Cantwell, local legislators move to combat housing crisis
Source: The Spokesman-Review
The nation’s housing crisis has reached the halls of government in Spokane, Olympia and Washington, D.C., where politicians have all agreed in recent budgets to find new ways to boost affordable housing.
In the nation’s capital this week, a proposal from Sen. Maria Cantwell, D-Wash., to expand the Low Income Housing Tax Credit by 12.5 percent over the next four years was agreed to by budget negotiators, adding about $3 billion per year to the program.
Housing advocates had been worried about the fate of the popular tax credit program that helped build 3 million low-income housing units since its creation three decades ago. But Republicans agreed to expand the program in exchange for doing away with the “grain glitch” that favored farmer-owned cooperatives over agriculture corporations and was included in the GOP tax overhaul in December.
In Olympia at the close of the legislative session this month, legislators passed seven bills aimed at increasing affordable housing, including a $107 million investment to the state’s Housing Trust Fund, which will create an estimated 3,500 low-income housing units statewide.
And in Spokane, the City Council and mayor agreed to spend $2 million in one-time funds to increase the amount of low-income housing units within the city.
The separate efforts signal that elected officials recognize the urgency of the growing housing crisis, though Cantwell said there was a long way to go, and called the tax credit program’s expansion “a start.”
“It is a start to dealing with the housing crisis,” Cantwell said. “Not the finish line, but it is a start in addressing the problems. The first bump.”
Basic economics
Cantwell said the housing crisis is driven by several factors, but noted the problem was “basic economics.”
“Rents have gone up and wages haven’t necessarily followed suit,” she said.
According to the U.S. Department of Housing and Urban Development’s 2017 Annual Homeless Assessment Report to Congress, homelessness is on the rise, and the primary culprit is a lack of affordable housing, particularly in tight housing markets such as Seattle and Los Angeles where soaring rents and stagnant wages have pushed people out of their homes.
With the crisis more pronounced in West Coast cities, the problem is knocking on Spokane’s door.
“We have a severe shortage of affordable housing,” City Council President Ben Stuckart said, adding that there are 500 people in Spokane County with federal housing vouchers who can’t find a home. “The latest reports show that Spokane has a need of 11,000 residential units in the county.”
Nationwide, according to a report done by the National Low Income Housing Coalition, there is a shortage of 7.4 million affordable rental homes, an increase from 4.6 million in 2000. In Washington state, there are more than 230,000 households with “extremely” low income, the report said.
Since the federal tax credit program’s creation in 1986, developers in Washington state have built more than 1,000 properties funded by the program, creating more than 78,000 units for more than 158,000 people. Across Washington state each year, the program doles out about $17 million to developers of low income housing. Since 2011, developers in Spokane County have received nearly $20 million in funding through the tax credit program to build housing for the poor and elderly.
Cantwell said her provision will help counter the reduction in corporate taxes, a major element of the GOP tax plan passed in December that cut the rate from 35 percent to 21 percent and hampers investment in affordable housing, which the credit relies on.
Corporations and wealthy individuals receive a dollar-for-dollar reduction in federal income tax payments for years if they donate to affordable housing development projects. With the cut to corporate tax rates, the fear is there will be little incentive to seek out tax credit savings.
Despite this fear, Cantwell said the expanded credit should give affordable housing development “a shot in the arm.”
“The tax bill made it worse,” she said, noting that it’s still not clear how the Republican tax law will affect housing. “We’ll have to see how this tax season goes.”
Jonathan Mallahan, vice president of housing at Catholic Charities, said the tax credit was vital to the work his organization does in Spokane.
“The … tax credit is the tool that has allowed Catholic Charities to be able to house the most vulnerable people in Spokane,” he said. “Without this program, that wouldn’t have happened.”
Over the last 17 years, Catholic Charities has built nine affordable housing projects at an estimated cost of more than $100 million, much of which was supported by the tax credit.
In the last three years, Catholic Charities used the tax credit to help build Father Bach Haven II, which received $930,000 for a complex of 50 affordable housing units, including 38 for the homeless; Father Bach Haven III, which received more than $1 million toward 50 low-income units; and Holy Names Homeless Families, which got $1.4 million for 75 affordable units, 57 for families transitioning out of homelessness.
Mallahan said Catholic Charities has three buildings scheduled for construction in the next two years, bringing 175 additional units of affordable housing. The projects all rely on the tax credit for funding. Mallahan said Cantwell’s expansion of the tax credit will allow more projects such as Catholic Charities to be built in Washington.
“In terms of projects, if 10 projects are funded a year, that means they’ll be able to do 11, maybe 12,” Mallahan said. “For Catholic Charities, that would mean another 50 units of housing for the most vulnerable people, the lowest earners in our community.”
City has options for $2 million
Stuckart said there was “no firm plan” yet on how the $2 million would be spent, though he’s heard three “good” proposals.
The first would use the money to match grant funding, increasing the amount of funding but also delaying any construction for two or three years as the city seeks out and applies for grants – years when housing is needed immediately.
The second option would create a public insurance risk pool for landlords who worry about renting to people with housing vouchers for fear their property would be damaged.
Lastly, Stuckart suggested the city may pair with developers and subsidize a portion of rent, turning market rate projects into affordable housing for 10 to 20 years.
“I’m going to firm up the options and present them to council,” Stuckart said. “As soon as humanely possible.”
In Olympia, the $107 million added to the Housing Trust Fund will create about 3,500 affordable homes, according to Washington Low Income Housing Alliance, but it was just one of many bills legislators passed to confront the crisis.
Another law, funded by a $22 increase to a fee paid when real estate documents are filed, will help 11,500 people who are homeless, or at risk of homelessness, find housing assistance and other services.
The legislature also banned landlords from asking potential renters if they use rental or income assistance to help pay rent.
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