Where Did All The Money Go? ‘Social Housing’ Proposal In Seattle Is Redundant

A ballot measure is being proposed in Seattle to raise money for, you guessed it, housing. This time, the scheme is being called “social housing,” and it demonstrates a variety of the problems plaguing the discussion of housing in the United States. A big problem is short memories. There have been numerous efforts and schemes to shake more cash out of the economy for housing, most of them have been implemented, yet the media, activists, and local government in Seattle have yet to ask, “Where did all that money go?” or “Wait, did all that money we poured on the problem end homelessness or lower prices?” Perhaps now Seattle voters will demand answers to these questions and deny a place on the ballot for the measure this fall until answers are given.

Currently the ‘social housing’ proposal is pretty vague. The Seattle Times describes the scheme this way:

“The effort is known as “social housing,” and it’s essentially publicly owned housing that is insulated from private market forces and designed to be permanently affordable. This model is popular in Europe and other countries around the globe including Vienna, Austria.”

Before we get to the substance of the proposal let’s look at what’s happened with money and housing in Seattle already, the mechanism being proposed by advocates, and then take a look, once again, at what the real problem is with housing in Seattle and across the country.

Where did all the money go?

Over the last decade in Seattle, it’s been a steady drumbeat: more money, more money, more money. The most common metric used for quantifying housing problems has been one-night counts of homeless people and the ubiquitous “cost burden,” the number of people supposedly paying more than 30% of their income for housing. That number, cost burden, has been all over the place but one candidate claimed it was 37,000 people meaning a need for that many units. I’ve already pointed out this is a preposterous number. But here’s what’s been done so far.

  • Housing Levy $290 Million – Seattle has a housing levy, a property tax that pays for housing and according to the City, the “2016 Seattle Housing Levy provides $290 million over seven years for housing production, preservation, and assistance.” Here’s a chart outlining what those funds paid for over 3 years.
  • Mandatory Housing Affordability (MHA) $96.1 Million – According to the last report from the City, “as of 12/31/2020, total MHA payments received by the City sum to $96.1 million.” The MHA scheme is essentially a tax on the production of all new housing for the purpose of handing that cash over to non-profits. It appears as if 712 units of housing were built or were in progress as of the report.
  • Uber

    UBER
    Tax $25 Million Per Year
    – The City of Seattle decided that Uber riding was a luxury and thus should be taxed to pay for, what else, housing. The tax imposes a 57-cent charge on every ride. According to the Seattle Times “new tax will raise about $25 million a year. Over the next six years, about $52 million would fund affordable housing, including rental units for people making about $59,800 for a family of three.” It’s unclear whether this money has actually produced any housing yet.
  • Head Tax (“Jump Start”) $248.1 Million – A huge battle broke out in the summer of 2018 over whether to tax Amazon

    AMZN
    to punish them for creating so many jobs in Seattle. The so called “head tax” was intended to tax all those new jobs. The tax failed that year, but after the turmoil in the streets after the death of George Floyd, the Council acted. According to Geekwire, “JumpStart brought in $248.1 million in its first year — $48.1 million more than projected, a 24% jump.”
  • Housing Choice Vouchers – According to the Seattle Housing Authority’s latest report, “in addition to its nearly 8,500 units of owned/managed housing, SHA administers more than 7,000 tenant based vouchers.”
  • Housing Trust Fund $131 Million Allocated in 2021-The latest allocation for housing money from the state which is usually used along with federal Low Income Housing Tax Credits (LIHT

    HT
    C) is competitive, but Housing Trust Funds are used in almost all new non-profit developments in Seattle.
  • Money Allocated for Tiny Houses $2 million – Recently former Speaker of the Washington State House of Representatives Frank Chopp got caught grabbing $2 million allocated for tiny houses to address homeless encampments. The reason seemed to have something to do with the fact that nothing had been done with the funding

So, there you have it, about $750 million so far wrung out of the economy primarily for construction projects to build housing. That should buy a lot of housing, right? Not really if you consider that $750 million divided by the fanciful 37,000 units I mentioned earlier would be about, $20,270.27, not enough to pay for a covered parking space these days. But let’s lower our sights and say that all that money could pay for 3,700 units at $202,702.70. Sorry, I have some bad news. The new housing project built by Mercy housing at Magnuson Park rang in at $67 million for 108 units or a total of $620,000 per unit.

How much is the average single-family home in Seattle? According to Zillow, $958,027. But that’s an average. Clearly, something is wrong here and it isn’t my middle school math. An enormous amount of money is being spent or at least collected to buy subsidized housing in Seattle. It’s clearly being spent inefficiently when it is being spent and nobody has declared the “housing crisis” over.

Capitol Hill Housing Improvement Program (Community Roots) is already a Public Development Authority

King County has 19 PDAs already, and many can build housing as can both the Seattle and King County Housing Authority using bonds.

The Mechanism: A Public Development Authority (PDA)

As if to highlight their complete and willful ignorance and disinterest in all this the advocates for the new measure go one step further. They argue that what is needed for “social housing” is a mechanism called a Public Development Authority. The PDA in Washington law cannot generate any tax revenue, but it can issue public debt, bonds, in order to generate money to make capital improvements including housing.

But here’s the deal: there already is a PDA for housing called Community Roots Housing, formerly known as the Capitol Hill Housing Improvement Program (CHIP). The CHIP iteration notoriously built 88 units in a project called 12th Avenue Arts at a price tag of $47 million or about $500,000 per unit. Also, there are a total of 19 PDAs that have been constituted in King County 11 of which are in Seattle and at least three of which have housing as part of their charters.

Housing PDAs already exist in Seattle and a few of them like the Seattle Chinatown International District Preservation and Development Authority (SCIDpda), the executive director of which was recently appointed head of Seattle’s Office of Housing. Does Seattle really need another housing PDA.

What’s the Problem?

Clearly the problem in Seattle isn’t a lack of funding. Almost all of the sources I mentioned above are churning cash on an annual basis; these aren’t just one-time hits of cash; they are fountains of cash. And along with a housing authority that can issue debt, there are PDAs in Seattle that can and have built housing using a variety of sources of funding.

And here’s something hilarious and not unusual in the bizarre world in which I’ve lived over the last decade; I supported doing this years ago.

“[Sharon] Lee [Director of the Low-Income Housing Institute], City Councilmember Kshama Sawant and Roger Valdez, an advocate for builders, have called for a bolder step. They argue the city should use its borrowing, or bonding capacity, to finance affordable-housing developments on its underutilized land.”

Yep, that’s right. I supported this 7 years ago. What changed? You can read that full story in another post, but the short version is that housing became the hot political issue and the solution was always more money. And when there was money from somewhere, say a tax on Uber rides, it went toward housing. Yet during all this period there has yet to be a single comprehensive review of all the collecting and spending of this cash and why, to date, it hasn’t, evidently, put a dent in the “housing crisis.”

For Seattle it might be too late. But it is possible voters will take a look at all the money they’ve been asked to spend on very expensive housing and pass on the new measure. Maybe voters will demand the media start asking tougher questions of elected officials and hold those officials accountable for the gross inefficiency and overregulation that has kept people with less money in housing uncertainty.

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