Loading...
HomeMy WebLinkAboutMinutes_SKHHP_ExecutiveBoard_2023_August SKHHP Executive Meeting August 18, 2023 MINUTES I. CALL TO ORDER Chair Nancy Backus called the meeting to order at 1:03 PM. a. ROLL CALL/ESTABLISHMENT OF QUORUM Executive Board members present: Nancy Backus, City of Auburn; Colleen Brandt-Schluter, City of Burien; Traci Buxton, City of Des Moines; Sarah Bridgeford, City of Federal Way (alternate); Merina Hanson, City of Kent (alternate); Ryan McIrvin, City of Renton; Kristina Soltys, City of Covington; Eric Zimmerman, City of Normandy Park; Cynthia Delostrinos Johnson, City of Tukwila; Kristin Pula, King County (alternate). Staff members present: Claire Goodwin, SKHHP; Dorsol Plants, SKHHP; Maju Qureshi, SKHHP Advisory Board; Hannah Bahnmiller, City of Renton; Nicholas Matz, City of Normandy Park; Matt Torepy, City of Maple Valley; Laural Humphrey, City of Tukwila; Dafne Hernandez, City of Covington. II. PUBLIC COMMENT No public comment was provided. III. APPROVAL OF JULY 21, 2023 MINUTES Traci Buxton moved to approve the July 21, 2023 minutes as presented, seconded by Kristina Soltys. Motion passed (9-0) IV. BRIEFING a. Overview of Affordable Homeownership and Community Land Trusts Kathleen Hosfeld, CEO/Executive Director of Homestead Community Land Trusts, provided an overview of Community Land Trusts and the work Homestead has done to produce affordable homeownership opportunities. Homeownership is distinguished from other forms of affordable housing in several ways. Homeownership creates stability and allows a family to develop roots in the community. Homeownership also creates a two-generation solution to economic mobility, with the economic benefits extending to the owners' children. Affordable homeownership addresses the history of redlining and racial covenants in our area. Affordable homeownership is essential in addressing the housing crisis and can support families starting at the 50-80% AMI range. For many affordable homeownership developers, the goal would be to serve residents in the 50-60% AMI range. The reality of the subsidy environment doesn't allow homes to be priced that low. Developers are restricted by what construction materials cost and the limited funding sources available. This has led to many affordable homeownership projects priced to serve 60-80% AMI. In rural communities, there has been a push to increase the service range to 100% AMI. Homeownership is a cost-effective strategy to provide affordable housing in your jurisdiction. The mortgage of the future owner covers half of the cost of development. The price per individual in the household tends to be lower, sometimes as low as 1/3 the cost in other housing types. As people move up into homeownership, it opens additional rental space in the community. An investment into a permanently affordable homeownership model means there will not be a need for future investment after the purchase. The Community Land Trust model is the origin of the permanently affordable home model. In fifty years, Homestead CLT has, on average, served seven households at the same property address. Each home has created at least seven first-time home buyers. Homestead was created in 1992 and has 245 homes in permanent land trusts. They have created 312 homeownership opportunities and serve residents who make less than 80% AMI. Over the course of their whole program, only two homes have gone into foreclosure. There has been an increase in residents at risk of foreclosure coming out of COVID, but every household is actively working with Homestead and will likely avoid foreclosure. The Community Land Trust model is distinct because they are accountable to the communities around their homes. Homestead has equitable governance, and the homeowners are voting members that elect the Board of Directors. Community Land Trusts are one of the best forms of displacement prevention for communities that risk gentrification. The model was created in the late 1960s as part of the Civil Rights movement in Albany, GA when Black sharecroppers were evicted from their farms after registering to vote. The model would grow into the urban areas of Cincinnati, OH, and Boston, MA, soon after as land costs outpaced worker's incomes. The reality in King County is that home prices are simply out of reach for most of the residents in our region. The median home price requires $169,000 a year to afford the home, but 65% of the residents in King County make less than $100,000 a year. From 2014 to 2021, home prices have increased 72%, but incomes have only increased 31%. Homestead keeps homes permanently affordable through a direct partnership with the owner. Homestead can reduce home prices by 30-50% by building or receiving them through partnerships. This keeps homes affordable for modest-income households. Upon the first sale, the title of the land is separated from the title of the house. The land is held in the community trust, and the owner acquires a typical 30-year mortgage through a partnered lender. The owner leases the ground for a small monthly fee while they own the home. Agreements are secured with the owner to upkeep the home, support the community, and limit their equity gain to an approved formula. This formula allows them to build wealth, but enough appreciation is not attained to make the home unaffordable to the next family upon resale. The qualifications to access Homestead's services include being a first-time home buyer or not owning a home in the last three years. The buyer must make 80% AMI or below and qualify for a 30-year mortgage through an approved lender; ITEN and Halal mortgages would also be accepted. Additionally, the buyer will need to be able to contribute 1% of the home price as a down payment. This is possible because the home value is significantly more than what the owner is paying on the mortgage. The loan-to-value ratio creates this opportunity where other forms of ownership require 10% or more in downpayment. While home prices vary, a general guideline is to encourage potential buyers to make a minimum of $50,000 a year when considering applying for a mortgage. Homestead's current waitlist is over 2,000 households, and it tries to provide prospective buyers with as much autonomy in selecting a home as possible. When discussing Affordable Homeownership Programs, the terminology often suggests different strategies are the same or similar. One example is the differences between down payment assistance programs and the creation of subsidized-priced homes. Down payment assistance is typically a loan to the buyer to close the gap between what is affordable and what is available. Under current market conditions, this could mean closing the gap between $300,000 and $400,000. Down payment assistance tends to defer payments while you occupy the home and requires repayment with interest upon resale. At resale, the home price will likely have increased and be unaffordable for the next household because home prices always trend upward. This is why the creation of subsidized-priced homes can create permanent affordability. In the example of a community land trust, the subsidy is to the community land trust. It is tied to the property address to reduce the price of the home into the affordability range. The owner does not need to repay after resale. Historically, down payment assistance worked when home prices were in greater alignment with median incomes. Kathleen Hosfeld provided an example of how a homeowner builds wealth. A homebuyer purchased a home for $200,000 and, after ten years, decides to sell. If the home's value appreciates at 1.5% annually, the resale price would be $223,108. The home equity is determined by the value appreciation and the loan amount paid off. This would mean the equity for the homebuyer was $67,026 at the time of resale. Most first-time homebuyers who work with Homestead will sell and purchase a market-rate home using the equity they have built while staying in the Community Land Trust. Many will also remain in the Community Land Trust and place roots in the community there. Homestead Community Land Trust has several locations throughout King County. Each home is built from high-quality, environmentally sustainable materials. Materials are also selected to protect air quality in the house by having low volatile organic compounds (VOC). Homestead tries to prioritize the development of three- and four-bedroom homes so they can serve large families. The Southard is one location under current development in the City of Tukwila and is a net zero project, meaning it will produce more energy than it uses. This is good for the environment but will reduce the overall cost of the home for the owner by saving energy costs. The Southard will have three homes for $275,000, priced for residents at 60% AMI or below. Seven homes will be sold for $320,000 and serve residents at 80% AMI and below. Those ten homes will all be three-bedroom, and one four-bedroom home will be sold at $332,000, which would serve 80% AMI or below. Another five homes on the property will be sold at market rate prices and not have resale restrictions, and two homes will be owned by Parkview Services to support adults with disabilities in a group home environment. Willowcrest is in the City of Renton and is twelve townhomes that are also net zero. Homestead has applied for funding to create a second phase, which would add sixteen permanently affordable homes. There has been some discussion around including a few market-rate homes like the Southard project. This is a form of subsidy; Homestead will charge slightly above the cost of production for the market rate homes, and the profit will go to support the affordability of the other homes onsite. SKHHP can support Community Land Trusts's work in several ways. This includes recognizing homeownership as an essential tool in the continuum of housing and that access to homeownership is an issue of racial equity. Additionally, SKHHP can advocate for more homeownership funding at the state and county levels. King County needs to track affordable homeownership units on its Affordable Housing Dashboard, not leaving out an essential understanding of a critical solution to the housing crisis. Local jurisdictions can look for ways to fund homeownership projects like the SKHHP Housing Capital Fund or donating surplus land for affordable homeownership development. Jurisdictions can also identify a key staff person who can support and encourage affordable homeownership development. Finally, jurisdictions can find ways to waive impact or utility fees, reducing the cost of developing affordable homes. Traci Buxton asked if the equity formula changed upon resale based on the market value increase. An example is how a home bought thirty years ago in our region could have cost $45,000 but now would cost $600,000. Kathleen Hosfeld responded that the resale formula price is intended to keep the home price aligned with the median income. The housing market is uncoupled from the reality of incomes, and Homestead's goal is to avoid market pressures to maintain affordability. Kristina Soltys asked where Homestead has found developers to work with them to keep prices affordable. Kathleen Hosfeld responded that Homestead is the developer, and in our region, Homestead and Habitat for Humanity are the primary developers for affordable homeownership opportunities at these price points. Homestead hires subcontractors and tries to find partners that prioritize BIPOC hiring. Nancy Backus asked who was responsible for the common areas in a project like the Southard. Kathleen Hosfeld responded that a homeowner's association shares the responsibility. Homestead does provide support and ensures the homeowner's association is set up for success. V. BOARD BUSINESS a. 2023 Second Quarter Progress Report Claire Goodwin reviewed the 2023 SKHHP Second Quarter Progress and Budget Report, which the SKHHP Interlocal Agreement requires. The second quarter of 2023 represented a time of collaboration, communication, and overall raising awareness of SKHHP’s work. The Executive Board adopted the 2024 SKHHP Work Plan and Budget this quarter and added additional revenue for the Housing Capital Fund through pooled HB 1590 funds. Claire Goodwin presented at many of the SKHHP partner City Councils and committees to shed light on the great work SKHHP is doing. SKHHP staff also met with Representative Adam Smith (WA 9th District) and his staff to raise awareness of the housing needs in South King County. Claire Goodwin was also a presenter during Affordable Housing Week, which provided an opportunity to inform developers about the Housing Capital Fund. The Progress Report is broken down by goals, with the first being implementing the SKHHP interlocal agreement. As part of the agreement, SKHHP staff presented the 2024 SKHHP Work Plan and Budget at the SKHHP member jurisdictions with the support of the staff work group. Dorsol Plants facilitated the start of the SKHHP Advisory Board recruitment drive to bring the board up to its full fifteen-body membership. Claire Goodwin asked Executive Board members to send suggested candidates to Dorsol Plants to ensure geographic representation on the Advisory Board. Goal two was to build long-term sustainability for the SKHHP Housing Capital Fund. SKHHP developed and adopted language for the Housing Capital Fund to ensure that projects not supported by the jurisdiction do not proceed. SKHHP staff facilitated conversations with SKHHP members that collected HB 1590 funds and brought the 2023 Housing Capital Fund total to $6 million. The SKHHP Executive Board also began discussions to identify additional revenue sources. Goal three was to work with partner jurisdictions to enhance and develop policies that protect existing affordable housing and accelerate access. This quarter saw the completion of the SKHHP Affordable Housing Inventory Dashboard, which had significant input from the SKHHP member jurisdictions. Additionally, on April 26, SKHHP facilitated a Joint Planners & Developer's roundtable, which brought both sides together to discuss South King County's affordable housing development barriers. A summary of the discussion and critical takeaways is available on the SKHHP website. SKHHP participated in Affordable Housing Week and accepted the Affordable Housing Week Proclamation from the City of Federal Way. The Executive Board also received briefings from neighboring jurisdictions on the permit accelerator programs. The SKHHP quarterly budget report is slightly different than previous versions. Claire Goodwin changed this to better show revenue received and the Housing Capital Fund expenditures. The Housing Capital Fund amounts in the budget only reflect the SHB 1406 funds, and HB 1590 funds will likely appear on the fourth quarter budget report. The 'contributions/donations' line item shows a negative amount of $5,000. The amount was used as a placeholder in the second- year budget in the founding interlocal agreement. This was included to be able to accept grants before SKHHP was staffed. An assumption was made that a grant for $5,000 would come in, but the funding wasn't pursued, so it has appeared in SKHHP’s fund balance since. Removing it from the system required noting it as a negative amount on the quarter's budget report. Operating expenditures for the quarter total $180,673. There are no current expenditures for the Housing Capital Fund, but they will begin appearing in the third-quarter budget report. SKHHP has pooled $2,460,084 in SHB 1406 funds for the Housing Capital Fund between this year and the previous year. An additional $4.9 million from HB 1590 will be added to that balance for the third quarter budget report. The Staff Work Group will be provided a copy of the Second Quarter Progress and Budget Report to distribute internally to their jurisdiction. b. Legislative Priorities Claire Goodwin presented the draft of a legislative flyer to help raise awareness about the housing needs in South King County. In July, the Executive Board discussed alternative options for engaging the State and Federal delegation. There was a consensus not to pursue a hefty legislative agenda but to rally around one shared legislative priority. The need to fund all aspects of affordable housing was chosen as the primary focus for SKHHP in 2024. SKHHP staff prepared a one-page flyer that provides information about our community and the need for increased funding for affordable housing. SKHHP staff will develop talking points for the Executive Board to use along with the flyer. A draft of those talking points will be reviewed in the fall of 2023. Claire Goodwin requested to include the SKHHP priority on each jurisdiction's legislative priority list when possible. This will help present a unified approach to the topic of affordable housing. It can amplify the need if multiple State and Federal delegates see the same message across the region. Traci Buxton asked for clarification that the flyer was developed in place of a legislative priorities list. Claire Goodwin confirmed it was. Traci Buxton further raised the concern about the amount of text and suggested combining the sections "Who We Are" and "Purpose" and eliminating the Executive and Advisory Board description. There should be a greater emphasis on the priority section and less text to encourage the receiver to read the document. Colleen Brandt-Schluter said it serves as a good background document and a reminder to the Executive Board members to help articulate SKHHP. If the paper asks for something, it should be clear what the ask is. While the document is a good background piece, the brief interaction with the delegation should have the paper focus on precisely what we need them to know and our ask. Nancy Backus supported the current text and suggested bolding or using a different font for the legislative priorities. Nancy Backus felt it was essential to speak to the 'why' of the ask and demonstrate that we are using the funding available, not just asking for more. Claire Goodwin suggested that the Executive and Advisory Board section could be removed but leaving in the description of the Housing Capital Fund. Traci Buxton supported Nancy Backus' suggestion and suggested using green to highlight the legislative box, and the remainder of the document is in white and navy blue. This would keep the same color scheme but highlight the legislative priorities. Kristina Soltys said that more attention might be drawn by not staying in the color scheme but highlighting the priorities in another way. By doing this, all the text could remain but would draw immediate attention to the priorities. Maju Qureshi suggested sending the one-page flyer to a legislative aide for their feedback as someone familiar with how the delegation likes to receive information. c. Subregional Affordable Housing Preservation Strategies Claire Goodwin provided an overview of the Affordable Housing Preservation Strategies survey. The questions are intended to solicit the board’s unique perspective and the preservation needs in each jurisdiction. Surveys on preservation are also being used to draw feedback from the Advisory Board and the SoKiHo planners’ group. Survey information will be collected and discussed at the September 15 meeting. Jurisdiction planners have been asked to attend the September meeting to provide a brief overview of affordable housing preservation strategies in their jurisdictions. VI. UPDATES/ANNOUNCEMENTS Claire Goodwin reminded the Executive Board that she is on vacation from August 18 to September 4. Dorsol Plants is available for urgent issues. Claire Goodwin updated that Mayor Backus would join her to present to the Maple Valley City Council on September 11 on the SKHHP Housing Capital Fund and the use of HB 1590 funds. Claire Goodwin received an invitation from the Sea-Tac Planning and Economic Development Committee on September 21 to introduce SKHHP and discuss Sea-Tac joining as a member city. Claire Goodwin provided an overview of the Housing Capital Funds and the eight pre- application meetings SKHHP has processed. Projects represent geographic diversity and include housing in Auburn, Des Moines, Kent, Sea-Tac, and Unincorporated King County. Applications are due by September 15. VII. ADJOURN Nancy Backus adjourned the meeting at 2:57 PM. Program Coordinator-SKHHP