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All right, the February 11th, 2026 meeting of the Housing Arts and Civil Rights Committee will come to order.

It is 2.01 p.m.

I'm Dionne Foster, chair of the Housing Arts and Civil Rights Committee.

Will the committee clerk please call the roll?

Council President Hollingsworth?

Council Member Juarez?

Council Member Rink?

Present.

Vice Chair Lin?

Present.

Chair Foster?

Here.

Chair, there are three members present.

Great, and I believe we should be expecting Council Member Hollingsworth or Council President Hollingsworth shortly, so we will welcome her when she arrives.

If there is no objection, the agenda will be adopted.

Good morning, adopted.

Hearing no objection, the agenda is adopted.

We will now open the hybrid public comment period.

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

Clerk, how many speakers are signed up today?

Three.

Great.

Each speaker will have two minutes.

We will start with in-person speakers first.

Clerk, can you please read the public comment instructions?

Yes.

The public comment period is up to 60 minutes.

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

We will begin with in-person speakers and then move to remote speakers.

Speakers will hear a chime when 10 seconds are left.

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.

The public comment period is now open.

We will begin with the first speaker on the list.

The first speaker is Alex, I'm gonna mispronounce her last name, it starts with a T.

And then the second speaker is Eileen Court, who will go afterwards.

Thank you, my name is Alex.

You're supposed to be knowing me.

I'm the best of the best.

Where is my time?

Oh, 57, good, yeah.

My name Alex Zimmerman, I speak something about what is for my understanding, my English not enough, what does mean expression civil right?

I have lived here for 40 years, every time what is I come to council speak for last probably 30 plus years, I cannot understand what does mean civil right.

I cannot understand this.

Seattle have unique situation, what is don't have analogy in America.

This city very unique.

Civil rights in Seattle, from my understanding, never exist.

Why?

Because the city, what they call, degenerative idiota with Nazi, commie, Nazi, fascist, idiotic faces, my slogan, what has existed for many years.

So city of idiot can elect only idiot.

When city don't understand what is mean civil right and constitution, so they elect people what is supposed to be don't understand too.

They're all identical.

For 30 years, Seattle never elect one man or woman or one council or mayor who understand what is mean civil right.

I don't understand because my English is not so good, but you all speak very good English.

You're supposed to understand this.

It's nothing happened.

For Tory plus here, what is I come here?

You don't understand what civil rights, why?

Because Seattle degenerative idiot, what is I call them, commie, Nazi, fascists with idiotic face, have their civil rights.

I don't understand can they qualify like civil rights, you know what this means.

Maybe this qualifies like a bandita, like a mafia, like organized criminal, like a junta civil rights.

Junta have civil rights, Hitler have civil rights, Stalin have civil rights, you have civil rights.

Nice people, no problemo.

It's exactly what they're talking.

Guys, stop acting like a...

All right.

Clerk, can you read the name of the next speaker, please?

Eileen Quirt.

Just in the bin that's right over there, you can drop those.

I'm here to talk to request the protest protest the HOA fee charged when the tenant move in.

They always charge HOA fees.

So the city has an ordinance that says the landlord can only charge fees that's caused by cleaning or by screening tenant.

But HOA, they always charge tenant fee.

because they are kind of like the landlord for the common area, that's why they charge fees.

But the common area, the homeowner already paid the assessment, they already paid the maintenance, everything.

So by charging the moving fees, like a double dip, so they should not be allowed to charge those fees.

So AGOA, to get around it, they will say, we charge tenants, we are not landlord, but because they are the common area landlord, they shouldn't be allowed to charge fee or they charge the unit owner which basically increases the housing cost.

So that's why I'm here.

I hope the council can make it clear to the HOAs they shouldn't just charge.

Sometimes it's like $500 for moving in, moving out.

It's just a lot of burden.

The assessment is already very heavy.

Over the past five years, the HOA assessment has doubled for the union owner.

It's just unbearable.

Thank you.

Thank you so much.

All right.

Clerk, are there any more public speakers?

Yes, the first remote speaker is Ali Muna, or Muna Ali, I apologize.

For those speaking remotely, please press star six when you hear the prompt, and then you will be unmuted and ready to speak.

Just a second, I'm gonna share my screen.

actually not seeing you present.

Okay.

It looks like the speaker is no longer present.

Is that correct, clerk?

Correct.

Okay.

Are there any additional registered speakers?

No.

Okay.

With that, we will end public comment.

Will the clerk please read item one into the record?

Agenda item one, introduction to the office of housing for briefing and discussion.

All right, and we will have our presenters join us at the virtual committee table and we will have you all introduce yourselves when you are ready.

Before I hand it over to our presenters to introduce themselves, I will just say thank you so much for coming.

We're really excited to have this first presentation from the Office of Housing.

We really wanted to use today's committee meeting to allow us to set a frame for what's happening with our Office of Housing, some of the biggest challenges that the office faces, as well as the work that they have been taking on.

OH is also gonna help us understand the work they're gonna bring in front of this committee this year, so that committee members can be briefed and start to prepare questions for future items that are gonna be coming in front of this committee.

There are a number of things that we are hearing from constituents, everything from high housing costs that are pushing residents out of the city, to junk fees, to concerns that we've just heard in public comment today around move in and move out and HOA.

So we're excited to have this presentation as a first step to get us on the same page so that we can have a legislative agenda this year that works to really meet the moment that folks are in in our city.

With that, I will hand it over to the presenters and colleagues.

I will ask that you please hold your questions until the end.

And a reminder that we have two presentations today, one from the Office of Housing, and then we will have the social housing developer in after, just so that we can make sure we are all pacing ourselves.

All right, with that, OH folks, hopefully I've gotten you enough time to get all online and introduce yourselves.

Great, thank you.

Good afternoon.

Chair, Foster, and Committee Members.

I am Kelly Larson, Director of Policy and Planning at the Office of Housing, here with my colleague, Rosie.

Hi, I'm Rosie Jo.

I'm the Director of Capital Investments for the Office of Housing.

I'm going to share.

There we go.

All right.

So we will plan to provide an overview today of the work of the office, a discussion of the top priorities for the year ahead, our 2026 calendar of Council actions, and a more detailed discussion of the affordable housing sector, supportive housing and operating costs, and the local incomes, rents, and housing costs burden data that we care about as we make policy and investment decisions.

It's the vision of the Office of Housing for everyone to have a healthy and affordable home.

The Office strives to achieve this vision by investing in community partners to create affordable housing, paying special attention to equity and displacement pressures with a focus on increasing housing opportunities for people with low incomes.

The majority of OH's budget, 84%, is dedicated to building new homes and preserving existing homes, both rental and for sale housing.

These graphics represent how OH's two primary fund sources are allocated over a seven-year levy period.

You can see the difference between how levy funds and PET funds will be deployed.

The levy spending categories are established with the authorizing levy ordinance and will hold constant for a seven-year period with the majority focus on new rental housing in the blue PET funds are increasingly dedicated to operating maintenance and services or OMS represented in the green to fund workforce stabilization and operating and services expenses in supportive housing and affordable housing These OMS funds provide stable staffing to support resident stability and well-being.

So, what does the Office of Housing do?

We invest in community partners to create and preserve affordable homes throughout the city.

We also invest in annual costs to operate, maintain, and provide services for supportive and affordable housing.

And finally, we provide energy efficiency and weatherization upgrades for low income homeowners and renters.

The majority of OH's budget is focused on creating and preserving affordable homes.

In 2025, the office released a notice of funding availability that was designed to better respond to the current housing market conditions and challenges in the housing sector.

There was greater emphasis this year on stabilization and preservation than we have seen in previous years, or previous funding rounds, I should say.

And the 2025 NOFA awarded $155 million to support over 2,000 apartments.

This included $64 million for 439 new rental homes.

39 of those will be two bedrooms or larger.

For permanent affordable home ownership, 34 new for sale homes have welcomed new homeowners since November.

So to respond to major operating challenges in affordable housing, OH is taking a multifaceted approach that addresses both short-term needs and long-term system challenges.

In the short term, OH released 14 million in 2024 and 28 million this year to provide rent assistance and to support staffing, maintenance and capital needs in affordable housing.

For longer term stability, OH has redesigned the NOFA to place greater emphasis or the 2025 NOFA to place greater emphasis on stabilization and preservation.

Over the last three years, OH has deployed more than $130 million in capital stabilization funds to help projects complete construction and to convert to permanent financing.

This has been necessary to keep projects moving forward and has enabled hundreds of new affordable homes to open in the last few years.

In addition, OH is updating underwriting criteria to better reflect current market conditions.

and is conducting deeper holistic portfolio reviews to ensure that we're understanding organizational and project level risks so that we can design appropriate solutions.

The OH weatherization team has supported 1,500 single family and multi-family homes with energy upgrades.

That includes oil or gas conversions to electric heat or home repair grants to improve cost efficiencies and living conditions for Seattle residents.

Great, now we'll move into our top priorities for 2026. So this year OH will prioritize protecting and preserving affordable homes and continue supporting the city's response to homelessness.

OH has invested in many thousands of apartments that are aging and in need of reinvestment.

We expect to continue to prioritize preservation investments this year and to ensure that our current portfolio of affordable homes can continue operating for many years into the future.

The office will continue its work to reduce homelessness by prioritizing existing and new investments to serve people with the lowest incomes wherever possible and work with other key city partners to make housing development easier.

Our existing portfolio provides affordable housing to over 20,000 residents.

Affordable housing requires reliable and consistent funding to be successful.

OH is committed to our existing investments, playing a role in addressing increased operating costs, and prepared to address a portion of funding gaps if federal funds are withdrawn.

For buildings with expiring affordability terms, such as older OH funded projects and expiring tax credit buildings, we will continue to work with owners and operators to maintain affordability as far as the OH capital dollars can be efficiently and effectively deployed.

OH will maintain its existing investments to support the workforce and operate supportive housing.

These funds have improved worker retention and supportive housing and reduced the number of vacant positions.

This is critical to provide continuity of care and lasting relationships between staff and residents and leading to the best outcomes for people living in supportive housing.

We're committed to opening the supportive housing in the current pipeline and ensuring that it operates soundly.

We will continue working with local and regional partners to identify resources and strategies to fund new supportive housing.

Finally, OH will continue improving our underwriting criteria for new and existing projects to respond to current market conditions and will continue emphasizing capital investments in new homes for people with very low incomes, below 50% of area median income, and for families.

Looking ahead, specifically at the actions that we have coming before Council, this is our reports calendar for 2026. OH will submit several reports that respond to statements of legislative intent.

In quarter one, we will report on the operating and capital stabilization investments that have been finalized over the last two months.

Urgent operating stabilization totaled $28 million and capital stabilization totaled $57 million.

So we'll be bringing more information about how those dollars landed in the next month or so.

In quarter two, OH will provide annual reports on all investments.

This is something we do every year.

So every dollar that we've spent will be reported on, the multifamily tax exemption portfolio, the mandatory housing affordability portfolio, and the religious lands work.

We'll also be updating the Seattle Housing Investment Plan, which was created last year, and submitting additional information about future stabilization needs and use of payroll expense tax funds.

Finally, we're developing a map of existing OH investments to share publicly, along with a new dashboard that will educate the public about OH capital investments in process.

Moving to quarter three, OH will provide a report about Housing connector vacancies in affordable housing and barriers for people with very low incomes, zero to 30% of AMI, to move into vacant affordable housing.

That will be an interesting report.

We are already talking with folks about this one, and it will be great to have this report submitted to you all.

And by quarter four, but likely earlier, OH will release $6 million of rental assistance that was required by a budget proviso.

This slide represents our legislation plan for the year.

We aim to transmit legislation starting with quarter two when we hope to accept a property that is currently owned by the Washington State Department of Transportation, which is used for staging the 520 project at Montlake.

This depends on a state capital appropriation that will be considered in the coming months.

We hope that this will be moving forward.

In quarter three, we have several pieces that we aim to bring forward.

The 2026 Fort Lawton redevelopment plan update.

A ground lease for the Mount Baker redevelopment sites.

Technical updates to the Office of Housing housing funding policies that drive our work and provide the boundaries for our investments.

And last, the coordinates to convey $5 million to the Seattle Housing Authority Northgate Commons project.

In quarter four, it's all about home ownership.

The South Della Street site, we were aiming to be transferring that from SPU to OH and we may have up to five additional homeownership sites coming forward that will be either site acceptances from other entities or transfers with between other city departments.

It's important to understand that Seattle is not alone in facing operating and cost challenges in the affordable housing sector.

Most of the country faces systemic shortage of affordable housing.

There is no metro area with an adequate supply of affordable and available homes for people with extremely low incomes.

Decades of optimistic underwriting to stretch public dollars as far as possible, forced affordable housing developers to do more with less.

There was good reason for this, to focus on new production of units, but we are now seeing numerous challenges surfacing for older projects and change market dynamics that are changing how affordable housing competes in the market.

This has all been compounded by increasing income inequality, the pandemic, a labor shortage, increasing operating and construction costs, and federal funding cuts.

These numerous and compounding factors have contributed to major affordable housing portfolios entering receivership, including Skid Road Trust in LA and Heartland in Chicago.

In Seattle specifically, production has focused on studios and one bedrooms for several years.

the slowed rent growth and increased vacancy for the smallest apartments.

At the same time, the area median income increased significantly, largely driven by higher income homeowners.

When the area median income increases, the affordable housing rents also increase.

In Seattle studio, one bedroom and two bedroom private market units overall rent at levels between 60 and 70% of area This chart shows how housing supply and vacancy trends in Seattle over the last decade.

The largest gray bar represents the total new units opening citywide.

Within those bars, OH-funded apartments are shown in dark blue at the bottom, MFTE restricted rental units in green and non-OH funded affordable apartments in yellow.

These are primarily tax credit and Seattle Housing Authority properties.

Smaller numbers of OH funded home ownership are represented in orange and you can see blips of it in 2022 and 2025 which were bigger opening years for home ownership program.

The lines on the chart represent vacancy rates.

The OH funded apartment vacancy rate is represented by the blue line and the citywide average vacancy rate is displayed with the red line.

The higher greener line represents MFTE restricted unit vacancy and the vacancy rate of OH funded buildings is similar to the citywide vacancy rate hovering around six to seven percent over the last few years.

As you can see here, the citywide vacancy rate has mostly been above 5% over the last decade, while the vacancy rate for OH-funded apartments has increased from a low around 3% to a high just above 7% in the last decade.

There are several contributing factors here, but we believe vacancy is largely driven by the supply changes in the Seattle metro region and will likely decrease in future years.

This chart shows the supply of different unit types has changed over the last 15 years.

You can see that studio, about 40K or 40,000 and one bedrooms, about 20,000 apartments have increased at the fastest pace since 2010. Seattle has increased the number of two-bedroom units by about 15,000, but the stock of larger apartments, like three bedrooms or more, has relatively remained stagnant since 2010.

Now we'll talk a little bit more about permanent supportive housing.

Housing is the solution to homelessness and supportive housing or PSH combines affordable housing with enhanced services to serve people with the most complex challenges such as behavioral health challenges, serious physical health conditions, and folks who are exiting chronic or long-term homelessness.

OH has developed over 4,300 supportive housing apartments and provides operating maintenance services support to over 1100 supportive housing apartments each year.

Supportive housing and affordable housing have similar construction costs, but supportive housing requires deeper and longer term subsidies to pay for operating and services costs.

And we believe that this operating maintenance and services package is what really makes these buildings homes.

OMS ensures that supportive housing can effectively serve the people living there and allow for residents to live successfully for years in supportive housing.

Operating and services costs have increased for all affordable housing over the last decade, but you can see here that they've also increased for supportive housing.

In 2013, the OMS operating maintenance and services costs for supportive housing were primarily covered by vouchers from the Seattle Housing Authority, which are in that sort of darker green and the federal continuum of care funds or the COD funds that you've heard a lot about in recent months.

Also, King County was a major funder of supportive housing back in 2013, represented by the lighter grief.

Seattle provided a very small portion of OMS a decade ago, just with a really small per unit contribution from the Seattle Housing Levy O&M program or the operating and maintenance program.

That really started to change in 2022. particularly in the last five years, OMS funding streams have changed such that local funders are contributing a higher percentage of these budgets.

In 2022, we opened supportive housing with a combination of Seattle Jumpstart payroll expense tax funds represented in blue.

The green project in the middle is a King County health through housing sales tax project.

And on the right there, PSH number three is a mix of state commerce funds, that come from the docket recording fees, the federal COC funds came into this project, and Seattle payroll expense tax.

Moving to the far right in 2026, for the three most recent supportive housing projects in our region, Seattle is providing the majority of OMS funds entirely funded by Jumpstart payroll expense tax, with lower amounts from King County and state commerce.

There was a state budget cut that occurred last year that exacerbated this funding challenge.

These obligations for OMS will continue on every year as long as these buildings are operating.

You can see these three buildings in 2026 have no federal funds supporting the operating budgets.

This was the reality before 2025 as federal fund retraction started several years ago.

But because state, county, and city governments are struggling with their budgets overall and with major federal funding threats, there are concerns about future funding availability for new projects.

OH is fortunate to have a stable funding source with the Seattle housing levy and the Jumpstart payroll expense tax.

Mandatory housing affordability payments also provide enormous support to our office to continue building new homes, preserving the homes that we have, and operating these existing supportive housing projects.

This is another view of what OMS funding looks like right now.

So due to multiple government budgets facing deficits and federal funding uncertainty, there are risks ahead for existing OMS funds in Seattle's supportive housing portfolio.

The loss of COC funds, the continuum of care funds, is a serious concern.

This graphic shows the current COC supportive housing portfolio and the OMS funding mix with Seattle in blue, the Housing Authority in pink, King County in green, state commerce in yellow, and the federal COC funds in black.

All of these funds have been braided together over many years to put together these OMS packages.

The chart contemplates a 40% reduction of COC funds in 2027, and there may be a larger cut in 2028 and beyond.

If there is a 40% cut to COC funds in 2027, we estimate an impact to Seattle projects of approximately $19 million.

and that gap could grow in 2028 and further beyond depending on HUD actions.

And we'll wrap up here with this section on income, rents and cost burden.

Area median income, which HUD calculates and which Seattle uses to set rents has increased by 64% in the last eight years, largely driven by the top quintile or the top 20% of higher income earners and homeowners.

OH and other housing agencies set rent charts based on this HUD AMI chart.

This AMI chart includes the entire population from people with extremely low incomes to people with extremely high incomes.

When we view homeowners and renters separately, the income reality for these two groups is very different.

Renters' incomes are much lower than owners' incomes.

You can see here that owner household incomes are more than double the household incomes of renters.

Separating these two groups, you can see the stark difference with homeowners earning about $200,000 per year and renters earning about $87,000 per year.

This is very important data for us to consider as we're setting future policy and investments and establishing rent and income limits for new homes.

Here you can see some specific income stories of Seattle and King County residents and what income limits they would qualify for.

Oftentimes people make assumptions about who low-income people are and also what a percentage AMI meets.

And this helps to show some of the real stories behind these labels.

Starting on the left, child care workers are people who are unemployed.

and a household with a part-time physical therapy aid and a part-time retail worker would all fall under 30% of area median income.

People on fixed incomes like social security disability and people experiencing homelessness often equal qualify below 30% of AMI as well.

Moving to the middle part of the chart, a substitute teacher or a household with a cashier and a veterinary assistant are examples of job types that fall in the range of 31% to 50% of area median income.

There are many types of jobs that fall in this range between 40 and 60 percent of area median income, and that has really changed in the last five to ten years.

Finally, transit drivers or a retired couple or a household with a nursing assistant and a construction worker would have income in the range of 51 to 80 percent of EMI.

This is another important view of median income, which we are thankful to Chair Foster for elevating.

This chart shows 2024 median income in Seattle by race.

The dotted line across the middle shows the 50% AMI figure just above $60,000 per year.

You can see there are significant racial disparities in income occurring for people in Seattle.

Black and Indigenous households have income below 50% of area median income.

This is important data for housing funders to consider in making new housing investments and establishing rent limits for new affordable homes.

We must ask who we are building housing for.

This graphic presents a broader view of Seattle housing needs and existing efforts.

Seattle needs 112,000 homes by 2044 as the city grows.

The green represents affordable income restricted housing and the gray represents the private market.

unrestricted housing.

You can see there's a blending of colors and a gradient from green to gray as there is overlap and mixing that occurs in that 40 to 60 percent AMI range of housing.

It's important to note that the greatest need for affordable housing is at the lowest income levels, zero to 30 percent of area median income, both for supportive housing and affordable housing.

At the bottom, the multifamily tax exemption portfolio is represented in yellow to gray.

MFTE applies to an entire building with 20 to 25 percent income restricted rents.

And you can see those in yellow.

But there is a blend here as well up to the remainder of an MFTE building that is unrestricted in gray.

And these rents also overlap and mix between restricted and unrestricted depending on unit type, age of building and the neighborhood.

The red dotted box is meant to show the overlap between OH funded rental units at 40 to 60% of AMI and the MFTE units at 40 to 60% of AMI.

Importantly, there are also private market unrestricted rents in this income While Seattle does have significant housing needs, it's important to note that our city has made great progress in building new housing in the last decade and leads the way for the rest of the region.

But we have more to do.

This is another view of the shortage of affordable and available housing units for people with the lowest incomes.

Here the mismatch between rents and incomes in Seattle can be seen with actual household incomes represented by the dark blue bars on the left and available housing stock shown by the light blue bars on the right.

We have less than half of what is needed for housing affordable to people at zero to 30% of AMI for extremely low income households.

And you can also see there's a surplus of housing affordable for households at between 50 and 100 of area median income.

Severe housing cost burden means that someone is spending more than 50% of their income toward housing costs, which leaves them with less money available for other necessities like food, health care, and payments on debt.

This means that housing costs are burdening their household budgets.

You can see the lowest income renters have the highest rates of severe housing cost burden.

60% of people with the lowest incomes in Seattle are severely cost burdened, paying more than 50% of their income toward their housing costs.

It's generally believed that renters experiencing severe housing cost burden are those most at risk of eviction, displacement, and homelessness.

This demonstrates why OH prioritizes investments for households below 30% of their immediate income.

Recalling the earlier chart, important to remember that these folks at zero to 30% of AMI are childcare workers, folks who are unemployed, and part-time workers.

They are also seniors and people with disabilities.

This presents another view of the racial disparities occurring in Seattle's housing market.

BIPOC households are more cost burden than white households.

And BIPOC households are also two times more likely than white households to be renters.

Disparities are most significant for Black and Hispanic or Latino households.

with 56% of Black households experiencing housing cost burden and 48% of Hispanic or Latino households experiencing housing cost burden.

And that concludes our presentation.

Happy to take questions.

Thank you, excuse me.

Thank you so much Kelly and thank you Rosie and the OH team for all the work that you put into that presentation.

I think we're working on getting our screen back up.

Okay, there we go.

I really appreciate it.

Colleagues, I know we're blended on Zoom and in person here in chambers today so just ask that you use the raise hand function to ask any questions that you may have.

There are a couple of comments that I will make, but colleagues, I will give you the opportunity to ask those questions first, given that we have another presentation to follow this one.

Council Member Rink.

Thank you chair and thank you to our colleagues at Office of Housing for providing today's presentation.

You covered a lot of ground.

There is a lot happening in the realm of housing and I think you tackled the various complexities facing our affordable housing landscape really well.

So thank you for being in committee today and for walking us through a lot of this.

I have a couple of questions and I'll start with the specific and then kind of to zoom out to talk a little bit holistically about how we're approaching addressing our affordable housing needs in our city.

To get a little bit specific first, taking us to slide 15, I just wanted to take a quick beat to clarify one piece because I see here it has you reporting back on the $6 million proviso for rental assistance in quarter four.

Could you clarify the timeline right now OH is working under to get those dollars out the door?

We typically don't report back on a proviso, but yeah, I just put this in quarter four assuming we will actually be spending this money much earlier.

It is our plan to move this as quickly as we can.

We're working on it.

We just got wrapped up with the urgent operating stabilization funding release and the NOFA and are looking forward to working with our partners to decide how to allocate the six million.

We'll do it as quickly as we can.

Appreciate that.

Thank you.

I know that was certainly Council's intent, hearing the urgency across our affordable housing partners.

So look forward to getting updates on that.

And then on slide 18, I see where you're expecting an $18 million gap by 2028 in permanent supportive housing funding.

Can you dig into what we can expect to see here in Seattle, options on the table for action and what's being done right now on the part of Office of Housing to prepare?

There are there have been several meetings that thank you to council member for your leadership and as well that we've been talking with a lot of our funding partners about how we all work together to address this challenge if it comes to pass with these federal COC funds being reduced or cut and I think everyone is playing a part and planning ahead set aside funds and be ready The Office of Housing is playing a role in this as well because we are fortunate to have the payroll expense tax.

But we do have a limited pot of funds in our budget, which aims to do and folks seek for it to do a lot of things every year.

So build new homes, preserve homes.

It's needed in order for us to meet our housing levy goals now because costs have increased so significantly.

And we also are spending it more more and more higher percentage on operating maintenance and services expenses and current supportive housing.

But there is a set aside in our current PET budget to protect against COC cuts.

And thank you for your partnership at that table to try and sort out how we're planning to address the loss and continuum of care funding.

I know we need to be working towards a structural solution to be able to maintain the permanent supportive housing that we have and also be very clear that we need more permanent supportive housing to really meet the needs in our region.

And just wanted to make a holistic comment share related to all of this.

Just these are concerning graphs.

to look at when we look at the challenges facing us when it comes to meeting the needs of our residents.

I'm particularly stuck on slide 24. Again, looking at this chart and seeing City of Seattle's contribution to these projects.

So just wanna acknowledge that for the record and I might chime in later in the discussion if that's okay as we continue on, but I'll cede my time for now.

Thank you, Chair.

Thank you so much, Council Member Rink.

I see that Council Member Lynn has a hand, but I'm gonna take a quick point of privilege just to follow up on what Kelly said, because this is one of the most important takeaways that I wanted to elevate from the presentation today is the increasing importance of the payroll expense tax in meeting our housing levy goals.

So is my understanding colleagues that we need to be utilizing about $40 million annually in payroll expense tax in order to cover the goals that are in our housing levy right now.

And so when we think and we look at some of these charts and we can see in chart 24, the funding mix for these housing projects that were brought online this year, we see Seattle, but that is increasingly both our housing levy as well as the payroll expense tax.

I know that that has been a fund that has been tapped into in previous years for other projects and for helping to cover gaps in the general fund.

But I want to make sure that it is on Council's radar and on the public's radar how the increasing importance of that fund to make sure that we are staying on track with the goals that we have right now.

So thank you for that.

Kelly, do you want to add anything to that statement that I had before I pass it over to Council Member Lynn for his questions?

No, that was great.

We saw growth in PET from when it first started coming through in 2022. And then it's been pretty stable and steady for the last two years.

And as costs continue to grow, we can just do less with the same amount of money as it costs more per unit to build and more per unit to operate.

Yeah, thank you.

I think that's an important point to make that we are, that is, we are being driven by the increasing cost of bringing housing online, which is what is causing us to need to utilize those dollars.

So thank you, Kelly.

Council member Lynn.

Thank you.

So excited to see Office of Housing partners here today and then to follow this up with the social housing developer.

Just a very exciting today to talk about what I think is just perhaps the most important issue for our city right now, housing affordability.

And I heard you say, Kelly, early on, that homelessness is a housing problem.

Just wanted to hear a little bit more if you have any thoughts about that.

And just the relationship of the work of the Office of Housing with our comprehensive plan, if you have any kind of ideas around that.

And for me, as I looked at slide, I think 30, You know, we need 112,000 homes across the income spectrum.

Obviously, I don't think the market is ever gonna produce zero to 30% AMI.

but we have to produce a whole range and if we're not producing the higher end that also I think affects our whole housing spectrum if we're making it too expensive to build so if you have any thoughts in general about how we can address housing barriers to how expensive it is to build Just, yeah, I'll leave it there.

Broad topics, I will do my best.

We certainly, you know, at the Office of Housing, we've looked at a lot of the data and maps and zoning possible for the types of projects that we build, which are typically mid-rise.

And we estimate that we can build mid-rise affordable housing in about 3% of the city.

Zoning really matters.

and zoning matters for density and for housing of all types.

And so this is a huge part of the housing plan that the Office of Housing does not control, but our partners at OPCD and others in the city are contributing significantly to comp plan changes and reforms that are really necessary and significant for the housing market overall.

In addition, permitting reforms and speeding up the development process, infrastructure, All of that contributes to delays that end up costing more and then cost, actual hard costs that add to projects' budgets and make them less feasible.

Interest rates are huge right now and driving a lot of the barriers that are keeping new housing from coming online and it affects our projects too.

But there's a lot within the city's control that we can do to support new homes coming online across the board of zero to 120 and above AMI.

Thank you.

Any further questions, Council Member Lynn?

No, okay, I see your hand down.

Council President Hollingsworth, I saw your hand up there for a second.

Did you still have a question, CP?

Thank you, Chair.

That was an inadvertent hand.

Thank you so much.

Okay, wonderful.

Well, colleagues, I will draw your attention to a couple of things briefly prior to us moving on to the presentation from the social housing developer.

So one is I'll sort of start a bit from the end and just places that I want to drive home.

Kelly, I think you did a fantastic job, but I just can't help myself.

On slide 29, I really want us to understand when we're talking about homes that are built at 50% AMI, where those line up with just the median income for black households and for native households.

So what we see in this slide is 50% AMI, that the median income for black households and native households is under 50% AMI.

And so I just want to draw and connect these dots from this slide over into when we think about areas where we have mismatched rents or areas where we are lacking in the production of affordable housing below 50% area median income, what that means for our goals when we are trying to integrate around racial equity and building a city that continues to be diverse and a city where black families, native families, and families of color can continue to afford to live.

It's just, I cannot underscore this enough as we are thinking about holistically our goals and not just how much housing we're building, but who we are able to build housing for.

So thank you so much OH for your work on being responsive and creating that that brings that to the forefront.

The other thing I wanna bring to the forefront, and Kelly, I'll kick it over to you a little bit here, is returning to the vacancy slide.

I know it was reported in some places that the vacancy rate was closer to 11%.

I don't see that reflected in this slide here.

Can you just clarify that for us?

Yes, you bet.

The Office, we're working on some materials.

I'll just share this up so that everyone can see.

Materials and a narrative to really address the vacancy issue.

But the number that was reported in the Seattle Times was not a vacancy rate for the Office of Housing portfolio.

And it was actually a measure of a point in time rather than a period of time.

So these vacancy rates that we're reporting here are annual vacancy rates, which represent the number of days over the course of year that a bed is empty in an apartment.

And there are a number of reasons that vacancies occur.

Vacancy does not necessarily mean that a quilt is on a bed and someone is ready to move in.

Oftentimes it is about the unit being in process of being turned.

So there's painting and replacement of fixtures and bringing in of new furniture happening.

There's repairs, there can be weights for maintenance and subcontractors in this environment that we're in right now.

There's more significant damage that people are still dealing with from the pandemic when folks were really inside a lot.

And so there's actually a lot going on there in the vacancy rates and every single vacancy story is unique and it's quite something.

But across our entire portfolio, this is the truth of the vacancy.

It is right around 6% right now in the OH portfolio.

7% mean and our median is actually below 5% at 4.7 last we looked.

So this is much more in line with the citywide vacancy.

You know, we'd like to see it closer down to three if we could get there, but it's not really out of range or out of whack from the way that other units are operating in the city right now.

Thank you.

And then my final piece that I'll draw attention to so we have enough time for our second presenter is you talked a little bit at the beginning of the presentation today about the crisis for affordable housing providers being part of a nationwide crisis.

And you mentioned some things that were happening in other municipalities there.

Can you just speak to that a little bit more and help us understand how that connects to what we've incentivized and invested in in the affordable housing space I think you spoke in particular around resources that have been made available from the federal government and resources that we've invested locally, really being heavily focused in the capital and upfront investments, but a gap in operating and maintenance that sort of seems like it's coming due nationally.

Yes, we are very fortunate to be part of a group of high cost cities that meet regularly to talk about housing issues.

and these issues are impacting all jurisdictions but especially high cost jurisdictions like New York, San Francisco, Los Angeles, Chicago, Denver.

These are the colleagues that we speak with on a regular basis and everyone's wrestling with this in different ways but the collapse of a major housing provider in Los Angeles when Skid Row Housing Trust collapsed and all of their portfolio had to enter into receivership and the government had to play a role in helping to, it is still working on disposing of those assets.

It really was a wake-up call to the entire industry to look inward more and understand what is happening with our assets across the board and what we need to do to prevent something like that happening in our cities.

So we have really been listening and looking at as much data as we possibly can to understand how we can invest differently in Seattle to support what exists now.

And we really saw that with this 2025 notice of funding release that we did, where you see three primary investment categories that really all receive significant resources, new production, stabilization of existing projects that are underway, and preservation of older projects.

And we expect to see a similar investment pattern in 2026. as well as more funds going into the operating maintenance and services bucket.

We are not coming close to addressing the full need for operating subsidies if we were to want to solve the severe housing cost burden for every renter in the affordable housing portfolio.

That would be a very significant investment.

But we can start to look at other ways that we invest operating dollars.

But as you have seen in some of these charts, Those are required every year for as long as the building is operating at that income regulation and with this income mix of tenants and it becomes very expensive very fast.

So it's really important that we're making intentional decisions around those investments.

Thank you so much, Kelly.

I really appreciate that.

And we look forward to having you back in council to share more about what you learned from those operation and stabilization dollars later on in the year.

With that, colleagues, I see no further questions.

And we wanna thank the presenters from the Office of Housing for joining us today.

And we look forward to continuing to engage with you all.

We will now move on to the next item.

Will the clerk please read item two into the record?

Agenda item two, Seattle social housing developer update for briefing and discussion.

Thank you.

Will our presenters please unmute yourselves and introduce yourselves when ready, starting with the social housing developer team.

Thanks council member.

And good afternoon, everyone.

I'm Tiffany McCoy.

I use she, her pronouns.

I am the interim CEO for Seattle social housing developer.

And formerly I was the co-executive director of how's our neighbors.

I'll turn it to ginger.

I'm Ginger Siegel, I'm the Chief Real Estate Development Officer for the Social Housing Developer, and I have 38 years of experience in affordable housing development and policy.

And with that, I will turn it over to James.

Hi, City Council.

I'm James Maiden.

I use he, him pronouns.

And prior to starting work with Seattle Social Housing, I led asset management and development programs at the Seattle Housing Authority for about the last decade.

Good afternoon.

My name is Mike Eliasson, he, him pronouns.

I'm the Director of Design and Policy at SSH.

Prior to this, I founded Larch Lab where I focused on climate adaptive housing and research policy for better buildings and neighborhoods.

Wonderful.

Good afternoon.

I think that was everyone from Social Housing Developer.

I'm Jen LeBrecq.

I'm on City Council Central Staff.

Fantastic.

Thank you so much.

I am really grateful to our presenters for being here.

As folks know, we just passed as council the interlocal agreement that funds the Seattle Social Housing developer just yesterday.

So we are excited to hear how the developer is going to be hitting the ground running as you are set to receive the first transfer of funds from Prop 1A in early March.

We know there's been lots of change afoot over at the developer.

so we're excited to digging in and hearing more.

I believe I am handing it over to Jen to start us off, is that correct, with some context setting about the developer and then we will be hearing directly from social housing developer.

Colleagues, I still will ask that we hold questions until the end and I think I was more or less on time with our first presentation but SSHD team, just be aware of time so we have plenty of time to engage in conversation at the end.

I'm gonna go ahead and share my screen.

All right, does that look okay to everyone?

That's great.

All right, I'm providing a brief, probably five minute overview just to ensure that all the committee members have the same understanding of the background or the history of the Seattle social housing developer.

All right, give me a moment here.

So as I'm sure you are all aware, Initiative 135 or I-135 was approved by voters in February of 2023, and it established the Seattle Social Housing Developer, which is a public development authority whose mission is to develop, own, and maintain publicly financed mixed income social housing developments.

I-35 does have several or a number of requirements that social housing must meet, including that any building must be owned by the social housing developer into perpetuity, that to the extent possible it must be in mixed income with the range of units affordable to a range of incomes, that rental rates should be based on operations, maintenance, and loan payments, and that a resident should be provided opportunities for restorative justice conflict resolution prior to eviction proceedings.

And as you can see here, there are some other requirements as well, including that the property cannot be sold or transferred to a private entity or a public-private partnership.

Initiative 137 or I-137 was approved by voters a year later in February of 2024 and it imposes a 5% tax on compensation paid in Seattle to any employee who makes above $1 million a year.

Or sorry, it's a 5% tax on compensation paid in Seattle to any employee above $1 million a year.

At least 95% of such tax revenue must be allocated and then promptly transferred to the social housing developer Up to 5% can be retained by the city to administer the tax not to exceed $2 million per year.

The tax went into effect on January 1, 2025, and the first tax payments were made on January 31, 2026. So the first payments to be transferred to the Seattle Social Housing Developer will reflect an entire year's worth of payments.

The city has provided prior support to the social housing developer before I-137 proceeds will be transferred.

Under I-135, the city was obligated to fund startup costs for 18 months along with providing limited in-kind support.

The city provided during that time $20,000 in initial funding in 2023, which essentially did not count towards that 18-month clock.

and then $850,000 in startup support as part of the 2024 adopted budget.

The Washington State Department of Commerce also provided a $200,000 grant to the Seattle social housing developer, which the city administered on their behalf.

And in 2025, council approved a $2 million bridge loan to the social housing developer to sustain operations until I-137 proceeds were transferred to the social housing developer in Q1, 2026. As Chair Foster mentioned, just yesterday, the City Council approved Council Bill 121-153, which authorizes the executive to execute an interlocal agreement with the Seattle social housing developer.

As we just said, under I-137, the City is responsible for administering and collecting the tax imposed by I-137 and then transferring it promptly to the social housing developer.

So this ILA essentially has the terms and conditions for the transfer of the tax after it's been collected by the city.

Under the ILA, 2025 tax proceeds must be transferred to the Seattle Social Housing Developer by March 2, 2026. And that is my presentation.

I will stop sharing.

Thank you so much for that, Jen.

We're going to go right into the presentation deck from the Social Housing Developer.

It looks like you are muted.

Thanks council member.

Good afternoon again.

We are going to jump right into our slideshow and discuss what it is that we've been up to and what we're planning in the years to come.

What we'll cover in today's presentation is going into what is social housing.

Jen laid out a lot of the technical aspects of I-135, but just really grounding in what the voters passed.

We'll go into who we are, who is our governing board, who are the staff, give an update on progress to date, look at our budget and property purchases and plans, and then what we will be doing moving forward.

So first, what is social housing?

What is this concept and how does social housing add to Seattle's affordable housing ecosystem?

The mission of the Seattle social housing developer first and foremost is to develop, own, lease and maintain mixed income housing to people priced out of market rate housing.

We will be providing high quality mixed income housing with resident governance, but we are not a social service provider.

We are not serving people who need supportive services in order to maintain stability.

That's what our peers do, and we need to support them fully in that space.

Instead, the Seattle social housing developer provides publicly owned, permanently affordable housing that's available to all and removed from market speculation.

We are part of the broader affordable housing ecosystem.

And if you look across the world and even in places like Montgomery County, Maryland, we know that the successful implementation and construction of social housing has the potential to fundamentally shape Seattle's housing landscape.

We are part of a national movement of social housing in the United States, but thus far we are the only jurisdiction with a social housing developer with a dedicated revenue stream.

This allows for us to plan our development pipeline more concretely and flexibly, but we still acknowledge that payroll taxes have historically been a volatile funding source.

Another key difference for the social housing developer is that we have the ability to bond, which we will discuss more later.

One of the main differences financially between the Seattle social housing developer and the rest of the affordable housing ecosystem is that we are not reliant on the federal government.

We're not reliant on project-based vouchers, the low-income housing tax credit, and uniquely, we do not have to go out and find multiple funding sources for our capital stack.

This housing is then preserved as public infrastructure and because it is not reliant on the low income housing tax credit or other subsidies that have affordability expirations, we are better positioned to maintain this housing as a public asset and permanently affordable for the long term.

We also have the ability to cross subsidize between our housing projects.

We provide mixed income housing, which is housing for a wider mix of incomes than what our affordable housing partners and allies provide.

We have a range of low and moderate income households that we will serve.

Renters across the income spectrum are struggling as the Office of Housing just showed us in the presentation before.

There is not enough housing available to serve households in the zero to 30, 30 to 50, and the 100 to 120% AMI brackets.

SSHD serves all of those income brackets and is perhaps the only public program intended to serve folks in the 100-120% AMI income range with stable housing solutions.

We get to build family size units where neighbors can age in place.

These units are not being built by our affordable housing partners because they just don't have the financing and the private sector doesn't build these because it isn't profitable to do so.

This is a crucial role that we look forward to filling in Seattle.

Throughout last year's comprehensive plan, I know that creating housing where neighbors can age in place was a huge priority for a lot of council members.

I think I heard most of you bring it up multiple times throughout that process.

We can create that opportunity in social housing.

We hope to utilize some of the family-sized housing comp plan incentives that both Council President Hollingsworth and Council Member Rink championed.

Studies have continued to show the positive effects of mixed income communities on our children.

Studies have found that children from mixed income communities earn more, they're more likely to attend college, and they're less likely to be incarcerated.

We see social housing as an anti-displacement tool.

Market rate housing alone can increase overall costs in neighborhoods, pushing out residents who struggle to keep up with the rising cost of living.

By acquiring and developing social housing in these areas, the opportunity for permanently affordable housing can provide stability to those at risk of displacement, which ensures that they can remain in the communities in Seattle that they want to be part of.

This is a representation of the Seattle Social Housing Governing Board, just shifting gears here a bit.

Our board, as dictated in Initiative 135, is a 13-member board with a mix of renters, labor, we have a public finance housing expert, an urban planner, and we do have three open board seats.

Our executive committee is comprised of a chair, a vice chair, treasurer, secretary, and a board committee liaison.

We just had a special meeting last Monday, a couple days ago, and all of those executive committee positions have been filled.

Staff, we have multiple on the call today, but just cumulatively, the staff of the Seattle Social Housing Developer have over 83 years of development, real estate, and affordable housing experience.

We have 20 years of architecture experience.

For hiring in progress, we are currently looking for a permanent CFO and a permanent, sorry, permanent chief financial officer and a permanent chief operating officer.

I was appointed as the interim CEO just a little more than three weeks ago and the board intends to hold a permanent CEO process in the next six months.

We as a staff intend to lead this agency with humility, clarity and purpose and we will bring transparency, joy, hard work and hopefully a renewed admiration for the public sector.

Switching to our progress to date, what have we been up to?

So Jen went over some of the infusions of funds that we are greatly needed and very grateful for, but we as an agency overall have been operating with very limited funding since the first board meeting in May of 2023. But in that time, we have established a weekly real estate committee, which is a mix of board and staff members with real estate and finance experience.

We've created a design standards protocol.

We continue negotiations with the Seattle Building Trades because we do intend to sign a project labor agreement.

We have negotiated that interlocal agreement, which passed unanimously yesterday.

Thank you to Councilmember Foster and Councilmember Strauss for championing that interlocal agreement.

Just recently we secured permanent office space.

We are in the process of securing a third-party independent auditor.

We want to be really great stewards of public funds.

We are exploring financing with the AFL-CIO Housing Investment Trust Fund, exploring our property management apparatus for our initial acquisition, and we've hired just in the last three weeks an interim chief financial officer.

Before I turn it over to Ginger, just one last thing from me is we have also passed our 2025-2028 strategic plan and we are actively implementing that.

And that goes into these four key areas, which are one, securing properties, preparing for growth, two, forging connections and building community, three, building an experienced staff and board, and four, building a diverse and sustainable financial foundation.

You can find our strategic plan on our website at seattlesocialhousing.org.

And with that, I will turn it over to Ginger.

Ginger, just tell me next slide and I will pivot to that.

Great, thanks.

So my job is to develop affordable housing across the city, and that's not only my job, it's also the job of my colleagues who are here today, James and Mike.

So the three of us are planning and starting to put projects in place.

We are pursuing two different tracks for new development.

The first is acquisitions.

The market conditions are favorable for acquisitions of high quality rental housing right now and we expect those conditions to continue for the next few years.

But we also are pursuing a track of new construction development projects.

New construction is very important.

It takes three to four years between when we identify and commit to a new construction project and when the project is open for occupancy.

So there's a long lead time and we want to get projects started now.

The acquisitions are expected to be mostly for studio and one bedroom units, as we saw with the Office of Housing, one of the Office of Housing slides.

The majority of new construction has been studios and one bedrooms, especially with private market housing.

So there just isn't a lot of family housing that has been built in Seattle in the last several years.

Another reason for new construction is most of the buildings that are available for sale or that we potentially could buy are concentrated in some neighborhoods across Seattle, where when we build new housing, we can build it throughout the city, even in areas that the private market has been passing up for investment.

Next slide.

We are coming out of this kind of incubation period where we've been putting the foundation in place for our organization.

So the city was generous in providing us with a $2 million bridge loan, which we'll be happy to repay shortly.

With that money, we have hired not five as when this slide was first drafted, but we've hired seven new staff members.

We are acting very quickly to build our organization and get our infrastructure in place.

We hired a contract lobbyist who is working in Olympia on a couple of policy initiatives now.

We have developed key internal infrastructure, we have office space, we have our technology set up, and we now have the foundation to roll up our sleeves and get to work.

We have been doing community outreach with over 100 community, civic, business and government leaders so that we have the relationships to support our ongoing development activities.

We have had many people come to us with project ideas, project possibilities, but we also put a call out to the broader community through a request for information for possible new projects.

And that was a very broad call for land that is available for multifamily housing, to projects that are in development but unable to proceed, and also for completed projects.

We received 14 responses to the RFI, but some of those responses had many sites, developers that were working on many sites.

So there were actually about 50 different sites that we received through the RFI process, and we were starting to review those and see which ones to pursue.

Next slide.

This slide shows the resources that we have available to develop the projects to achieve our production goals.

So we only learned in the past day or so the amount that the 2025 tax or the amount that the tax generated from 2025 that we'll be receiving soon.

So we developed this presentation with the assumption that that tax would generate $50 million a year.

And we just learned that it'll be a higher amount.

So we will be updating our projections and our planning.

but our planning right now assumed the lower amount.

We do plan to bond against the tax revenue, and I'll talk more about that in a moment.

We do believe that there are other entities in the community that will want to invest in our projects.

Tiffany mentioned the pension fund, so that's one possibility, but we also know of other entities out there that may join us in providing resources for our housing.

Because we plan to bond against the tax revenues, we will have net operating income, significant net operating income coming off of our projects.

We're not going to be using rent to repay the initial bond loan.

We're going to be using tax revenue.

So you can see that that number starts small as we only have a few projects that are planned to come online this year.

But as more and more housing comes online, that becomes a more significant number.

Next slide.

Long-term debt.

So we are going to leverage the tax revenue to increase the pie to be able to produce more housing.

We are planning to issue a special tax revenue bond this year.

We expect to get at least a 3.5% interest rate.

We've been in discussions with a couple of entities, and we think it's likely we'll be able to have a lower interest rate than that, than 3.5%.

We would start with a 10-year bond, which would generate the $165 million to deploy this year.

And we would be obligating $20 million a year in future tax revenue for 10 years to repay that bond.

With our production goals, with our first five-year production goals, we will need additional debt.

That bond issuance this year will not be sufficient to cover our production goals.

And in 2028, we expect to seek more debt.

or secure more debt, and we would either look to a more sort of traditional model where you secure debt with property, either bank loans or CDFI loans or impact investments such as the pension fund, or we may again bond against future tax revenues.

The original bond, the bond from this year, will only be using about one-third of our agency debt capacity in 2028, so we'll have plenty of capacity to borrow more to keep a high level of production.

Next slide.

These are our production goals.

In the first five years, you can see that there is sort of the shift from acquisition to new construction.

And you can also see on this slide the ramp up for new construction.

This slide shows when the units are completed, not when they're started.

So those new construction units that are completed in later years are actually started this year and next year.

We plan to acquire 300 units of housing this year.

and while market conditions continue to be favorable, we'll keep trying to take advantage of opportunities of buying good quality buildings on the market, but we do think that it's cyclical and that's not going to continue to be, there won't continue to be such good opportunities, but we will also be shifting to new construction.

So we believe that we will, in the first five years, we will have over 1,000 units of acquired housing and 630 units of housing built through new construction.

And actually, if you go out a couple more years, there's about 400 more units that will be started within the first five years but not completed until year eight.

Next slide.

So the first financial slide that I shared showed the cash that would be available for our agency's activities.

This slide shows both the cash and the expenses, the uses of those funds.

So the second row is the development expenses.

It's quite expensive to purchase buildings and to build buildings, and that's where the majority of our funding goes.

But we also are planning for, of course, repaying our bond loan, the principal and interest on our bond loan, and then our agency operating expenses.

This year, our agency budget is about $3.8 million.

We expect it to go up at about 20% a year as we stand up the other parts of our organization, including property management, the community organizing to support self-governance.

The last line shows the sort of cumulative cash balance.

So we'll receive the tax revenues from 2025 shortly, and then we'll quarterly receive the new tax revenues going forward.

and then we'll use the money as well.

And you can see with our production, we run out of money in 2028, and that's when we would take out new debt.

Now again, we did not know about the higher amount of the tax proceeds, so we will either increase production or we will delay when we take out additional debt.

Next slide.

So our next steps, first-year next steps are on the next slide.

This year we plan to acquire 300 units of high quality rental housing.

Market rate residents will be encouraged to stay.

We will initially fill vacancies with low income residents until the income mix is achieved.

Some of the buildings we're looking at have turnover rates as high as 50% a year.

So we do believe we will be able to meet our income mix goals from zero to 120% within the first few years.

All of us know that there are many, many tenants in Seattle that are paying more than 30% of their income in rent, so we will be able to provide some immediate relief to low-income residents by reducing their rent.

This year we will identify between two and four new construction projects for development in order to create about 180 units of housing.

We will issue a special tax revenue bond.

and we will stand up our asset management division so that when we acquire our first buildings, we can be good stewards of that asset.

Next slide.

Our goals for the next three years, so between now and the end of 2028, we will have cumulatively purchased 800 units of high-quality housing.

We will have 630 units of new construction in the pipeline.

We will hopefully have completed 50 units of new construction family housing.

We will take property management in-house.

We will have stood up our property management division.

We will have added residents to our board of directors.

We will be issuing a new set of bonds in 2028. And we will have enough information on what's worked and what hasn't worked to begin to evaluate and make modifications in how we proceed.

And we will have learned about developing passive house new construction buildings and other climate adaptive standards that we might want to include in our housing in the future.

Next slide.

Thanks Ginger, and after this we'll wrap it up, but I do just want for the Council to know that we are already running up against a section of the Initiative 135 Charter, Article 2, as you can see here on the slide, that may pose challenges to our ability to take out debt for future housing construction or acquisition.

This is definitely an unintended consequence need to be remedied I've provided some potential language but I definitely want this to be an iterative process but I thought it was prudent for us to bring this to the public's attention that we are finding with some banks that they don't feel we could put the buildings up as collateral if we wanted to take out bank debt to fund our mission and with that I we're opening it up to questions, but I just wanted to offer there's a QR code here.

If folks want to stay up to date with what we're doing, that will assign you to our newsletter, but also you know how to reach us.

So thank you councilmember Foster and council members.

We're happy to take questions now.

Thank you so much Tiffany and to the entire social housing developer team and it's wonderful to see that there is a team here and it was great to hear from you all and your combined experience.

I will once again allow my colleagues to raise their hand to ask any questions and I think we all know I may jump in and take a point of chair's privilege, but I typically like to ask my questions towards the end.

So colleagues, I will pause to see if you have questions for the developer and we will jump right in.

Council Member Rink.

Everyone's so shy today.

I know, I think it'll heat up.

I think it'll heat up, yeah.

Thank you, Chair.

Thank you all for the presentation.

I know the public has been eager to hear about how the social housing developer is standing up and everybody wants to ensure that we're delivering on and social housing for the public.

And so very excited that you're here.

Thank you for this presentation.

And I'm going to take us into one piece here just related to leadership.

I know interim CEO McCoy, you're here in an interim capacity.

as the chair alluded to in her opening remarks, the social housing developer has been through some very recent big changes, some of which have been reported about in the Seattle Times.

And so I wanna give you an opportunity to speak to some of the changes in leadership of the social housing developer, changes on the board and how you're working on improving organizational stability moving forward.

Yes, thank you, council member Rink.

So yes, I was appointed as the interim CEO at the January board meeting, the governing board felt that a leadership change was necessary and needed.

So they removed my predecessor and at the same token appointed me to make sure that there was an immediate transition of power, especially as we are about to receive public dollars.

Public trust is essential.

We have a huge mandate and a huge need to fulfill.

So the governing board I thought ahead of making sure that that leadership transition happened, you know, as seamlessly as possible.

And I've been up and running with this team for about three and a half weeks.

Some of the folks on the team, James and Mike, were brought onto staff before, but within about two days, three days after I was appointed, reached out and talked to Ginger and brought Ginger on immediately because I know where my skills lie as a leader and I also know where they need to be bolstered and that's where Ginger fills in with her over 38 years of affordable housing experience and Ginger's also deep dedication to the mission and if I can say Ginger eagerness to dive into this new housing model and be part of like really history that we're making here.

And then within the last three weeks I've also brought on an interim chief financial officer because it is critical to me to have deep financial controls in place before we receive these dollars.

And we've also accelerated the permanent CFO search.

So the board is in place.

We do have three seats open.

One of those is the Green New Deal Oversight Board.

I believe they're going to replace their appointee by March.

And the reason that that seat is even open is because the former person in that seat is Michael Eisen, who is now a staff member.

I've already alerted Councilmember Foster about the City Council appointee.

There is an individual that did resign through the leadership transition.

and then also there is a seat open for a community organization that provides housing to marginalized communities and I've alerted the board of the need to fill that seat and we will be discussing that at our regularly scheduled meeting a week from tomorrow.

So please know that I take this responsibility tremendously seriously.

This matters a lot.

This is not new to me.

I helped to create this vision and so I just know like I'm deeply accountable to you all and open for any questions and comments and the same for the public.

So as I said in the slides, in six months the board will be commencing a permanent search.

I am here each and every step of the way to make sure that that is a seamless transition and that we continue going forward with the mission.

Thank you for that, Tiffany, and certainly wanna just echo a sentiment that I know you hold dear in what you stated, just that we need to make sure that we deliver, we have a responsibility to the public, and just want to give respect to you for stepping in in this pivotal moment for the social housing developer and hearing loud and clear that the board will be taking up a, starting the process of a new CEO search, I heard correctly, six months?

Fabulous, thank you for that.

and I want to also acknowledge, Ginger, for your component of the presentation and for kind of walking us through the bonding and financing plan and just acknowledging, and you acknowledged it in your comments as well, but wanted to name, you know, we're projecting a budget based, previously we're projecting a budget based on 50 million from the tax revenue.

Now we're expected, you all are expected to receive significantly more for that.

And so how are you going about adjusting projections in light of the recent news about the much higher than expected revenue that will be coming in?

Well, the recent news is very, very recent.

Yes.

So we haven't had much chance to adjust yet.

We will probably do a combination of increased production and pushing off some of the debt a little bit longer.

We may not do that increase in production this year because we are ramping up as an organization this year.

So if we do a big jump in production, you'll probably see that starting in 2027 rather than 2026. We also may do more land banking than we had previously planned so that we can be queuing up larger new construction projects or queuing up more new construction projects.

We know that the earlier we can take the land off the market, it'll stop escalating in value because the land escalation has been so incredibly high in Seattle.

Thank you for that.

Just want to take a personal point to express the interest in my office for pursuing land banking.

It's something that we've heard from a number of community groups about a desire to purchase or retain a property or have more community ownership over certain properties as like an anti-displacement measure.

and so I'm encouraged to hear that that's under consideration by the social housing developer at this time, again in service of trying to take properties out of market speculation.

I'm going to stop my questions there for now, Chair.

Thank you so much, Council Member Rink, and I'll insert a quick comment before I go over to Council Member Lynn, whose hand I see.

Just on the note of taking properties off the market, I would also make sure that we hold at the center of our attention that we do also have community groups who have been able to acquire land to take it off the market, but do need support in getting that developed.

So I think there are needs to continue to make sure that we are acquiring spaces, but also development capacity and opportunities to partner there.

With that, Council Member Lynn.

Thank you.

Thank you all for coming.

So excited for you to be here for the promise of social housing and for the wonderful good news about the revenues you know and I think back to the prior presentation about the need for you know 112,000 homes by 2044 across this broad range of incomes and you know excited for your model which addresses that whole range of income needs potentially in one building and the opportunity presented by mixed income housing to create better community for us as we've become this, continue to be this deeply segregated city based on wealth and class and race.

And so I'm excited for the opportunity of social housing to make a meaningful difference there.

And on that point, just wondering, and I think you talked a little bit about this, but would love to just hear any thoughts about the role social housing could play, collaboration with our public schools, you know which are not only facing enrollment challenges we have some of the highest need for family size housing and I know that that's a priority for you but also again to get back to this point of our schools are segregated because our neighborhoods are segregated and so just wondering you know if you've had thoughts or and I know it's early so there's a lot of stuff that we're gonna be asking to put on your plate, but just wanted to tee that up.

Thank you, Council Member Lynn.

I know because I do have friends in the Seattle Education Association who have ties with wonderful Seattle Public Schools board members that there are a couple of sites that very, very early stages of discussion.

So that's really all I can say for now, but just know that like that intersection is really crucial to us.

Again, there's so many unique things about social housing, but this is like one key crucial factor is we get to build family size units, which we all desperately know we need.

We remember Seattle Public Schools Director a couple years ago, when looking at enrollment, you see it's not that Seattleites are not still having kids and having families, it's just that once they enter the public school age is when they're leaving the City of Seattle because they can't afford our housing needs here.

So we want to make sure that we are Mike I might jump it to you because one of the ways that we like are prioritizing where we go is this matrix and is it close to schools, is it walkable, is it bikeable, is it not as noisy, so I don't know Mike if you or James want to jump in on that, but Councilmember just know we hold that dear, I know that the Council holds that dear, I know that there's extra incentives as I indicated that Councilmember Hollingsworth put forward in the comp plan, so this is something we look forward to pursuing, I don't know if my team has anything else to add on to that.

Yeah, I'll just chime in to note that I'm a parent of two Seattle Public School students.

My oldest is a student leader at Washington Middle School, and I know that family housing affordability is a big challenge for a lot of our public schools, so this issue is near and dear to me.

I think there definitely is a lot of good discussion that's already occurred about our location strategy for family housing and Mike is probably best equipped to talk about some of the particular factors we're looking at.

We're kind of trying to take this comprehensive approach, you know, access to transit, access to community amenities, what kind of public health exposures are people exposed to with the comp plan focused on Corridors, you know, how do we site family-sized housing so that, you know, kids aren't growing up directly on roads like Aurora or 15th Avenue Northwest, you know, broad arterials, high levels of pollution, they're loud, right?

So we're starting to think about how we can site these buildings so that they can be in quieter places, so that they are places that people will want to raise their kids or want to stay in place.

You look at some of the high turnover in some of our buildings and I think a lot of it is really related to where the building is, right?

And whether it's a walkable neighborhood, whether it's the kind of place that you want to stay long term.

The way we design and build housing in the U.S. is fundamentally different than any other place.

And so we have this opportunity to really lean into the design of buildings, this design of social housing, to match up with what they do in Switzerland and Austria and Singapore and even in Canada to some degree to provide these places that are stable and just offer a much higher quality of life than what we're going to see in market rate development.

Can I follow up?

And yeah, and that's one of the things I'm really excited for.

And I guess it calls I think into question a little bit for me, about how and you know these will be I think more as you get to design your buildings instead of acquire existing buildings and so we're really looking sort of long-term but you know for me I kind of wonder about how we measure some of these other benefits yes there's the housing benefit I think but you know how do we long-term look at other intangible benefits you know about community building about public health about educational outcomes and I know again this is a sort of a long-term sort of vision and plan but I just want to keep that in mind because I think that you know the housing component is obviously critical but we're talking about families here and you know we're talking about improving outcomes holistically and so I just you know want to somehow keep that in mind as we look to the future

Thank you, Council Member Lynn.

I'm just gonna quickly say, you know, it'd be good to have more from the developer on this.

I will say I heard a lot of context there, but I don't feel like we necessarily got to what was at the core of Council Member Lynn's question.

So I'm just gonna, I'm gonna move us on, but I'm gonna say, I think there's a need for some followup around that question.

And I have a couple of questions myself around size and I see Council President Hollingsworth's hand.

So I'm gonna go over to Council President and then I will close us out with some questions.

Thank you, Chair.

I appreciate it.

Thank you all for being here.

Really appreciate the presentation.

Obviously super excited about anything about housing in Seattle, we're excited about.

But the one thing I just wanted to flag too is, and it's not a question, it's more a comment, by the way, okay?

Just one thing I wanted to flag.

If we could be very intentional also too about our vendors and meaning that, you know, we know that the people that we're serving, I think Councilmember Foster had talked about average household income for Black families, Native families, area, AMI.

and also knowing that those are, you know, some of the target demographics, you know, mixed income and people that we're serving.

And then I heard Councilmember Lynn talk about that holistic approach.

And when I'm thinking about this, and oftentimes this happens with a lot of folks, whether it's transit, construction, any type of construction, I think as a holistic approach is also the diversity of our vendors.

and the comms people and the designers and the engineers and that reflecting the Seattle values.

And so I want to flag that because there are a ton of vendors.

One of the greatest projects, Rainier Beach and all the vendors that they had and the diversity with the designers and the contractors and the people working on the job.

and how that holistically of having people that look like the folks that we're serving are also working on those projects, that is like the cycle of the economic mobility in our city that we're talking about and thinking about the local vendors and the small vendors.

And so I just wanted to highlight that because I think this is a great opportunity to continue to keep wealth circulating in our city.

And as we have taxed some of the most wealthiest people in our city, a really great way of returning that wealth is using those vendors that are smaller who don't get opportunities to be working on these projects and to look like the people that we're serving.

So I just, and the staff for the social house, everyone.

So I just wanted to highlight that because I think that's really important.

Thank you, Madam Chair.

Thank you so much, Council President.

I will join in on that and say, actually, a funny little story here, as I was looking back at some old photographs, and I found a photograph of me in chambers when Council was debating and discussing priority hire more than a decade ago, which is one of the city policies that helps make sure that our resources go to those contractors.

So that may be, and actually maybe I'll just pose it as a question, has the social housing developer looked at some of those existing standards, priority hire for example, which requires that on projects that are city funded over a certain dollar amount, contracts are going to people from disadvantaged zip codes.

Has the social housing developer considered that or looked at ways that you can be intentional on that deployment of resources?

Council member Foster, we actually wrote the priority hire into the charter, into I-135.

So that's in there at the end.

And we were just talking about that as we are getting prepared to put out the RFQ process.

So yes, active discussions that's baked into our charter.

Fantastic.

I see Councilmember Lin's hands.

I'm going to let him squeeze in here before I get into my questions.

Just want to, as we're talking about that, just want to also put in a plug.

They're doing some amazing stuff down at Beach on making sure they're getting youth connected to these construction jobs.

and so just want to, you know, make sure to, as you do priority hire, you work with some of the trades that are specifically focused on uplifting our youth in Seattle.

Thank you, Council Member Landry.

Thank you, Council Member Mike.

Be on mute.

I just wanted to piggyback onto this.

We gave a presentation with, Council Member Rink probably about six months ago with an institutional partner, potential partner.

I think that there's this opportunity around these buildings are living laboratories, right?

So there's social research, training the trades, right?

There's this huge opportunity to connect these to the neighborhoods.

And I have two young kids at SPS too.

The teachers are asking all about social housing.

So that is really great opportunity to kind of continue those conversations into the community.

Thank you.

I'm going to move us on.

So I want to make sure that before we get out of here today, we get to a couple of questions that I think are really important on the financing side of things.

So first, actually, before I go to financing, I want to go back to some of the discussion around acquisitions.

So one of the things that I heard you say was, and I believe you have in your slide, sort of a breakdown of units that you might acquire and then units that you might build.

I also heard within that a note around the potential for acquiring studio and one-bedroom units, given sort of the way that that market is right now.

I'm looking for you to help me square the circle on the focus on building more family-size housing alongside the fact that some of those early acquisitions will be studio and one-bedroom units.

Is it the focus of the developer to be converting those into two-bedroom units, and how do you plan to address that?

And note that I've probably got five questions here.

So if we can just get like straight to the point responses and then we can make sure that we can move on.

Thank you.

Sure.

So we do, the market right now for new construct, for recently constructed apartment buildings is quite good.

So we can pick up some buildings at a good price point.

And we think the market's gonna cycle away from that in the next two or three years.

So we do hope to take advantage of that.

You can buy pretty high quality apartment units for about $350,000 to $400,000 per unit right now, whereas to build them is like $650,000 a unit.

So we want to take advantage of this kind of dip in the market or dip in prices in the market.

And some of these are LEED gold, very high quality recently constructed buildings, but they are almost entirely studio and one bedrooms.

and the ones that we've looked at so far, it's about 10 to 15% of the units are two bedrooms or larger.

So there's no getting around the fact that the private market is building mostly small units, which is cycling through the whole ecosystem as we've seen with the OH presentation.

We will look for opportunities to combine small units and make them larger.

There might be some opportunity for that, but we are also trying to build a diverse portfolio for people in Seattle that need housing.

And so that ranges from small households to big households.

And we think the majority of the way we're gonna serve family-sized households is through new construction.

We'll do some conversions, but we think mostly we have to fill that void that the private market is leaving of not building family-sized units.

I appreciate that and I guess I'll just close with a comment on that one which is I will say that we are seeing this increased need and you saw on the OH deck on the recent dollars 39% of those dollars that were towards new construction were for family size housing and as the social housing developer continues to grow I think we appreciate and you all make your own decisions here but you know some focus on making sure there's targets in that area because the gap for family size housing is as you know, so significant.

I want to move us over a little bit to the bonding conversation.

So I really appreciated that obviously some of the numbers from the revenue are new and very recently announced.

But I wonder if you can speak a little bit more to whether or not you expect to run into any barriers against, as it relates to bonding against the tax revenue.

So my understanding is that currently the way that the charter is written, there are potential barriers to bonding against the units themselves and the acquisitions, what you have in the portfolio once you get there.

And that is what led to the intent of sort of bonding against the revenue.

We also heard Interim Director McCoy speak to the changes in those revenue projections.

So I'm curious if you can talk a little bit more about whether you anticipate running into any challenges there.

We have been speaking to underwriters and advisors and we understand that this is a new tax and there might be some concerns because it's a new tax, but that we are proposing such a modest encumbrance on that new tax.

We're proposing $20 million a year in repayment out of a tax that at that time we thought was 50 and now we know is 100. So we have heard from people that operate in the bond market that our approach is very reasonable and will be favorably seen.

So we do not anticipate a problem of actually being able to issue those bonds and generate those proceeds.

The interest rates are very, very low.

So we think it's a good way to go right now, and it's going to really help with our production the next few years.

After the next few years, I think we'll have to to re-evaluate and see if we want to encumber more of that tax revenue or if we want to start encumbering the buildings.

But I think we need the flexibility to encumber the buildings because otherwise we might have financing tools that we can't use.

It's either that we would assume from a seller, you know, if somebody has a very low interest loan, we might want to assume that loan versus take out a new loan.

Or, you know, opportunities to get impact investments at 3% or 4%, we can't currently do that because we can't secure those kinds of loans with property.

So we do want that flexibility, but we're going to do our initial purchases of our initial acquisitions, we're planning to deal with a bond against the tax revenue.

Thank you so much for that.

I want to move us over to, I believe it is slide 22, and Interim Director McCoy, you spoke to this a bit earlier, and I think folks will know from the OH presentation that I'm always interested in this question of not just how many units but the size of units and then who is served by those units.

So I want to ask if you can just kind of give us a little bit of a, I don't want to say a deeper dive, but almost just sort of restating to make sure my colleagues are tracking, and I know that my colleagues are tracking well, I want to bring this point to the front around the way that acquisitions would work when you are acquiring buildings that may have existing residents and how that plays into what the income mix in that building could look like.

Yeah, so as we described council member in the slideshow, we have a mandate not to displace any residents in our building.

And so if we take on an acquisition, we would then fill vacant units with lower income residents.

So say it's taking over a building that has folks 70% AMI and above.

They stay in that unit.

They keep paying market rent to the building.

But then those units that are open, we open up to those in the 30 and the 50 and then mix of that income to that.

So that would be our priority.

And then I'm going to turn it over to Ginger to talk about our ideal income mix with new construction.

Right.

So we are still working with our board on exactly what the income mix is.

Our charter says from 0 to 120%, and then it has specific bands between 0 and 120%.

Right now we're doing our financial modeling at 10% of the units at 30, 30% of the units at 50, 30% of the units between 50 and 80, and 30% of the units between 80 and 120. So that's how we're doing our financial modeling.

but we are working with our board to sort of solidify what our income targets will be.

But that's what we're working with.

That's our working assumption at this time.

Thank you.

And then my last question, and I just, maybe it's more of a statement, but I appreciate you gave an update around, it sounds like you're working on a project labor agreement, but that's not yet finalized.

Is that correct?

Correct, council member.

Okay, fantastic.

I just wanted to make sure that we were tracking where that was in process.

So we look forward to, and I know you've got to go through the right steps to get that in place.

So we look forward to hearing more when that is ready.

Colleagues, any further questions for the great folks from the Social Housing Developer today?

Okay, seeing none, I want to thank the presenters and I want to acknowledge that you all have done a lot of work in a short period of time to both get ready for this presentation and bring on, I mean, you know, the slide said five and it was seven staff by the time that you got here today.

So we really appreciate the the pace at which you are moving to ensure that the organization is fully staffed, is staffed with a really experienced team and appreciate you all coming in in relatively short order to bringing this team on and appreciate that that really demonstrates I think your commitment not only to this project but to the collaborative relationship between the council and the public as we get to ensure that the social housing developer is a success.

So I really want to commend you all for that and commend you for the hours that you put in.

And I know last night was your celebratory party.

Maybe we should have been able to have you in yesterday so that you could not have this to look forward to the morning after.

But I really appreciate you all for spending your time with us and providing this update to Council and wanna just continue to reiterate, I think we all see our job as partners and our job as public servants to make sure that we are asking questions and understanding where things are for this new developer so that we can all work collaboratively to make it a success.

So I appreciate you all for spending that time with us today.

Thank you, Council Member Foster for having us and thank you, Council.

You know how to find us, please reach out.

Thank you.

All right, is there any further business to come before the committee?

Seeing none, that concludes the February 11th, 2026 meeting of the Housing Arts and Civil Rights Committee.

Our next scheduled meeting is on February 28th.

Thank you all for attending.

It is 3.53 p.m.

and we are adjourned.