City Hall
Council Approves New Rent Limits for Developer Tax Break
With all the back-and-forth today about the tunnel (the city council overturned Mayor Mike McGinn's veto of three tunnel agreements with the state, Mike O'Brien attempted to put the agreements to a public vote, and McGinn held a press conference to say the council was wrong), you'd be forgiven for missing the fact that the council also approved some fairly sweeping changes to a tax-exemption program designed to give developers an incentive to build affordable housing.
The program---known as the Multifamily Housing Tax Exemption program---exempts rental-housing developers from property taxes if they agree to dedicate 20 percent of their units to people making a certain percentage of median income. In the most recent version of the program, that percentage varied from 80 percent of median ($48,000 for an individual, $55,000 for a couple), to 90 percent of median ($54,000 for an individual, $62,000 for a couple), depending on the size of the apartment. The legislation the council adopted today lowered those income limits to 65 percent of median for a studio ($39,000 for an individual, $45,000 for a couple), 75 percent for a one-bedroom ($45,000 for an individual, $51,000 for a couple), and 85 percent for a two-bedroom or larger ($51,000 for an individual, $58,000 for a couple).
Council member Nick Licata, echoing arguments he made during a meeting of the council's housing committee last week, argued that those limits should be even lower to accommodate people who need housing more than the essentially middle-class folks the current program serves. Under Licata's proposal, one-bedrooms would have to be affordable to people making 70 percent of median income and two-bedrooms to people making 80 percent of median.
Opponents of adopting those levels argued that they would make the program prohibitive for private developers, who would decline to participate. One of the goals of the program is to encourage more private development in areas where companies aren't currently building; discouraging private development, they argued, could thwart that goal. "It does look like there is not enough gain for the private sector to keep them in the game" under Licata's proposal, council member Sally Clark said. "There's a part of me that would love to see the lower affordability levels get adopted, but if those units don't get built, then no one benefits from them."
Responding to those arguments, Licata said this afternoon that "one of the major objectives of this program is that we provide housing in the city for those people who are most in need of housing, and the data that's available to us shows that the lower[-income] you go, the greater demand there is for housing and the fewer housing options there are. So it was my thought that we should shape this program to try to meet the greatest need for the greatest number of people."
Looking at some of the projects that have been approved for the tax exemption in the last two years, it's easy to see why Licata would be concerned that it isn't serving people of modest means. In many cases, the subsidized "affordable" apartments are near, at, or above the actual market rent in the same building; in other words, the city is subsidizing apartments that are already effectively market rate. And none of the projects produced apartments most would call "affordable" anyway.
Some examples:
• The Link Apartments in West Seattle, where Seattle set "affordable" rates at $1,050 for a studio and $1,128 for a one-bedroom. Currently, unsubsidized studios are available starting at $995, and unsubsidized one-bedrooms are available starting at $1,324 one bedroom.
• The Pratt Park Apartments at 23rd and Union, where Seattle set "affordable" rates at $1,086 for a studio and $1,220 for a one-bedroom. Unsubsidized studios at the Pratt Park start at $778, and one-bedrooms start at $1,172.
• The Altamira Apartments in West Seattle, where the city set "affordable" rents at between $995 and $1070 for a studio and between $1295 and $1304 for a one-bedroom. Unsubsidized studios at the Altamira start at $850, and one-bedrooms start at $1,087.
Some of the apartments the city has subsidized through the program remain a relative deal---a "deal," that is, to those who can afford a $1,180 subsidized studio apartment at the Equinox on Eastlake, for example, or a $1,310 subsidized one-bedroom at Ballard on the Park Apartments in Ballard---but it's clear that the program doesn't serve those who, as Licata put it, have "the greatest need."
Licata's amendment failed 6-2, with Mike O'Brien voting yes and Tim Burgess absent.
The program---known as the Multifamily Housing Tax Exemption program---exempts rental-housing developers from property taxes if they agree to dedicate 20 percent of their units to people making a certain percentage of median income. In the most recent version of the program, that percentage varied from 80 percent of median ($48,000 for an individual, $55,000 for a couple), to 90 percent of median ($54,000 for an individual, $62,000 for a couple), depending on the size of the apartment. The legislation the council adopted today lowered those income limits to 65 percent of median for a studio ($39,000 for an individual, $45,000 for a couple), 75 percent for a one-bedroom ($45,000 for an individual, $51,000 for a couple), and 85 percent for a two-bedroom or larger ($51,000 for an individual, $58,000 for a couple).
Council member Nick Licata, echoing arguments he made during a meeting of the council's housing committee last week, argued that those limits should be even lower to accommodate people who need housing more than the essentially middle-class folks the current program serves. Under Licata's proposal, one-bedrooms would have to be affordable to people making 70 percent of median income and two-bedrooms to people making 80 percent of median.
Opponents of adopting those levels argued that they would make the program prohibitive for private developers, who would decline to participate. One of the goals of the program is to encourage more private development in areas where companies aren't currently building; discouraging private development, they argued, could thwart that goal. "It does look like there is not enough gain for the private sector to keep them in the game" under Licata's proposal, council member Sally Clark said. "There's a part of me that would love to see the lower affordability levels get adopted, but if those units don't get built, then no one benefits from them."
Responding to those arguments, Licata said this afternoon that "one of the major objectives of this program is that we provide housing in the city for those people who are most in need of housing, and the data that's available to us shows that the lower[-income] you go, the greater demand there is for housing and the fewer housing options there are. So it was my thought that we should shape this program to try to meet the greatest need for the greatest number of people."
Looking at some of the projects that have been approved for the tax exemption in the last two years, it's easy to see why Licata would be concerned that it isn't serving people of modest means. In many cases, the subsidized "affordable" apartments are near, at, or above the actual market rent in the same building; in other words, the city is subsidizing apartments that are already effectively market rate. And none of the projects produced apartments most would call "affordable" anyway.
Some examples:
• The Link Apartments in West Seattle, where Seattle set "affordable" rates at $1,050 for a studio and $1,128 for a one-bedroom. Currently, unsubsidized studios are available starting at $995, and unsubsidized one-bedrooms are available starting at $1,324 one bedroom.
• The Pratt Park Apartments at 23rd and Union, where Seattle set "affordable" rates at $1,086 for a studio and $1,220 for a one-bedroom. Unsubsidized studios at the Pratt Park start at $778, and one-bedrooms start at $1,172.
• The Altamira Apartments in West Seattle, where the city set "affordable" rents at between $995 and $1070 for a studio and between $1295 and $1304 for a one-bedroom. Unsubsidized studios at the Altamira start at $850, and one-bedrooms start at $1,087.
Some of the apartments the city has subsidized through the program remain a relative deal---a "deal," that is, to those who can afford a $1,180 subsidized studio apartment at the Equinox on Eastlake, for example, or a $1,310 subsidized one-bedroom at Ballard on the Park Apartments in Ballard---but it's clear that the program doesn't serve those who, as Licata put it, have "the greatest need."
Licata's amendment failed 6-2, with Mike O'Brien voting yes and Tim Burgess absent.
