Ballot Issues Committees August 2016 Recommendation for Proposition 1: Seattle Housing Levy

19
Jul
2016

MUNICIPAL LEAGUE OF KING COUNTY

 

Proposition 1: Seattle Housing Levy

 

August 2, 2016 Primary Election Ballot

 

Summary of Measure:

City of Seattle Proposition 1 sets out a proposed 2016 Housing Levy that would be a successor to the 2009 levy that expires this year and to four other previous Seattle housing measures dating back to 1981. The new 7-year levy would raise $290 million, double the amount of the expiring levy. Since 1981, the City has preserved or created 12,500 units of affordable housing and each prior levy has met or exceeded its production goals. With this levy lid lift, Seattle property taxpayers would pay up to $0.25 per $1,000 of assessed value. This is estimated by the City to cost the typical Seattle homeowner $122 per year ($5 more per month) based on the median assessed home value of $480,000. (The Multiple Listing Service recently reported a current median Seattle market value of $666,500).[1]

The 2016 housing levy would allocate 69% of its funds to rental preservation and production throughout the city, 14% for operating and maintenance support, 3% to home ownership assistance, and 4% for emergency rental assistance to prevent homelessness. Nine percent of levy funds are set aside for administration of the measure.

Rental Production and Preservation Program $201,000,000

  • 2,150 units would be produced or preserved and 350 units reinvested.
  • Existing multifamily housing would be rehabilitated, with affordability requirements imposed.
  • Housing will primarily serve the most vulnerable households, defined as those at or below 30% of median income; in limited cases up to 40% of median income.

 

Operating and Maintenance Program $42,000,000

  • 510 units would be supported.
  • Operating support would supplement rent paid by residents at or below 30% of median income, including formerly homeless and other residents with supportive service needs.

 

Homelessness Prevention and Housing Stability Services $11,500,000

  • 4,500 households would be assisted.
  • Rent assistance and stability services would be provided for individuals and families at or below 50% of median income, to prevent eviction and address homelessness.

 

Homeownership Program $9,500,000

  • 280 households would be assisted with emergency home repairs, foreclosure prevention, or first-time home buyer loans.

The proposal continues a 13-member volunteer oversight committee to monitor and report on the progress of the levy programs. At least two of the committee members must be city employees. No more than five members may have a direct or indirect relationship with an entity that receives or competes for levy funds, and any member with such a relationship shall fully disclose it and may not vote on any matter in which the interest of the entity is directly involved.

Arguments FOR the measure:

  • Seattle is in the midst of a housing affordability crisis. Over 45,000 Seattle households pay more than half their income for housing.
  • In 2015, Mayor Ed Murray declared a homelessness crisis in Seattle. The renewal and expansion of the housing levy is one response to these crises of homelessness and affordability. It is not a silver bullet, but an important tool that expands on a successful model.
  • Seattle’s rental housing costs have skyrocketed, making living in the city unaffordable for many people. The primary use of levy funds is preservation and production of rental units, which will result in an additional 2,150 affordable homes for individuals and families.
  • The levy is targeted to the needs of Seattle’s most vulnerable citizens, including seniors, people with disabilities, domestic violence victims, veterans, and formerly homeless individuals and families, who because of their complex needs, are often less able than other low-income populations to access other housing assistance and are at higher risk of homelessness.
  • The levy also provides short-term assistance to renters to prevent eviction, and it assists low-income home owners with home repairs.
  • Administrative costs are fully borne by the levy program.
  • Low income residents of Seattle have been receiving significant assistance from housing levies in the City of Seattle for the past 35 years. Renewing the levy would cost the typical Seattle homeowner $122 per year, or $5 more per month.
  • In its previous bonds and levies, the City has built a very good track record of accountability, meeting or exceeding production and service goals.
  • The expenditure of levy funds will create private-sector jobs and enable the City to leverage other housing resources, such as federal, state and private dollars, at a 3:1 rate of return.
  • This measure is endorsed by business, labor, the Church Council, and many civic leaders.

Arguments AGAINST the measure:

  • The housing levy represents a failed and outdated policy that has done little to prevent or alleviate the twin crises of affordability and homelessness in Seattle. The housing levy seeks to mitigate the effects of Seattle’s affordability crisis rather than tackling its causes.
  • The expansion of the levy to $290 million is not justified by an addition of significant new units. The cost per new unit is up 50% over the previous levy, far beyond the cost of inflation in recent years.
  • The allocation of program funds has remained largely unchanged since the City began proposing housing levies in 1981. In the rapidly rising real estate market in Seattle it may no longer make sense to ask voters to pay to assist individual home ownership. Instead, we should be allocating much greater proportions of funds to preventing evictions and alleviating the crisis of homelessness.
  • The proposed levy allocates a mere 3% to dealing with the problems of homelessness prevention. New kinds of supportive housing with services and innovative housing models to house homeless people quickly are not included in the proposed programs.
  • The cost of administering the proposed levy is projected to be 9% of total funds or $26 million.
  • The measure represents an almost doubling of taxes paid for affordable housing. Seattle’s homeowners have already faced a doubling of their property taxes for parks and transportation in the past year, and this measure is on the ballot just before the ST3 transit measure coming before voters this fall.
  • The oversight committee cannot be counted on to provide credible independent oversight because employees of the organizations that receive or compete for levy funds serve as members and have institutional interest in seeing the status quo preserved.

RECOMMENDATION and RATIONALE

 

The Municipal League of King County supports the 2016 Seattle Housing Levy.

In deciding to recommend support of this measure, the Municipal League concluded that the levy’s benefits to our city—and the crisis-level needs in our community—warrant the renewal and expansion at the proposed levels. Soaring housing costs fall most heavily on our most vulnerable citizens and the levy will make a real impact for thousands of Seattleites. We considered the substantial growth in levies to fund City services in recent years and believe that the financial impact on taxpayers is fairly modest. Seattle homeowners will pay an estimated $122 per year (compared to $65 in the previous levy). A levy increase is reasonable to cover the higher costs of land and construction. In addition, property tax rates in Seattle remain low compared to cities of similar size, including cities that are subject to state income taxes.

While we strongly support the levy, it is far from a silver bullet. The proposal’s substantial size increase gave us pause, but more importantly, we were concerned that the program structure and the allocation of funds seemed to reflect status quo thinking that did not adequately respond to the new realities of Seattle’s rental and real estate market and to the crises of affordability and homelessness. We wished we had seen innovative thinking about new housing solutions rather than just the same fund allocations to the same programs as in past housing levies. In short, the City must do more to grapple with the root causes of the affordability crisis, rather than focusing largely on mitigating impact on a relative handful of homeowners and renters.

While the League acknowledges that the City has a track record of meeting its production goals, we also share levy opponents’ concern that the citizen oversight committee be able to provide credible and effective monitoring of levy operations and programs. For this reason, we recommend that if the levy is approved, the Mayor and City Council protect the public interest by ensuring that the oversight committee is comprised of people who represent the broad range of Seattle residents who support the goal of affordable housing and who are free from conflicts of interest with respect to the administration of the levy funds.

In sum, the Municipal League believes that the need for low income housing assistance in Seattle, especially for our most vulnerable citizens, is more acute than ever, the levy’s size and taxpayer impact is reasonable, levy programs have been an effective tool in the past, and that this ballot measure is worthy of support.

[1] Seattle Times July 6, 2016. http://www.seattletimes.com/business/seattles-devilish-new-home-price-record-666000.

© Municipal League Foundation 2013 - Built by another MuniLeague Volunteer