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HomeMy WebLinkAboutAgendaPacket_SKHHP_ExecutiveBoard_2024_1_19SKHHP Executive Board January 19, 2024, 1:00 – 3:00 PM Virtual Meeting Video conference: https://us06web.zoom.us/j/99857398028?pwd=eXFiMmJpQm1abDZmMmRQbHNOYS8ydz09 OR by phone: 253-205-0468 Meeting ID: 998 5739 8028 Password: 085570 I.CALL TO ORDER a. b. II.PUBLIC COMMENT III.APPROVAL OF NOVEMBER 17, 2023 MINUTES Motion is to approve the November 17, 2023 SKHHP Executive Board meeting minutes 1:09 1:10 BOARD AND INTRODUCTION Presenter: Claire V. Goodwin, SKHHP Executive Manager Purpose: Appoint up to six candidates to serve on the Advisory Board. Introduce current and new members of the Advisory Board. Background: Established in 2021, the Advisory Board consists of 12 to 15 members to support the work of the SKHHP Executive Board. A panel of Executive and Advisory Board members interviewed 12 candidates over three days and selected six candidates for the Executive Board’s consideration for appointment. The six appointments would bring the Advisory Board to 15 members. Motion is to adopt Resolution 2024-01 appointing the recommended candidates to the SKHHP Advisory Board for a term of four years to end January 19, 2028. 1:30 Presenter: Morgan Shook, Partner/Senior Policy Advisory at ECOnorthwest Purpose: Introduce tax increment financing with a focus on affordable housing and how to apply it. Background: A discussion was held at the June 2023 the Housing Capital Fund. Tax Increment Financing was one tool identified by the Executive Board to learn more about. At the November 2023 Executive Board meeting, the Board confirmed its interest in hearing a briefing to learn more about the topic. RCW 39.114 permits local governments to use the financing tool known as Tax Increment Financing by designating an ‘increment area’ surrounding sites of public improvement. Future property tax increases in the designated area are allocated to pay for the public improvement costs. Presenter: Claire V. Goodwin, SKHHP Executive Manager; Dorsol Plants, SKHHP Program Coordinator Purpose: A brief update of legislation introduced for the 2024 State Legislative Session with a focus on housing and land use. Background: The Washington State Legislature convened for a short, regular session beginning January 8, 2024. SKHHP staff will monitor and provide updates on legislation connected with housing at the monthly Executive Board meetings. Special focus will be provided on any bills which further SKHHP’s adopted legislative priority, “to fund all aspects of affordable housing.” VII. UPDATES/ANNOUNCEMENTS • Chair/Vice Chair nominations • Upcoming agenda topics 2:45 • 3:00 SKHHP Executive Meeting November 17, 2023 MINUTES I. CALL TO ORDER Chair Nancy Backus called the meeting to order at 1:03 PM. II. ROLL CALL/ESTABLISHMENT OF QUORUM Executive Board members present: Nancy Backus, City of Auburn; Dana Ralph, City of Kent; Colleen Brandt-Schluter, City of Burien; Debra Hartsock (alternate), City of Covington; Traci Buxton, City of Des Moines; Brian Davis, City of Federal Way; Sean Kelly, City of Maple Valley; Eric Zimmerman, City of Normandy Park; Ryan McIrvin, City of Renton; Cynthia Delostrinos Johnson, City of Tukwila; Sunaree Marshall, King County. Others present: Claire Goodwin, SKHHP Executive Manager; Dorsol Plants, SKHHP Program Coordinator; Cathy Sisk, SKHHP Advisory Board; Laural Humphrey, City of Tukwila; Merina Hanson, City of Kent; Matt Torpey, City of Maple Valley; Nicole Nordholm, City of Des Moines; McCaela Daffern, King County; Nicholas Matz, City of Normandy Park; Angie Mathias, City of Renton. III. PUBLIC COMMENT Robin Garcia urged the Executive Board to consider the impact on public schools and public safety when looking at the larger volume of housing with higher needs when reviewing the Housing Capital Fund applications. Robin stated the projects will bring zero funding to schools when school districts are considering funding cuts. It would be better if we had workforce housing for young workers or those attending college. One project located near the 272nd Park and Ride will be located near a planned property involving the Multi-Service Center and a large number of housing units and families. This will be impactful because of tax exemptions. Another project at the Kent/Des Moines station sounds like it might involve special needs which often require extra support in the school that is unfunded due to lower funding for special education coming from the federal government. This would also be impactful because of tax exemptions. While Open Doors for Multicultural Families and Mercy Housing NW projects may have a good reputation, the impact will most definitely be greater due to the schools and public safety when looking at larger housing with greater need. These properties are often on the border of cities and may pull away from services being provided inside the town. I urge you to consider the smaller, less impactful projects. Anna from Federal Way provided the following written comment, “I would like to comment about the projects that are being considered for funding today. I urge all of you to consider the impact on the public schools and public safety when looking at larger volumes of housing with higher need. These projects will bring zero funding to our schools at a time when school districts are looking at funding cuts. It would be better if we had workforce type housing for young workers or those attending college. One of the projects planned for the 272nd park and ride will be located near a planned property involving the Multi-Service Center and a large number of housing units and families. This would be impactful because of the tax exemptions. Another project at the Kent Des Moines Road sounds like it might involve special needs which often requires extra support in the school that comes unfunded to begin with due to lower funding for special education coming from the federal government than what we should be getting. This would also be impactful because of the tax exemptions. While open doors and Mercy House projects might have a good reputation, the impact will most definitely be greater due to the larger numbers. These properties are also on a border between cities and can often draw on services clear at the edge of town that may not be available or might pull away from the need in the local centers of town. This can have a huge impact. I urge you to consider the smaller less impactful projects.” IV. APPROVAL OF OCTOBER 20, 2023 MINUTES Traci Buxton moved to approve the October 20, 2023 minutes as presented, seconded by Dana Ralph. Motion passed (11-0) V. BRIEFING a. FINANCING ACQUISITION AND PRESERVATION OF AFFORDABLE HOUSING Claire Goodwin introduced Andrew Calkins, Director of Policy and Intergovernmental Affairs, Tim Walter, Senior Director of Asset Management and Development, and Robin Walls, Executive Director/CEO of the King County Housing Authority (KCHA). Andrew Calkins began by summarizing the September Executive Board meeting presentation by KCHA, which focused on KCHA’s strategy to grow affordability over time through preservation. Today’s briefing will focus on financing challenges, how to make larger projects pencil, and what the SKHHP Board should consider as it moves its focus to preservation. Robin Walls spoke about the tradition and history of KCHA having a well-defined preservation and acquisition strategy that sets them apart from other housing authorities. Salish Place in Des Moines was acquired in 2021 and is a hallmark of the KCHA strategy. It is a mid-sized property with 136 units and is a family housing type property with a mix of 39 one-bedroom, 47 two- bedroom, and 50 three-bedroom units. The three-bedroom units enable the site to serve families, which is unique to other developments. Salish Place is also within ¾ of a mile of a future Link light rail station. KCHA is focused on preserving transit-oriented development or properties located near transit. The interest rate environment has enabled KCHA to continue focusing on acquisition in South King County, and they are about to announce closing on a property in Kent. Andrew Calkins grounded the conversation by framing the competitive nature of acquisition, which competes against the private market. Per unit costs of multifamily dwelling units have doubled and potentially tripled in some areas over the last decade. Acquiring and preserving property is roughly half the cost of building new types of multifamily development. Acquisition and preservation continue to be a cost-effective strategy for increasing affordable housing. For both a private purchaser and a housing authority, the single largest source of potential financing is the debt based on what the tenants on site are paying. The critical difference is that a private purchaser and real estate investor will typically bring along their equity and cash and that of other investors. This may mean they do not have the same need for debt service as a housing authority. The state empowers housing authorities to go out and issue tax-exempt bonds on the municipal bond market; the revenue generated from bond sales is usually the single most significant source of funds to make acquisitions work. Housing authorities and other nonprofit organizations do have access to other resources. The most extensive resource is the Low-Income Housing Tax Credit (LIHTC), which can sometimes be used for acquisition and preservation projects that include a substantial rehabilitation component. Unfortunately, this is a highly competitive resource and the demand has exceeded the available funds which makes it very difficult to use for preservation. Local funding sources such as SKHHP’s Housing Capital Fund are examples of other resources that are available for housing authorities to use for acquisition and preservation. Tax-exempt bonds and debt are the primary financing tools used currently by KCHA when acquiring and preserving housing. Tim Walter explained that preservation is critical because it is so difficult to build new housing and keep up with the demand for housing. Rents have been increasing so quickly over the last 15-20 years that loss of affordability has been more significant than the ability to build in a response. KCHA has strived to identify apartments with relatively modest, family-size units in communities anyone would be happy to live in but are still affordable for a working class household. These properties are an asset to the community, with the hope to provide housing and opportunities to redevelop in the future to increase density when needed. When considering preservation, one should consider both the near-term opportunities and the long-term opportunities to grow or increase density on an acquired site. Competing against the private market is challenging. KCHA aims to buy properties before they enter the market. At the very least, KCHA wants to talk with property owners before they might be ready to sell. Housing authorities must be prepared to pay the property's market value because they will be competing against buyers who can and will pay the market value. At the time of acquisition, Salish Place, located in Des Moines, had tenants paying roughly $400 less than what the property owner could have been charging. A private market investor would see an opportunity to acquire the property, do some upkeep, and raise the rent to the current market rate. At the time, an investor looking at Salish Place could assume around $2 million in cash flow. With the acquisition price, this amount would be used to determine the capitalization rate, or “cap rate” (rate of return on a real estate property). On the market, properties are priced based on the cap rate. For Salish Place, the cap rate would have been around 5.4%. The average cap rates in our region for real estate fall between 3.5% to 6% return on investment. KCHA looked at the property, and to maintain rent affordability and to accomplish necessary repairs meant that KCHA would not see the $2 million in cash flow. It would likely be closer to $1.3 million. Preservation projects like Salish Place come with an active revenue stream from current tenants. This cash flow can be used to help finance the acquisition, which is a clear advantage preservation projects have over new development. The goal is to determine how to acquire the property without raising the rent to maintain affordability for the current tenants. When KCHA is considering a property, they must also be mindful of the current interest rate environment and determine at what rate they can borrow money. The higher the cost of the debt, the less KCHA can afford to leverage or borrow with the current revenue stream. Looking at Salish Place with a 35-year loan at 6% interest, KCHA could support debt of around $20 million. At 4% interest, they could support debt of around $26 million. Once KCHA knows what it can finance, the next challenge involves closing the remaining gap in funding. A 35-year loan at 6% interest would create a fund gap of roughly $16 million. A 35-year loan at 4% interest would create a funding gap of around $11 million. While a private investor could cover this gap out of pocket or use equity from another investment, KCHA often borrows additional funds to close the gap. KCHA will utilize previous properties that can support additional debt to support the purchase of the new property. The new property, over time, will be able to take on additional debt in the future and be used to purchase the next acquisition. KCHA strategizes balancing the risk and cost to minimize the potential funding gap. Historically, borrowing money in the short term has been cheaper than in the longer term. KCHA will borrow money on a 35-year amortization loan that must be paid back in ten years, known as a bullet maturity. Because of the shorter payback period, the loan tends to have a lower interest rate of 4% compared to the 6% rate a loan paid off over 35 years. While it is likely that at the ten-year mark, KCHA will have to refinance the loan (which has some exposure), other properties may be able to take on debt at the time of refinancing. KCHA’s goal is always to lock in the lowest interest rate over the longest term possible. KCHA’s portfolio consists of almost 600 apartments of workforce housing and every month, KCHA pays down one month’s worth of debt. Often, these more seasoned properties can take on more debt without raising the rent on tenants. Property values continue to increase, and taking action to preserve now will likely be cheaper than waiting ten years. As a municipal body like a city, KCHA has a municipal credit rating of AA from S&P. This enables them to issue bonds to assist in financing properties. Housing authorities can borrow money on a tax-exempt basis, and there is no limit on the amount of bonds KCHA can access. Additionally, there are local funding options such as Transit Oriented Development bonds and private partnerships like Amazon and Microsoft. These tend to be more the exception than the rule. Riverstone Apartments in Federal Way is next to the incoming Link light rail station. Once the station location had been determined, KCHA immediately contacted the property owner to acquire and preserve the property before the station was built. Initially, the property owner was not willing to speak with KCHA but, over time, became willing to sell. Riverstone Apartments is the largest apartment complex near the incoming station. Between the current revenue stream and the debt KCHA was able to take on, a gap of around $11 million remained to acquire the property. KCHA was able to work with Microsoft to close the gap. Riverstone Apartments was a $70 million acquisition of 308 units of family-size housing across from a future light rail station at a price of half what it would have cost to build a brand-new building. While it is a lot of money, it is a relatively small amount to pay for a property of that size. Andrew Calkins reviewed how the area medium income (AMI) of a population served can impact the debt that can be leveraged to acquire a property. Looking at an example property that has a cost of $250,000 per unit, at 60% AMI, the financing could be around $60,757 a year per unit. But serving 30% AMI, the financing could be around $223,626 a year per unit. This is why KCHA institutes affordability over time, gradually changing the AMI service levels where the community needs the support. Acquisition and preservation of housing are cost-effective strategies for affordable housing from the local to national level. The more we can do today, the better we will be, as property does not get cheaper. Traci Buxton asked if it was possible to bond for 100% of the cost of the property. Andrew Calkins responded that it was not, and roughly 50-65% of the property could be bonded on a good day. Traci Buxton asked if KCHA refinances properties they own or just finance the properties. Tim Walter responded that they have done both; KCHA has structured some of the bond issues so the revenues can be pledged to future acquisitions. Traci Buxton asked if that meant properties are never free or clear or if KCHA pays any properties down. Tim Walter acknowledged that they use their equity to expand. KCHA also has development lines of credit, which can be used to acquire a property quickly. Traci Buxton asked how an organization like SKHHP can help KCHA. Tim Walter responded that SKHHP is more in a funder role and can find ways to help close the financial gap and identify tools that nonprofits can use. Traci Buxton asked if SKHHP could provide housing authorities with a loan or grant. Tim Walter confirmed that SKHHP could provide a grant, and the state has implemented a policy to encourage collaborations between local government and housing authorities. Traci Buxton asked how KCHA would respond to concerns that it might be double dipping between government agencies. Tim Walter responded that KCHA does not have a tax authority or a revenue stream. Housing authorities are like cities and public utilities that have their statute under state law. King County Council approves KCHA’s board, but that is the only connection between KCHA and King County. Traditionally, housing authorities administer federal programs such as the Section 8 Voucher program. Robin Walls added that the private market program discussed today and the federal programs are two distinct business lines. KCHA’s relationship to the County Council is related entirely to the administration of the federal programs. Claire Goodwin added that KCHA is eligible to apply to the Housing Capital Fund as an example of how SKHHP and KCHA could partner on preservation. VI. BOARD BUSINESS a. 2023 SKHHP HOUSING CAPITAL FUND RECOMMENDED ALLOCATIONS Claire Goodwin presented the 2023 Housing Capital Fund recommendation from the SKHHP Advisory Board. The Advisory Board completed their review of six applications to the Housing Capital Fund. The intent of the Executive Board meeting today is to finalize a funding recommendation from the Executive Board to transmit to the SKHHP member city councils for concurrence. Along with a funding recommendation, the Advisory Board was asked to discuss their funding rationale and any special conditions on the grant or loan they wanted to include. The Advisory Board also supported the Executive Manager’s ability to add administrative standards and special conditions for the Executive Board’s consideration. SKHHP funds serve as a green light and signal that a project is wanted in South King County. When reviewing applications, the Advisory Board considered project readiness and alignment with the Executive Board’s adopted funding priorities. SKHHP staff requested that the recommendation be limited to three or four projects based on staff capacity. There was also no requirement that all funds be spent. New information has been received since the October Executive Board meeting. SKHHP received third-party construction reports on all four new projects and shared those findings with the Advisory Board. Key items from the reports were also incorporated in the memorandum attached to the Board’s agenda packet. Based on a request from the Executive Board, per-unit costs based solely on the residential costs of construction have been added to the memorandum. Additionally, the square footage cost was calculated by unit size to show the individual costs of the studios, one-bedroom, two-bedroom, and three-bedroom. After the Advisory Board made their recommendation, Claire Goodwin noticed no line item for contingency funding in the Multi-Service Center Victorian Place II project’s budget. After consulting with industry experts, she learned that a 15% contingency for rehabilitation is standard in our market. Based on this new information and SKHHP’s status as a sole funder, Claire Goodwin recommends including a 15% contingency in the funding recommendation, bringing the total to $777,306 sourced from SHB 1406 funds. The Advisory Board did disclose potential conflicts of interest as part of their review of the applications. One Advisory Board member is employed by one of the project applicants, Multi- Service Center, and she did not participate or vote in the funding recommendation. Two Advisory Board members disclosed the possibility of a conflict. They are employed by separate organizations that discussed opportunities to collaborate with one of the project applicants. These members participated in the deliberations and voted on the recommendations. The disclosure happened before the vote was taken, and the conflicting transactions were unrelated to the matter being considered. The SKHHP Advisory Board’s funding recommendations were presented and Claire Goodwin reviewed each project. (See November 17, 2023 Agenda Packet for the complete Project Summary Memorandum.) Dana Ralph stated that the picture provided by Mercy Housing NW to SKHHP during the application process was from early development. Changes will likely be made, such as the community center potentially being removed. The housing itself is still mostly consistent. Eric Zimmerman asked if Dana Ralph could speak to Kent’s position on the Mercy Housing NW project. Dana Ralph responded that Kent is very supportive of the housing portion, but there is still work to be done on how it is laid out on the site and how it looks related to the station. The current design has the back of the community center facing the new street, designed to access the new light rail station. The city and developer are still working on the multiuse element, but Kent supports the housing partnership with Open Doors for Multicultural Families. Traci Buxton asked if the back of the Mercy Housing NW’s Community Center was on College Way, which is the name of the street on the Des Moines side. Dana Ralph responded that on the Kent side, the street is called S. 236th St., and the latest drawings had retail facing out on the street, but there was a question of how those stores would be able to load and unload products. The commercial piece needs to be refined further with the developer. The idea of Transit Oriented Development is that it provides housing and services but also elements that invite the larger community in. There have been challenges balancing the community space with the housing on site. One solution is that there are further discussions with Sound Transit on the south side of S. 236th St. to see if there is a way to focus more of the community elements on this site. Traci Buxton agreed that when you get off the light rail, you want to feel like you have arrived at a place, but facing the back of buildings feels like a street. Dana Ralph added that Mercy Housing has been responsive to the feedback and the city is optimistic the site will get there. Nancy Backus added that while Mercy Housing has a strong history of housing development, the community center was added as a requirement and is newer to the developer. Dana Ralph said that elements of the community center have been incorporated into the residential space, with retail space occupying the site's south side. Dana Ralph observed that she had hoped to fund the Burien project, which was the only homeownership opportunity. She hopes to see more homeownership opportunities in the future, which can create greater stability for the families in our community. Colleen Brandt-Schluter seconded the hope to fund the Burien project but acknowledged the geographic equity and project readiness issue. She asked if SKHHP staff could provide consultation and technical assistance to projects not funded to help them be better prepared for future investment. Claire Goodwin stated the plan was to share the third-party assessment with ecoTHRIVE (the Burien project). She also acknowledged that ecoTHRIVE did not apply to other funders this year. Brian Davis asked if the applications indicated the total project cost. Claire Goodwin stated that they did, and the information could be found in the November and October agenda packets. Brain Davis added that Federal Way is not opposed to any of the projects if the member jurisdiction supports them. Sunaree Marshall added about the ecoTHRIVE project that SKHHP is relatively new to public funding, and it would be a challenge to be the sole funder of a project. In SKHHP’s early days it makes sense to serve more as a leverage partner. Claire Goodwin agreed with that and clarified that SKHHP is the sole funder of the preservation project, which is different than a new development project. Nancy Backus added that homeownership projects would be considerably easier to fund if the legislature would amend SHB 1406 eligibility to include households earning up to 80% AMI. There have been conversations about planned legislative action for the 2024 Legislative Session. Dana Ralph said she was supportive of the idea. Sunaree Marshall stated that King County supports the LIHI Skyway project in unincorporated King County. Dana Ralph responded to the public comment that in the City of Kent, there is pass-through funding that goes to schools any time there is new construction through impact fees. She agreed that limited funding was provided for law enforcement and is working to make that change in the Legislature this year. Traci Buxton moved to adopt the Advisory Board funding recommendation amended to include a 15% contingency for the MSC Victorian Place II project, seconded by Dana Ralph. (11-0) Project Sponsor Location # of Units Project type Amount requested Recommended Funding – HB 1590 Recommended Funding – SHB 1406 Mercy Housing NW Rental Rental Rental Center Moines Rental Homeownership Center Rental TOTAL $4,970,000 $777,306 b. 2023 THIRD QUARTER PROGRESS REPORT Claire Goodwin reviewed the 2023 third quarter progress report, noting that it was a time of action and shared vision among SKHHP. We saw the cities of Kent and Covington step up and pool their HB 1590 funds, which quadrupled the funding we could provide for affordable housing. SKHHP staff has been busy this quarter. A couple highlights include efforts by Dorsol Plants to recruit for the Advisory Board by engaging with over forty organizations and individuals. Interviews will be conducted in December to bring candidates for consideration to the Executive Board in January 2024. The Housing Capital Fund has taken significant staff time, including pooling the new source of revenue, administration of the capital fund, and developing capital contracts and funding agreements. It was all worth it. The work advancing subregional affordable housing preservation strategies is underway with SoKiHo (or the South King County housing planners). This quarter, SKHHP staff met with Congressman Adam Smith to advocate for South King County housing needs. SKHHP staff also collaborated with ARCH and King County to apply for the HUD PRO Housing Grant. Finally, SKHHP staff coordinated several educational briefings for the Executive Board. The budget has two key differences from the one presented last quarter. This includes higher interest earnings than anticipated due to favorable interest rates and a higher beginning fund balance. The higher beginning fund balance is due to the budgeted number adopted in the 2023 Work Plan back in 2022 was a conservative estimate. Due to high inflation and delays in staff hiring, the initial starting balance is higher. Both are good news for SKHHP. The estimated ending fund balance is $426,827. The HB 1590 funding will show up in the quarter four report, as will the first expenditures for the 2022 Housing Capital Fund projects. Sunaree Marshall asked if SKHHP was tracking a change in the Legislature that put in a new allowance for administrative expenses for SHB 1406 funds and if any of those dollars were available to SKHHP. Claire Goodwin stated that it is not included in the current budget but would be something to consider during future budget discussions. VII. UPDATES/ANNOUNCEMENTS SKHHP Chair and Vice-Chair elections will likely be held at the January 19 meeting. Executive Board members interested in serving or nominating someone for those positions, please email Claire Goodwin by January 2, 2024. The December Executive Board meeting will be canceled. The next Executive Board meeting will be on January 19, 2024, at 1 pm. Claire Goodwin has reached out to check in with each Executive Board member by the end of the year. Executive Board members who still need to meet should connect with her. Hannah Bahnmiller has transitioned to a new role outside of South King County. Her collaboration and support were appreciated and will be missed. Council President Delostrinos Johnson representing Tukwila on the Executive Board will be transitioning from her role at Tukwila and on the SKHHP Executive Board. Dana Ralph expressed gratitude for her time and work on the Board. Nancy Backus also expressed gratitude and wished her great success in the future. VIII. ADJOURN Nancy Backus adjourned the meeting at 3:02 PM. Memorandum South King Housing and Homelessness Partners TO: SKHHP Executive Board FROM: Claire Goodwin, Executive Manager; Dorsol Plants, Program Coordinator DATE: January 19, 2024 RE: Appointing Members to the SKHHP Advisory Board OVERVIEW The SKHHP Advisory Board had six vacancies as of December 2023. SKHHP staff identified expertise and backgrounds to target in recruitment in critical areas such as housing development, experience as a landlord, philanthropy, and people with lived experience related to affordable housing. Over forty potential applicants were contacted by the SKHHP Program Coordinator between June and October 2023, and thirteen applications were received. An interview panel consisting of SKHHP Executive and Advisory Board members interviewed a total of eleven candidates over three meetings and identified six strong candidates for appointment to the SKHHP Advisory Board. Once appointed, the Advisory Board will reach full membership of fifteen members. Candidates for Appointment Candidate Name Organization Represented or Community Member Area of Focus Term End Date Hamdi Abdulle Kathleen Hosfeld Olga Lindbom Social Services BACKGROUND The SKHHP Formation Interlocal Agreement (ILA) requires SKHHP to establish a 12-15 community member Advisory Board appointed by the Executive Board. The role of the Advisory Board is to provide advice and recommendations to the Executive Board on land and/or money resource allocation for affordable housing projects, input on policy needs related to housing stability, program design, and development, recommendations for emergency shelter and other immediate affordable housing needs, and to provide public education and community outreach services. The ILA requires that members appointed to the Advisory Board must know and understand affordable housing, be committed to furthering affordable housing in South King County, and represent diverse community perspectives. Appointments will last four years, with service limited to two consecutive terms. Current Advisory Board Roster Candidate Name Organization Represented or Community Member Area of Focus Term End Date Andrew Calkins KC Housing Authority Regional Housing Organization September 24, 2025 Ashley Kenny Mary's Place Homelessness September 24, 2025 Patience Malaba Housing Development Consortium Regional Housing Organization January 20, 2027 Tina Narron Verity Credit Union Financial January 20, 2027 Uche Okezie Community Member Nonprofit Developer September 24, 2025 Maju Qureshi Multi-Service Center Regional Housing Organization September 24, 2025 Cathy Sisk Community Member Lived Experience January 20, 2027 Dr. Linda Smith Community Member Homelessness September 24, 2025 Menka Soni Community Member Homelessness September 24, 2025 PROCESS Interviews were initially scheduled over a two-day period, but a third day was added to accommodate a candidate that was ill. 13 applications were received, but only 12 were able to be interviewed. The interview panel consisted of SKHHP Chair Mayor Nancy Backus, Vice- Chair Mayor Dana Ralph, Executive Board Member Brian Davis, and Advisory Board Member Dr. Linda Smith on December 13, 2023 and Advisory Board Member Maju Qureshi on December 18 and 20. Recordings of the interviews are available upon request to SKHHP staff. Candidates were provided with three questions in advance of the interview and were asked to answer all three in three minutes. The interview panel had five minutes to ask follow-up or additional questions of each candidate. The three questions provided to candidates were: 1. Please tell us about yourself. How do you think your experience, skillsets, and perspective would provide value to the SKHHP Advisory Board in carrying out its mission to advise the Executive Board? 2. Please tell us what interests you about serving on the SKHHP Advisory Board. 3. Is there an affordable housing policy or strategy (either current or future) that you see benefiting South King County? -------------------------------- Resolution No. 2024-01 January 19, 2024 Page 1 of 2 RESOLUTION NO. 2024-01 A RESOLUTION OF THE EXECUTIVE BOARD OF THE SOUTH KING HOUSING AND HOMELESSNESS PARTNERS (SKHHP) APPOINTING MEMBERS TO THE SKHHP ADVISORY BOARD WHEREAS, the SKHHP formation interlocal agreement (ILA) requires SKHHP to establish a 12-15 community member Advisory Board to advise SKHHP’s Executive Board on the matters specified in Section 8 of the ILA; and WHEREAS, Advisory Board member resignations have left Board vacancies that should be filled so that the Advisory Board is fully staffed; and WHEREAS, to fill these Board vacancies, SKHHP staff conducted a recruitment and selection process from July to October 2023 to identify eligible SKHHP Advisory Board applicants that met the Board’s ILA membership criteria; and WHEREAS, in December 2023, an interview panel comprised of SKHHP Executive and Advisory Board members identified the persons listed in Section 1 of this Resolution as strong candidates for appointment to the SKHHP Advisory Board. NOW, THEREFORE, THE EXECUTIVE BOARD RESOLVES as follows: Section 1. The SKHHP Executive Board hereby appoints the following individuals as members of its Advisory Board to serve a four-year term (and no more than two consecutive terms), with terms starting upon the adoption of this Resolution: 1. Hamdi Abdulle (representing African Community Housing & Development) Term Length: Appointment date through January 19, 2028 2. Maria Arns Term Length: Appointment date through January 19, 2028 -------------------------------- Resolution No. 2024-01 January 19, 2024 Page 2 of 2 3. Kent Hay Term Length: Appointment date through January 19, 2028 4. Kathleen Hosfeld (representing Homestead Community Land Trust) Term Length: Appointment date through January 19, 2028 5. Olga Lindbom (representing Open Doors for Multicultural Families) Term Length: Appointment date through January 19, 2028 6. Rumi Takahashi (representing SMR Architects) Term Length: Appointment date through January 19, 2028 Section 2. This Resolution shall become effective upon passage and signatures. Dated and signed this _____ day of _________________, 2024. SOUTH KING COUNTY HOUSING AND HOMELESSNESS PARTNERS ____________________________ NANCY BACKUS, SKHHP EXECUTIVE BOARD CHAIR TIF 101 a nd Afforda ble Housing Prepa red for South King Housing a nd Homelessness Pa rtners January 11, 2024 Insert image/graphic on top of this box. Leave green border. Agenda What is TIF? What are the key elements? How does it produce revenue? How to think about affordable housing provisions. Tax Increment 101 Ta x Increment Fina ncing Economic development tool available to cities, counties, and ports Allows increased property tax revenue stemming from private development to be used “up front” to invest in infrastructure to support the development Designed for a specific site (or area) where there is a high level of certainty that the development will proceed forward The desired private development would not be expected to occur solely through private investment within the reasonably foreseeable future without the proposed public improvements. Legisla tion •Passed in 2021 Session •Chapter 39.114 RCW •Limited to cities, counties, and ports Key Terms Tax Increment Area –TIA Base Value -certified assessed value in the TIA for the current tax year Increment Value –value for the tax year using the current assessment year minus the base value Public improvement –owned by a local government TIF Projects Public ownership (ca n be inside or outsideTIA) •Street a nd roa d construction •Wa ter a nd sewer system construction, expa nsion, a nd improvements •Sidewa lks a nd other nonmotorized tra nsporta tion improvements a nd streetlights •Pa rking, termina l, a nd dock fa cilities •Pa rk a nd ride fa cilities or other tra nsit fa cilities •Pa rk a nd community fa cilities a nd recrea tiona l a rea s •Stormwa ter a nd dra ina ge ma na gement systems •Electric, broa dba nd, or ra il service •Mitiga tion of brownfields Also a llowed expenditures (ca n be inside or outside TIA) •Purcha sing, reha bilita ting, retrofitting for energy efficiency, a nd constructing housing for the purpose of crea ting or preserving long -term a fforda ble housing; •Purcha sing, reha bilita ting, retrofitting for energy efficiency, a nd constructing child ca re fa cilities serving children a nd youth tha t a re low -income, homeless, or in foster ca re; •Providing ma intena nce a nd security for the public improvements; •Historic preserva tion a ctivities a uthorized under RCW 35.21.395; or •Reloca tion a nd construction of a government -owned fa cility, with written permission from the a gency owning the fa cility a nd the office of fina ncia l ma na gement. Conditions •Ordinance designating increment area and identifying the public improvements to be financed and the type of private development that would occur. •Ordinance must be adopted by June 1 in order to create it for the following tax year. •Cannot add additional public improvements or change the boundary of the increment area once adopted. TIF Conditions Conditions Prior to the a doption of a n ordina nce a uthorizing crea tion of a n increment a rea , the loca l government must: •Hold a t lea st two public briefings for the community solely on the ta x increment project tha t include the description of the increment a rea , the public improvements proposed to be fina nced with the ta x a lloca tion revenues, a nd a deta iled estima te of ta x revenues for the pa rticipa ting loca l governments a nd ta xing districts, including the a mounts a lloca ted to the increment public improvements. •Submit the project a na lysis to the office of the trea surer for review a nd consider a ny comments tha t the trea surer ma y provide upon completion of their review of the project a na lysis a s provided under this subsection. •The trea surer must complete the review within 90 da ys of receipt of the project a na lysis a nd ma y consult with other a gencies a nd outside experts a s necessa ry. •Upon completing their review, the trea surer must promptly provide to the loca l government a ny comments rega rding suggested revisions or enha ncements to the project a na lysis tha t the trea surer deems a ppropria te ba sed on the requirements in subsection (2) of this section. TIF Conditions TIF PROJECT ANALYSIS •Bounda ries a nd dura tion of the increment a rea . •A description of the expected priva te development within the increment a rea , including a compa rison of scena rios with a nd without proposed public improvements. •A description of the public improvements, estima ted public improvement costs, a nd the estima ted a mount of bonds or other obliga tions expected to be issued. •Assessed va lue of rea l property within the increment a rea a nd a n estima te of the increment va lue a nd ta x a lloca tion revenues expected. •Estima te of the job crea tion rea sona bly expected to result from the public improvements a nd the priva te development. •An a ssessment of a ny impa cts a nd necessa ry mitiga tion to a ddress impa cts on a fforda ble a nd low -income housing, loca l business community, loca l school districts, loca l fire service •If 20% of the a ssessed va lua tion of fire district is within the increment level or there is a n increa se in level of service to increment a rea , must negotia te a mitiga tion pla n. Office of the Trea surer Review •Focused on the elements of the Project Analysis •Keenly interested on analysis looking at downside risk financial risk •Wha t if development doesn’t proceed a s a nticipa ted? •Are there fina ncia l stra tegies in pla ce to sa fegua rd the fina ncia l position of the city? •Debt issua nce a mount a nd timing? •Reserves? •Developer risk sha ring? •Other? Bounda ry •No more tha n two a ctive increment a rea s (TIA) per sponsoring jurisdiction a nd they ma y not overla p. •Increment a rea s ma y not (a t the time of their crea tion): •Tota l more tha n $200 million in a ssessed va lua tion, or •Be more tha n 20% of the tota l a ssessed va lua tion of the sponsoring jurisdiction. •Idea l Increment Area ? •Low Ba se Va lua tion •La rge nea r - (a nd long -) term development (va lue, sca le) •Rela tively sma ll infra structure investment TIF Boundary Considerations Ba se a nd Increment •Base value is the taxable real property value in the year TIA is formed. •Increment value 100% of any increase in the true and fair value of real property in an increment area that is placed on the tax rolls after the increment area is created. •The increment value can not be less than zero (no ”negative” payments). TIF Ba se a nd Increment TIF Example of “Increment” Value Example Increment Values (used for revenue determination). Assume $10 M in base value. $500K in new construction value added annually. Levy a nd Revenue •All regular levies in use for TIF except (includes voted lifts): •Sta te school •Excess levies •Loca l schools TIF Affects Regular Levies Levy a nd Revenue Example site in Shoreline •2023 Tax rate of $9.68 •Levies for TIF = $3.46 •36% levy “capture” rate TIF Levy Use City Fina ncing •Limited to the a mount needed to fund the public improvements outlined in ordina nce. •Limited to 25 yea rs. •Bonds issued will count a ga inst the debt ca pa city of the issuer; no sta te ba ck up. •Additiona l revenues not needed to repa y bonds or pa y other costs of the public improvements a re then a lloca ted ba ck to the ta xing districts in proportion to their regula r ta x levy ra tes. •Loca l governments crea ting a n increment a rea ma y be responsible for reimbursing the county a ssessor or trea surer for costs. TIF Finance Considerations How Did TIF Change Property Tax Changes to apportionment of taxes Base Value taxes collected by affected jurisdiction Increment Value taxes apportioned to TIF sponsor jurisdiction Changes to the levy calculation rules Creation of an Increment Add-On Value Allows for a larger maximum allowable levy under TIF 17 TIF crea ted two sepa ra te but rela ted cha nges to sta te property ta x la w. Offset and “No Harm” Connection Works at the District Level Works at the Property Level District Exa mple 18 TIF Increment Value Flow Increment add-on value (like new construction value add-on) expands the levy capacity to cover TIF tax allocations. Insert image/graphic on top of this box. Leave green border. Exa mple Project Example Project in Shoreline •Based on The Alexan •Before construction: site assessed value about $5.2 M •300 units of multifamily •Assumed to develop in 2025 Exa mple Project •Includes city and all TIF levies •$5.67 M in present value @ discount rate of 4.5% •$11.2 M in nominal cashflow (the maximum amount available for principal and interest payments) •Could support a bond in $7 M range TIF Exa mple Project •TIF cash flows can take time to ramp – most revenue in the later years. •Sponsors must have a financial plan for covering early “deficit” years. •Fiscal strategy must look at out year financial risk. TIF in Moses Lake Insert image/graphic on top of this box. Leave green border. Afforda ble Housing Provisions •Project Analysis •Eligible Expenditures Project Ana lysis •Language in RCW: An assessment of any impacts and any necessary mitigation to address the impacts identified on the following: (i) Affordable and low -income housing •Has been interpreted to mean specific projects, not in general •Criteria: Policy/plans, Displacement, Construction, Negative operating/occupancy impacts. Assess Impact In Project Analysis Eligible Expense •Language in RCW: Expenditures for any of the following purposes: (i) Purchasing, rehabilitating, retrofitting for energy efficiency, and constructing housing for the purpose of creating or preserving long -term affordable housing; •These are exclusive (doesn’t have to be ”energy efficiency in affordable housing”. •Expenditures for affordable housing must be named in the creating ordinance (can not be added later). Use of TIF Funds Tension Points For Government Top 3 Issues 1.Opportunity Cost •Only a llowed two concurrent TIF a rea s -wha t's the best opportunity 2.Development Scale and Timing Certainty •Drives revenue a nd infra structure outla ys 3.TIF Revenue Cash Flows and Fiscal Responsibility •Some “deficit” yea rs –must secure debt covera ge 4.Infrastructure Outlay Amounts and Timing •Infra structure need ha s been la rge, TIF funds pledged for debt service 2024 State Legislative Update Dorsol Plants, SKHHP Program Coordinator January 19, 2024 SKHHP Executive Board 1 SKHHP Adopted 2024 Legislative Priority South King County is facing a growing affordable housing crisis. In order to address this crisis, we need to fund all aspects of affordable housing, including: • Homeownership for moderate income households and below • Preservation of naturally occurring affordable housing (NOAH) • Land acquisition to secure permanent affordability • Permanent supportive housing (PSH) • Infrastructure around affordable housing developments • Workforce housing 2 2024 Legislative Session Timeline First Day of 2024 Legislative Session 8 Jan. Policy Committee Cutoff 31 Jan. Fiscal Committee Cutoff 5 Feb. AWC’s City Action Days 2024 7 Feb. Chamber of Origin Cutoff 13 Feb. Opposite Chamber Policy Committee Cutoff 21 Feb. Opposite Chamber Fiscal Committee Cutoff 26 Feb. Opposite Chamber Cutoff 1 Mar. Sine Die 7 Mar. 3 Governor’s 2024 Budget Highlights: Capital Items Agency Amount Rapid Capital Housing Acquisition program Department of Commerce $100,000,000 Housing for Intellectual & Developmental Disabilities (IDD)Community Department of Commerce $4,500,000 Trust land affordable housing development project Department of Natural Resources $2,253,000 Total $106,753,000 4 Governor’s 2024 Budget Highlights: Operating Items Agency Amount Housing Emergency Fund Department of Commerce $2,500,000 Support local housing programs Department of Commerce $10,000,000 Landlord Mitigation and Tenant Preservation programs Department of Commerce $7,500,000 Housing for human trafficking victims Department of Commerce $1,500,000 Youth Direct Cash program Department of Commerce $550,000 Trust Land Affordable Housing Development Department of Natural Resources $2,000,000 Housing Emergency Fund Department of Commerce $2,500,000 Total $24,050,000 5 Funding Affordable Housing Bill Number Description Status SB 5949 Concerning the capital budget. 1/11 public hearing in the Senate Committee on Ways & Means HB 2089 Concerning the capital budget. 1/11 public hearing in the House Committee on Capital Budget HB 1628 Increasing the supply of affordable housing by modifying the state and local real estate excise tax. 1/8 By resolution, reintroduced and retained in present status. House Rules "X" file SB 6065 Concerning the property tax exemption for cities or counties providing affordable housing to qualifying households.1/9 First reading, referred to Housing SB 5118 Concerning modifying the multifamily property tax exemption to promote development of long-term affordable housing. 1/10 Public hearing in the Senate Committee on Housing 6 Funding Affordable Housing Continued Bill Number Description Status HB 1796 Concerning property tax exemptions for certain mobile homes and manufactured homes. 1/8 By resolution, reintroduced and retained in present status HB 1343 Providing local governments with options to grant rent relief and preserve affordable housing in their communities. 1/8 By resolution, reintroduced and retained in present status SB 5493 Limiting a business and occupation tax deduction for financial institutions to fund affordable housing 1/8 By resolution, reintroduced and retained in present status HB 2219 Providing tax relief for nonprofit development of affordable housing.1/9 First reading, referred to Finance HB 2071 Concerning residential housing regulations. 1/18 executive session in the House Committee on Housing 7 Housing and Land Use Bill Number Description Status SB 6024 Promoting community and transit-oriented housing development. 1/11 public hearing in the Senate Committee on Local Government, Land Use & Tribal Affairs HB 2160 Promoting community and transit-oriented housing development. 1/9 Public hearing in the House Committee on Housing HB 1517 Promoting transit-oriented development. 1/8 By resolution, reintroduced and retained in present status SB 5466 Promoting transit-oriented development. 1/8 By resolution, reintroduced and retained in present status. Senate Rules "X" file HB 1892 Concerning the workforce housing accelerator program. 1/15 executive session in the House Committee on Housing 8 Housing and Land Use Continued Bill Number Description Status HB 1998 Concerning co-living housing. 1/11 executive session in the House Committee on Housing SB 5901 Concerning co-living housing. 1/9 Public hearing in the Senate Committee on Local Government, Land Use & Tribal Affairs HB 2084 Establishing an oversight committee to improve construction-related training and pathways to state registered apprenticeships in state correctional facilities. 1/8 First reading, referred to Community Safety, Justice, & Reentry HB 1944 Establishing a running start for the trades grant program. 1/8 First reading, referred to Education HB 2123 Establishing a running start for the trades grant program. 1/8 First reading, referred to Education 9 Housing and Land Use Continued Bill Number Description Status HB 1507 Concerning fair housing training for officers or board members in common interest communities. 1/8 By resolution, reintroduced and retained in present status HB 2276 Increasing the supply of affordable and workforce housing. 1/18 public hearing in the House Committee on Finance SB 6191 Increasing the supply of affordable and workforce housing. 1/11 First reading, referred to Ways & Means SB 6015 Concerning residential parking configurations. 1/11 public hearing in the Senate Committee on Local Government, Land Use & Tribal Affairs HB 2113 Concerning compliance with the housing element requirements of the growth management act. 1/18 executive session in the House Committee on Housing HB 1245 Increasing housing options through lot splitting. 1/10 First reading, referred to Local Government, Land Use & Tribal Affairs 10 Housing and Land Use Continued Bill Number Description Status SB 5961 Improving housing stability for tenants subject to the residential landlord-tenant act and the manufactured/mobile home landlord- tenant act by limiting rent and fee increases, requiring notice of rent and fee increases, limiting fees and deposits, establishing a landlord resource center and associated services, authorizing tenant lease termination, creating parity between lease types, and providing for attorney general enforcement. 1/12 public hearing in the Senate Committee on Housing HB 2114 Improving housing stability for tenants subject to the residential landlord-tenant act and the manufactured/mobile home landlord- tenant act by limiting rent and fee increases, requiring notice of rent and fee increases, limiting fees and deposits, establishing a landlord resource center and associated services, authorizing tenant lease termination, creating parity between lease types, and providing for attorney general enforcement. 1/11 public hearing in the House Committee on Housing 11 Questions? 12