Seattle is in a housing crisis. We need urgent action to address high prices, limited supply, and increasing numbers of low income people being forced out of the city. Housing Now is the campaign to create a massive public finance program to build 10,000 affordable housing units in the next 10 years. This campaign is gaining steam, but we need your support to get this program started in next year’s budget. Legislation for that budget will be voted on this Monday (November 16th).
The City already finances affordable housing through the Seattle Housing Levy and other funding sources. The City issues bonds in order to pay the upfront costs of development and then repays the bonds over many years. Currently, all the affordable housing we build is heavily subsidized. Under status quo assumptions, a recent city study showed that rents would pay for less than 50% of debt service. It’s time to challenge these assumptions.
Like many things, it starts with a study. A housing study is necessary to set the groundwork for a pilot and then a full program. At a minimum, it will show how how we can reduce costs in the following ways:
- Improving the interest rate on the bonds issued from that assumed by the earlier city study
- Leveraging federal tax credits, and other funding sources outside the city
- Reducing construction costs, such as in building materials, due to economies of scale
- Providing exceptions to zoning and other restrictions where appropriate
Funding the study is a necessary first step to enact any policies. At a minimum, it will help us spend our housing dollars more efficiently. Ideally, we can achieve enough cost savings to build thousands of units with minimal subsidies. Either outcome will be critical as the city contemplates expanding the housing levy in 2016.
This study, and the publicly financed housing program it will support, will solve a number of problems.
The first of these problems is cost. By making this a massive program, we can better achieve savings from land, construction, and financing costs. In each of these areas the savings will be modest, but in combination we’ll be able to reduce total costs considerably. With lower cost buildings, non profit developers will build more units, increasing access to housing for people of any income.
The second problem is income inequality. Matthew Rognlie published a re-interpretation of Thomas Picketty’s wealth inequality dataset in which he showed how rising housing costs (and increased home values) has amounted to a transfer of wealth from the poor to the rich. Publicly financed housing counteracts this trend by achieving increased non-profit ownership of land and the residences contained upon them. Keeping rents low allows for low income households to pay down debts and build household resources while avoiding displacement, deprivation, and long commutes.
The third problem this solves is the eroding “social contract” between renters and builders. The housing construction we’re seeing right now is overall a good because it’s a response to increased demand for housing. In the long run the units being build now will become older and less expensive. But in the short run there are two reasons this is insufficient. Reason number one: “in the long run, we’re all dead” as Keynes famously quipped. While these units are paying off the loans, people need housing they can afford. Reason number two: we can’t know in advance how many older, “naturally affordable” buildings we’ll need. Maybe in 20 or 30 years time Tesla or the next Amazon will move here, boosting demand for existing building stock and continue to drive up prices.
The only guarantee we’ll have affordable units is to build them, and keep them affordable. Without that guarantee, the worse case scenario is spiking demand for housing and low income people being pushed out in droves. Without short term solutions to more affordable housing we’ll also see declining political support for housing, producing a negative feedback loop. We’re already seeing this in the San Francisco Bay area.
How do we get there?
We need you to sign our petition in support of public finance for more affordable housing. You can also spread the word by sharing this petition on your Facebook wall and liking our Facebook page. For extra credit, email the Council at firstname.lastname@example.org. And for extra extra credit, write personalized emails to each member of the Seattle City Council. Councilmember Mike O’Brien, Kshama Sawant, and Nick Licata are sponsoring this budget request, so we particularly need emails to the other six: Sally Bagshaw, Tim Burgess, John Okamoto, Jean Godden, Bruce Harrell, and Tom Rasmussen.
More information about Housing Now can be found on our website.