's talk about this.
How are eviction bans affecting LIHI?
What needs to change here? Let's get into it.
-Yeah. And, you know, I want to start by saying that
we are in the business
of housing low-income individuals.
And evicting people is always the last step after many,
many, many other options.
And so first and foremost,
you know, we try to understand
why somebody is unable to pay their rent.
Have they lost their job?
Are they having any type of family or medical emergency?
We try to set up a back payment plan
for paying those rent arrears.
We try to, if possible, in a building
where there are lower-income units that would be available,
moving that person from,
let's say like a 50% AMI building with, you know,
a higher rent down to a 30% AMI unit with a lower rent as a way
to help them afford their rent.
But ultimately, we are finding that
there are quite a few people with large arrears.
We are finding that there are instances of people
that are working full-time that have the funds to pay it
and are not paying the rent,
and so we have had to move forward with eviction
because it affects not only that building's ability to function,
but it affects the entire portfolio,
and it affects the way that investors, that bankers,
that the city, that the state look at LIHI as a developer.
And if they are seeing buildings not performing, they say,
"Well, maybe I shouldn't give you money for this next one."
So it not only hurts the developer's existing portfolio,
but threatens the possibility of future housing down the line.
-Got it. Patience, some thoughts on this.
We talked with the Housing Justice Project about this.
They told Seattle Channel there's been some cases
where tenants are being evicted for being
behind just a few hundred dollars.
I just wanted to get into this.
Do you tell members don't evict, work it out instead?
Can you talk about this process and what it's like?
-Yeah, our members are in the business of housing people
and ensuring that they are staying stably housed.
It's going to be important for the new leadership,
the mayor, as she comes on board and sets out her vision
to really take a close look at the issue.
It's important to protect residents.
It's also important to ensure sustainability
of affordable housing production, preservation,
and housing production across the board.
And there are targeted areas
where the mayor can make meaningful policy change.
The ability for providers to know who lives in their units,
the ability for providers to remove someone in instances
where safety is undermined in a building.
Those are very targeted opportunities for policy.
It's not a sweeping change.
It is intentional policy making that can ensure
the affordability agenda is delivered on.
Because when you have investors who are looking at our market
as a high-profile risk area,
that will undermine our ability to continue
to see more homes come online.
And I think the mayor understands
that there's a complex issue here.
It's a delicate one.
And I fundamentally believe that the coalition
that can get this policy passed
is one that will be built by the mayor.
-And I want to make sure I ask you this,
Jon Grant, if I could,
because City of Tacoma
recently changed its eviction policy
to allow affordable housing providers to evict renters
during winter months, evict during the school year.
I know as mayor-elect,
Mayor Wilson has disagreed with that idea.
Can you talk about her approach to this eviction issue
as mayor, please?
-Yeah, and I think it's really helpful
to understand the history of this issue.
This is really a legacy of the pandemic.
Back then, the governor set out a very broad moratorium
that froze all evictions statewide,
and that remained in place for some time.
It has since been rescinded.
But as a result of that,
there was this incredible backlog in the court system
even years after the moratorium was lifted.
Now, it's important to understand the distinction
between that and the Seattle moratorium
on winter and school evictions. -Okay.
-For example, the winter moratorium
is from December 1st to March 1st.
So this is about a three-month period.
It is not actually freezing the eviction process in place.
It is a legal defense that a tenant can raise.
It does not prevent the landlord from then proceeding
with an eviction against you.
So you're still going to wind up in court.
What it freezes in place is
when the sheriff actually enforces the eviction.
So at most, it might be adding another
30 days to the eviction process
for a standard eviction for nonpayment.
So it's important to understand
that the focus on the moratorium
has really been driven by this long-standing legacy
of there being a backlog at the court
where evictions were taking six months or more.
And since then, you know,
I think recently as February of last year,
King County Courthouse added two dedicated justices just focusing
on evictions to help work through that backlog.
So the pressure on this issue
has been a little bit alleviated.
I would say that I think
that we want to look at a diversity of strategies
to address, you know, rent arrears that we're seeing.
What can we do to ramp up stabilization funds?
What can we do to make sure
that our housing providers are being made whole
at the end of the year,
because the point that Patience made is 1,000% correct.
We cannot have a scenario where investors feel
like they cannot be doing business in the city of Seattle.
So we need to make sure
that we're taking very intentional steps
to make sure that our affordable housing portfolio is protected,
and balancing that with the needs of tenant protections
for at-risk tenants.
-Can I ask briefly if you have some ideas,
some guidance as to how eviction rules --
do the bands need to be loosened so much?
Any thoughts to pass on here
or that you're thinking about with HTC?
-This is a delicate issue that will require a coalition
that sits down and identifies the policies together.
We do have clear ideas of the policies that must change.
But we're looking forward to sitting down with the mayor,
talking through those policies, building consensus,
building a coalition partnership with council housing providers
across the spectrum so we can get policy passed.
-I know there's a meeting that's happening very soon,
so looking forward to hearing that.
John Torrence, some thoughts here about
how to guide eviction policy going forward?
Again, it is a very delicate issue.
-Oh, I completely agree.
And I think the mayor's office has another opportunity,
another path through this.
And it is through kind of operating supports of like,
you know, pushing,
providing not just like a back filling of lost rents,
but providing units with more structured operating supports
into project-based operating supports for buildings,
you know, where the unit has the operating cash,
instead of it going to the individual renters,
which would really help to stabilize these buildings.
-Okay. Thank you for that.
I do need to start wrapping up with you.
And Patience, I'll start with you.
And I just wanted to put it in perspective.
Seattle voters have been very supportive of housing measures
over the past several years on the ballot.
The housing levy in 2023, for example,
nearly 70% of voters said yes to a seven-year,
$970 million package.
I'm just trying to figure out where we go from here
in terms of where the money is going, right?
Is the future of affordable housing in Seattle
going to involve building more units
or trying to prop up the ones already in place?
Can you talk about where we're heading in the future here?
-Yeah, I mean,
we've got to treat housing as the infrastructure that it is.
And today we must absolutely maintain
the progress we've made.
So it starts with the stabilization
of the existing portfolio that we have, and the city
has been really responsive with stabilization funding,
with preservation as a new strategy and as a new approach.
So that's one.
Let's protect the amount of progress we've made so far.
The second level, though, is beyond the protection,
we've got to continue about what's looking at scale.
What does scale look like?
How can we produce more housing continuously,
which takes three different buckets?
One, we've got to increase supply.
And the mayor has a lot of work to do in increasing supply.
We've got phase two of the comprehensive plan
that is coming up.
Let's maximize the density to the highest possible level
that code currently can allow.
Let's get that right as phase two.
Secondly, let's get our permitting process aligned
and ready to really support people in a meaningful way.
So we have an opportunity on that front.
We also need to be looking at, beyond permitting,
design review's another area
where we've got to get that reform,
move forward. -Speed up the process.
-Across income spectrums, market-rate housing
being a part of that solution.
Beyond the supply focus there,
there's also a lot of work to do on subsidy.
And I think the mayor has committed
to increasing resources
to support the production of housing,
the preservation of housing.
Importantly, right now,
operating maintenance services dollars
for permanent supportive housing is a big area of opportunity
that the mayor knows and understands,
and we've got to invest in that.
-Thank you very much. John Torrence,
some final thoughts to wrap up here about
where our affordable housing system is headed.
What kind of conversation are we going to be having
about this next year?
Where do you want to guide that?
-Yeah, I completely agree with Patience on her comments,
and I think it would be good to point out that,
you know, even compared to I think it was like 2023,
that we've seen a massive drop-off in the amount
of building permits currently at SDCI
at the Department of Construction.
-Yeah.
-We have a glut right now,
but we are at a point
where that's going to dry up really quickly.
And so we've talked a lot about stabilization,
but production needs to remain a focus going forward.
-Okay. Thank you for that.
Jon Grant, you've heard a lot of ideas here.
Some final thoughts on
where the mayor's office wants to assist
with the affordable housing crisis in the near term
and in the future, please?
-Yeah, well, I think you're you're going to hear a lot
of agreement from the mayor's office here.
Like, we are absolutely committed to advancing
affordable housing within the city of Seattle
because of the tremendous need.
And I think we do need a diversity of tactics,
a diversity of strategies.
The Office of Housing investments
that was just announced for 2,000 preserved
or new units for affordable housing
is a huge step in the right direction.
You know, making this new investment in affordable housing
within Seattle Social Housing Developer
and supporting that leadership to do that.
I think there's all these new tools
that are at our disposal to make sure
that we can make Seattle affordable for all,
and that has been a commitment and a promise
that this mayor has made to the city.
And you'll be hearing more announcement
to advance that mission and vision in the coming months.
-All right. Thank you for that.
And we will be right back.
What are people saying on social media
about the affordable housing crisis?
One person writes...
Another person writes...
We'd like to know what you think.
Send us an e-mail at contact@seattlechannel.org
or find us on social media.
Great to have that feedback and a big thanks to John Torrence,
Patience Malaba, and Jon Grant,
really appreciate you being here.
-Thank you. -I'm Brian Callahan.
We'll see you next time on "City Inside Out."
♪♪