Studios are less than $750 at a 50-unit apartment building in pricey Queen Anne. It was renovated for low-income workers, using an innovative funding mechanism that involves socially motivated investors.
Jaime Welker had lived for some 20 years in her beloved Queen Anne neighborhood when, in 2009, her landlord decreed yet another rent increase that brought her two-bedroom apartment to $1,200 a month — more than she could afford on her salary working for arts organizations.
For a while, Welker and her daughter shared a house with Welker’s sister in another neighborhood. But when the daily commute back to Queen Anne so her daughter could still go to school there became too much, the pair moved back into the neighborhood, living in what Welker calls a “small, dark, dirty” one-bedroom apartment.
Then, one of her co-workers at the 5th Avenue Theatre, where Welker currently makes $35,000 a year as front-of-house manager, told her about The Parker Apartments, a 50-unit building on Queen Anne designed for low-income workers.
Developed by Bellwether Housing, a Seattle-based private nonprofit developer and manager, The Parker offers studios, one- and two-bedroom homes for households that make 50 to 60 percent of the local area median income.
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The rents are about half the market average.
The Parker, which has been undergoing renovation for the past couple years, held its official opening Thursday. It’s the first project the 35-year-old Bellwether has paid for, in part, with a new funding mechanism that supplements regular financing with private capital from socially motivated investors.
The idea — variously called “impact investment” or “mission investment,” among several names — is to align investors’ personal values with how their money is spent: a financial return but also a social return.
The idea itself isn’t new. But “it’s in the last couple of years that we’ve really seen it be used and investments being made,” said Linda Couch, senior vice president for policy at the Washington D.C.-based National Low Income Housing Coalition.
With federal funds stretched thin, this investment model brings in new money and also “builds your base,” Couch said. “Bellwether Housing will now have more people for whom affordable housing maybe wasn’t on their radars.”
It’s perhaps particularly pertinent in Seattle, a city where rents have skyrocketed, pushing many residents out of the city, and where there are civic-minded investors.
Bellwether bought The Parker building in North Queen Anne, from Seattle Pacific University in 2012. It held off on major renovation until last year, when it was able to pull together permanent financing for the $12 million project.
The bulk of the funding comes from traditional affordable-housing financing sources, including $3.65 million from the Seattle’s Office of Housing, about $3.6 million in a bank mortgage, and about $3 million in equity through use of the federal low-income-housing tax-credit program.
With its new impact-investment initiative, Bellwether aims to raise $1.8 million; it has$1 million so far.
Bellwether is promising 100 percent return of principal and 2 percent interest to investors.
“What it does is stretch the public dollars that would otherwise be needed,” said Tory Loughlin Taylor, deputy director of Bellwether.
In terms of impact investment, a 2 percent return, “by today’s standards, is pretty good,” said Jeff Clarke, executive director of Philanthropy Northwest. “Historically, it’s ranged from 1 to 5 percent. Two percent is in line historically with these kinds of below-market investments.”
Mark Reed, a real-estate developer who grew up in Seattle and now lives in New York City, heard about Bellwether through his friend, Loughlin Taylor.
He thought Bellwether’s business model was good and its financials strong. And since he already had an investment fund intended for charitable purposes, he decided to invest $100,000 of it in Bellwether.
“There aren’t very many organizations that will go out and raise money from investors for low-income housing,” Reed said.
“To have my charitable assets gaining interest — 2 percent is not bad in today’s investment climate — it’s a worthwhile trade-off. And it’s a way of maintaining my connection to Seattle.”
Rents at The Parker currently range from $737 for studios, $805 to $958 for one bedrooms, and $932 to $1,131 for two-bedrooms.
Applicants who live there can’t make more than 50 to 60 percent of the area median income, which translates to $30,900 to $37,080 for a single person, up to $47,650 to $57,180 for a five-person household.
Residents include social workers, teachers, veterans and nonprofit workers.
There are no vacancies since the building has been occupied throughout the renovation.
For Welker, the single mom and arts worker, what The Parker means is that she now pays $1,094 a month in rent in a neighborhood where the average monthly rent for a two-bedroom, one-bathroom apartment is $1,809, according to Dupre + Scott Apartment Advisors.
“I feel very fortunate to live here,” Welker said.
“I think it’s important for people to understand that, in this city, if the service people — the people who take care of other people — are priced out, you lose all those interesting people and you lose a dependable base to draw on for those positions.”