Seattle enthusiastically voted to tax itself to create social housing. By some means, as an alternative, we have now a Seattle Social Housing Developer that won’t open new properties till 2029. Regardless of receiving $115 million this 12 months — sufficient to construct two or three residence buildings free of personal funding — the Seattle Social Housing Developer is about to borrow $165 million from the non-public market by issuing bonds, tying the company to offering returns to non-public capital within the type of charges and curiosity funds. SSHD plans to make use of these {dollars} to purchase present housing slightly than add to Seattle’s housing inventory.
Would possibly an acquisition that preserves affordability, considerably rehabilitates broken buildings and/or replaces a hypothetical unhealthy landlord with an inexperienced however well-meaning landlord be useful? Possibly. If SSHD one way or the other manages to chop rents and nonetheless keep buildings effectively, and if the prevailing residents are keen and in a position to take part within the resident governance the developer aspires to, then perhaps these costly acquisitions will likely be useful to some present residents. Will that materially contribute to addressing Seattle’s housing disaster? No.
The Seattle Social Housing Public Improvement Authority was established three years in the past. In that point, it has created zero properties. It has created no growth pipeline. It has, nonetheless, spent and obligated thousands and thousands of {dollars} to rent and hearth a CEO who by no means lived in Washington state, pay questionable consultants and embark on a hiring spree.
Standard actual property house owners and traders suggested SSHD to buy a portfolio first. That is an environment friendly technique in case you are profit-motivated and have the expertise and capability to handle the great dangers of multifamily actual property possession and administration. We voted to create and fund the Seattle Social Housing Developer to develop properties freed from the market, to not create yet one more landlord. And whereas the SSHD may be a well-intentioned landlord promising rents at 30% of revenue and resident governance, it’ll even be a landlord with zero expertise managing properties, zero expertise proudly owning properties and questionable capability to take action. Why ought to the SSHD tackle the dangers of possession earlier than it’s prepared? Possibly the SSHD is simply speeding to point out it may possibly do one thing, something in any respect.
A extra productive technique would have seen SSHD spend the previous few years finishing predevelopment on a growth pipeline so it could have been in a position to instantly use its $115 million to interrupt floor on a growth this spring. Having failed that already, the SSHD might nonetheless doubtlessly break floor on new properties shortly in 2026 by buying growth rights from different mission-aligned housing builders who’ve pipeline initiatives ready for funding (or extra merely, simply fund these skilled nonprofits to undertake building on SSHD’s behalf). Specializing in new building would add the badly wanted properties that Seattle repeatedly votes to tax itself to fund. Additional, the 18-to-24-month building interval would give SSHD satisfactory time to construct its capability for possession and administration as a brand new group.
Within the final decade, Seattle constructed up reasonably priced housing funding sources, an Workplace of Housing and an ecosystem of nonprofit builders and house owners. Seattle has many years of expertise offering hundreds of reasonably priced properties. And whereas a pacesetter in the US, our reasonably priced housing efforts have been insufficient. We’re too gradual and too difficult. Our typical affordable-housing world is hamstrung by layers of necessities and inefficiencies from federal, state, county and native governments, plus a dependence on non-public capital within the types of debt and tax credit score fairness.
Seattle’s Social Housing Developer has a golden alternative to do higher. It might construct reasonably priced housing with out the strings and problems of federal and state funding and with out the necessity to present the investor and lender returns that eat up about 20% of the price of typical reasonably priced housing. I fear the SSHD is about to throw that chance away.
Seattle didn’t vote for a jobs program or a nicer landlord. We voted to develop social housing. Let’s not squander the chance to take action.
