It’s been more than eight years since the Seattle Housing Authority (SHA) first announced plans to demolish and redevelop the 561-unit, 28-acre Yesler Terrace public-housing project. SHA’s plan calls for nearly 900,000 square feet of office space, some retail and approximately 5,000 mostly market-rate and high-end housing units. Come May, SHA’s plan finally will go to the City Council for its review.
According to recently disclosed documents, the city is poised to give SHA permission to offer only 420 of the new units — less than 10 percent of the total on site — at rents affordable to those now living there with incomes less than 30 percent of median.
Documents also show that SHA expects the city to subsidize its $293 million plan with more than $100 million in local revenues. That includes at least $30 million in city housing- and parks-levy dollars, block-grant funds, general-fund monies, utility funds and Bridging the Gap transportation dollars. (Is this what you thought you were voting for when you approved the Bridging the Gap, housing and parks levies?)
In addition, SHA will ask the city for “multifamily tax exemptions.” In return for offering 900 units at rents deemed affordable to those with incomes between 60 and 80 percent of median, SHA would receive tax breaks valued at more than $80 million. Keep in mind these rents actually are higher than Seattle’s average rent. And if SHA doesn’t pay these taxes, we will — in the form of higher property taxes.
Combined, the amount of direct housing-levy dollars and MFTE (Multifamily Property Tax Exemption) tax breaks SHA seeks rivals the value of our current voter-approved, seven-year housing levy.
In addition to this $100 million-plus of city funds, SHA is seeking permission to tap tens of millions in state trust-fund dollars and low-income housing tax credits so that SHA can enter into partnerships with nonprofit housing developers to build the 420 very-low-income units on the site. In return for free land, the nonprofits would be allowed to access limited state sources to cover a portion of the cost for these units.
Like housing levy revenue, these are limited existing sources we desperately need to expand our low-income housing stock, not to assist SHA in a “teardown” that will result in replacement of only 420 of the current 561 public-housing units.
In need of another plan
What’s more disturbing, an independent fiscal analysis recently commissioned by the city, the Gardner Report, raises serious questions whether the project can pay for itself — even after tapping city and state dollars.
That’s because SHA’s plan also depends on the willingness of developers to purchase 17 of the 28 acres on site and turn them into approximately 3,000 units of high-end housing and nearly a million square feet of high-rise offices. It’s the proceeds from this sale that are supposed to cover $141 million of the $293 million Yesler project price tag.
The Gardner Report questions whether the project can capture such a huge chunk of the office and residential market. And when that doesn’t happen, you can bet SHA will be back, seeking yet more handouts from city government.
Why should local and state taxpayers be on the hook for any portion of this project? SHA now holds an inventory of about 1,800 market-rate units citywide. Simply selling off some of this inventory could underwrite what SHA now wants the city to cover.
Also, according to SHA's 2010 annual budget report, the agency realized a $20 million surplus in revenues.
Also, we’ve learned from a disclosure request that, since 2000, SHA has accumulated more than $50 million in the state's Local Government Investment Pool, a special state account where public-development entities may hold excess revenues and earn higher interest.
Any combination of these sources could underwrite the Yesler Terrace project or be used to cover cost overruns. If SHA doesn’t want to tap its own resources, it could redesign the project to bring its costs in line with what it can afford.
For instance, SHA could forego ripping up and replacing the existing street grid or certain design elements of debatable value. (With these elements added, the per-unit cost of housing on the site rises to $300,000, making it one of the most expensive, publicly subsidized housing projects ever built in this city).
SHA's mission first and above all is preservation and expansion of units serving the poorest in our city. Take out some of these other elements — not public housing.
Not before it’s time
Even though the Department of Planning and Development has not yet finalized its recommendations, we’ve learned the city Office of Housing will send a letter this week to the federal Department of Housing and Urban Development (HUD) pledging city funding, including housing-levy dollars, for the project. The letter will accompany a grant request SHA is submitting for federal money to pad the Yesler Terrace budget.
How can one department pledge city support while another department hasn’t completed its review and the Council won’t start its review until May? Only then will council members learn the budget implications — and what a colossal waste of limited city resources this project could become.
JOHN V. FOX and CAROLEE COLTER are coordinators for the Seattle Displacement Coalition (www.zipcon.net), a low-income housing organization.