Summary of Measure:

The proposed 2009 Housing Levy would be a successor to the $86 million 2002 levy that expires this year. The new 7-year levy would raise $145 million, limited to $20,714,286 annually.  Seattle property taxpayers would continue to pay up to $0.17 per $1,000 of assessed value as under the expiring levy.  This is estimated to cost the typical Seattle homeowner $65 per year.  In comparison, the expiring levy cost the typical homeowner $49 per year.  

The $145 million is proposed to be leveraged with state, federal and private funds to produce an estimated 1,850 units of affordable and low-income housing and otherwise provide for the housing needs of 3,420 low-income households.  Since 1981, Seattle voters have approved one bond and three levies to create affordable and low-income housing. Over this period, the city has preserved or created 10,000 units of housing affordable to people below 80% of median income.

The 2009 housing levy would allocate 72% of its funds to rental preservation and production throughout the city, 10% for operating and maintenance support for housing for very low income people (up to 30% of median income), 6% to home ownership assistance, and 3% for emergency rental assistance to prevent homelessness. Nine percent of levy funds are set aside for administration of the measure. 

The measure would also fund a $6.5 million short-term loan program to finance purchases of buildings or land for affordable and low-income housing developments.  The loans are to be repaid in full, and the repayments would be used to fund the other levy programs.
The proposal would create 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 has very high housing costs, making a home in the city unaffordable for many people of limited means. The primary use of levy funds is preservation and production of rental units, which will result in an additional 1,850 affordable homes for individuals and families who would otherwise be unable to live in the city.
•    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 assists low-wage first-time home buyers and provides low to moderate-income housing within community development projects.
•    While the current economic downturn had caused the need for assistance to be greater than ever, this is a maintenance levy that is calculated to maintain current services and annual housing production, taking into account higher real estate and building costs. 
•    The proposal will not fund any additional city staff positions. Administrative costs that were previously carried by the city’s general fund will now be fully borne by the levy program, as with all of the city’s levy-funded programs.
•    Low income residents of Seattle have been receiving significant assistance from housing levies in the city of Seattle for the past 28 years.  Renewing the levy would cost the typical Seattle homeowner $65 per year. 
•    In its previous bond and levies, the city has built a very good track record of accountability, prudently managing levy funds and exceeding production and service goals.  Independent studies have documented program effectiveness and reduced utilization of higher-cost public services.
•    The expenditure of levy funds will create private-sector jobs and enable the city to leverage other housing resources.  With the 2002 $86 million levy, the city realized a 3:1 rate of return on every dollar spent. 

Arguments AGAINST the measure:
•    The cost of administering the proposed levy would be more than three times the cost of administering the 2002 levy.  Administration costs for the 2002 levy were about $4.25 million, as compared to about $13.3 million for the proposed levy.
•    This is not a maintenance levy.  The measure represents an overall tax increase of 68.6%.  The increase far exceeds annual increases in inflation during the past seven years, which averaged about 2% to 3% per year.
•    In the current economic recession, many taxpayers are finding it hard to make ends meet.  The proposed increase is simply too big in this challenging economic environment.  This levy should be rejected, and the City Council should be encouraged to submit a less costly measure. 
•    The oversight committee cannot be counted on to provide credible independent oversight because employees of the organizations and businesses that receive or compete for levy funds are allowed to serve as members.  
•    While this measure would clearly benefit the levy’s direct beneficiaries, it will have little or no beneficial impact on the broader community.  

RECOMMENDATION and RATIONALE

The Municipal League of King County supports the 2009 Seattle Housing Levy.

 
In deciding to recommend support of this measure, the Municipal League carefully weighed the levy’s anticipated benefits to our region against the proposal’s significant increase in size over the expiring levy.  We determined that the documented effectiveness, sound administration, and demonstrated economic benefits of the expiring levy programs warrant the renewal at the proposed maintenance levels.  

While the proposal’s substantial size increase gave us pause, we concluded that it is not unreasonable.  The increase is necessary to cover the increased costs of real estate and housing construction and the levy’s incorporation of the cost of the Office of Housing’s staff, which previously has been paid out of the city’s general fund.  The reason for higher portion of the levy devoted to administration is because the full Office of Housing’s staff costs will now be funded from levy proceeds.  Notably, the proposal would not add any city staff to administer levy programs.  It seems to us that the size of the proposal is reasonably calculated to maintain current housing production and service levels, which have significantly increased in cost over the past seven years.  

Compared to the measure’s large increase in size, its financial impact on individual taxpayers is fairly modest.  As under the expiring levy, Seattle taxpayers would continue to pay no more than $0.17 per $1,000 of assessed value, costing the typical Seattle homeowner an estimated $65 per year (compared to $49 in the previous levy).  The substantial increase in revenue generated by the levy is due to a larger tax base and higher property values as compared to seven years ago.  The substantially larger proposal, then, would not result in a correspondingly large increase in the amount of property taxes that individual Seattle taxpayers are paying under the expiring levy. 

Seattle’s housing levy administration and programs have in past years been subjected to regular independent financial audits and effectiveness studies in which they have performed well.  While the League acknowledges this strong track record, we 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, previous levy administration and programs have been efficient and effective, and that this ballot measure is therefore worthy of support.