|
Affordable
Housing and the GMA
I.
Introduction
The Washington State Growth Management Act requires that counties
and cities within the state adhere to mandatory and discretionary
provisions specifically designed to enhance the development of affordable
housing. In developing comprehensive plans, the GMA states that
communities should seek to encourage the availability of affordable
housing to all economic segments of the population. The GMA also
supports the establishment of a variety of residential densities
and housing types, and encourages the preservation of existing housing
stock. As concerns development form, the GMA discourages the conversion
of undeveloped land into sprawling, low-density development. Counties
and cities are to plan the affordable housing within the framework
of their comprehensive plans.
Comprehensive
plans are required to have a separate housing element that includes
an inventory and analysis of existing and projected housing needs;
a statement of goals and policies for housing preservation, improvement
and development; identification of sufficient land for housing,
including government-assisted housing, housing for low-income families,
mobile/manufactured housing, multifamily housing, and special needs
housing; and a plan for meeting the housing needs of all economic
segments of the community. A 1991 amendment to the GMA further emphasized
that the requirement of policies that consider the "need for
affordable housing for all economic segments of the population and
parameters for its distribution."
In addition,
the Washington state GMA encourages the use of innovative land use
management techniques to enhance conditions for affordable housing
though such mechanisms as density bonuses, cluster housing, planned
unit developments, and the transfer of development rights. Further
information on affordable housing and Washington State’s GMA
is available in a primer on affordable housing published by Municipal
Research and Services Center.
The primer is
available on-line at http://www.mrsc.org/textaht.htm
II.
Case Study of King County
Elizabeth Mountsier serves as Lead Analyst for the Metropolitan
King County Council House and Policy Planning Committee. She spoke
with students recently about affordable housing issues in King County.
The following
discussion is based on Ms. Mountsier’s presentation.
A. Definitions
and Facts
What do we consider
affordable housing? Based on the U.S. census, the median income
is determined throughout the state on the county-level. Median income
is how household income is measured for the purposes of affordable
housing. (Note that the average, rather than median, income would
be skewed higher.) The median income used for purposes of affordable
housing projections is 62,000 USD per household for King County.
The poverty
level is defined as 30% of that median income. As a general rule
in King County, most new apartment projects aim to sell those new
units at the equivalent price of the 70-80% of the median income
figure of 62,500 USD. Developers know what people can pay and design
developments accordingly. Ownership costs occur at levels of about
80% of the median income figure.
Home ownership
has gotten even more expensive in King County during the last two
years. Typically, the county has examined three types of situations
for affordable housing:
1. substandard
housing (until 10 years ago no sanitation was not uncommon in King
County)
2. overcrowded situations (too many people)
3. overcharged
- people who are paying too much for their housing (the definition
of being overcharged is a household paying more than 30% of its
income).
Bankers, who define expenses for ownership to include mortgage and
insurance, accept rates as high as 32-35% as tenable household expenses.
B. Issues
of Supply and Demand
When goals are
set for providing affordable housing in King County, the income
breakdowns are relatively steady, even as incomes go up, 24% of
city households are in the category of monthly housing payments
of 0-50% of the median income and another 17% are in the category
of monthly housing payments of 50-80 %; both figures remain relatively
stable over time.
Based on income,
and taking into consideration the number of new households coming
in, including permits, estimates of how much housing would be needed
is 375,000. This is above the basic figure of 130,000 and is considered
to be the demand of housing.
The size of
households is also considered. The Office of Financial Management
(OFM) gave an estimate of how many people to expect in an average
household: 2.2 persons/household. Households are getting smaller;
this is part of graying, and also a result of fewer marriages.
C. Adherence
to the GMA Guidelines
Each of the
cities of King County basically is asked how many households they
can take (they would benefit from public transit) in order to satisfy
the demand of 375,000 households. The city strategy is to create
13 urban centers which would take 25% percent of new growth. Well
developed public transport would link those urban centers.
Eight other
cities are participating, including Bellevue and SeaTac. Renton
is also included as a major bus hub.
According to
the GMA’s mandate, 75% of the affordable housing needs to go
within the urban growth boundaries. The strategy is that a lot of
growth should go into the centers.
Of the 375000
new households, 25% of that will be in those newly created urban
centers.
In King County,
each city has been required to examine affordable housing closely.
The county decided
to set a goal of a certain percentage of new houses to address the
0-50% and the 50-80% categories. The goal was that of all housing
units in a region, a certain percentage should be of the 0-50% and
50-80% categories.
D. Toward
Implementation
How is King
County progressing with housing production and more particularly,
affordable housing? Basically, production-wise, and only 5 years
into the 20-year period, the county is producing the required number
of housing units. But it widely varies widely depending on location
within the county; pre-growth management, there used to be a lot
of development in the rural areas.
Why draw an
urban growth boundary? One reason is that local governments can’t
keep paying for infrastructure in the suburbs. In effect, suburban
developments have been subsidized, the local governments were paying
for this. Impact fees have been an effort to offset the increased
costs by having developers pay for developments.
Out along the
fringe of the urban growth boundary, the bigger homes are still
being built right along the boundary. Concurrency requirements were
supposed to be the gatekeeper. The gatekeeper was also supposed
to have been the road infrastructure. Some urban centers have taken
off in terms of compact housing development. This is true of Bellevue
and Redmond. Not as much housing is developing in SeaTac and Federal
Way. In terms of housing production then, the supply situation is
fairly good. On the other hand, the issue that is raised by the
private sector – they say, on paper, that looks good for the
five-year goal.
But in terms
of employment, the county is running 40-50% over the number of jobs
to housing that had been expected. This is an indication of great
imbalance in the region, as it shows that King County is still by
far and away the major job creator in the whole Puget Sound region.
In terms of
affordable housing, the 50-80% category of median income is in good
condition, but the county is falling behind even further is the
0-50% category. This means that there has to be a subsidy. King
County’s major strategy is to get federal funding. (Other funding
includes state funding; housing opportunity fund, tax credits, and
bonds.)
E. Financial
Considerations
The county’s
main approach has been to subsidize construction costs, as operating
costs can then usually be covered by the rent of tenants. So more
money is always needed for affordable housing. Between land costs,
and the construction costs, the county definitely needs more funding
in order to solve the affordable housing problem.
Various techniques
have been tried to raise money. The city of Bellevue had an inclusionary
zoning (1 out of 10 new housing units had to be affordable housing).
This was an ordinance which required the construction of a certain
percentage or number of below-market units. But the ordinance simply
added costs to the other units, in most cases. This ordinance was
later overturned. This tool is used a lot in California, along with
a mechanism of density bonuses.
Solutions for
the developers include reducing the amount of regulations, either
environmental or other. Developers often complain that they are
being overregulated.
It is true that
regulations in the county are strict. The State Environmental Protection
Act was led by King County to be among the first counties in the
nation to implement such strict regulations; the building codes
are getting tighter and tighter. Sprinkling is required in the new
affordable housing, for example. These regulations are good, but
they all have added-on costs.
A movement exists
to attempt to streamline more of those regulations in order to reduce
the cost of such housing. The purpose in streamlining is to ensure
that they are not conflicting regulations. When the regulations
conflict with one other, higher housing costs are generated.
Other major
costs, according to the critics, include the land, due to the urban
growth line.
This is a sensitive
topic, as most Washington residents have come to the conclusion
that sprawl cannot be allowed to grow unfettered. It’s a fact
that land prices in King County have risen dramatically.
But what actually
drives land prices is much more linked to economic development than
the GMA. Today’s high prices appear to near the same peak that
has occurred in the past on approximately a 10-year cycle. Job growth
peaks at the late end of the decades.
The standard
pattern is that employment takes off, the housing lags behinds,
and then catches up. Boeing helped the economy of Washington for
so long, and in the past those surges and drops mirrored the Boeing
workforce rises and reductions.
F. Strengthening
the GMA
King County
has been looking at policies to strengthen the GMA. County growth
management strategists believe that housing targets should be set
by each city and that financial responsibility should also be given
to a greater extent to the cities.
What do city
governments do to promote housing? There is a tension between the
GMA, which pushes for infill, and the necessity to provide affordable
housing. Cities are tearing down older single-family homes, or older
apartment projects in order to engage. Most cities have tried to
achieve a balance between:
- preserve the
housing those cities have
- build new affordable housing
The argument
is made that if some of the old housing stock is not torn down,
then new families will not come in and there will no mechanism to
help to subsidize financially the neighborhoods. In some cases,
it is true the end result of a great deal of construction can be
that the city is left wit the same number of low-income housing
units. (The absolute number of housing units is admittedly larger
after that development.) There is a standard debate about which
units a city should hold, and which it should develop.
This was the debate 10-15 years ago in downtown Seattle. The city
elected to allow non-government organizations to buy some of the
buildings. In those cases the city decided to subsidize the existing
units – in general, it’s less expensive to preserve existing
housing than to build. The results have been largely positive in
terms of providing affordable housing in downtown Seattle (much
of which remains in existence today, despite the severe crowding
of high-rise buildings in the city center).
G. Other
Funding Issues
Using money
to subsidize the purchase of existing or buying new housing continues
to be seen as the best solution for securing affordable housing.
The subsidies are needed because the rents those people can afford
is usually only enough to provide for the operating costs.
Other funding
solutions include helping with down payments for housing at below-market
rates for mortgages. For most of people who are paying unaffordable
rents, they have no possibility of saving money in order to pay
for a down payment. Employer-assisted housing is another common
solution. For example, the University of Washington has started
an employer-assisted housing; the program includes lower fees and
lower interest rates.
Non-profit developers
are building a lot of the affordable housing in King County. A federal
program of tax credits makes this possible. Corporate contributions
mean that for every $.05 they put in, they receive $1.00 index in
tax credits, making the financial indexing of the non-profit developers
possible.
One of the main
reasons that Seattle competes well (above and beyond those funds
which the city is allocated automatically for being of a certain
size) in federal grant applications is the non-profit support. The
city’s success rate has a lot to do with support of the non-profits,
and how the city develops services.
H. Conclusions
Political realities
remain a significant obstacle for securing funding to support affordable
housing. It was once thought that the only way to go about this
was for King County to impose a levy. But the constituency almost
always feels that they pay too high a tax already. The levy was
considered politically unacceptable to even those politicians who
are highly sympathetic to affordable housing issues. It was frustrating
for all the people, including politicians, who were very committed
to affordable housing.
But one positive
consequence of even discussion and debate over affordable housing
is that the press makes people understand that affordable housing
is genuine issue in the city. Parents begin to understand that their
own children’s teachers cannot afford housing in the city.
Or that there are also a lot of people who work multiple-part time
job, but who still cannot afford housing in the city.
Many residents
of the region are not strangers to issues of affordable housing.
They realize that if they had to buy a house today in the region,
they probably could not afford to buy; those who bought more than
ten years ago once had reasonable access to affordable housing.
Those owners of houses were among the fortunate, and can attest
from personal experience to the advantages of affordable housing.
For more information,
Elizabeth Mountsier can be contacted at beth.mountsier@metrokc.gov
III. Further Sources
A. State
1. Affordable Housing in Washington State
The Buildable
Lands Program is testing these positions over time with specific
data in six Western Washington counties. Visit them at: http://www.cted.wa.gov/info/lgd/growth/fact_sheets/Affordable_Housing.htm
2. Washington State Housing Finance Commission
The Washington State Housing Finance Commission develops and administers
financing programs that promote home ownership, encourage community
development, and make possible the production of affordable housing
throughout the state. Additionally, Commission programs assist nonprofit
organizations in the creation of facilities that address a broad
spectrum of needs. There web site is: http://www.wshfc.org/
B. King County
1. Local Government
Local government
has launched several initiatives to increase the housing supply
and number of housing units that are affordable to low and moderate
income families. Those initiatives include the Surplus Property
Program, King County Credit Enhancement Program, Open Door Loan
Program, and the South King County First Homes Program. Those programs
are described at: http://www.metrokc.gov/smartgrowth/livable.htm
2. Seattle
Government
The City of
Seattle is engaged in several initiatives. These two sites offer
much more detailed information:
Seattle Office of Housing at: http://www.ci.seattle.wa.us/housing/default.htm
Seattle Housing Action Agenda Progress Report available at: http://www.ci.seattle.wa.us/housing/ActionAgendaReport.htm
Prepared by
Nathaniel Trumbull and Professor Christine Bae. Last updated 12/12/1999.
|