Group Chat

Does Seattle Need Social Housing?

Three wonks mull whether a ballot initiative to create a tenant-run public developer would really cap more rents.

By Benjamin Cassidy December 12, 2022

Image: Jane Sherman

► Rachel Fyall, associate professor and faculty co-chair of [email protected]’s Homelessness Research Initiative, University of Washington
► Nicole Macri, deputy director for strategy, Downtown Emergency Service Center; state representative, 43rd Legislative District
► Tiffani McCoy, co-chair, House Our Neighbors!

In late August, after no shortage of signature snafus, I-135 qualified for a February 14, 2023 special election ballot. Backed by the advocacy group House Our Neighbors, the social housing initiative proposes the creation of a tenant-run public developer that would cap rents for residents making up to 120 percent of the area’s median income. Unlike other affordable housing providers, the Seattle Social Housing Developer would be accessible to a broad spectrum of the population. It also wouldn’t rely on funds from the federal government.

There’s no doubt Seattle’s in the midst of a housing crisis. But would adding another flavor of affordable housing help solve the problem?

We asked two proponents and one skeptic of I-135 to discuss. The conversation, held over Zoom, has been edited and condensed for clarity.

Where are our current affordable housing models in this city falling short?

► RF: We have a lot of interventions, both locally and nationally, focused at the lowest end of the income spectrum, folks who often have a lot of complex needs. And we’ve actually learned quite a bit about how to best serve and provide housing for those with really complex needs and what to do. Things like the Housing First model pioneered in part by DESC, and other groups nationally and internationally, are now the model for what we do for those experiencing chronic homelessness.

In a city like ours, where housing has become expensive for everyone, I think there has been not that much attention on housing needs for folks who don’t necessarily have complex needs, but still are having a hard time finding housing. So from my perspective, that has been a gap in the conversation as well as policy.

► TM: I would say for why Real Change and why House Our Neighbors has gone forward with creating Initiative 135—and specifically creating the Seattle Social Housing Developer—is, as Rachel said, there are a lot of interventions that are working and working really well. But we do have this massive gap of housing that is truly permanently affordable and permanently owned by the public sector and that is able to span larger area median income, AMI for short, brackets in the city.

But also nationally. This is not a Seattle-specific issue. Social housing is growing nationally. And maybe we can get into that later. But working at Real Change, and I’m sure Representative Macri feels this too, keeps me very humble and grounded in the advocacy that I do. We work with the most vulnerable. We work with folks that are afraid of benefit cliffs and are afraid of not being at the phone at the right time to be able to get on the call to keep on the housing list. So we keep seeing more folks entering homelessness year after year. And we continue to see every year that more Black, Brown, Indigenous, and low-income communities are priced out of the city. And there are no really broad, deep plans, bold plans, to address this displacement at the scale of our needs.

So we wanted to bring in a social housing model that is wildly successful across the globe—we’re not talking about just Europe—to incorporate here in the United States. Because we haven't really embarked on this path outside of Montgomery County, Maryland, and we want to bring it here to Seattle.

► NM: I think they covered it well. As a policymaker, I’ve pushed for some of the largest public investments in affordable housing at the state level and have worked for years to advocate at the local level for efforts like the JumpStart tax package to invest significantly in more affordable housing. But both the income and wealth inequality, and the fact that the demand for housing has so far outstripped the supply, have created this dynamic where we just have so many people who can’t afford housing. It’s just not tenable in the short term, especially to expect that government investment alone is going to solve this challenge.

We need more creative solutions. Ones that are equitable, climate-resilient, and focus on strategies like cross-subsidization, like I-135 is focused on. I’ll say the movement for this kind of thinking is building across the country. We’re not alone here in Seattle in thinking about an idea like this. There’s been significant efforts in Hawaii and California in recent times, and they’ve made a lot of progress in building coalitions around creative ideas like social housing.

Tiffani, I’m wondering if you can spell out some of the ways that this differs from some of the other affordable housing models. How does social housing work?

► TM: I would say, first and foremost, because I think this is a very important educational piece for voters, is the model of housing that we’re putting forward isn’t going to be reliant on the massive subsidies and tax credit programs that the federal government provides. The vast majority of affordable housing in the nation—again, this is not a Seattle specific issue—relies on the Low-Income Housing Tax Credit Section Eight vouchers; Section Nine still is there, but barely; or project-based vouchers. All of those are critically important, don’t get me wrong, but they have very serious restrictions and are incredibly onerous. And they only last for X amount of years, as if we’re not going to need affordable housing after the time period lapses.

So putting forward this social housing model, this is permanent affordability because we are able to look at a building that is acquired or a building that is going to be built under this public developer and break down: Okay, how much is the loan that we have to service a year? How much [are] the operations and the maintenance costs? Okay, in our 100-unit building, hypothetically, this is how many folks we can serve in the zero to 30 percent [AMI]. This is how many we can serve 31 to 50, 51 to 80, 81 to 120. And these are the rents that we can charge each individual so that there is, as Representative Macri said, this revolving cycle of cross-subsidization. So it’s not wholly dependent on outside subsidies in order to function. It’s based on the internal cross-subsidization that takes place. That’s one of the largest differences as far as like the financial aspect goes.

We can get into the environmental differences. We have the grace of doing this through an initiative, so we’re able to be a bit more bold. We’re requiring all new builds to meet passive-house standards. We are in the climate crisis right now. We need to make sure that we’re creating buildings that are climate-proof, heat-proof, and where folks are going to be able to breathe clean air going forward when we are in the hot wildfire season. And I know Representative Macri informed me that one of the DESC buildings is actually Passive House, which is really great.

But, getting back to it, that’s what I would say is one of the biggest differences, is not that over-reliance on the federal government.

► RF: I agree with many of the things that Tiffani said. [But] I think many of our current affordable housing interventions are permanently affordable…that is not a new component of this initiative. Some of them are federally funded.

I think it’s also important to reiterate that every currently subsidized housing option does have rent from residents going in. We don’t want to imply that there isn’t any sort of sustainability within our existing affordable housing models, which isn’t to say that it’s not a different model, but [we] just want to be careful about implying that there’s no income being provided by residents into our current affordable housing models. Because in every case, unless there’s someone with zero income, they are contributing a portion of their rent to help with maintenance and building costs.

Tiffani, I want to follow up on the term “cross-subsidization.” Is the idea that since the AMI is up to 120 percent, that that higher [income] bracket is sort of subsidizing people who can’t pay as much?

► TM: Yes, in a nutshell, that’s exactly what it is. Folks at the higher end are able to help subsidize those at the lower end. And with the current affordability mechanisms that we have from the federal government, those don’t allow the servicing up to that high of an AMI. We need targeted pools of money for those in the zero to 60 percent AMI, don’t want to mess with that. Let’s let them keep doing what they’re doing with those dollars. But we need to make sure that we’re also servicing a larger population, because—I don’t know, there’s this idea that teachers and bus drivers and nurses are able to not be rent-burdened. And that’s just not true on its face. These are folks who are also at risk of displacement. So we want to make sure that we have housing that’s seen as a public good, and you’re not going to pay more than 30 percent of your income into this housing, and you’re able to truly grow in place. So if you make more money over the lifetime, you’re able to stay in that housing. Your rent just adjusts a bit. As opposed to some places where they are not able to serve folks that make more money because they’re restricted by the federal financing.

I’ve seen a lot of support for this online. But I did see the Housing Development Consortium released a statement saying that they were against it. The gist of it is: “We do not need another government entity to build housing when there are already insufficient resources to fund existing entities.” How do you respond to that criticism?

► TM: I think that criticism is coming from a justifiable place. We have this idea of resource scarcity, even though we live in one of the wealthiest cities in the entire world. And actually, if we’re getting into the minute details of financing from the federal government, which the majority of affordable housing mechanisms are dependent on, there is a lack of resources in there.… So from that vantage point, yes, I’ll give them that there’s a scarcity of resources. But the beauty of social housing, and the model we’re putting forward, is that it isn’t dependent on those financing mechanisms and can do that cross-subsidization and have more flexibility. So we get to embark on a new path and not have to be restricted by what the federal government will ultimately finance.

► NM: I’ll add, I think some of it comes from—I don’t want to say misunderstanding—but there is concern about, are we going to draw public resources that are dedicated to the lowest-income people, making sure that people who are homeless, extremely low-income disabled seniors, get the housing support that they need, and pull that toward the kind of more middle-income population? And I think the House Our Neighbors coalition has been clear that that is not the intent here.

What we want to do is make sure we can maximize the existing public resources for housing stability for the lowest income [people] and bring more creative approaches to expand housing affordability for others. It’s hard to say, are there too many public or nonprofit players participating in the affordable housing sector? I think we actually have been very fortunate in the Seattle–King County area to have a very robust development community that has helped to drive innovation in terms of building types, in terms of operational models. I mean, Rachel mentioned that Seattle has been one of the key birthplaces of things like the Housing First movement. We are working to build environmentally sustainable housing to Passive House standards in this region. And I think that comes from having a diversity of options.

I’ve been doing housing development and, and homeless housing operations, for a couple of decades in the city. And I remember times when we said, “We don’t need the small developers.” And what we are saying now is that we actually need to build capacity for our BIPOC, grassroots, community-led organizations, because the culturally specific models that they bring both to the design and development as well as the operating model adds value for community members who have been ostracized and not felt like they can find a comfortable home for themselves in this city.

So, I don’t know, I have a bias toward diversity. And I think that the I-135 social housing model will bring more diversity.

► RF: I actually have some questions for, maybe they’re questions for Tiffani and others about the initiative. Because I think something that doesn’t come up enough in what I’ve read so far [is] we actually have quite a few public development authorities already in this city. Not only the Federal Housing [Administration], but things like the Pike Place Market [PDA] and SCIDpda, Community Roots Housing. So personally, I would be more excited to see the model that’s being proposed by the initiative being spearheaded by these groups that are already embedded in the communities, that already have the bonding authority to do the financing models being discussed in the initiative. I think that it is a bold move, and I am not opposed to bold moves, to say we need a new organization. But I’m wondering why that has been bypassed [from] these existing resources embedded in communities already.

I think we can all agree that some of the values, especially about tenants’ rights and collaborative governance, may be shared by many, but they’re not universal values. So I’m curious how that is embedded in something that we see as our kind of full city effort coming forward, rather than piloting or trying them out first with some of these groups that already are public development authorities.

► TM: I think that’s an excellent question. I do wish we were living in a region that is like Montgomery County, Maryland. That has the Housing Opportunities Commission that, five, six years ago, realized very organically, these are the restrictions that we have due to federal financing. We have the ability to actually do some projects without those restrictions and do broader cross-subsidization in order for buildings to be close to revenue-neutral. They did that on their own. They used the authority behind them and their bonding authority, their credit ratings, et cetera, et cetera, to do that.

We don’t have that here. And as a coalition, instead of trying to lobby current PDAs, or the Seattle Housing Authority, over several years to try to change things, to try to implement new programs, based on what I’m seeing daily at Real Change—and I can't stress that enough—and what the community members that are on the steering committee of House Our Neighbors, who are predominantly Black, Brown, Indigenous, queer, [are seeing], we can’t wait for solutions. So we wanted to go forward boldly with a new public developer that’s solely focused on social housing and isn’t going to at all try to take any of those resources that come from federal financing.

It’s about urgency and time. We believe we’re already on a trajectory in this city to become only affordable to those who have generational wealth, and have middle to high six-[figure] income salaries. And we’re not going to be able to reverse it once it gets there. But we can do interventions now rapidly to try to stop that, to stop the pipeline into homelessness, to stop displacement from happening in the city. So it’s more like a strategy thing. Instead of spending time lobbying, we just wanted to put this forward with the community in the partnerships that we have, and make sure that we’re also including provisions that deal with climate, rent, or leadership.

We know that tenants want more of a say in their buildings. We’re very glad to hear that one of the current PDAs actually just started having a tenant on their board. That’s really, really awesome. But we also wanted to make sure that we had a board that was rooted in the community and wasn’t rooted in financial or private interest, to be perfectly frank with you. We wanted to make sure that those ideas of housing as a commodity weren’t going to be at risk of being pushed on the board.

► NM: When Tiffani and I first met about this proposal, I had some similar questions. Like, why a PDA and not a 501(c)(3) nonprofit structure? And why not a strategy that tries to influence the existing developers in the community?

It got me thinking about our current PDA community. You mentioned SCIDpda and Community Roots, Delridge [Neighborhood Development Association]’s another one. I think some of them are doing lots of great innovative stuff. Their missions have evolved, or expanded, over time. Community Roots, I know, does a lot of work to try to support more grassroots BIPOC developers, and they’ve expanded outside of just the Capitol Hill neighborhood over time in that specific work.

This is a public process to establish a PDA. The other question I had is, Why a ballot pathway versus a legislative pathway? Because the city council has the authority to establish a public development authority. We don’t need, technically, to take it to the voters. Of course, you can take it to the voters through the initiative process. Just raising the profile of this, getting community buy-in into it, have been strategic decisions that the coalition has made—and to have this focus around a lot of what Tiffani said about the urgency.

I remember when the organization I work for, DESC, was really one of the only developers that was squarely focused on developing housing exclusively for people with histories of chronic homelessness. Now, over time, other organizations have started doing more and more housing development for that high-needs group of people. And I think it has built a lot of diversity and innovation that wouldn’t exist if only one organization was doing that. I think the social housing PDA could have that impact on helping this spur others.

But, Rachel, you’re correct, in that there’s nothing—we don’t need the establishment of a new PDA in order to do this. But it’s more like: There is a mission-focused group interested in doing this, and the PDA organizational structure is the best structure to do it because of the bonding authority. If they were just setting up a 501(c)(3), this wouldn't really be a very broadly public conversation, as it is when you're doing a ballot initiative to establish a public development authority.

► RF: I appreciate that, because I’m learning here too. I think I’m not convinced about this as the fastest path. I absolutely agree this is an urgent problem. And I am excited about the initiative as raising the profile of this issue, because I can’t agree more with [its] values and goals. But in rereading the text and talking about 18 months of free staff support that we are funding, by our city, and then assuming that’s going to be enough time to get us up and running for projects…and I think about the recent experience—granted, it’s a larger coalition—of the King County Regional Homelessness Authority, it is not quick to start new organizations.

Personally, I think urgency could happen through many different avenues that are not being explored. I would love to add voice to some of those options, too. Things like changing financing options for First Right of Refusal for tenants to purchase buildings that are for sale, or other creative financing, for allowing more support and more likely loans for lower-income folks to get into cooperative models.

We do have cooperative models of housing in Seattle where you can be part of a co-op. We do have land trusts that are permanently reducing the market rate. So we do have some options that are already available if we’re looking for an investment that would appropriately target this population. I think what worries me a little bit is that this is the only way to address this need, and I think that’s a little bit limited in our thinking.

► TM: Everything you’re saying is factually true. We have all of these tools. But they’re not being utilized to actually prevent displacement at scale, to build housing that’s deeply affordable at scale, to address the pipeline into homelessness, which is overwhelmingly due to rent increases and inability to pay rent. With the coalition, and why I’m so deeply honored to be a co-chair for this coalition, is because we have community members that have been burned by the system, that have been hurt by redlining and structural racism and different obstacles set in their path. And we don’t firmly believe in just a legislative path or just a lobbying path in order to make change. We believe that change comes from the bottom and from movements and from organizing.

We want to serve a broader population. We want to make sure that housing is seen as a public good for everyone. The initiative says 120 percent is the top. But that’s obviously not a firm cap, because maybe people are, over their lifetime, they’re going to make up to 130 percent of the AMI. We don’t want them to then become rent-burdened just because we think that they can afford to be rent-burdened. People should not be rent-burdened, period. They should be spending that extra money on their kids, on vacations, on hobbies, etc.

We want an overhaul of a housing system that is shown to be successful across the globe, and we want to do that here. And yeah, I wish that we were able to put forward a progressive revenue source with this. We actually thought we could and started doing that. And then our lawyer’s like, No, public developers cannot do progressive revenue. We still wanted to go forward.... We are deeply committed to getting funding for this because we believe in this. This isn’t about political posturing.

I want to make sure that everyone that is on the steering committee, and everyone at Real Change that’s a vendor, and unhoused folks in the city and teachers and nurses and bus drivers, are able to keep living here if that’s what they want. Because right now, we can’t guarantee that. Ultimately, that is a choice that we are making as a city and as a state and as a nation—that if you can’t afford to live here, we want that to not be the case, but implicitly, we’re saying you’re just going to have to move out. And we don't agree with that and want to challenge that head on.

We know where Tiffani stands. And I think I know where Rachel and Nicole stand. But Nicole, to ask you directly, do you support this initiative? Would you like to see this passed?

► NM: Yeah, I do support it. I endorsed the campaign relatively early. Initially I had a lot of questions. I got behind it because I think that it raises really important public policy questions, and I think it really caused us to have a conversation about, what are the other ways we can address the housing needs of people in our city that we haven’t been talking about? That’s been refreshing.

You’re speaking for yourself. DESC hasn’t taken a position yet, right?

► NM: I think nonprofit organizations like DESC are sometimes just selective in the kinds of things they weigh in on. And I don’t think it means that DESC won’t necessarily weigh in on it.

 Okay. And Rachel, do you support this going forward?

► RF: I still have a lot of questions. I would say if I had to vote today, probably not.

Right now, the initiative text feels very prescriptive, without necessarily a plan behind it to show how that will happen in a timely way. So my concern is not that this is wholeheartedly a terrible idea, but rather that if we move forward potentially with these specifics, as prescribed in the legislation, it’ll be potentially a boondoggle and not actually provide the housing that it’s promising.

For me, can I be convinced that this specific text is the path to get to these goals? I might be. It’s just, I will need to see some more plans and information about how to get there. But right now, I haven’t seen it.

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