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HomeMy WebLinkAboutMinutes_SKHHP_ExecutiveBoard_September2023 SKHHP Executive Meeting September 15, 2023 MINUTES I. CALL TO ORDER Chair Nancy Backus called the meeting to order at 1:02 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; Brian Davis, City of Federal Way; Dana Ralph, City of Kent; Hannah Bahnmiller, City of Renton (alternate); Kristina Soltys, City of Covington; Eric Zimmerman, City of Normandy Park; Sunaree Marshall, King County; Sean Kelley, City of Maple Valley. Others present: Claire Goodwin, SKHHP; Dorsol Plants, SKHHP; Tim Walter, KCHA; Andrew Calkins, KCHA and SKHHP Advisory Board; Nora Gierloff, City of Tukwila; Merina Hanson, City of Kent; Sarah Bridgeford, City of Federal Way; Chaney Skadsen, City of Federal Way; Dafne Hernandez, City of Covington; Josh Steiner, City of Auburn; Matt Torpey, City of Maple Valley; Denise Lathrop, City of Des Moines; Kristen Holdsworth, City of Kent; McCaela Daffern, King County; Nicholas Matz, City of Normandy Park. II. PUBLIC COMMENT Ben Taylor from the Master Builders Association of King and Snohomish Counties (MBAKS) informed the Executive Board that MBAKS would be holding their annual Housing Solutions Breakfast on October 19. Sen. Mark Mullet will be the keynote speaker, and a panel featuring local mayors, including the Executive Board Chair, Nancy Backus, will follow. III. APPROVAL OF AUGUST 18, 2023 MINUTES Kristina Soltys moved to approve the August 18, 2023 minutes as presented, seconded by Traci Buxton. Motion passed (9-0) IV. BRIEFING a. King County Housing Authority (KCHA) Workforce Housing Strategy Claire Goodwin introduced Andrew Calkins, Director of Policy and Intergovernmental Affairs, and Tim Walter, Senior Director of Asset Management and Development from KCHA, to review how the organization preserves affordable housing through its Workforce Housing Strategy. The presentation is the first in a two-part series, with the focus today being on an overview of KCHA's work and the challenges and opportunities for SKHHP to consider. The second part will be in November and will focus on the financial aspects of their preservation strategy. Andrew Calkins provided a brief overview of KCHA, which formed in 1939 as an independent municipal corporation and is one of forty housing authorities across the state. Their service area includes King County, except for Renton and Seattle, which have their own housing authorities. KCHA is overseen by a board of commissioners, including one residential member, and is primarily funded through HUD and rent collection. KCHA has been designated as a "Moving to Work" housing authority by HUD, which provides increased flexibility when designing innovative housing programs. Across all programs, KCHA serves 23,600 households and owns over 12,500 affordable homes, with 8,200 being workforce housing units. KCHA fulfills many roles in the community, the most well-known being the rental assistance programs. KCHA provides over $120 million yearly in rental assistance in South King County alone. While housing is the primary focus, KCHA also serves as a social impact agent and provides workforce training and other educational programs to ensure residents can support their health and well-being. KCHA supports the community with a wide range of affordable housing programs. Federally subsidized programs can be divided into two categories: Subsidized Housing and Housing Choice Vouchers. Subsidized Housing primarily serves seniors, people with disabilities, and families with children that earn below 30% AMI. KCHA fully manages these properties, and tenants usually pay around 28% of their income on rent and utilities. There are approximately 4,300 permanently affordable homes through this program. Housing Choice Vouchers, formerly Section 8, enable the holder to use the voucher at any private landlord willing to accept the voucher. There are over 11,000 tenant-based subsidies in use in King County. The workforce housing program is unique compared to other housing authorities, which have a less extensive portfolio of non-subsidized housing units. KCHA has over 8,000 homes in this program, which collects monthly rent at a much more affordable level. Most properties are funded through tax-exempt bonds or the Low-Income Housing Tax Credit (LIHTC) program. KCHA has refined its preservation strategy into two approaches: the preservation of existing affordable housing and the preservation of privately owned housing. In the first case, this refers to the need to preserve housing already in an affordability program such as a Low-Income Housing Tax Credit project. KCHA has had great success acquiring and maintaining properties with HUD Rental Assistance Contracts, intending to keep the valuable federal rental assistance here in our community. The second case involves the acquisition of existing naturally occurring affordable housing that has been privately funded here in King County. KCHA has been working to acquire and remove large multifamily rental projects from the private market. Traci Buxton asked if KCHA groups properties together in a portfolio and averages out cost or if each property stands independently. Tim Walter responded that thirty years ago, the investment return on a rental was between 9% and 12%, but over time, that has gone down, and across all, King County cap rates are 4.5% to 5.5%, meaning gap funding for property can be around 40% of the total cost. KCHA pools property as a tool to re-amortize debt on properties that have already been paid down to help carry the burden. Tim Walter reviewed several examples of workforce housing properties that KCHA has taken steps to preserve. Meadowbrook Apartments in Shoreline was acquired in 2011 and provides 115 workforce housing units. There is a $604 difference in the monthly rent amount collected at Meadowbrook compared to other market-rate apartments in the same area. Units are affordable for residents earning 45% AMI. Auburn Square in Auburn is similar to Meadowbrook in South King County. When both properties were purchased, KCHA couldn't lower rents, but by maintaining or reducing the incremental increases, they have continued to build greater affordability over time. Villages at South Station, located adjacent to the Tukwila Light Rail station, provide 191 affordable workforce units. This is an example of how incoming light rail can cause displacement; within one year of the station's opening, rent at the Villages at South Station increased by 20%. The property also had twelve residents using Section 8 vouchers, and within one year of the station opening had zero residents with vouchers. KCHA acquired the property before it was listed on the market, and rents are below $300 to $400 a month compared to other apartments in the area. The property provides support to housing voucher holders, including the VASH Voucher, designed to support US Military Veterans. Abby Ridge Apartments is the closest and largest multifamily rental property to the Sea-Tac light rail station and provides 146 affordable workforce housing units. KCHA used the LIHTC program to leverage capital investments and acquire the property before the station opened. Birch Creek, formerly known as Springwood Apartments, is on the East Hill in Kent. KCHA acquired the property in 1975 and did massive renovations about ten years ago using tax credit funding. Riverstone Apartments in Federal Way is on the border of Federal Way and Kent and is located near the incoming light rail station. KCHA reached out to the owner in 2016 to attempt to acquire it, but the owner was initially unwilling to speak with them. After two to three years of coordination, the owner sold the property, providing 308 affordable workforce units serving residents at 51% AMI. Andrew Calkins closed the discussion by identifying opportunities and challenges in preparation for the second half of the presentation in November. There are significant opportunities to lock in affordability across South King County. The challenge is that the steps to preserve affordable housing can be limited by the owner's lack of resources or willingness. KCHA has been able to grow affordability over time through non-profit or public ownership and believes it can lead to deeper affordability over the next decade. Nancy Backus asked if KCHA supports HB1220 and HB1110 or if they have concerns about the displacement of naturally occurring affordable housing. Andrew Calkins responded that the Association of Washington Housing Authorities was supportive of HB1110. KCHA continues to talk about its preservation strategy and how the legislative changes will not create affordability on its own. Some types of NOAH properties that could be at risk by HB1110 would be smaller, and KCHA's preservation work has focused primarily on larger, multi-rental projects. Dana Ralph followed up that it was the smaller, single-family residence she had been worried would be at risk of displacement. Kent has a high demand for housing that supports multigenerational households, which often require larger spaces than a multifamily rental can provide. Nancy Backus asked about concerns about the number of applicants for housing choice vouchers compared to the few available. Andrew Calkins responded that the last time KCHA opened their waitlist in 2020, there were over 2,500 people on the waitlist in the first two weeks. The demand for rental assistance is extreme. During the pandemic, the emergency housing choice vouchers were the most significant single increase in available vouchers in years. That support has ended and KCHA received 28 vouchers last month. Those were general vouchers available to serve families. Tim Walter added that the KCHA Section 8 program costs less by placing vouchers in KCHA housing where the rent has not increased. These savings go back into the program and provide support to additional residents. V. BOARD BUSINESS a. Subregional Affordable Housing Preservation Strategies Claire Goodwin framed the discussion around the need to build a foundational understanding of the affordable housing preservation policies and needs in each SKHHP jurisdiction before developing a subregional preservation strategy. To support that effort, planners from each SKHHP jurisdiction were invited to provide an overview and answer questions about affordable housing preservation. This information and the results of the Affordable Housing Preservation Surveys taken in August will help guide small group discussions to begin the subregional work. Josh Steiner, City of Auburn, highlighted the adoption of the International Property Maintenance Code (IPMC), an optional element of international building codes. Secondly, the city adopted the National Healthy Housing Standards, a set of standards that further strengthen the bare minimum standards of the IPMC. The city has also adopted a rental licensing and inspection program, which empowers the city with the location of rentals and how to get ahold of property owners when there are concerns or issues. Auburn has also implemented a "Just Cause" eviction standard to help protect tenants' rights. All the mentioned policies are designed to protect and ensure that the living conditions for tenants are above par. The challenge is that these standards could be burdens on the owners, which may be further passed on to the tenant through rental increases. Property owners may see these policies as difficult and encourage them to sell. Colleen Brandt-Schluter presented information on behalf of the planning staff for the City of Burien. Burien is concerned about the many affordable multifamily rentals that are aging or deteriorating. A significant amount of the housing in the city was constructed between 1940 and 1970 and needs redevelopment. The city needs more resources to go in and acquire or rehabilitate the property to preserve affordability. Burien lacks underdeveloped land, so preservation is crucial for providing affordable housing. The current preservation work includes a rental licensing and inspection program, and the city has also implemented "Just Cause" eviction strategies. Burien also has a "Notice of Intent to Sell" policy, which requires private owners of naturally occurring affordable housing properties to notify the city of an intent to sell six months before the property is listed for sale. This information is shared with SKHHP and other non-profit organizations, hoping the land will be acquired and preserved. Dafne Hernandez, City of Covington, described the need for affordable housing preservation as low for the jurisdiction. There are only two affordable housing programs in Covington, both utilizing the city's Multifamily Tax Exemption Program; one project explicitly serves residents 55 years or older. The city has begun preliminary discussions about the next steps for when the affordability term expires for both properties in 2026. Covington hopes to learn more about the tax incentives and why the city has yet to see many developers applying to develop under the MFTE. Denise Lathrop, City of Des Moines, mentioned that the city is one to two years behind other jurisdictions in terms of housing planning work due to limited staff capacity. Des Moines recently adopted its Housing Action Plan in June 2023, with housing preservation being one of the critical elements to mitigate displacement in the city. Des Moines has a minor home repair program, and the city has requirements for maintaining rental properties. Des Moines has also applied for the Middle Housing Grant from the Department of Commerce to help plan around the implementation of HB 1110 and increasing the city's housing supply. Anti-displacement will work in tandem with implementing HB 1110 into the Comprehensive Plan work. The city’s biggest challenge is raising housing costs, which have grown by over 100% in the last few years. Chaney Skadsen, City of Federal Way, explained that historically the city has had a lower residential production rate than other South King County cities. This has led to a low vacancy rate and a higher demand for housing, which is the crux of Federal Way's housing issues. Reviewing the housing need by income band, the city has a high demand for housing in the lowest and highest tiers but is meeting the demand for the middle-income bands. This increased demand and two incoming light rail stations could cause the city to experience major housing market shifts. Federal Way also has between eight and ten mobile home parks; most are located near the incoming light rail. One option to support affordable housing is that the city has implemented an Inclusionary Zoning policy, which requires the inclusion of a set percentage of income-restricted units, currently 4%. The city also adopted a Housing Action Plan in 2021, which aims to increase regional collaboration through organizations such as SKHHP. Federal Way is considering a "Notice of Intent to Sell" policy. Kristen Holdsworth, City of Kent, introduced the city as one of the last locations for affordable housing accessible to quality jobs and amenities. Kent has a sizeable single-family housing stock and some of the largest collections of naturally occurring affordable housing in the region. Roughly 60%-70% of the city’s housing units are considered to be naturally occurring affordable housing. The city is also challenged by the multifamily rental market not producing units with three or more bedrooms for larger families. The housing stock is older, which helps with affordability, but there is an increased need for repairs. Kent does provide a home repair assistance program. The city has also implemented a rental housing inspection program to ensure each unit meets essential health and safety standards. Over a cycle of years, all rental units will be inspected throughout the city. Kent also has a "Notice of Sale" policy for the sale or closing of mobile home parks inside the city, including a requirement for a relocation plan from the seller. This policy currently exceeds the requirements recently established at the state level. City planners have engaged in analysis and discussion around HB 1110's impact on their housing market, and developers have stated they will need at least four units to justify demolishing an old house. This raises concerns about demolishing the larger, single-family homes and replacing them with a greater density of smaller units that cannot serve the displaced, multigenerational families. Yesterday's market-rate housing is today's affordable housing, and the city continues to want market-rate housing development alongside affordable housing. Sunaree Marshall, King County, mentioned that King County serves in the role both as a regional government agency and a local one. Within the local realm, Skyway and North Highline tend to be where significant housing market forces are felt and the county has spent considerable time supporting those areas. Research has shown that the lowest income bands and renters are the most likely displaced in unincorporated King County. There are several income-restricted multifamily projects with expiring affordability terms, and the county is wor king to better track those. Preservation is crucial in the Comprehensive Plan because the projected housing need numbers assume no loss in current housing. King County has been able to implement more at the regional scale, such as providing funding for rehabilitation and an extensive home repair program. King County piloted community preference programs in Skyway and is looking for ways to expand it. The interim loan program, which can be used for acquisition prior to development is being looked at to make it more responsive to preservation needs. Matt Torpey, City of Maple Valley, mentioned the city is young, and since incorporation in 1997, housing has been primarily detached single-family homes with few mixed or multifamily properties. A few years ago, the city took steps to require new development to have a 10% set aside to serve residents at 70% AMI or less. Maple Valley has over 500 units in development, which means at least 50 units of affordable housing coming in the next few years. The city has one income-restricted property, which appears to have affordability expiring at the end of this year. Maple Valley has just begun discussing its land use and planning update for its Comprehensive Plan. The city appears set for affordability in the future, and it's just a matter of being built over time. Nicholas Matz, City of Normandy Park, is working to review policies to prevent displacement and gentrification of its senior and renter population. The city has a unique makeup compared to other municipalities in the region. The city's future affordability is more in cottage-style homes, detached accessory dwelling units (ADUs), and different housing types through lot splitting. Much of the physical real estate in the city is single-family parcels characterized as being by water with views and not located near transit or commercial cores, which limits the city's ability to create greater concentrations of density. Additionally, given the type of housing, the real estate market forces may exceed impacts in similar-sized cities. One direction the city is considering is that while the rate of residents entering homelessness is nondetectable, data will be collected on residents' vulnerability to becoming homeless. Eric Zimmerman added that while the city is unique, Normandy Park does benefit from the regional collaboration and ability to share information through SKHHP. Hannah Bahnmiller, City of Renton, mentioned that while the city does not have a preservation- specific strategy, preservation has been woven into the city's work through the Housing Action Plan and the revitalization work of the Sunset Neighborhood. Renton's most significant challenge with preservation has been the high cost of acquiring and renovating the older housing units. There is a high cost per unit in rehabilitation and with the naturally occurring affordable housing properties deferred maintenance costs have been a significant issue. The deferral has helped prevent an increase in rent in the short term but has raised the long-term costs of keeping the building safe and healthy for residents. Renton has a minor home repair program, which is eligible for homeowners. The city also has a rental health and safety inspection program. A pilot program the city used to support the revitalization of the Sunset Neighborhood was a partnership between the city, Renton Housing Authority, King County Housing Authority, and Rebuilding Together Seattle to do a weatherization demonstration project on a 1940s-era duplex in the Sunset Area of Renton. Improvements to the property would include an energy audit, foundation leveling, roof replacement, heat pump, foundation skirting, windows, doors, insulation, and other significant work totaling around $100,000 in renovation. This remained a pilot program due to a need for more funding resources to continue it further. Renton is looking at finding ways to use their Multifamily Tax Exemption program to help finance rehabilitation projects, which is allowed under state statute but is not in the city's code. The city has also had an internal conversation about using home improvement funds to support rental projects that may come with a restrictive covenant or other ways to ensure affordability. Nora Gierloff, City of Tukwila, said there was much alignment between the city and the other thoughts and concerns raised in the region. Tukwila has a rental inspection program that was paused during the COVID-19 pandemic, and since the program has restarted, there has been a deterioration in the properties. The city has several mobile home parks, which will also need support as they age, and the redevelopment pressures are rising. Tukwila has seen a pattern where residents are priced out of Seattle, which creates a cascade of current residents being priced out of Tukwila and moving further south. The city has a small home repair program, which has been essential to keep some seniors in their homes. Tukwila has also adopted ADU reforms, and there is a significant interest in the community in developing them. The city has developed most of its vacant land, meaning that the options remaining to create affordable housing will require some form of redevelopment which creates a greater risk of displacement for the community. Claire Goodwin acknowledged that time was short and asked the Board if they were willing to skip the small group discussions. The Board agreed not to have the small group discussions. Claire Goodwin provided an overview and summary of the Executive Board’s August Affordable Housing Preservation survey results. Question four: What is the outcome you would like to see with regards to a subregional affordable housing preservation strategy? Answer: Comprehensive understanding of preservation options, avoiding displacement and maintaining affordability, city autonomy and tailored recommendations, collaboration and resource sharing, and preservation for vulnerable populations. Question five: How would you describe the need in your jurisdiction for affordable housing preservation? What is the problem that needs to be solved? Answer: There is a need to preserve existing affordable housing and add new market-rate housing, loss of naturally occurring affordable housing due to redevelopment, rising rents, and physical deterioration, and risk of redevelopment and displacement, especially for: low-income seniors, multigenerational households, households near light rail, mobile home park residents, fixed-income households, and households living in income-restricted units with expiring affordability. Question six: Are there neighborhoods, specific populations, or housing types that you would prioritize for preservation? Answer: Multifamily (4), mobile homes (2), single family residential (2), seniors/fixed incomes (2), locations with the greatest risk of displacement (2), properties that accommodate larger families (1), expiring affordability (1), populations that have been displaced previously through discriminatory practices like redlining (1), current and future light rail stations (1), veterans (1), and people with disabilities (1). Dana Ralph stated that concerns were raised by each jurisdiction on the impacts of HB 1110 and expressed a desire to find a way to provide a unified voice to discuss the current and potential future effects on our region. Nancy Backus reinforced the desire to create a unified voice as South King County will likely be the first to see displacement impacts from legislation that will have widespread unintended consequences. Colleen Brandt-Schluter added that lack of funding continues to be an issue. The state will provide planning grants but not implementation grants, which means many ideas are never used. Colleen Brandt-Schluter asked what other tools could be used with HB 1110, such as requirements for new developments to include rooms for larger families. Claire Goodwin reminded the Executive Board about the draft legislative priority’s flyer, which focuses on the need for increased funding for all aspects of affordable housing. Claire Goodwin stated that the conversation could be brought back to determine if there was broad interest from the Board on taking a unified stance on the impacts of HB 1110. b. Pathways to Removing Obstacles to Housing Grant Claire Goodwin updated the Executive Board that the Department of Housing and Urban Development (HUD) is making $85 million available to address affordable housing production and preservation barriers. King County is offering to be the grant holder and contract monitor and would provide staffing resources to benefit South King County directly. Funding would create a staff position supporting South King County on a regional level, including code updates, data analysis, policy development, and more. A draft letter of support was provided to the Executive Board to consider adoption at the November meeting. Sunaree Marshall added that within the $85 million available, the amount available to a jurisdiction is between $1 to $10 million, and the grant period goes from January 2024 to September 2029. King County is applying for funding, hoping to implement elements in the Comprehensive Plan for Unincorporated King County, which currently needs more resources. The County believes the application will be more robust by partnering with SKHHP and ARCH. King County is designated as a high-priority area for funding due to the high costs in our region. ARCH has circulated a letter of support like the draft presented to the Executive Board today. Traci Buxton asked how the process to break funding further down by jurisdiction would be decided once funds were received at the county level. Sunaree Marshall responded that the county would have to create an application process and would partner directly with SKHHP to help develop that process. Brian Davis suggested that since the letter was already consistent with SKHHP's approved mission and goals, rather than having each Board member sign, the Chair and Executive Manager could sign the letter of support. Colleen Brandt-Schluter added that SKHHP could send templates for each jurisdiction to sign and asked when the letter would be due. Claire Goodwin responded that King County will start their public comment period on October 13. The letter isn't required for the public comment period, but it would be helpful. Nancy Backus said she would sign the SKHHP letter with the Executive Manager, and a template letter would go out to each SKHHP member for their show of support for the county application. c. Housing Capital Fund Applications Update Claire Goodwin drew attention to a document in the packet that reviews the seven anticipated applications due by 5 p.m. on September 15. Dorsol Plants confirmed that five applications had been received by the time of the Executive Board meeting. Requests total around $11 million, with approximately $6 million available. The Advisory Board will review applications at the October meeting. SKHHP staff will provide the Advisory Board with access to the full applications and also summary memos for their review prior to the October meeting. The SKHHP Advisory Board will make a funding recommendation at their November meeting. VI. UPDATES/ANNOUNCEMENTS Claire Goodwin requested volunteers to form a subcommittee to interview applicants to the SKHHP Advisory Board. Mayor Nancy Backus, Mayor Dana Ralph, and Brian Davis offered to serve on the subcommittee. VII. ADJOURN Nancy Backus adjourned the meeting at 3:09 PM. Program Coordinator-SKHHP