Housing and Human Services Committee 7242024

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Okay.

Good morning, everyone.

The time is 9.30, and the July 24th meeting of the Housing and Human Services Committee will now come to order.

I'm Kathy Moore, chair of the committee.

Will the clerk please call the roll?

Council President Nelson?

Present.

Council Member Saka?

Here.

Council Member Wu?

Vice chair Morales here chair more There are four present All right.

Thank you Moving on to approval of the agenda if there is no objection today's proposed agenda will be adopted See a hearing and seeing no objection the agenda is adopted.

I All right.

So thank you, everyone, for being here today for the July 24th meeting of the Housing and Human Services Committee.

On today's agenda, we have our Office of Housing with us to walk us through their 2023 annual reports.

All four reports and a summary of each report were circulated to committee members on June 27th by Kelly Larson, and they have all been attached to today's agenda.

We will now be opening up for hybrid public comment.

Public comment should relate to items on today's agenda or be within the purview of this committee.

Clerk, how many speakers are signed up today?

Currently we have one in-person speaker and there are no remote speakers.

All right, thank you.

So each speaker will have two minutes.

We will start and end with in-person speakers.

Could you please read the public comment instructions?

The public comment period will be moderated in the following manner.

The public comment period is up to 20 minutes.

Speakers will be called in the order in which they registered.

Speakers will hear a chime when 10 seconds are left of their time.

Speakers' mics will be muted if they do not and their comments within the allotted time to allow us to call on the next speaker.

All right, shall we begin?

Okay, the first in-person speaker is Eli Youngs.

Right here?

Just one second, let me get your timer up.

Her screen.

Okay, so Seattle's mandatory housing affordability program is effectively a tax on dense infill development, which is what the city desperately needs.

So single-family houses do not have to pay into MHA, but if you want to build a fourplex, a sixplex, an apartment building, you do end up paying into MHA.

Here in Washington State, we have the highest liquor taxes in the country, and the reason we do that is we want people to drink less alcohol.

The taxes are there to disincentivize behavior that we think is harmful.

But by analogy, the MHA fees on dense development are treating building a fourplex like downing a bottle of liquor.

It's a completely absurd way to handle what really is a solution to a problem that we have, which is not enough housing in the city.

The city talks about how MHA is a way to mitigate the impacts of development, but on the whole, the impacts of development are very positive.

We see from cities like Austin and Nashville that if you allow a lot of construction, even if that's market-rate construction, that can very quickly bring down rents for the entire city.

If we build more housing, it's a lot easier to solve homelessness.

It's hard to get people off the streets into a home if that home does not exist and was never built.

If we build more housing, That's more property tax revenue for the city to help our budget shortfall.

That's more people who can patronize local businesses.

That's trans kids and refugees who don't feel safe where they are being able to move here to a city where they're going to be accepted.

Ultimately, you know, if we want to promote more housing development, we need to just make it easier to build housing.

We shouldn't tax it with MHA fees.

If we do want to specifically support below-market-rate housing, I recommend looking into what Los Angeles has done with Executive Order EB-1, they have an expedited permitting schedule for affordable units so if you want to build something below market rate there's actually a 60-day permitting shot clock this has been extremely successful in a way and it does not have the negative effects on choking out development that mha fees do thank you all right thank you very much jared that was our last speaker all right uh just i have the record note that council member wu has joined us um

If you want to sit closer, you're welcome to also sit over here too.

Just trying to make sure you're able to not be so far away.

All right, so thank you.

There are no additional registered speakers, so we will now proceed to our item of business.

Members of the public are encouraged to either submit written public comment on the signup cards available on the podium or email the council at council at seattle.gov.

We will now move on to our first item on the agenda.

Will the clerk please read the short title of the first agenda item into the record?

Agenda item one, Office of Housing 2023 Annual Reporting for Briefing and Discussion.

All right, thank you.

So to the colleagues today, we have with us Director Michael Winkler-Chin and Andrea Akita at the committee table, and Kelly Larson online.

Is she joining?

Okay.

To walk us through the Office of Housing's 2023 annual reports.

Again, as I mentioned earlier, the four reports are attached to the agenda today to cover OH investments, the levy, MFTE, and one for MHA and incentive zoning.

Without further ado, I will turn it over to our presenters.

Thank you very much.

Kelly Larson, you there?

Yes.

Okay, Kelly is joining us from vacation.

So before I start, I wanted to allow my colleague to introduce herself.

Good morning.

My name is Andrea Akita.

I'm the Deputy Director for the Office of Housing.

Thanks and okay, so good morning council members.

We are happy to be here to share highlights from our four annual reports produced by the Office of Housing, which celebrate the accomplishments of our affordable housing partners and staff in 2023. The Office of Housing's vision is for everyone to have a healthy and affordable home, and we partner to create affordable housing by equitably investing to prevent displacement and increase opportunities for people to live in Seattle.

And these reports represent ways that OH's mission and vision are being realized by city investments in the creation and preservation of affordable rental and homeownership developments and through programs and market rate development that also provide affordable housing opportunities.

So we're going to cover four different reports.

And so we'll make sure that hopefully we're clear on when those transitions happen.

All right, Hannah, I think you are driving.

There you go.

Okay, so slide.

First, we're gonna talk about our annual investments across all of OH's funding sources.

So in 2023, our partners opened 13 new multifamily buildings and three new home ownership developments.

We also have 16 multifamily buildings under development or under construction and 11 new home ownership developments.

And that in total is over 2,100 new homes that will open for families and individuals in the upcoming months.

Okay.

Next slide, please.

So, the Rental Housing Program invested $57 million in five new buildings, creating 542 apartments.

And OH issued $18 million in short-term financing to secure sites for 528 homes to be permanently financed in the future.

And the Home Ownership Program announced $12.3 million for 115 new permanently affordable for sale homes.

The Home Repair Program provided nearly $600,000 to support critical repairs for 38 low-income homeowners, The weatherization program provided $2.7 million for energy efficient upgrades in 143 homes and 17 apartment buildings.

And the clean heat program provided $1.8 million to convert 84 homes from oil to electric heating systems.

And in 2023, the city continued to help low-income renters affected by COVID by distributing emergency rental assistance.

Our emergency rental assistance fund sources included the Federal Community Development Block Grant, CDBG, and COVID relief in state funding.

This program started in 2021 with a plan to reach over 11,000 Seattle renters, and the plan involved three elements.

First, partnering with the United Way of King County for eviction prevention.

Second, working with nonprofits through the Seattle Office of Housing.

And the third was engaging community organizations, especially those supporting black, indigenous and people of color, immigrant and refugee communities during that time.

And through the end of 2023, the city provided $51.9 million in rental assistance to 11,181 households.

About 68% of the recipients identified as people of color and 15% identified as Hispanic.

Next slide, please.

Thanks.

So this map shows the 2023 OH rental housing and home ownership investments by neighborhood or urban center.

Okay, Hannah, next slide, thank you.

And these are the fund sources for those investments.

Okay.

And now we are transitioning away from all of our investments and just talking specifically about the levy, about the past levy, the 2016 levy.

So we're celebrating the end of the 2016 housing levy period and the launch of the new 2023 housing levy this year.

We're grateful for the strong support for this work from Seattle voters and taxpayers who have resoundingly supported this investment in our housing infrastructure for 40 years.

And the 2016 housing levy had four program areas, and we're gonna discuss those four now, or report out on those four now.

So the first one here is the Rental Housing Production and Preservation Program.

And that program exceeded their goals, achieving 139% of the goals by investing in 2,864 new apartments and rehabilitating 621 existing apartments in our portfolio.

And the Seattle Housing Authority's Juniper Apartments up in Yesler is the final multifamily building of the 2016 levy.

The home ownership program, program number two, also exceeded the goals, achieving 135% of the goal by supporting 379 households.

In 2023, the program issued over 100, sorry, $110,000 in grants and $355,000 in purchase assistance loans.

Next slide, please.

The third program area is Operating Maintenance and Services Program.

And that met the goal, supporting long-term operating and services costs for 526 permanent supportive homes.

And DESC's 15th Avenue Project is the final award of the 2016 levy supporting 45 homes yet to be built.

And the fourth program area is the Homelessness Prevention and Housing Stability Services Program.

That program achieved 97% of the goal, serving 4,364 households over the levy period.

The program assisted 510 households in 2023, deploying $1.8 million of assistance.

Okay, now we are transitioning to the third report that we do, which is the, we're shifting away from a discussion on our direct investments in affordable housing to our multifamily tax exemption program, which is a market-focused program to increase affordable housing.

You may remember we briefed you on this program in the spring, and we will be returning to committee in early 2025 to resume our MFTE program discussion and reauthorization.

So just for reminder, the MFTE program is an incentive program created in the state of Washington to do two things, encourage increased residential opportunities, including affordable housing, and to stimulate the construction of new multifamily housing and rehabilitation of vacant or underutilized buildings.

In the city of Seattle, we further use it to do two things as well, increase and maintain affordable housing and affirmatively further fair housing.

Seattle's MFTE program provides a property tax exemption on eligible multifamily housing in exchange for 20 to 25% of those units to become income and rent restricted.

The majority of MFTE occurs in the rental housing market.

And we currently have 286 properties with active exemptions in place for over 6,600 apartments and 49 approved applications.

And 17 properties have expired or opted out of MFTE.

We also use MFTE in supporting permanently affordable home ownership, and it's provided incentive, financial incentive, for 217 OH-funded homes for low-income buyers with 54 active exemptions, 68 under construction, and 95 homes that have expired or opted out of MFTE.

The fourth report out that we have is about the MHA program.

And it's the second development program we're discussing.

Next slide, please.

So the MHA program ensures that new development contributes to affordable housing.

The primary purpose is to create more affordable housing options for low-income residents, addressing the city's growing affordability crisis.

The MHA program requires new commercial and multifamily residential developments to either include affordable housing units, which is a performance option, or make payments to the city to fund affordable housing projects.

That's the in lieu payment option.

So you have two options there.

Next slide, please.

So the Mandatory Housing Affordability Program is Seattle's required inclusionary zoning program.

The program launched in 2017 And what that did is it upzoned an increased density in certain neighborhoods, along with mandating requirements for new developments to either include affordable housing on site or make in lieu payments to the city.

The MHA program represents a significant policy effort to balance the city's growth with equity and help the city achieve its goals for affordable housing.

This program intends to mitigate the negative impacts of new developments by preventing displacement providing new opportunities for households to live in the city and ensuring that Seattle remain a diverse and inclusive place to live.

In 2023, building issues were issued for 227 projects meeting MHA requirements.

The amount of payments decreased, the amount of payments we received decreased by 15%, while those choosing the performance option increased by 60%.

Next slide, please.

That increase in those choosing to perform is noted here, if you notice, the difference between the two-date commitments and the 2023 commitments.

And then those payments generated through the MHA program have created both rental and permanently affordable homes.

And in 2023, the payments received funded two apartment buildings and 26 permanently affordable homes.

And that was just a lot of data and a lot of numbers thrown at you this morning.

So we're happy to take questions because you guys have been very quiet this morning.

Thank you.

That was, yes, a very rapid review of some pretty hefty information.

Blah, blah, blah, blah, blah, blah.

Yes.

Lots of numbers.

So I'm assuming there will be questions.

So questions?

Yes, Council Member Wu.

I have a quick question.

How do people expire out of the home ownership MFTE program?

How do they expire?

Out of that MFTE program for homeownership.

I'm just curious.

So I do not know why they do, but the tax exemption is for a limited amount of time.

And it's...

I'm looking at Kelly to make sure I'm getting this right.

It's a 12-year time period for the homeownership.

And at the end of that, the renewal, the extension option, I think is a relatively new function.

Kelly, I'm asking you for your suggestions.

Yeah, you bet.

Well, home ownership, home ownership, MFTE for home ownership, affordable home ownership is used exclusively by our nonprofit existing partners.

It helps to make projects work.

And those do not typically end before the 12 year period.

They take up the entire 12 year exemption period that they're able to.

And then at the end of 12 years, they expire.

Great, thank you.

Thank you for all that you do.

This is amazing results, and I look forward to seeing it double or further in the next couple of years.

Thank you.

Council Member Salka.

Thank you, Madam Chair.

And thank you, Director Winkler-Chen, Kelly, and Andrea.

Appreciate your time here and this kind of report out.

Couldn't agree more, Madam Chair, about the rapid-speed, lightning-fast overview, a very distilling of very complex topics in about 12 minutes.

But it was a good refresher as well.

Just curious, how many cities in Washington currently have MHA programs?

And what are the closest ones geographically to Seattle?

I do not know that number off the top of my head, and I will have to get back to you.

To both of those.

Thank you.

Yeah, I would definitely love to hear more about that when you learn.

So thank you.

Please do give back.

So with respect to performance versus payment options for MHA, good to see some of the data rolling in that more developers are choosing to perform, less are choosing to pay, high level, which is a good trend.

We want to continue to increase and keep that trend going.

Can I ask, what are some of the barriers What are some of the barriers to developers choosing to perform rather than, which from my perspective is more favorable versus payment, which is less favorable, less desirable from my perspective?

So council member, what are some of the barriers?

I think we've thought more about why the shift might be happening at this moment in time as to why we're seeing more performance at site.

And I think as we've discussed this within the office, because I think we got this question from the Seattle Times actually, as they were looking at the reports as well.

We think some of the shift has to do with city council ordinance that waived design review for projects choosing to perform.

So the city council has made it perhaps more enticing for people to actually go through the performance option.

The other thing has to do, we believe, with the cost of money.

So if you are choosing to pay instead of perform, you pay at the start of your permits.

You pay much earlier than you would.

Thus, it's money out.

And right now, the cost of money is pretty expensive because of interest rates.

And so it is incenting people to choose the performance option at this time.

Okay.

And we think both are a good thing.

It is very curious to see that the ordinance that City Council passed has potentially driven people to actually perform, which is great.

Yeah.

All right, thank you.

And then final question here is, what is the, so that's, what are some of the I guess implicit in your response is some of the barriers.

Design review.

The council passed an ordinance to directly address that, simplify and eliminate that in certain circumstances.

Great.

Some of the costs.

Okay.

What is the path, in your view, to making sure...

To the extent that is desirable, it is from my perspective, that we have more developers perform rather than pay.

What is the path to continuing that trend in a good direction?

Well, interesting you should bring that up.

There is a MHA review.

So when the legislation was passed, geez, maybe five years ago, to have this mandatory housing affordability program, there was language in there to...

have us do a review.

So we are in the middle of that review process right now.

And I think like with most programs, you need to make adjustments along the way.

Did it meet the outcomes that you had anticipated doing?

So the mayor's office right now is working on a study.

We are in the middle of that and we are engaging some researchers to help us understand that.

And I think if that is the, if we really want to hold off until we see the data from that to figure out how best to incent that in some ways.

Some of it is totally, and I wouldn't know because I'm not a for-profit developer, so some of that work will engage talking with the for-profit community to think about exactly what you're asking.

But also, when you're looking at the underlying land use codes, certain, we might need to tinker and make some adjustments in order to make that happen.

Fair enough.

Thank you for sharing.

And so it sounds like there's a pendant review and report coming out.

Any sense on when we can expect to see that the results of that report released?

I believe the research is going to be done.

I think Council Member Moore probably has the most accurate information, her office.

I think it's, yeah.

Yeah.

I think we're looking at December.

Okay.

Thank you.

And a year.

Okay.

Yeah.

Great.

Thank you.

Wait, Council Chair Moore, is your office performing that review?

No, no, no.

Okay, all right, all right, cool.

Thank you, thank you.

I can contract it out.

Council President Nelson.

Thank you very much for going through quickly your investments of your values various fund sources, and I have a question about what is not invested.

And we've been digging into the City of Seattle's audited comprehensive financial reports and just looking at the fund balances for the low-income housing fund, the office of housing fund, and the housing office's budget in the general fund, it looks like there's about a total of about $337 million in unspent funds for 2023. a minimum of about $150 million for prior years.

And I understand that there are many reasons why it's difficult to get money out the door.

Also, according to central staff, as of March 31st, 2024, Office of Housing had about $442 million in capital funding, cash balance, and availability authority.

So is there a plan for addressing some of the barriers to getting this money out the door faster or helping nonprofit housing providers put together more?

doable projects or something.

I mean, I've mentioned this in previous meetings before, because if we can't get this money out the door, we're basically operating a savings account.

And at the same time, as the public commenter said, you know, we are taxing the production of multifamily housing and also our property owners who are paying into the housing levy, which is making housing more expensive for everybody.

So we're scribbling and trying to understand the question.

So a couple of things, Council President.

Jeez, it feels like a long time ago, but Kelly Larson and I did a presentation on, I think it might've been the financing that happens in housing.

And if you remember that, and I can forward over the slide later, there is a gap of time between when we award a project and when it actually falls under construction.

That is when the person who receives our funding goes out and finds other sources of funding to leverage that.

So we are not paying for 100% of the housing, right?

So we, as well as the Low Income Housing Tax Credit, as well as the bank, as well as the state, have all invested in that, and that can take time.

So the dollars sit in an account while that work is happening, right?

Otherwise, we would end up paying for the whole project itself, and that's not the way that our funding is set up.

The other thing that we have done internally for the office is that for our funding criteria, we have requested that a priority be given to projects that'll be under development in, I think in the last round, about a year and a half from the moment that it, we award.

And so what that means then is that the projects have to be under, be moving along in the permit process as well because projects typically don't want to invest a lot of money into starting the whole development and permitting process until they are ensured that we are willing to invest in it.

So part of it, we can get back to you exactly on the numbers because it's the difference between, I think, encumbered and committed, if that's correct.

And expended.

And expended.

Because it takes a while to spend down the dollars, too, once you've closed on our loans.

Because the construction project can take about 18 months.

And does the balance ever get to near zero or so?

Because $337 or $442 million, that's a big chunk of just the total amount of the housing levy.

Yes.

I'd have to think about it off the top of my head, no, because like this year we are giving, last year we gave out, I don't know, about $55 million.

Those projects are not under construction yet.

And they won't be until later on this year.

So that dollar stood out.

At this point, we have announced a $112 million levy.

You're going to expect those to not be closed on on the loan for about a year and a half to two years.

And then for them to be fully expended, a construction project takes about 18 months to complete.

So those dollars...

will not have been fully spent for several years.

It takes a while to spend down those dollars, right, and for a construction project to be done, but it takes a while for you to get all your financing as well as to get through the whole permitting process for that.

So do you just, when you say get those dollars out, do you just write a check to the project and then would it be out the door and then they proceed with their...

No, no.

So...

That's a level of detail that is deeper than in the financing chart that we showed, where we showed it takes projects a while.

So we sign, we close on the loan.

It's a legally binding loan, and it's all the different fund sources closing.

And then the spending down of dollars happens throughout the construction time period, which can be 18 months.

Because we don't, if we spend all of our, if we give all the money to the developer up front, we want some controls to make sure that they're actually constructing

So that is the difference between spent and encumbered.

It's awarded.

Encumbered and then expended and encumbrance is a legally binding point in the development process awarded is there's still some contingencies, including some other financing that may need to take place.

And so it's at the point in which all those other funding sources are aligned and committed.

and we make an encumbrance of those dollars and it becomes legally binding.

But we do consider an award also as a liability because those dollars help to leverage other funds.

The city tends to be the first into projects and it allows us to really be leading on the projects that we wanna see others invest in within the city of Seattle.

And it helps us direct kind of other dollars to ensure that they're within the city.

Okay, so basically it's normal that there is an Office of Housing budget.

I think it's about 500 or something million now, and then there's always going to be a large balance at the end of the year.

Yes.

Yes.

Okay.

There will always be a large balance, yes.

Okay, I'd like some more information on this at some point.

Thanks.

Thank you, Council Member Morales.

Thank you.

Good morning, everyone.

I have questions about each of the different reports.

I'll start with MFTE.

I'm kind of thinking out loud here, so bear with me.

So we have typically these projects have a 10 or 12 year tax credit, right?

But at that point, it feels it seems like cash flow should be stabilized.

and affordability might be able to increase.

So I'm interested.

Um, I know we'll, we'll have this conversation a little bit later, but it feels like, you know, over a few cycles, um, if at least some of our MFT buildings are at say 30 to 80% AMI or, or higher, um, we, We could be moving in that direction, otherwise it feels like it might just be a windfall to the projects itself at renewal.

So I'm trying to understand what that affordability rate should change to so that we are ensuring the stability of these projects and that we are really trying to ensure a longer term, a more permanent affordability for folks.

So Andrea and Kelly, correct me if I'm wrong, but the renewal option, so the MFT program was for 12 years.

And I think in 2021, the state authorized an extension for an additional 12 years.

And our rules are that if you're going to extend for another 12 years, you have to look at the existing program, not the one that you originally signed up for, but the existing program.

And I believe it's a 10% AMI drop in that rent level.

So, and that was put into place, I believe, with the belief that a new unit is probably more valuable than an older unit.

So when you would, so right now, if somebody were to renew, they would be renewing, not at their old P2, P3 level, at the P6 level, And if you're renewing, then you would do a 10% AMI drop in what the rent should be for that unit type.

If that makes sense.

Kelly, do you want to step in?

That's correct.

And then I think, you know, we'll be bringing this forward for Program 7 reauthorization as well, consideration of different, potentially different rent limits.

We don't know exactly yet what that will look like, but that will be part of the discussion in the early part of 2025.

Okay, let's move to, I'm interested in the rental assistance.

You mentioned that some of that is state funding.

Can you tell us what the source is for that state funding?

Kelly, do you know the source of the state funding for that?

CBG, I believe, and potentially some COVID relief that was passed through the state, but we can get back to you with details.

And then that rental assistance is provided, just to be clear, provided directly to landlords?

Kelly is nodding her head.

Kelly's nodding.

Okay.

Are eviction prevention funds, is that administered by OH or is that SDCI?

The eviction prevention dollars that are in the housing levy are passed through to the human services department who holds contracts.

Got it.

Okay, so we heard last committee from landlords that maintaining their dwellings to code is an issue.

Can you talk about what funding is available to help landlords with serious habitability issues?

And can you talk about whether OH does work with SDCI to help landlords that have serious habitability issues in accessing funding?

Did you say habitability?

Yeah.

Okay.

So we heard at the last from Chip and from Andrew and Michael, yeah, about some of the challenges that they're having.

Some of it is property damage, but we also know that a lot of, I hear from a lot of constituents who have habitability issues that their units are not being maintained.

So my question is what support do landlords get for keeping their units up to code?

And whether we work with SDCI on that.

Yeah.

Okay.

Ask Kelly about that.

So Kelly, could I ask you to talk a little bit about the operating support dollars that have gone out?

So we recently released $14 million for operating stabilization for the OH funded providers that are operating affordable housing in the city of Seattle.

This was an opportunity to support folks who are dealing with some of these issues in their portfolios, particularly those with older buildings and larger portfolios that are experiencing higher risks and challenges across the board.

We also operate preservation funds at the Office of Housing that do provide the opportunity for providers to submit projects for some of their older portfolio projects.

to come in for reinvestment and rehabilitation.

We are limited in all the funds that we have, but we have put forward this new RFQ that we just did was a first time for all of us.

And we understand it's been relatively well received from providers and contracts are getting underway now.

Great.

And then a final question, if I might.

Council Member Morales, I would also remind folks that all of the Projects, I think, that have been funded that the Office of Housing has invested in, at least for the last 20 years, have a replacement reserve requirement, and those dollars should be going towards habitability as well.

And so I think that is a deep...

We're really starting to really think about how we better asset manage and help organizations do that.

I think the organizational stabilization funds that we just put out is part of that, but as we start thinking about our projects that have been around for a long time and in the development of the housing levy, I think it was clear from hearing from providers at that time that they wanted more dollars towards rehabilitation.

And that's why I think in the upcoming levy, we've been much more clear about it and have to be clear in our communication with our investees that these dollars are available and targeting prioritizing rehabilitation of existing projects.

Well, and I'll just say, you know, there is certainly an issue with maintenance.

It is expensive.

It's getting more expensive, I'm sure.

But we hear regularly from constituents, whether it's in nonprofit housing or regular housing, that that there are units are not being properly maintained.

And.

We also hear a lot about property managers in general and, you know, sort of a separate issue for me and a question that I have is what our ability is to kind of regulate property managers, because a lot of these companies, entities use third party property management companies.

There is like no accountability for their responsiveness when there are, you know, a broken toilet or mold in a unit or pest infestation.

And I have been in side units that are not habitable.

and nobody should be living in the conditions that some of these units are in.

So I do think we have sort of another obligation to understand better how we hold property management companies accountable, but we also need to make sure that the developers that we are providing public dollars to create housing are also accountable for keeping those units, um, and holding their property managers accountable if that's the, if that's the sort of order of operations there.

Yeah.

We used to, uh, we are coming back from a period where we were not going out and, uh, doing our physical inspections of units.

During the pandemic, that stopped.

And so I think it was in 2023 when we went and reinspected all units or the majority of units in the OH portfolio.

And depending on how you scored, And whether other, we are not the only investor oftentimes in these projects that are within our portfolio.

It's typically the state and the Washington State Housing Finance Commission.

They are starting to do third party property inspections.

And so we are trying to sync up and make sure that the projects that require more inspection get more inspection.

And then you, as somebody who's been inspected before, you get an inspection report and you have to fix certain things and report back.

I also think that the Renting in Seattle work group, which sits in SDCI, does communicate with us.

And we do have conversations between the departments as to what they're seeing.

But there is the Landlord-Tenant Act, the Residential Landlord-Tenant Act, which does cover what is the landlord's responsibility, what is the resident's responsibility, how that communication should happen.

And that works with SDCI.

And that document is translated into multiple languages and is a requirement of when you're moving into property, you're supposed to get that.

That's been a longstanding rule for, I don't know, 20 years.

You have to get that.

Yeah.

We'll deal with SDCI in my committee, so...

So my last question, we know that the payroll expense tax is the largest funding source for Office of Housing.

Based on this annual report, can you talk about how many of the projects are also funded with EDI money?

Oh, that we would have to get back with you.

Okay.

Yeah, that'd be great.

Thank you.

Thank you very much, Chair.

Sure.

The record will reflect that Council Member Rivera has joined us.

Did you have any questions, Council Member Rivera?

I do, Chair.

Thank you so much for the opportunity and thank you for the report.

I have a question.

Do you all have a dashboard?

Because to the point we made earlier, this is a lot of information, but I also noted there's a lot of apartments being created by the various programs.

And so do you all carry a dashboard that shows each of the programs with how many units and then total number of units at the end?

Because this doesn't really show, you know, it is, a lot of different units, like I said, with the different programs.

I think it would be really helpful to see it in a dashboard.

Do you all have that?

We have websites dashboard.

We had a mayor's fellow develop for us, I guess you'd call it a dashboard that shows the, was it the MFTE units?

We have, yeah.

Yeah, go for it.

Thanks for the question.

We have a, no, we don't have the kind of dashboard that you're speaking to.

We have it right now for some of our individual programs and we're working toward that.

The Office of Housing is currently working on updating our database systems to allow us to, have better reporting we've been working with with you know multiple systems over time evolution that uh you know has made it harder for us to see across all of our programs so we're excited that in the next year you know we'll have a new vendor uh crossing our fingers that will allow us to work with all of the data that we have more effectively and i think the the question you're asking councilman rivera is exactly the kind of vision that we want to be able to you know have available because there are so many programs that are providing such great outcomes across the city.

And I want to, I should have provided some context of why I was asking this as well.

It's just, you know, we're having a lot of conversations about need across the city, housing need and various AMI levels.

And I'm not clear and I have not been able to get a clear picture on what that actual need is.

And we are creating a lot of units It makes it really hard to track, are we actually addressing the need or are we not?

Where are we falling short?

That is not clear from what we hear anecdotally the need is on housing.

And then this presentation that so greatly shows all the great work that the city is doing to create more housing.

in this case at the low income level, which I know is needed, but we need to see the bigger picture.

What is the need?

How much are we creating annually?

And how much we have left to go to fill the need.

I think that will be really helpful.

I think having a dashboard to clearly lay that out would be extremely helpful as we're looking at other legislative fixes to support the building of more units.

But today, I'm not clear that we are not addressing the need.

I don't know what the bigger picture need is.

Thank you.

Thank you.

Any other questions?

Yeah.

Council President?

Well, building on that, I will say that one need that I hear about all the time is the need for more workforce housing.

And I've said many times that that is not a category that is funded in the housing levy.

And I don't know how we would on a dashboard that need because it's so fluid.

But I will note that that is a need that is filled by the MFTE program.

And I will put in yet another plug for this because unlike the balances that I referenced earlier that seem to be ongoing, I don't know if that level of performance is considered in other cities that produce, that have funds to produce affordable housing.

But what I will say is that I am very much hoping that the new MFTE program is designed to increase participation.

by developers because you get two policy goals fulfilled.

You get performance, on-site performance, and you also get more affordable housing that the city is not responsible for funding.

Yes, there is a tax revenue hit, but It's less than $200 million per year or $337 per year.

I think that last time we were talking about the MFTE, I think that you said that there would maybe be $6 million or something like that, if I'm correct, Kelly?

What was the question on the $6 million?

That is the property tax...

well, hit from the MFTE program.

In any case, my point is simply that I really want to make sure that the Office of Housing is thinking about expanding the participation in the MFTE program.

I understand that this, it was supposed to end, this particular program was to end at the end of this year.

I recently referred legislation to grant an extension of a quarter, so the end of March of 31st if that passes, but Hopefully, we can get some information in the interim to find out.

I would like some information in the interim to find out how that work is proceeding on the next housing MFTE program.

Offer some responses to council member Rivera and Nelson council president Nelson.

So I have to go back and find the annual shifted taxes amount for, but it's much higher than 6Million dollars and the foregone taxes are also significant.

These are part of these are some of the impacts that we'll bringing forward to make sure that it's really clear what the costs and benefits are of the program, which were.

Really interested in exploring really thoroughly alongside our council colleagues and for council member Rivera.

Um, we, it would be great to revisit the housing financing briefing from May of 2024, where we did discuss the need for affordable housing.

And private market housing in the city of Seattle, which is dictated by the growth management planning council.

So we need 112,000 new homes by 2044, and there's an array across the different income levels of need, and there's some really clear slides in those presentations about where we have needs and what the Office of Housing will be able to do with the investments that we have, and we'd be happy to follow up with you on that.

Thank you.

Chair, thank you.

Thank you, Kelly.

I still think a dashboard would be really helpful to contain all of that information because we are having to toggle between presentations and websites and between you all and SDCI to Councilmember Nelson's point, workforce housing and housing at market rate.

You're not tracking that necessarily, but you're the Office of Housing, so I think it's natural for people to think that you are.

But I do think the city in general needs to partner together, both OH and SDCI, to provide some kind of dashboard, because that is ultimately what we need to be able to see it in one place.

All the various, like I said, presentations that you all give, SDCI gives, and in my mind, this is really critical in terms of addressing this need that we're talking about.

And if I may, Council President, I wanted to address the question you asked about the money out the door.

When departments put out RFPs and RFIs and people apply, they get an award letter.

You're getting awarded X amount of money.

But that's not a contract.

And so the money is not actually encumbered until there is a contract.

And that's what OH was talking about in terms of legally binding.

So once the contract is created with that award money amount and both parties have signed, Now you've encumbered that money, but it doesn't mean that the city does a reimbursement system when we award money, when we give monies.

So once it's encumbered, we're on the hook for it legally, but then we disperse it in chunks as the work is actually done because we do this reimbursement model so that we can make sure that the work actually gets done.

So the money, the check is never written on the onset as they do the work.

then they get reimbursed for the work.

So I hope that is helpful.

Yeah, that is helpful.

How many projects represents about the sums I was talking about?

So just to help me understand...

I think that those, yeah, those fund balances.

I think you said it was roughly $400 million.

That is the figure from central staff.

Let's see what I said.

But then there's also, you know, 442 is the figure from central staff, the audited financial reports.

I would like to know what the fund sources are and what that is.

We'll have to get back to you with those numbers because it depends on the type of project.

I am pulling that up and I can get that back to you.

And Council Member Rivera, to touch on your point, totally agree on a dashboard that would be great.

And let's make sure the OPCD is included in that because they're looking forward while SDCI is looking at permits, right?

It's a citywide director, citywide, but we do need it.

It's hard to do this work without such a tool in 2024.

And the $442 million of that, $180 million was under contract, so the loan closed.

$157 million was awarded, but the loan had not yet closed, and $105 million had not yet been awarded.

Hannah, do you have that email?

Pardon me?

I'm, like, looking over at Hannah because I can see that she has something up.

If we could get those numbers forwarded to us, that would be extremely helpful.

Thank you.

But you don't, okay.

They don't seem familiar to you?

Because we don't think about it in that way.

Yeah.

I'm sorry.

I missed the period of time in which we're talking.

It's a very dynamic number.

That was as of March 31st, 2024.

Yeah, it's very dynamic.

We are doing quarterly reports.

So it would just be helpful for us to be able to see the reference document that you're looking at and get with our finance team.

Thank you.

Okay.

Okay.

Council Member Saka.

Thank you, Madam Chair.

I just want to quickly, plus one, Council Member Rivera's ask for a dashboard of some sort.

It sounds like there's already alignment there.

And yeah, I think that would be very helpful from a council member's perspective.

And also, most importantly, from the general public's perspective, these are highly complex, nuanced constructs and very strategic programs and taxpayer dollar investments.

and to have a single pane of glass, so to speak.

And I know there's, and I appreciate that there's multiple city departments and agencies involved in overlapping sort of bodies of work in this case, but to have a dashboard that's accessible, open, and available for all in this case would be very helpful.

So thank you.

Okay, thank you.

Any other questions?

Okay, I just have a couple of questions and comments.

I would note that in looking at the MFTE, one of the things that we hear from providers is that the paperwork from requirements from OH are overwhelmingly burdensome and that is an obstacle to participation.

So I would just ask that that be, I think that's an area where we could really easily make changes to make it easier and more.

It's a way to keep the people who are already in the program in the program.

So that would be one of my suggestions.

The other thing that I would ask is I would like more information about how TO THE POINT THAT COUNCILMEMBER MORALES WAS MAKING ABOUT HOW DO WE MAKE SURE THAT THE UNITS THAT ARE RECEIVING CITY FUNDING ARE IN FACT HABITABLE AND MAINTAINED.

ASIDE AND APART FROM THE ISSUES THAT ARE HAPPENING DUE TO TENANT destruction due to behavioral health or substance use issues.

But we often hear, and I know Seattle doesn't have any control over this, but complaints about Seattle Housing Authority properties not being well maintained.

So I think wherever there's public money, we need to have a very robust inspection system.

One of the changes that I would like to see in the private market is that we inspect, require PROPERTIES TO BE INSPECTED ROUTINELY ON A MORE REGULAR BASIS RATHER THAN ON A RANDOM BASIS BECAUSE I DO THINK HABITABILITY IS AN ISSUE THAT WE NEED TO, AS A CITY, BE CONCERNED ABOUT.

SO I'D BE INTERESTED IN HEARING MORE ABOUT HOW WE CAN HAVE A ROBUST INSPECTION PROGRAM FOR CITY-FUNDED PROPERTIES.

And then I had a question about the stabilization funds that we're talking about.

My understanding was that there were less awards issued for new development, affordable projects in 2024 because of the fact that so much backfill was needed relating basically the stabilization fund relating to operation management and services and that a significant portion of that money was because of rent arrears.

And I'm just wanting to get confirmation that that was a contributing factor to not being able to have as much money to award for new housing projects.

There are a couple of things that are factored in there.

Kelly, are you off mic?

You want me to go?

Sure.

Go for it.

Yeah.

So these are interrelated issues, to be sure.

However, there's a distinction between operating and capital concerns, where there are some concerns with existing projects that are under development, and they are facing increased cost, inflation, and interest rate concerns.

Those projects that are currently under construction are high priority for the office of housing to ensure that they complete that is cost escalation or backfill as you reference council member more.

And those are requiring significant resources for us to ensure that they're seeing through to the finish line basically to get those buildings done.

Then we have, and some of those in order to close and to achieve permanent financing, it requires stabilization and full lease up and maintenance of tenants ongoing.

And that is also tied up in all these issues related to rent arrears and non payment of rent as well as behavioral health concerns and all the other concerns that you're hearing from.

operators out there today.

The Organizational Stabilization Fund is meant to come in and provide some support for that.

Of course, we were not able to fully fund any requests, and we also capped requests.

So if we had allowed folks to come in for as much as they needed, it would have been likely an extraordinary ask of resources.

We have $14 million going out into community, which will hopefully help to stabilize to some extent, and there is more to be done.

All right.

Thank you.

And I think some of that money is coming from the housing levy, is it not?

All payroll expense tax.

All payroll.

And then on the capital side, some mandatory housing affordability.

Okay.

Okay, good.

Thank you for that clarification.

And then I guess another question that I had is, well, two questions.

To the emergency rental assistance, I know that's been since 2021. Was that created in response to, it seems that that program was created in response to COVID and also to the eviction moratorium?

If we're talking about the part that's discussed in the annual investments, right?

Yeah, the investment tools.

We have eviction prevention that's, sorry, homelessness prevention under the levy, but then we also had the eviction prevention program.

The emergency.

When we were talking about the eviction prevention program, it was created in 2021 as a response, I think, to COVID and to, yeah, it was basically COVID.

In that program mandated, the payments go to the landlords as a way of trying to mitigate eviction.

Is that your understanding?

Yes, it was in order to minimize the amount of, we understood that people really were unable to pay rent.

And so that was to try to prevent them from building up a huge amount of rent that was owed, but also then to prevent eviction.

Because at that time, in 2021, you couldn't evict people.

So there's, I mean, my understanding, though, is now that you do contract with community-based organizations so that they have funds where if a client comes in and says, I need $600, I'm not going to be able to make my rent, I need a $600 grant, they have the money to do that.

We are wrapping up our program with that, yes.

Yeah, okay, so that we do have the ability to provide funds directly to the community-based organizations that can then directly provide the funds to the renters.

We're not having to go providing it to the landlords.

It's still paid to a lot.

All checks are made to landlords, but we have to certify income and eligibility with tenants directly.

There was a pre-existing program.

We stepped in in 2021, but there's always been some system oftentimes tied to the United Way of people who, when they owe rent, they go to the United Way and ask for rental assistance.

Yeah.

Okay.

So it's not an unusual model.

I mean, that the money Obviously, it's the landlord who needs to have the check made out to them, but you're helping the tenant stay housed.

And then my last question, and I'll wrap this up, is I'm interested in the 2023 housing investments slide by Urban Center Village.

I'm excited to see that there's a significant number here of affordable multi-unit home ownership projects, which is something I'd love to see more of.

Slide number seven, right, I think?

Seven, yeah.

So, and I also note that in the housing investments by fund source, that almost 50% is coming from payroll expense tax.

So the reason I note that is when we did the ANF, there was a the bulk of that money for distributing the housing levy funds was to go to rental units and there was a smaller for home ownership and so we're limited and and where we can direct money in home ownership through the levy but it looks like we're not necessarily limited uh with the payroll expense tax and i'm just i'm just curious about how can we really shift to providing more home ownership opportunities rather than just continuing to build out rental apartments, which don't create, while they create housing, they don't create the sort of long-term stability that I think is important for us to have in our community, nor do they create property taxpayers, which also expands our tax base.

Yeah.

So with our homeownership program, the payroll expense tax also has a percentage that's dedicated to homeownership.

So we've tried to grow our homeownership programs.

I mean, it's successful in doing that by ensuring that we have resources in our different funding sources to be able to address the needs that you're speaking about.

And then in...

the capacity within the nonprofits that develop home ownership opportunities is really limited.

So the other things that we've been doing is also trying to increase the capacity.

And we're also being successful to be able to work with different BIPOC organizations.

They've been partnering with other existing home ownership developers.

to be able to take on more projects of their own.

So there's a wonderful partnership between Habitat for Humanity and the African Community and Housing Development Group.

Housing and Community Development.

Housing and Community, ACHD, has also been entering into a partnership in which that organization, ACHD, will be able to take on more projects of their own We've been working with the Nehemiah program as well to be able to build capacity of many churches and others who are interested in doing the same work.

So it becomes very complex, and we want to make sure that these organizations have the right kind of infrastructure.

So we've been fortunate to be able to provide also payroll expense tax to be able to support the work to do some of that, the building of...

the capacity and finding resources for those to be able to then take on projects and expand the number of people who can develop home ownership opportunities with our resources.

Thank you.

All right.

Any questions based on that?

No?

All right.

I'm not seeing any additional questions, so I'm going to say thank you very much for your presentation today.

And I know we'll have some follow-up from you.

If you could share that with everybody who was here today, that would be great.

We're all getting the same information.

So thank you for your presentation.

Thank you.

All right.

If there's nothing further, this concludes the July 24th meeting of the Housing and Human Services Committee.

The next meeting is scheduled for August 14th, 2024. The time is 1037, and we are adjourned.

Thank you.

Thank you.