One year later: A look at Vancouver’s solution to a vexing issue
It’s been little more than a year since voters approved Proposition 1, agreeing to tax themselves to create more affordable housing in Vancouver, and some feel there’s not a lot to show for the $6 million collected so far for the city’s Affordable Housing Fund.
Steve Smith is one of them. He was one of three who helped write the opposition statement for the 2016 voters’ pamphlet. Now he says he wants to know how the city is using the money and doesn’t want to see it used to give out “freebies.”
To date, the city hasn’t spent the $6 million it will have collected by the end of the year. The Vancouver City Council allocated $4.4 million of the funding in October to help agencies build and preserve affordable housing. Meriwether Place, a $9.9 million project, will receive $500,000 from the fund and could be the first completed project with an anticipated July opening. It’s one of 11 awards this year.
Given the typical government process, Peggy Sheehan, Vancouver’s community development program manager, argued that while the community may not see progress on the ground in terms of new affordable housing, the process has actually been swift.
Housing Initiative LLC CEO Sierk Braam agrees. On average, he said, most real estate developments take between two and five years from start to finish.
Portland also works to address housing shortageAcross the river, Portland is going through a process similar to Vancouver's Affordable Housing Fund. Rose City voters approved spending $258 million to fund approximately 1,300 units of affordable housing. Unlike Vancouver, Portland is restricted in how it can use the funding because it's a bond rather than a levy. Levy dollars can be used for noncapital purposes, such as down payment assistance services. Portland's bond can only be used to buy land for development or buildings. Portland Housing Bureau Director Kurt Creager said the Portland process is going well, which includes a few offers from private developers that had plans but decided not to move forward, as well as opportunities to buy existing buildings. Portland bought one building, the 263-unit Ellington, just a month after the bond was approved in 2016. That decision drew heavy criticism and forced the city to hit the brakes and spend the next several months coming up with a plan to move forward.
— Katy Sword
“To be able to get money out the door within a year of having it available on the city’s part is a pretty amazing job,” he said. “They were a pretty quick study on growing pains, and I think that is really, truly remarkable.”
While there’s always a chance a project could fall through, Sheehan said all the 2017 projects have been vetted.
“They understand the commitment to affordable housing,” she said. “They understand that they’re signing a long-term loan agreement. I don’t think we’re going to have any problems.”
The city didn’t always have its plan nailed down.
Vancouver endured blowback in February when it considered purchasing a wedding venue in Hazel Dell and turning it into a homeless shelter using the Affordable Housing Fund. The proposal sparked discussions about how and where the tax money should be spent.
Eight months later, the city finalized its allocation plan, which includes the stipulation that money can only be spent within city limits.
The fund retains some flexibility, however.
For example, loan agreements are largely structured as half-loan, half-grant arrangements with the loan to be repaid over time at a low interest rate. The only loan negotiated so far has a 1 percent interest rate. The city is also willing to work with projects that may not have the funds to pay back a loan, such as a Habitat for Humanity project.
“They’re willing to agree to keep the property affordable longer if we can grant the money,” Sheehan said. “It’s pretty small when we give them that money, but it’s important or they couldn’t move forward.”
As the coffers refill, she said the city will finish distributing the first round of funding awards before considering new projects.
Most of the agencies that received funding are familiar in the world of subsidized housing development, such as Vancouver Housing Authority. The agency is involved in most of the projects in some way, whether by providing a loan or Section 8 housing assistance vouchers.
“It’s just something that we’ve kind of taken as a philosophy of the agency is creating affordable housing within the community,” said Roy Johnson, the authority’s executive director. “It doesn’t have to be owned by us. If we’re able to help some other agency create it, then good.”
Here are a couple of the projects funded so far.
Meriwether Place, a three-story, 30-unit apartment building rising in central Vancouver may be the first completed project that uses Affordable Housing Fund money.
The project would have been built without money from the fund, but Leah Greenwood, executive director of the nonprofit behind Meriwether Place, Columbia Non-Profit Housing, said the city funds make a big difference. Without the local funds, Meriwether Place wouldn’t have qualified for a property tax exemption that saves money down the road.
“It means that we can have a higher level of property management staffing and a higher level of (on-site) service staffing, which from our tenants’ standpoint means they have more support,” she said.
Additionally, if Meriwether Place hadn’t received the $500,000 — or if Proposition 1 hadn’t passed and the fund was never created — Greenwood said the project would have needed a traditional bank loan, which tacks on a mortgage payment and interest.
Meriwether Place is about halfway built. Greenwood said planning for Meriwether began in 2015, and applications for low-income housing tax credits were submitted at the beginning of 2016. Since then, construction costs increased about 20 percent, some due to wage rate requirements triggered by certain types of funding. National discussions about tax reform resulted in those tax credits being worth less.
Greenwood’s story of scraping together a patchwork of funding sources to make a project a reality is not unique. The Affordable Housing Fund is becoming part of that patchwork.
Housing Initiative LLC got Affordable Housing Fund money for two projects. It recently closed on a purchase of land and secured a construction loan from Vancouver Housing Authority to build one of those projects, The Pacific, an 18-unit building for people exiting homelessness.
Housing Initiative is a subsidiary of the Council for the Homeless, a nonprofit, but it acts more like a for-profit company. The idea is that Housing Initiative can react to different opportunities and leverage money with fewer of the regulatory requirements that are often attached to public funds.
Without $250,000 from the Affordable Housing Fund, Braam and partner Andy Silver say they don’t think The Pacific would’ve penciled out. At least it wouldn’t have been as affordable. The total cost for The Pacific is $2.1 million, or about $117,000 per unit — much lower than a traditional subsidized unit.
Braam said their approach is “in some ways a better, quicker way to react” to the lack of housing that is affordable to people at all income levels.
Vancouver Affordable Housing Fund
By the numbers
$6 million collected annually.
257 total units to be built or rehabilitated so far.
20-year affordability period required for funded projects.
“We’re proud of our cost per door, because that’s part of our model as we’ve been describing it, but we don’t think it should in any way reflect on these other developments that are using tax credits because that is the only way to use tax credits,” said Silver, who is also executive director of the Council for the Homeless. “If we stopped using tax credits, then we’d have almost no affordable housing in the community.”
During the next few years, city projects that were awarded money in the first round will be finished and start housing people. Rehab projects that upgrade rundown homes will also be completed.
Meanwhile, the city is working to allocate $1.2 million for rental assistance vouchers and services. Later, it will discuss how to spend $300,000 on temporary shelter.
Sheehan said Vancouver’s levy structure and approach to affordable housing is being discussed by leaders in nearby cities. There’s also a general consensus that people would like to see the private market more involved in affordable housing.
The lack of affordable housing is not just a Vancouver or Clark County or Portland metropolitan area issue; there are places along the West Coast and across the country where people struggle to secure a place where they can afford to live.
The past, present and future of The Affordable Housing FundMay - Dec. 2015: Vancouver's 21-member Affordable Housing Task Force meets to discuss policy options to protect vulnerable renters and increase the supply of affordable housing in Vancouver.
September 2015: Vancouver City Council approves three new ordinances to protect renters.
January 2016: The Housing Task Force submits its recommendations to the city, which include creating a dedicated fund to construct or rehabilitate low-income housing.
Feb. 22, 2016: City council agrees to begin process for placing an affordable housing tax measure on the general election ballot.
April 11, 2016: City council declares an affordable housing emergency, paving the way to ask voters to pass the tax measure, called Proposition 1.
May 2016: Bring Vancouver Home launches its campaign advocating for Proposition 1 passage. There is no opposition campaign.
June 22, 2016: City council votes to put Proposition 1 on the ballot.
Nov. 8, 2016: Proposition 1 passes with 57.64 percent of the vote.
Dec. 13, 2016: City outlines timeline for when Affordable Housing Fund applications are due and when funds will be disbursed.
Feb. 13, 2017: City staff propose using Affordable Housing Fund money to convert a Hazel Dell wedding venue into a homeless shelter, an idea that faces backlash and later gets dropped.
Aug. 7, 2017: City council approves regulation changes that encourage the development of accessory dwelling units.
Oct. 2, 2017: City council approves $4.4 million in funding recommendations. The council also approves expanding the Multifamily Tax Exemption program.
Nov. 30, 2017: City gets applications for housing assistance and self-sufficiency services.
December 2017: City collects full $6 million and reviews applications.
February 2018: City council discusses funding recommendations for housing assistance and self-sufficiency services.
Summer 2018: The first new-construction projects that received Affordable Housing Fund financing open.
“All we can do is try this one thing and see if it helps,” Sheehan said.
Come January, the city of Vancouver will take a second helping of $6 million and start the process over again.