
By Erica C. Barnett
The city will award far less money to affordable housing projects this year than it has in previous years—just $53 million, compared to $147 million last year. Those funds will pay for just four projects, including two in north Seattle, one in the Central District, and one in Beacon Hill. In comparison, last year’s awards—known colloquially as the “NOFA,” for the Notice of Funding Availability that starts the funding process each year—funded 12 projects across the city.
Another 18 projects that applied for funding this year will not receive it.
City officials, including Mayor Bruce Harrell and Office of Housing director Maiko Winkler-Chin, announced the awards yesterday at El Centro de la Raza in Beacon Hill; the event also included announcements about homeownership programs that are not part of the affordable-housing NOFA.
PubliCola reported on the reduction in funding on Tuesday; the Seattle Times had its own story on the awards yesterday.
A primary reason for the reduction, Winkler-Chin told PubliCola Wednesday, is the need to “backfill” projects that are unable to pay their construction loans due to issues like the increased cost of labor and construction materials (which went up 15 percent last year), the concrete strike, interest rate hikes, and “operational issues,” like tenants failing to pay their rent.
Typically, an affordable housing project gets a certain amount of funding from OH—say, $10 million— based on a set of assumptions about what the project will cost to build and how much revenue the project will take in from rents once it’s up and running. Those assumptions then inform the size of the loan the developer will be able to get from a bank after construction is complete and the building is leased up.
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If those assumptions are wrong—if, say, construction costs spike, there’s a concrete strike, and 20 percent of the tenants aren’t paying rent—the bank will reduce the size of the project’s “permanent” loan based on the new numbers, leaving a gap. If an expected $10 million loan gets reduced to $8 million, the Office of Housing will step in to fill that gap. And when that happens, say, 50 times, the gap works out to around $100 million—about the size of the reduction between 2023’s awards and this year’s.
Ben Maritz, an affordable-housing developer whose proposal the Office of Housing did not fund this year, said unpaid rents have become “the biggest problem” for providers who need those revenues to pay their construction loans.
Rents in subsidized housing, which are set by the US Department of Housing and Urban Development based on local median, have climbed much faster than wages for low-income people, making it harder and harder for tenants to keep up, Winkler-Chin said. “A lot of people are unable to really recover and pay their rent, and that does have an impact on how much of a loan a developer can get as they’re building up their housing.”
Another reason for the lower award amounts, Winkler-Chin said, was that the city had already “forward-committed” funding from the JumpStart high-earners payroll tax and the housing levy in previous years—guaranteeing funds for projects that were in the works but wouldn’t begin construction until later. About 43 projects funded in previous rounds of funding are currently in the works, the Office of Housing confirmed.
The JumpStart fund, most of which is supposed to go toward low-income housing, has reportedly been frozen as part of Mayor Bruce Harrell’s effort to address an estimated budget shortfall of more than $220 million.
But there may be other factors contributing to this year’s relatively paltry awards.
The JumpStart fund, most of which is supposed to go toward low-income housing, has reportedly been frozen as part of Mayor Bruce Harrell’s effort to address an estimated budget shortfall of more than $220 million. Projects already funded through JumpStart will continue moving forward, but revenues from the payroll tax are reportedly not being dedicated to new projects, reducing the overall pool of funds for affordable housing significantly. Last year’s city budget, for example, included $138 million for affordable housing from the payroll tax.
Asked about the reported freeze on the use of JumpStart funds for new projects, Harrell spokesman Jamie Housen said the City Budget Office’s “direction to the Office of Housing (OH) is to use JumpStart [Payroll Expense Tax] funds on housing. Payroll tax is one of several large revenue streams in the OH budget, and the annual NOFA opportunities are just one of the ways OH makes investments in the community. Other investments include supporting operations, maintenance, and services (OMS) for affordable housing providers—including wage increases for staff who work in affordable housing buildings—and providing support for increased costs on previously awarded projects.”
Every year since its inception, Seattle mayors have used JumpStart funds to fill budget gaps and fund priorities that aren’t in the JumpStart spending plan; last year, about $89 million in repurposed payroll tax revenues allowed the city to pile the budget with new programs (like the police surveillance system Shotspotter as well as generous police recruitment bonuses). This year, given the size of the deficit, it’s probably that the new council and Harrell will again view JumpStart as a solution to help close the revenue gap without cutting pet programs or laying off large numbers of city workers.
If the the payroll tax is converted, at some point in the future, into an all-purpose funding source for city needs, that would represent an abandonment of its official, legally codified purpose: Building new housing, funding small businesses, and supporting climate-friendly economic development.

It’s unclear whether the mayor plans to send someone other than Ceis over to the homelessness authority, which he recently criticized (along with Seattle-King County Public Health) to the 

By Erica C. Barnett
The Puget Sound Business Journal