Veronica loves living in Bellwether Housing’s new affordable-housing project The Rise on Madison on the border between Capitol Hill and First Hill. In fact, she said she “freaking loves it,” sitting outside the building on a cloudy August afternoon.
She moved into her studio apartment earlier this year with her rambunctious 4-month-old puppy Precious. The new place, not far from Veronica’s childhood home at 25th and Union in the Central District, marks her return to Seattle after a dark period that she described as chaotic.
Seven years ago, Veronica, who asked that Cascade PBS not use her last name for privacy, was living in Kent when she was evicted from her apartment and fell into homelessness. At first she lived in her car on the street, then in transitional housing in Kent and Skyway and eventually with her daughter in Tacoma.
Veronica’s new home on First Hill is one of 1,750 subsidized affordable apartments in 13 projects that opened in Seattle in 2023 using funding from the city’s Office of Housing. The buildings are in the Central District, on Capitol Hill, in Licton Springs, Rainier Beach and elsewhere.
Those numbers come from Office of Housing’s 2023 annual report. The document helps illustrate the progress Seattle is making on housing affordability and the challenges it will face in the coming years as rising construction costs and interest rates hinder the city’s efforts.
The Rise is part of a joint project by nonprofit housing developers Bellwether Housing and Plymouth Housing. The 17-story building, Seattle’s first high-rise affordable-housing development in decades, was built on surplus land gifted by Sound Transit for the effort.
Bellwether owns “The Rise” portion on floors six through 17 and rents the 250 studios and two- and three-bedroom apartments to people earning 60% or less of area median income. Sixty percent of AMI is currently $63,240 for an individual.
On floors one through five, Plymouth owns Blake House, which rents 112 studio apartments to seniors and veterans exiting chronic homelessness. Blake House is known as a permanent supportive housing project, with three live-in staff members as well as onsite health care services.
Veronica said her experience at The Rise has been good. But of course good is not perfect. Her room got way too hot during Seattle’s heat wave, but she was able to get a portable air conditioner. Veronica also complained that some of her neighbors don’t treat the building as well as she thinks they should.
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The Office of Housing provides money to nonprofit affordable-housing developers who build and operate subsidized housing projects available to people earning no to low incomes, typically 0% to 60% of area median income. Developers combine the grant money from the city with other state funding, tax credits and traditional bank loans to pay for land acquisition, construction and operations of the housing projects.
The city has significantly ramped up its investment in subsidized affordable apartment construction in the past seven years. In 2018, for example, only four Office of Housing-funded buildings opened, adding 362 subsidized apartments to Seattle’s supply. In 2022, 15 affordable housing projects opened with 1,651 apartments.
The Puget Sound Regional Council estimates that Seattle needs to build at least 112,000 new units of housing over the next 20 years to meet demand. More than half of those units need to be affordable to people earning 0% to 50% of area median income. Office of Housing director Maiko Winkler-Chin said the private market essentially never builds unsubsidized housing that’s affordable to residents with the lowest incomes, and rarely meets the need for people in that 30% to 60% median income range.
That increase in housing production was aided by new tax revenue from the Jumpstart Payroll Tax on large businesses and the Mandatory Housing Affordability (MHA) program, which requires private developers either to pay into Office of Housing’s fund or include units of subsidized housing in their apartment projects. Jumpstart was created in 2020; MHA was created in 2019.
Seattle once relied almost entirely on the Housing Levy property tax to fund construction of subsidized housing in the city. The levy is still a key source of funding for the Office of Housing and voters renewed it last fall at a historically large $970 million over seven years.
Jumpstart, which taxes companies with payrolls of more than $8 million, is now the largest funding source for affordable-housing construction in the city. Of the $57 million the Office of Housing awarded to developers in 2023 for construction of new subsidized apartments, $23 million came from Jumpstart. Another $19.8 million came from the Housing Levy, $5.6 million from MHA and the rest from federal grants and other programs.
The MHA program saw a 15% decline in revenues in 2023, driven by the slowdown of a private real estate market facing high construction costs and high interest rates.
The Rise on Madison/Blake House is a 17-story, 362-unit affordable-housing building on First Hill jointly owned by Bellwether Housing and Plymouth Housing. It is one of 13 such projects that opened last year using funding from Seattle’s Office of Housing. (Genna Martin/Cascade PBS)
At a July 24 City Council committee meeting, Councilmember Rob Saka pointed out that increasingly, developers are choosing to build affordable housing on site rather than pay the fee to satisfy MHA requirements, a change from past practice. It’s something Saka wants to see more of in the future.
Winkler-Chin explained that the city had recently passed a law exempting developers from design review when they include the MHA units in their project, which was likely a factor in the shift. Design review can add delays and cost to a project.
Winkler-Chin told Cascade PBS that it’s also likely a result of high interest rates and a more challenging housing market. When developers pay the in-lieu fee to the affordable-housing fund, they must do so at the front end of a project. When they incorporate affordable units into their project, they delay the cost until construction actually begins.
Those same challenges in the market — inflated construction costs and higher interest rates — are sure to have an impact on how much affordable housing gets built with Office of Housing funds in the coming years.
Affordable-housing projects work on long timelines and can take more than five years from conception to resident move-in. Kelli Larsen, the Office of Housing’s head of strategic initiatives, said Seattle is seeing an unprecedented number of new units open right now because the projects got started years ago. But she expects that today’s market conditions and the slowdown of new development will cause a future drop in the number of subsidized apartments built, though she couldn’t say how significant a drop it might be.
Historically the Office of Housing has focused on subsidized rental apartments. The city has long had a down-payment assistance program that helps low-income residents purchase homes on the private market but, prior to 2016, had only invested in the development a few affordable homeownership projects.
The department has increased its attention to homeownership in recent years. For example, Office of Housing investments helped nonprofits pay for the construction of three affordable homeownership projects, which opened last year with 20 units of housing. The previous year, four subsidized homeownership projects with 21 homes opened using funding from the city.
Councilmember Cathy Moore, who chairs the Council’s Housing and Human Services Committee, wants to see the city increase its investments in affordable homeownership.
“How can we really shift to providing more homeownership opportunities rather than just continuing to build out rental apartments?” she asked at the July 24 meeting. “While [apartments] create housing, they don’t create long-term stability that I think is important to have in our community, nor do they create property taxpayers.”
On the private market, landlords often pass along property tax costs to renters. But, according to the Office of Housing, many nonprofit affordable housing providers participate in the city's Multifamily Tax Exemption program to get a 20-year property tax break on subsidized units.
Correction: An earlier version of this story misstated when the Office of Housing started investing in affordable homeownership developments.