The Seattle City Council’s Planning, Land Use and Sustainability Committee took the first step toward making an affordable housing initiative a reality on Tuesday, Dec. 1, approving an interlocal agreement to secure housing sites, as well as administration of funds for that purpose.
The interlocal agreement execution for the Seattle area is expected to be approved by other municipalities and counties in the coming months, and the first projects are expected to start next year, with reports to follow in 2017 as the initiative rolls out.
The interlocal agreement includes King, Pierce and Snohomish counties, as well as the cities of Bellevue, Issaquah, Kenmore, Kirkland, Mercer Island, Redmond and Woodinville.
The agreement must go to the full Seattle City Council for final approval.
“It’s taken a number of years to get there, but we have actually gotten there,” said council central staff member Traci Ratzliff, about whether she thought the city could get everyone to agree on the affordable housing initiative. “Over a year ago, the City Council adopted a resolution that committed the city to financial participation in the Regional Equity Development Initiative Fund — the REDI Fund is what we refer to.”
Ratzliff said the resolution follows a $1 million allotment in both the 2015 and 2016 budgets, funds that were not to be touched until an interlocal agreement was developed and approved by the City Council.
“So we are here today with legislation that would authorize the office of housing to sign and administer that agreement,” Ratzliff said.
Seattle Office of Housing deputy director Miriam Roskin said the idea behind the REDI Fund was to leverage public monies to create a regional loan fund to secure sites for affordable housing with access public transportation.
Roskin reported the department had secured $5 million in public funds, which now could be used along with private investments for the construction or creation of affordable housing. National nonprofit Enterprise Community Partners had been selected as the administering agent for the fund and to organize the business plan and soliciting of private investment for the last year.
“A lot of the work we’ve done over the summer is to develop the interlocal agreement that’s before you today,” Roskin told the committee.
Enterprise representative Devin Culbertson said the fund would provide loans with seven-year terms at an interest rate of 3.5 to 4 percent. The REDI Fund amount totals $21 million, with Enterprise Community Partners being a major contributor, providing $10.5 million of the total fund.
“Enterprise is a national nonprofit, and we do a lot of things around our mission of ending housing insecurity,” Culbertson said. “We are also acting as a lender into the fund. While the public investment is really the catalytic piece that allows this fund to happen, the easiest way to think about the capital structure is to start with the senior debt. Most senior lenders and institutions are comfortable doing about 50 percent of an acquisition. The goal is to fill the gap, so that the fund could close on 100 percent of the cost of a site.”
He also reported the organization raised capital from both the King County Housing Authority and Living Cities to make up a good portion of the funding. Public investment monies make up the balance, Culbertson said.
The first five years would be the origination period, in which one- to three-year loans would be made, giving funds a chance to revolve within the REDI Fund, which was limited to a 10-year lifespan.
The Seattle area would receive 38 percent, or $8 million, of the total fund, with target areas outlined as within a half-mile walking distance from light rail and commuter stations and a quarter-mile walking distance from bus rapid transit and street car stops.
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