Financing

Δ Idea: Use existing financial tools and resources more effectively and develop new ones.

• Multifamily Tax Exemption (MFTE) Program – The current MFTE program has proven to be a successful tool for providing rental housing affordable to 80% AMI households. The City Council should consider expanding the program to existing housing and extending its geographical boundaries. It should not add more requirements or rules that would discourage developers and landlords from using it to create affordable units. Council could also consider expanding the MFTE Program to apply to owners who wish to provide below-market-rate rentals in existing housing.
• Make existing affordable housing funds easier to access and use – Historically, there has been a lag of 3 to 4 years between when the Office of Housing receives funding, and when that funding is applied to affordable housing projects. This delay slows the development of needed affordable housing.
• Land acquisition and loan programs for land – The City should improve and expand existing programs to acquire land. For example, the 2009 Housing Levy authorized $6.5 million for Acquisition Opportunity Loan Funds, but so far the loans have not been applied to land acquisition.
• Purchase/Preservation of existing low-cost housing – During economic downturns there are often opportunities to purchase distressed multifamily properties at considerable discounts. The City’s Housing Levy funds are not subject to the economic cycles of the private market, and could be used to make bargain purchases of affordable housing that could later be sold to entities such as the Seattle Housing Authority or other affordable housing non-profits. Transactions could be handled by a Public Development Authority.
• Tax underutilized land to fund subsidies – Generally speaking good tax policy taxes things that we want less of, raises revenue, and helps ensure fair resource distribution. At a time with lots of new jobs and people coming to the city, dense development is the most efficient use of a scarce resource: land. The City of Seattle should consider existing and new tools that would shift the tax burden toward underdeveloped property and away from dense and efficient use of land.
• Public Private Partnerships for financing, land acquisition, and technical assistance – As Seattle grows the City should find ways to facilitate more collaboration between smaller organizations with less capacity that want to build affordable housing. The 4 percent tax credit program could be an excellent opportunity for building mixed income projects throughout the city.
• Offer more relocation assistance – Current City of Seattle regulations provide for $3,000 in relocation assistance to households with incomes at 50% AMI and below. The cost is split between the City and the owner. The number of households using the relocation assistance from 2000 to 2005 was less than half of the total number of housing units replaced.
• Explore Tax Benefit Districts and Public Development Authorities for housing – The State’s Constitution limits methods for capturing increases in property values created by new development and building. The City should aggressively pursue the limits of existing tools like Tax Benefit Districts and Public Development Authorities to leverage tax and debt capacity. Public financing is much more affordable that private equity or bank debt.
• Tax Increment Financing – A few years ago an excellent Constitutional amendment was drafted that would allow ad valorem taxation for an efficient and true value capture mechanism. The City should advocate for this version of Tax Increment Financing (TIF) as a longer-term strategy to create more public resources for infrastructure, including housing. Even market rate housing would be less expensive with TIF since it would make public infrastructure financing much less expensive.