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HomeMy WebLinkAboutApprovedMinutes_SKHHP_ExecutiveBoard_August_16_2024 SKHHP Executive Meeting August 16, 2024 MINUTES I. CALL TO ORDER Nancy Backus called the meeting to order at 1:04 PM. 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; Kim Bachrach, City of Federal Way; Sean Kelly, City of Maple Valley; Carmen Rivera, City of Renton; James Lovell, City of SeaTac; Kristina Soltys, City of Covington; Thomas McLeod, City of Tukwila; Eric Zimmerman, City of Normandy Park. Others present: Dorsol Plants, SKHHP Program Coordinator; Maria Arns, SKHHP Advisory Board; Carl Schroeder, Association of Washington Cities; Angie Mathias, City of Renton; Nicholas Matz, City of Normandy Park; McCaela Daffern, King County; Laural Humphrey, City of Tukwila; Evan Maxim, City of SeaTac; Liz Stead, City of Burien; Matt Torpey, City of Maple Valley; James Alberson, City of Renton Alternate; Dafne Hernandez, City of Covington. II. PUBLIC COMMENT No public comment was provided. III. APPROVAL OF JULY 19, 2024 MINUTES Sean Kelly moved to approve the July 19, 2024 minutes as presented, seconded by Carmen Rivera. Motion passed (9-0) IV. AGENDA MODIFICATIONS No modifications to the agenda were made. V.BOARD BRIEFING a. 2025 LEGISLATIVE SESSION UPDATE AND HOW TO ENGAGE THE LEGISLATURE Carl Schroeder, the Government Relations Deputy Director for the Association of Washington Cities (AWC), provided a brief overview of the housing and homelessness issues being considered for the upcoming 2025 state legislative session. The biggest issue dominating thoughts in the interim between legislative sessions is rent control or stabilization. In the last session, the House passed a bill that would have capped the annual rental increase at 7% in most private market rental buildings over ten years old or mobile home parks. The bill failed to advance out of the Policy Committee in the Senate, was passed again in the House, and was referred to the Senate Ways and Means Committee. There was not enough support at the Ways and Means Committee to pass, but the makeup of that committee will be significantly different in the 2025 session. There will also be a new Senate Majority leader, who will change the dynamics of the upcoming sessions. Allies of the rental industry are developing alternate proposals focused more on the standardization of a rental registry and inspections, which would use the registration fee to raise funds for rental assistance. Eric Zimmerman joined at 1:21 PM AWC has worked for many years to find a dedicated revenue source for subsidized housing. Statewide, we know that we need over 1 million new homes, with over half needing to be affordable to 50% AMI or less, which the market is not set up to serve. AWC has supported enhancements to the Real Estate Excise Tax (REET) at the state and local levels. The proposal seems to be losing steam partly because the economy around the commercial real estate market continues to be depressed. A lot of high-value properties that would have been subject to the new REET increment, properties valued over $3 million, would be commercial and multi- family rentals, which have successfully made the argument that now is a bad time to be impacting the market with new taxation with such a demand for their product. The contrast is that the contemplated percentage increase is significantly lower than the commission the folks buying and selling the buildings are receiving, and AWC believes it's still a viable policy. A bill with better chances this year would be the short-term rental tax, which could allow cities to levy at one point up to a 10% tax based on the daily rental rate of a short-term rental like an Airbnb. The tax rate was reduced to 4%, passed the Senate, and got far in the House before dying in the House Finance Committee. The industry has expressed some interest in discussing the possibility of this tax, which could be a good tool. It's important for SKHHP to be aware that Washington has some significant budget challenges this year. Challenges include the underwater transportation budget due to a recently passed transportation package. The legislature must raise funds to meet the obligations already passed in the package. The general fund is also challenged in a few areas, and a couple of initiatives on the ballots could impact the budget. The legislature will not be able to raise funds for every critical issue that needs to be addressed, and housing advocates will need to be vocal about the need to fund housing issues. There has been a trend in the legislature in the last few years to take decisions historically left at the local level and move them to the state level. AWC has been reasonably successful in blunting the worst of those efforts at the city level and worked toward an agreement with the legislature on the Middle Housing Bill, which provides a significant state-level upzoning of single-family neighborhoods with flexibility for local governments. An unfortunate side effect is that the legislature has become more receptive to preemption proposals than they had been previously. The most prominent example is the Transit Oriented Development (TOD) bill, which would significantly increase development capacity near light rail and bus rapid transit stops. This bill didn't pass, likely due to a disagreement between the development and the low-income housing community. The low-income housing community wanted to ensure some degree of affordability included in the bill if the state is going to mandate upzones because it's challenging to put an inclusionary zoning or another requirement in place if the developer has already been provided capacity. The developer community was against any affordability requirement, even one as low as 1%. AWC's position was to put an affordability requirement at the state level but to allow the local jurisdictions to reduce the requirement based on the market conditions in their area. AWC did have concerns about the bill, including the possibility of encouraging further preemption and the use of bus rapid transit stops creating long corridors of capacity. Proponents of the bill would have only applied the mandatory provisions to the Puget Sound area because cities had been so far along in their comprehensive plan work. This bill is likely to return in 2025, but it isn't gaining support at this point. State approval of housing or development regulations that flow from the Housing Elements is likely to return in 2025. This bill is based on a lack of trust that cities will follow the recent state law changes around housing, and there is a desire to have Commerce monitor cities' progress on their work. AWC had several concerns about the bill, including that it would have delayed implementing the changes from the middle housing and ADU bills for six months without a clear value add. The bill would have also put Commerce in a position with few resources and staff to speak on housing elements that are often a balance of interest at the local level. There was no expectation that Commerce would visit communities to capture these dynamics before approving plans. If the state can't be involved in those concerns locally, it would be challenging for Commerce to understand the dynamics unique to the jurisdiction. Another potential bill concerns oversight of emergency housing and shelter placement in cities. The bill was born out of some recent controversies in King County last year around several canceled projects and a service facility having their license temporarily revoked. Those agencies advocated for a way for the state to intercede on their behalf at the local level, and a bill passed the House but did not move out of the Senate Local Government Committee. One solution was the creation of a dispute resolution system so that providers could request resolution between themselves and the city. There could be a value add for cities, but there are potential versions of the bill that would also be problematic, so AWC will watch how this bill progresses next year. AWC is aware of a strong desire from cities to improve affordable homeownership, particularly condominiums. The issue with condominiums is the liability insurance required for the development, which was implemented to protect buyers from purchasing a home built with poor construction standards. This was implemented after a period where bad actors in the construction industry left new homeowners with expensive repair work. The construction and insurance industry has identified that this has led to increased litigation even without a defect in the home being recognized, leading to costly insurance rates. The challenge is that the insurance industry isn't willing to identify which policies would result in them reducing their rates, requiring lawmakers to try to resolve the issue on their own. The desire to protect consumers has remained in the legislature, so wholesale change on condominiums isn't likely. AWC has done some work on the issue around smaller projects and is seeking to ask the state if they can play a role in researching the insurance impacts. Another issue challenging the homeownership environment is the ethic in this state that growth should pay for growth. The idea is that the existing community shouldn't have to pay to make it more feasible for new development and that new development should pay for the impacts to the existing community. While there is merit to this ethic, the reality is that it does raise the cost of new development, and there is a desire to reduce costs. Ways the state has tried to accomplish this include paying for infrastructure or impact fees. Permit reform and reducing regulatory costs are other routes that policymakers take to reduce costs. The challenge is ensuring that those cost savings translate to the homebuyer. Without accountability, the market will sell the home for what someone will pay. Mobile home parks are another area experiencing challenges. Some firms have been purchasing mobile home parks and raising rents very high. Mobile home parks tend to be naturally occurring affordable housing, and there is a lot of interest in figuring out how to preserve them. “Opportunity to Purchase” is already in place, but securing financing can be a real challenge. AWC is also exploring if some low-income infrastructure programs will support mobile home parks. Often, homeowners need help purchasing parks due to the backlog of repairs to infrastructure, and getting them back in working condition is incredibly expensive. A committee of 35 members from large and small cities intended to represent the communities around the state selects AWC legislative priorities. The committee has been working since May and has received feedback from surveys and other AWC committees. Housing funding issues are rising to the top of the discussion this year. After the committee selects its 3-5 priorities, the AWC Board considers and adopts them, and that is when conversations with legislators about what AWC is hoping to accomplish during the legislative session begin. City officials are very busy and may ask why advocating at the state level is vital with so many competing priorities, but the legislature is adopting policies or making budget decisions that impact the everyday functioning of cities. Legislators will hear a lot from advocates or single- interest organizations on specific policies, but it's essential for the legislature to hear from the city officials about the actual impacts of their policy decisions. The 2025 legislative session will be the first biennium session and will last 105 days. The key responsibility of the legislature this session will be to establish the biennium budgets, and this year, it is hard to know what to expect until after the election. This can often be the case when waiting to see which legislators are elected, but this year, two ballot initiatives could directly impact the budget. This will be on top of what is happening in the current economy. There are no major drops in the economic forecast, but if it were to occur, that would impact the session. Carl Schroeder wanted to reinforce that to be successful in the legislature; you must be engaged both during and outside the session. You're lucky to have time with a legislator during the session, but it won't be the time to start a conversation. If rental stabilization interests or concerns you, you should begin the conversation now, as legislators are beginning to make commitments with each other before the session. Carl Schroeder encouraged the Executive Board to find times to invite and meet with the state delegation outside the session. AWC encourages smaller cities to include legislators in the city's budget discussion to help understand the challenges of working with a smaller budget. AWC tries to keep cities informed during the session using various communication tools. AWC will send out a weekly bulletin and hold an action call on Friday during the legislative session, which any city official can join and ask questions or raise concerns. AWC also debuted a bill tracker last year, which allows you to see all the bills they are tracking in one place and see where the bill is currently in the legislature. Even though most housing goes into cities and counties, local governments are only sometimes seen as the primary stakeholders, and lately, they have been seen as a barrier to positive housing outcomes. Carl Schroeder encouraged the Executive Board to insert themselves in the conversation because the state forcing decisions on local jurisdictions is unsustainable. Most cities want good, smart growth in their communities; we all see different ways to get there. There is an idea among some legislators that cities are actively choosing not to build housing, but in most cases, cities are not in the lead and need development partners to produce housing. There are a lot of individual market dynamics; the City of Everett has had unlimited density for years but has yet to see the upzoning often predicted by advocates seeking to increase upzoning. There has been a trend toward simplicity in the arguments around housing, especially supply enhancement, which SKHHP can help by providing a deeper context. Regional partnerships like SKHHP are popular among state legislators, which is an advantage for advocating through SKHHP. Additionally, by combining our region, we have also combined our state delegation, which creates a larger group of state legislators who could advocate for the specific needs of South King County. Nancy Backus asked if there was one bill that Carl Schroeder could see passed what it would be. Carl Schroeder responded that he hopes the REET bill returns, which would be the most impactful over the long term. There is a strong need for dedicated revenue sources to build the housing needed to fill the gap. With the challenges in the system, it will take real revenue to fix them. VI.BOARD BUSINESS a. SKHHP LEGISLATIVE PRIORITY Dorsol Plants informed the Executive Board that the legislative priority flyers SKHHP staff produced from 2022 to 2024 were included in the agenda packet and were available on the SKHHP website. Dorsol Plants explained that one of South King County's greatest strengths is its diversity, but it can also be challenging. If a city is like a cake, the end goal is the same for every baker, but the different flavors and ingredients make each cake special. Want to ride a train to work every day? South King County has a city for that. Want to have a beautiful waterfront with incredible cultural events? South King County has that for you, too. Enjoy having airplanes flying overhead. South King County can make that happen. Each SKHHP member must provide housing, but the need to accomplish that goal varies across our region. Dorsol Plants explained that SKHHP's legislative priorities became less specific and more general to ensure that SKHHP represents the whole region. SKHHP staff have been previously directed not to take specific positions on legislative bills. This is largely because bills change rapidly, and legislation that would have benefited all of South King County can change, requiring SKHHP to rethink whether that item still works for its communities. By the time every jurisdiction can reconnect and confirm its position, the same bill could have undergone additional changes. This was why the Executive Board made changes to its approach last session, focusing on one single priority that benefits our whole region: "fund all aspects of affordable housing." Over the next two decades, SKHHP cities will need over 37,000 units to meet the projected need for affordable housing. To do that, SKHHP will need more funding, and despite some hard work last session, that hasn't changed moving into 2025. Last year, SKHHP Executive Board members were asked to include the SKHHP flyer with their jurisdictions' materials and serve as ambassadors to the state delegation on behalf of SKHHP. SKHHP staff also helped to do the same during the session and ensure that South King County's good work is noticed. An example of this includes Claire Goodwin's work in partnership with SSHA3P during the last session to educate legislators on our capital fund about SB 6173. SB 6173 enabled portions of the SKHHP Housing Capital Fund to support affordable homeownership projects serving up to 80% AMI. The bill was passed, and SKHHP staff modified our funding guidelines to reflect the increased access for this cycle. Another approach that SKHHP began last year was to use its regional voice to uplift priority projects in SKHHP member jurisdictions. SKHHP staff would work with SoKiHo and the Staff Work Group to identify what projects are being prioritized in SKHHP communities seeking capital support or CHIP funding. Often, it can be easier for legislators to connect with a specific project when considering funding over an ask that might sound more open-ended, like adding to our capital fund. Any projects SKHHP highlights would be selected by the individual jurisdiction and align with the priorities of that community. SKHHP could do the same for any Housing Capital Fund projects seeking additional funding. SKHHP staff sent out a couple of email alerts related to bills that could impact our work during the last session. Staff did not take a position on those bills but provided information to the Executive Board via email so that individual board members or their city could respond appropriately to their community's needs. Thinking ahead to the 2025 legislative session, Dorsol Plants has heard a desire to see better collaboration between the state and local housing authorities regarding acquiring and preserving Naturally Occurring Affordable Housing (NOAH). This work ties directly into SKHHP's 2025 Work Plan, which has SKHHP staff sharing opportunities to preserve NOAH. Increased funds are essential to preserve those properties. By highlighting SKHHP's work through the Affordable Housing Inventory Dashboard and our Subregional Preservation Strategies, SKHHP can communicate that South King County has already identified NOAH sites and would be able to implement an increase in preservation funding quickly and effectively. Additionally, work is being done through the Department of Commerce to increase funding for manufactured home preservation. While SKHHP did not call out manufactured home funding in the 2024 priority, roughly 60 registered manufactured home parks are inside of SKHHP member cities. Research shows that the owners and residents of manufactured home parks tend to be senior citizens at significant risk for displacement. Dorsol Plants believes this topic is a good example of how creating shared legislative priorities can be challenging. Manufactured home parks are a unique housing type, and not every SKHHP jurisdiction has a site registered by the state. Rather than taking a broad position on manufactured home parks, SKHHP could focus on parks that a jurisdiction has identified as needing to be preserved and add them to the list of priority projects so SKHHP can increase awareness of the funding need. One of SKHHP's true strengths is providing a unified voice for South King County to raise challenges like the need for more funding. As the South King County cities and SKHHP begin to think about the 2025 legislative session, Dorsol Plants wanted to provide some context and history around creating and adopting priorities. Dana Ralph felt that last year’s approach worked well, and it can be difficult to collaborate on some of the specifics inside of legislative bills. Colleen Brandt-Schluter said she felt the document was still robust and agreed with Dana Ralph that it could be challenging to collaborate beyond a high level on legislative bills. She added that she was interested in the idea Carl Schroeder put forward of inviting the state delegation to meet with the Executive Board. James Lovell agreed with Dana Ralph about staying at the high level. He would like to learn more about how different types of housing play out across the region. Since joining SKHHP last year, he also advocated that SeaTac be added to the legislative flyer. Nancy Backus asked when SKHHP staff would be able to provide an updated draft. Dorsol Plants responded that the draft would be ready by September but presented in October since the affordable housing tour would replace the September meeting. b. 2024 SECOND QUARTER PROGRESS REPORT Dorsol Plants began by recognizing that Claire Goodwin and Jeff Tate were critical to SKHHP's success from April to June. Also, nothing SKHHP staff does would be possible without the Staff Working Group and SoKiHo. Quarterly Progress Reports serve an important role by providing an opportunity to focus on the amazing work of the Executive Board and the Advisory Board. After today's presentation, the report will be provided to our Staff Working Group to communicate back to each of the SKHHP members. Dorsol Plants reviewed a few key highlights from the report and noted that the full report was available as part of the agenda packet. Relating to Goal 1, SKHHP has started the process for the 2024 HCF. While only one pre- application meeting occurred in the second quarter, more have been held since July. SKHHP will no longer schedule pre-application meetings after today. Goal 2 is where a significant amount of SKHHP's work in the quarter, including completing the subregional preservation strategies developed by the amazing SoKiHo team. Additionally, SKHHP staff facilitated a meeting between planners, developers, and faith-based leaders on ways to partner to generate more affordable housing. For Goal 3, SKHHP staff spend a decent amount of time in meetings attempting to keep SKHHP and South King County on people's radars. In the second quarter, a lot of that was getting the word out about the Housing Capital Fund. Finally, much of the administrative work associated with Goal 4 was related to seeking approval from the SKHHP partners on the 2025 Work Plan and Budget. Claire Goodwin worked tirelessly to prepare presentation materials before going on leave and Dorsol Plants and the Staff Working Group presented at the member councils to answer any questions and spread the word about the amazing work SKHHP is doing to support housing in South King County. Dorsol Plants added that on the budget report, the significant difference between Q1 and Q2 was the collection of the 2024 HCF contributions. The current balance for our Housing Capital Fund is over $11 million, including committed funds from 2022 and 2023 that still need to be distributed. c. GENERAL UPDATES Dorsol Plants provided a few couple updates since the July Executive Board meeting. The Staff Working Group met on August 7 to support the work on the agenda and received an update on the status of some of our Housing Capital Fund projects and the upcoming applications we expect in September. SoKiHo met the day before, on August 6, and provided updates and lessons learned as some of the SKHHP cities have completed the county review process and others are getting ready to undergo review. All the South King County planners are very busy doing fantastic work, but they are still making time for this meeting to ensure SKHHP is building a regional voice. On August 13, Dorsol Plants attended the Habitat for Humanity Miller Creek groundbreaking, which is the first SKHHP-supported project to break ground since we began the Housing Capital Fund. The Advisory Board met on August 1 and had a chance to hear from Commerce Housing Trust Fund staff on their process to evaluate projects and ways to collaborate on funding housing. This is the first in a series Dorsol Plants is beginning with the Advisory Board bringing public funders to learn their process and provide stronger recommendations to the Executive Board. A couple of the Advisory Board members who are developers also provided an overview of the decision matrix a developer uses when considering housing projects and provided insight into the tenacity it takes to take a project from idea to reality. Next month, SKHHP will have an affordable housing tour on Sept 20th in place of the Executive Board meeting. The intent will be to examine how funding already committed in South King County is being used. The tour will visit three sites across our region, and the goal is to finish by 3:00 PM. SKHHP staff will extend the calendar invitation till 3:30 PM in case of traffic or other challenges. Dorsol Plants requested that anyone attending the tour RSVP to help ensure there was enough seating provided. If attendees need to arrive late or leave early, Dorsol Plants can provide the tour route. Dorsol Plants thanked the Advisory Board for the presentation last month and informed the Executive Board that a recording was available online. He hopes to have the two boards together again soon. At the July Executive Board meeting, the Board members expressed a desire to form an ad hoc committee related to the second 'H' in SKHHP's name. VII.UPDATES/ANNOUNCEMENTS Dorsol Plants updated the Executive Board that Colleen Brandt-Schluter will be stepping down from the SKHHP Executive Board. Liz Stead, the Director of Community Development, will replace her and represent Burien on the Executive Board. Nancy Backus expressed gratitude for all Colleen Brandt-Schluter's work for SKHHP and said she would be missed as part of the Executive Board. Colleen Brandt-Schluter said that SKHHP has been one of the highlights of her time at Burien, and she is proud of the work everyone has done together. Dana Ralph was grateful for Colleen Brandt-Schluter's willingness to participate and push back in the conversation, and she will be missed in future meetings. VIII.ADJOURN Nancy Backus adjourned the meeting at 2:22 PM. Program Coordinator-SKHHP