At least three more affordable housing owners in Seattle have signaled they will try to sell off buildings as industry representatives cry for more financial help from Seattle City Hall.
The possible sales are timed with an announcement from Mayor Bruce Harrell Tuesday that the city will spend $170 million on affordable housing next year — the most in the city’s history — with an added focus on propping up struggling properties.
The possible sales of up to seven properties — from the Low Income Housing Institute, SouthEast Effective Development and Plymouth Housing — continue a yearlong trend of owners off-loading buildings as they seek to shore up their books.
If the sales go through, they would join the 13 already sold or transferred over the previous 12 months. Some may remain “affordable” by federal standards under standing covenants, while others could end up on the open market, potentially pricing out occupants.
The unprecedented divestment underscores the deep challenges facing the city’s affordable housing industry, as nonprofit and for-profit owners of housing aimed toward low-income residents unanimously report higher expenses and decreasing rent collections.
In turn, representatives for the Housing Development Consortium, the city’s most prominent affordable housing advocacy organization, called on Harrell last week to dedicate an additional $50 million to help stabilize providers, on top of the $100 million already promised in July for a mix of construction, preservation and operation support.
The $170 million, which draws from the city’s housing levy, fees on new development and a payroll tax on large business, goes further. It’s an investment that “embodies our focus on tackling housing affordability with urgency and action,” Harrell said in a statement.
Patience Malaba, executive director of the Housing Development Consortium, said the higher dollar amount “meets the moment for Seattle and demonstrates the City’s commitment to both creating new affordable homes and preserving the ones we already have.”
As for the sales, Kate Jacobs, spokesperson for Harrell, said the decisions by the Low Income Housing Institute and Plymouth represent a shift away from now-disfavored models of affordable housing in order to “optimize resources” for housing.
“We recognize that affordable housing providers face complex challenges that require varied solutions,” she said.
The postpandemic years have been challenging for affordable housing in Seattle. Record revenues from a new housing property tax and a tax on the payrolls of large businesses have not held back the tide of increased costs and decreased rents.
The reasons for the challenging math equation vary depending on who’s speaking, though the cost of insurance and construction, security issues and higher interest rates are shared concerns.
As for why rent collection is down — sometimes by as much as 50% — some point to continued hardship among tenants while others primarily blame city laws limiting evictions and making it harder to screen out individual tenants.
City Hall’s response so far has been limited. The city gave $14 million last year to help prop up ailing buildings and Harrell’s office has convened roundtable discussions with housing interests to chart a path forward.
But the city has not unveiled any dramatic shift in its approach to affordable housing.
A bill that would have rolled back some of the city’s landlord-tenant laws stalled. Then City Councilmember Cathy Moore resigned earlier this summer, killing momentum. With budget deliberations and a tense election around the corner, the window for the council to take it up again this year is narrow.
The clearest sign of trouble came when Community Roots Housing decided to list six of its buildings. Mt. Baker Housing soon followed with four and Inland Group transferred three of its buildings to a subsidiary of the Blackstone investment company.
If there was any thought that those listings were exceptions, the more recent spate of possible sales puts that to bed.
SouthEast Effective Development, or SEED, notified the city last week that it intended to sell its Lilac Lodge senior housing in Columbia City. It has 44 apartments.
A spokesperson for Plymouth Housing confirmed it had listed its Haddon Hall downtown “as part of a long-term strategic shift toward housing models that better support resident needs.” The organization had previously planned to demolish the building, but never began the work. The building is currently vacant.
The Low-Income Housing Institute, meanwhile, notified the city it intended to sell some of its single-family homes it uses to house up to five people.
Executive director of the organization, Sharon Lee, has been among the loudest voices calling for a change in approach to tenant management and the distribution of rental assistance.
“If you want to continue the expansion of affordable housing, which is so greatly needed, you have to make sure that the nonprofits are healthy and they’re not just burning down their reserves because the city has not done its part to provide sufficient rent support,” she said.
The financial picture for providers is slightly improved this year from last. But Emily Thompson, vice president of GMD Development, said the improvements can’t match the depth of the challenges.
“I’m hopeful for additional rental assistance resources that our tenants need because continued inaction is having harmful consequences on the affordable housing sector,” she said.
