This Week in Olympia: Another Cash Grab by Non-Profit Housers

Late last week I spotted a post on Facebook that I really couldn’t believe. The non-profit housing group the Housing Development Consortium (HDC) and Futurewise are pushing to use funds generated from the Real Estate Excise Tax (REET) for affordable housing. The legislation, House Bill 1797

I can’t put it any other way: This is outrageous.

Consider the facts about REET and non-profit housing in Seattle.

  • The City of Seattle collected about $73.5 million in 2015
  • Last year two affordable housing projects opened with a total of 200 units at a price of $92 million
  • Had Seattle allocated ALL of the REET funding for those projects it would have fallen short by almost $20 million
  • Funds from REET go to the Cumulative Reserve Fund to pay for capital infrastructure
  • Where would those infrastructure projects get funding from after they’re diverted to expensive subsidized housing?
  • One of the biggest demands among angry neighbors is impact fees in Seattle, something that we have argued is not needed because lots of infrastructure is paid for with CRF.
This is from the City of Seattle’s budget for 2017:

The 2017-2018 Proposed Budget appropriates $96.1 million from the Cumulative Reserve Subfund (CRS) in 2017 and $80.6 million in 2018 with approximately 80% of those appropriations backed by the two REET funds. Individual projects and programs supported by CRS resources are described in the departmental sections of this document and in the 2017-2022 Proposed Capital Improvement Program (CIP). A supporting summary schedule provides the amounts for the various City departments utilizing these resources.

So this money would now be available for diversion to projects that cost as much as $500,000 per unit to build and have years long waiting lists. Don’t forget that the Mayor and Council have already started to implement Mandatory Inclusionary Zoning (MIZ) to shake down builders for even more cash. When will this end? Non-profits already get money from the Housing Trust Fund, from local levy dollars, and low income housing tax credits (LIHTC). Now they want to grab money that currently funds sidewalks, drainage projects and other important infrastructure.
My sources in Olympia tell me this legislation is not likely to pass. But still, it reveals that greed commonly attributed to developers, builders, and landlords is really found among the non-profit housing community. Instead of working with market rate developers to lower costs on all housing, the non-profits seem only to be getting started on finding ways to shake down the system for more and more money all the while claiming that we’re having a housing crisis.
But the crisis is the gross inefficiency of how we fund subsidized housing, shoving more and more money into expensive subsidized units and paying for that with measure that, ironically, boost all other housing prices with taxes, fees, and tax shifts. Then when prices keep going up, this rationalizes claims for more money. It’s time to demand changes and more efficiency from the subsidy system, not add more money.

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