This week, Inland Journal is back with another housing panel. This time it centers around a simple but deceptive question: What is affordable housing?
Most people are in agreement that the Northwest needs more housing, and it needs to be more affordable.
But affordable for whom? Does affordable mean subsidized? Or does affordable mean a lower market rate?
What makes housing affordable? And who is responsible for building it?
Three experts join SPR in the studio to give their insight—and assurance that none of these questions are simple.
Eliza Billingham: Would you introduce yourself, your name, your position, and kind of what you do or what your organization does? And Deb, can we start with you?
Deb Elzinga: Sure, I'm Deb Elzinga and I'm the CEO at Community Frameworks. Our organization is really focused on housing across the spectrum. So we provide both rental housing and home ownership opportunities.
EB: Councilmember Cathcart?
Michael Cathcart: Yeah, Michael Cathcart. I serve on the Spokane City Council representing District 1, which generally encompasses Northeast and downtown Spokane. I've been serving on the council since the start of 2020, reelected in 23, and about halfway through that term.
EB: Congrats. And do you have any special interests or background in housing?
MC: Well, I previously served as Government Affairs Director for the Spokane Home Builders Association.
EB: Perfect. And John, who are you?
John Chapman: Yeah, I'm John Chapman. I'm the Director of Asset Management for the Spokane Housing Authority, and the Housing Authority does two primary things.
We administer the Section 8 voucher program for the area, and the department that I'm in charge of, though, manages and develops affordable housing. We have 10 properties that the Housing Authority owns in the Spokane area, and we're getting ready to build some more.
EB: Can you tell me when you say that you're in charge of building affordable housing? What does affordable housing mean to you?
JC: Usually, that's guided by the funding sources and the definitions that are provided to us by the government and the different funders that we have.
So I guess in kind of a technical way, it's driven off the area median income, and so different projects will have different types of affordability components. Some will be targeted towards extremely low-income folks, others will be kind of workforce housing, and so there's kind of different bands of affordability.
Yeah, so that's kind of at a high level what it means.
EB: Great. Michael, when you're on the dais, speaking about affordable housing, are you talking about the same thing or something different?
MC: Well, in my mind, as I think about affordable housing, it's less the technical side of it, although we can talk about that, but it's more, you know, how do we reduce the cost of construction? How do we reduce those regulations that increase cost and may or may not provide, you know, a benefit on the back end or a substantial benefit on the back end?
And so that's how I think about affordable housing, is how do we actually make it more affordable to achieve? But I think the city, and I don't necessarily agree with this, but the city has more or less taken the standpoint that affordable housing is up to about 80% AMI
There’s a couple of reasons for that, but the biggest, you know, we just adopted this affordable housing permit fee ordinance that I had some challenges with, but it ultimately says that we're going to defer or offer deferral of permit fees for projects that, you know, include a number of things, dollars out of the heart fund, which has a 60% AMI restriction, or it can also comply with MFTE, 12 year or 20 year, which I think allows for up to an 80%, but all the programs that they have to comply with are about up to 80.
Workforce housing, I think, is generally considered 80 to 120, but I would say that workforce is just as critical for that, you know, “affordability” component as anything else, and so I tend to think it's pretty short-sighted to exclude the 80 to 120 piece.
EB: Yeah, we're gonna come back to that, but Deb, can I have you answer the same question? How do you define affordable housing?
DE: Well, first I want to just say that I think we can all agree that affordability is a major concern for most people. The cost of food and gas and health care and housing has all gone up, and I'm guessing everybody knows people who are facing challenges with their housing costs, people who can't afford their rent, along with all their other expenses, and the people who are priced out of buying a home.
And so when I think about the question of affordable housing, I think about it in terms of the larger affordability context, and what I when I think about it, when I really think about what is underneath all the technical aspects and all of that.
I think that when people have a place to call home that allows them to live within their budget, to live within their means, and they can take care of all their other responsibilities, that they're gonna do better as a family, and I really believe that when that happens, we all do better as a community.
EB: John, I think maybe you were the first person to let me know or kind of let me in on the idea that it can be more expensive to build subsidized housing than it can be to build non-subsidized housing.
Can you talk to me about in in your experience dealing with grants, how does that affect the cost of building affordable subsidized housing?
JC: Sure, when I first started out in this industry, I was kind of shocked that affordable housing would cost so much more to construct and develop than market rate housing. And you kind of dig into that.
An analogy that you kind of think about is when you fund a project, you have to do what's called capital stacking, and you get different sources of funding, and some of those work together, some of them don't, and it's kind of like a layer cake, except each layer may not like be a good taste for the next layer, but you still got to make it all work together.
And so each funding source will have different legal fees and different requirements, some of them will have wage requirements, some of them will have environmental requirements, and often when one of those layers has a certain requirement, it kind of trickles through the whole layer cake.
And so we wind up with projects or properties that have specific requirements on who can live in there, and we have energy requirements like in the state of Washington, most affordable housing is built to the Evergreen Sustainable Development Standard, which is well-intentioned, but we have a really progressive energy code here, and to stack something on top of that makes it even more expensive to build, and kind of narrows the band of contractors that are willing to work with us.
And so those are some of the things, and we also have to build stuff that's really durable. We usually can only kind of rehab or bring big capital into our properties every 15 years or so, so we have to have stuff that can handle high wear, high needs for a really long period of time without substantial rehabilitation, and all that just it adds to the construction costs, and we have high design fees, high legal fees, and so you wind up with something that costs quite a bit more than a comparable market rate product.
EB: Deb, is that something that you face as well?
DE: Yeah, absolutely, absolutely, and I would say one of the things that people forget about is that in the affordable housing sector we're actually helping underpin some of the rest of the economy in the community.
So if I'm a low wage worker at Walmart, I really can't afford market rate rent, right? So that's where the affordable housing sector steps in and can often, by and large, offer rents that are below market.
So, but the other thing I wanted to underscore was what John was saying about all the layers that we have to deal with, and so I think all of us would agree that, you know, there's common-sense regulation and common-sense rules, and then there are rules that are actually, you know, inhibiting the very nature of what we need to do, which is to build more housing.
EB: Well, let's go to our public servant. Michael, what do you think our policies that you would like to see that would encourage more housing to get built?
MC: Yeah, well, you know, when I started on Council in 2020, I was, for a little while at least, this lone voice screaming about the housing crisis, you know, over and over, broken record, and it took a little while, some shifting on Council and things like that, but eventually that led to the adoption and implementation of an idea that I was really pushing hard, which we call BOCA, the Building Opportunities and Choices for All Act, which is now just the Building Opportunities for Housing.
The idea there is that we could create, and really the idea was homeownership at the core, was, you know, creating opportunities for more homeownership so that folks who don't have as high of incomes could still have access to a product that they could actually purchase, something fee simple.
And so that was able to get implemented, the state made some changes, and ultimately that went from four units to six units, and that is still in place, and we haven't quite seen the adoption, you know, that we would love to see, but I think over time it will pick up, but really the idea was how do we make it more feasible and possible to build housing at, you know, a less expensive rate, something smaller, something that folks can move into as a starter or, you know, as a senior kind of coming down the ramp.
That was really truly the idea behind it, and throughout that process and some others, you know, we've had a housing action plan and some environmental regulation stuff that we've adopted, and through those I have been sort of the broken record of, you know, any time you add a regulation, you add to the energy code, you add to these requirements, you are simply raising the bar, increasing the cost of housing, and limiting access.
In Spokane, if you look at NAHB data, the National Association of Housing of Home Builders, they show you that for every $1,000 increase in the price of a home, you are excluding 165 families, and so as you think about that, every time, every single time we adopt a regulation, we adopt a fee increase, we do anything, we are making the conscious choice to exclude families.
The other piece I would just throw on too, that I have tried to push for in regards to what we've discussed here, is a different way to consider our, we now call them the HEART dollars, but the housing sales tax dollars.
My idea has been that a portion of that we would put in a pot in the in the permit office, so to speak, right, not literally, but so to speak, and when market rate developers are coming in, we could have a pot of money to say, ‘Hey, we would like to buy down some of those units, or we would like to provide some additional dollars to add units that would come with an affordability component.’
Because of the HEART requirements, it'd be up to that 60% AMI, but to me, that would be the best way, or not the best way, but a great way, in terms of trying to identify lower construction costs, and I just think that should be something that we really strongly look at, is how do we get units built at a lower cost.
EB: John, is there any policy change that you would like to see that would make your job, well, maybe not your job easier, but that would make housing cheaper?
JC: You know, I think a lot of the things that the city has done recently with Councilmember Cathcart's talked about, have been helpful to a lot of folks. The Housing Authority, we haven't done anything on like single family lots, but the BOCO is, I think, in general, a good move for the City of Spokane.
We've utilized parking waivers a lot, especially in our senior projects, where there's not a high instance of car ownership, and that's really helped us provide more housing to people.
We've tried an experiment out in the Valley that is, we're building a 240 unit apartment complex right across the street from WinCo. It's out of the ground now, and that is a funding model that we haven't used before in this way.
We're doing what's called a turnkey construction with a local developer, the Inland Group. They do work across the Western United States, and essentially they're building it, and then we will acquire it. That allows us to use some public funding to be able to get private market efficiencies, and we're seeing on a per unit basis about a 30% cost savings.
If all of this pans out the way we hope it will, that'll be a good model for us. It's not a good model for everybody, and we don't need the whole Spokane area flooded with these things, but it is a good way for us to bring a lot of housing to an area that needs it, and it'll be income restricted for 60% AMI and below, and it will have a child care facility as well, because child care is really important given the cost of child care and not being a barrier to folks in all manners of life.
EB: Deb, I'll let you close us out here. Any policy issues?
DE: Yeah, I agree with both Councilman Cathcart and with John. Those are all really important new strategies, so just to underscore that all of us in the affordable housing sector are saying, ‘Hey, it's not business as usual anymore.’ We're gonna have to look at new ways of doing things.
And I think the other part of that is this idea that John referenced, which is private-public partnerships, cross-sector collaborations. The affordable housing sector, we cannot build our way out of this.
It really does have to be this multifaceted approach, including incentivizing building housing, reducing some of the regulations, and so forth.
MC: If I could add real quick, you know, I think in the city at least, we've seen a big uptick in the last couple of years in higher density multifamily, which is important. We need every unit, obviously we can get to help with the market overall, but we have seen, I think, fewer of the single-family homes or some of these others.
So without, I think, more thoughtfulness at the legislative level, state legislative level, to address, say, condo reform, it is adding challenges, I think, to creating those homeownership opportunities, right? You can do townhomes, you can do a unit lot subdivision and have those beefy, simple owner-occupied units.
You can, obviously, single-family homes, stuff like that, but with a larger multifamily facility, it takes a number of years to get to the point that you could convert, and there's just so many restrictions, and that is a place where the state, I believe, really truly desperately needs to quickly change some of the laws.
They've fiddled around the edges for a few years, but they just have not really substantially addressed it, and that would help homeownership for lower-income individuals, I think, across the city.
DE: Yeah, I totally agree with that. You know, the average cost of a new home in Spokane is $389,000, and the fact is that not many people can afford that, so we really do need to look at different models like condos and townhomes and smaller homes, but it takes time, money, effort to switch gears and to do that, but it's really important.
Homeownership is still the American dream, right? But there's way too many people who are priced out of the home buying market right now. And so many businesses are funded through the equity that folks build up in their homes.
EB: And I think you just explained it, and maybe I just didn't understand it well enough, but can you talk a little bit more about, because I've heard this, that condos in Washington are so difficult or messed up, and I don't understand why. Are you saying that it's difficult to buy a condo?
MC: I think it goes back 25-ish years, I want to say, when they changed the rules, and it really has to do with liability around the building, and I think it was predominantly issues in the Seattle area that led to this, and essentially the legislature has kind of gone back to it, but there's enough of a lobby out there that doesn't necessarily want this to change, that it's a hard fight.
I think we'll get there eventually, especially as the state gets more and more interested in different housing types and things like that, but for now it's still just, you know, you can only do, I think, like a three-story with so many units, and there's just very strict restrictions that are applied to condos.
EB: Okay, thank you. That's really helpful. I want to go back to this idea of public-private partnerships, which gets at an interesting question to me, which is who is responsible for building affordable housing?
Deb, maybe let's start with you, because you said that nonprofits can't shoulder this alone, right? So who do you think should build it?
DE: Well, I think it's both the private sector and the affordable housing sector, and in my ideal world, and I think in John's too, that we start to look at housing differently, that we look at housing as a central component of a healthy community, and if everyone doesn't have a place to call home, then how can we say we're truly a healthy community?
EB: John, would you have thoughts on that? Can Spokane Housing Authority do this on its own? Just muscle through, build enough housing?
JC: No, because we need all the different players, and we need the private market, we need different not-for-profits, because not everybody has the same needs or same capacity. The Housing Authority is not great at serving everyone.
We do our best with the folks that we have that reside in our buildings, but some high-needs folks were not set up as well to serve as other providers are, and you know, different developers bring different strengths and bring different characteristics and have different insights.
You know, Greenstone that did Kendall Yards has really good insights on how communities should be developed for walkability. The Inland Group has really good insights on efficiency and how to get the best bang for the buck, you know, and all of those things are really important for us to help build the community and build housing.
As far as whose responsibility is, I think it's everybody's, because we all live here, we all want to see our communities be strong, we all, I mean, I think everybody wants to have folks housed, but how to do that is complicated, and it takes all of us to be able to come up with a solution for that.
EB: Michael, I'm seeing you nod your head, which means that I get to ask you a follow-up question, which is, if this private-public partnership is important, how do you incentivize private developers to get involved in building housing that would lower the market rate?
MC: Sure, well, I think first and foremost, you need to be a place where it is easy to develop and build, right? I mean, obviously you're gonna have, there's always gonna be regulations and barriers, but to simplify that as much as you can, to make it an attractive place for folks to want to build housing, and they're not just simply gonna go to Hayden or elsewhere, which absolutely many of them do, many of them have just simply left the marketplace, you have to make it a friendly environment.
You also need, I think, to speed up things like permit fees. You know, it should not, honestly, for something simple, it shouldn't take more than two weeks, it really should not take more than two weeks, and for folks that have, and this has been discussed for many, many, many years.
For folks that have a long track record of doing really good work, there needs to be ways to expedite. I think we need, you know, internal incentives or disincentives, perhaps, to get things out the door quicker, and so there's a lot there that goes into it, and then there's also, I think, innovation that we have to consider.
You know, I remember years ago when CLT started to become a thing, there were building codes that made it really hard, right, to use those, use that material, and so things had to change at the building code council level, and I think even in the city back at the time, so being open to innovation, nimble enough to make changes to accommodate those things.
I mean, we've got new types of building, you know, strategies and technologies, you know, from 3D printing to, you know, sort of the prefab, you know, really advanced prefab type stuff that can reduce costs and things like that, and I think a lot of the private market are the ones that tend to dabble a lot more in those new types of innovations that then, I think, expand to other housing developers as well.
EB: For the casual listener at home, CLT, I think you're talking about Community Land Trust...
MC: Cross laminated timber.
EB: Well, good thing I asked. But Deb, you look like you wanted to say something.
DE: I agree totally with what Councilman Cathcart is saying in terms of we've got to get to a place where we're really dissecting the problem and really being expansive in the way that we want to solve the problem.
We always want to go to the solutions, right? But unless we really get underneath, what are the components of the problem that we're trying to solve? I don't think that there's going to be enough interventions in the typical way we do these interventions to really solve the problem.
MC: The other thing, if I could add too, you know, there exists a growth management steering committee. I currently serve as the chair, and, you know, we're going to be looking in the next few months at how do we change the urban growth boundaries, or do we? And that's, of course, a balance between, you know, the potential for increased costs of service delivery from the public side to more land availability, which can reduce the cost of housing on the homeowner side or the renter side.
And making those decisions in a real thoughtful way, I think, is very, very important. And so that, along with comp plan updates and things like that are coming in the next year, and those can have a big effect as well.
EB: We're coming up on time, but I have one question that I just wanted to throw out to you guys. We've talked about private-public partnerships and who's responsible for building housing, and it seems like we've really, as a society, gone away from the idea of government building housing. And I wonder why that is, and if it has a bad reputation, if that still is true.
Do you have any thoughts on that?
DE: I think the government needs to be the partner. But government should do what government does best, and housing developers, the private sector, the affordable housing sector should do what they do best.
In the ideal world, everything's working in perfect harmony. And so I'm not a fan of government-built housing. I think the government absolutely needs to play a role in it, but I don't see that as a very efficient, effective way for us to solve the problem.
In the state of Washington, some people already know the statistics, but the statistic is something like there's going to be the need for a million homes over the next 20 years.
And that's across the sector, across the spectrum of housing. So very low-income housing, attainable housing, affordable housing. So at the end of the day, we have a supply problem.
So I want to say it three times, supply, supply, supply.
MC: If I could piggyback on that a little bit, there's also this concept that I think is important called the housing ladder. And just because you're not necessarily building a home or a unit on the lower end of the pricing spectrum doesn't mean that you aren't having a big effect on availability of housing at that level. An upper middle class home means that the family that was there before can move up, or everybody can kind of go down that chain of availability of housing.
And so when you hear a lot of pushback saying, ‘Oh, well, you shouldn't allow development in this area unless it's affordable,’ it's a little bit of a misnomer because all of it plays into that broader market and can have an overall effect of reducing the cost of housing for everybody.
JC: When you said that, you know, why doesn't government build housing anymore? The first thing I thought, well, the Housing Authority is a government agency.
We trace housing, the public housing authorities kind of trace the roots back to the New Deal, back to the Depression. And those are public housing authorities.
Spokane Housing Authority does not have any public housing. We used to. We converted it and sold it off. And we're now using those resources to do things like the big project out in the Valley.
But I think, you know, decisions are made best, I think, when they're when they're close to the work being happened that's happening. And, you know, the Housing Authority, our board is appointed by the city of Spokane, city of Spokane Valley, the county, and then we have a resident commissioner as well. And I think that kind of makes, you know, it's not big government, small government.
And I think when those decisions get made closer to the needs and the people, they're better decisions that are made.
EB: Thank you all for being here. I really appreciate it.
