Low-income housing concerns outlined at City Council study session: Early plans for an affordable housing levy discussed

What is the biggest quality-of-life issue facing low- and middle-income Tacoma residents? According to human service advocates and some members of the Tacoma City Council, the answer is affordable housing.

“Housing availability is the top priority,” said United Way of Pierce County President Rick Allen at Tuesday’s City Council study session. According to Allen, the United Way conducted an extensive survey to identify the key challenges facing individuals served by United Way. “There is a sense of urgency in this community about housing pressures. That’s what people told us. Housing is a fundamental part of community infrastructure. We have to be there early as a community to talk about solutions and take the lead on solutions. That’s what this area’s residents are telling us.”

Allen appeared before the council to support a plan for an affordable housing levy, an idea largely spearheaded by Council Member Julie Anderson, and supported by representatives from private banking and commercial development firms, as well as human- and public-service communities. Such a levy would be presented to voters this fall. If passed, it would generate $2.5 million per year over 7 years for an affordable housing trust fund.

According to Anderson, 35,000 of the 76,125 households in Tacoma are ‘low-income’ households — households earning less than 80% of the median income for the Tacoma area. 12,000 renter households pay more than 35% of their income on housing, and more than 400 households are presently on the waiting list of the Tacoma Housing Authority, a service organization that provides affordable, quality public housing to low- and moderate-income people.

“There is a disparity between wages and housing in Tacoma,” said Sandy Bergess of the Metropolitan Development Council, a non-profit organization that helps homeless and low-income individuals. “Tacomans who work here are being priced out of their ability to live here.”

Historically, the city has received $3 million annually in federal funds to support affordable housing. However, the city will experience a 5% cut in federal funds, and a 50% cut is proposed by Congress next year. With current and proposed cuts in federal funding for affordable housing, says Anderson, it’s time to ask voters to help fund affordable housing.

Finding statistics to support affordable housing is easy. Convincing voters to approve a levy could be difficult.

The most recent efforts to support affordable housing in Tacoma date back to 1996, when then-mayor Brian Ebersole hosted the so-called Affordable Housing Summit. The event identified the need to establish a trust fund for affordable housing. Two years later, the City Council capitalized the fund at $1 million, and worked with private and public leaders to find on-going sources of revenue. In May 2001, however, the Affordable Housing Bond was rejected by voters.

In 2002, community leaders turned to an affordable housing levy as the most promising source of funds. The levy called for homeowners to pay 25 cents per $1,000 of assessed value annually over a 7-year period. The levy was supposed to appear on the November 2003 ballot, but issues such as the high cost of electric utilities, the murder-suicide of Tacoma Police Chief David Brame, and dissatisfaction from Tacoma residents over the idea of increasing property taxes killed the levy.

At the study session this week, three methods to generate revenue for the Affordable Housing Trust Fund were discussed.

The first plan is similar to the bond rejected by voters in 2001. Such a bond borrows funds up front, and requires repayment of those funds (with interest) over 20 years. The bond also requires public ownership interest in the housing units, prohibits the use of funds for homeownership programs, and requires that eligible participants earn no more than 50% of the area’s median income. The funds are also difficult to use with the Low-Income Housing Tax Credit (LIHTC) program.

The second plan is a housing levy similar to the one discussed in 2003. Through the levy, voters could establish a special affordable housing tax rate for the district’s property tax, and money would be collected over 7 years. Unlike the bond, a housing levy would not require public ownership interest in housing units, funds could be used for homeownership, and the money could be used in combination with LIHTC.

Finally, a levy lid lift would allow voters to establish a new approved maximum tax rate for the district’s property tax, and money would be collected over 7 years. Participants eligible for funding must earn no more than 80% of the area’s median income, potentially assisting a larger population of low- and middle-income households. The money could also be used in combination with LIHTC.

The council showed obvious support for the idea of affordable housing in Tacoma, but expressed reservations about the plan for a levy lid lift. The law caps property tax levies at 1% of a homeowner’s property value. That limit may be exceeded when 60% of the voters approve such a move (known as a “levy lid lift”). Asking voters to lift the cap might be viewed unfavorably by homeowners.

Council Member Mike Lonergan said, “I couldn’t support playing the levy lid lift card for affordable housing. I support closing the housing gap, but it’s very important that we keep our options open regarding the levy lid lift. We do need a special housing levy, but we need to reconsider using the levy lid lift for this sole purpose.”

Deputy Mayor Connie Ladenburg commented, “I’m in support of taking this further. I’m anxious to move forward on this.”

Allen at the United Way of Pierce County told the council that his organization had committed $100,000 toward finding a solution to the issue of affordable housing in the area.

For Bergess at the Metropolitan Development Council, placing a levy before voters this fall is the essential part of her organization’s workplan in 2005. “We cannot do more without a local resource,” she said. “A trust fund for affordable housing would help us control the direction of affordable housing in Tacoma.”