State lawmakers’ failure to pass a capital budget could threaten some affordable-housing projects across the state.
For two years, plans have been underway for construction of an 80-unit affordable-housing development in Kent for homeless veterans and chronically homeless people, particularly those dealing with mental illness and substance abuse.
It would be the first facility of its kind in South King County, which, like much of the state, is in the grips of a growing affordable-housing and homelessness crisis.
But now the Kent project, and many other affordable developments like it, could be delayed for a year or more unless legislators pass a state capital budget by next Wednesday, the deadline for a critical source of federal housing funds.
Failure to act by Jan. 17 could mean that affordable-housing developments designed for the poorest people might lose out on about $19 million in federal low-income-housing tax credits this year — making the projects casualties of the Legislature’s failure last summer to pass a capital budget for the first time.
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Republicans, then in control of the state Senate, held up the capital budget to force Democrats, who hold the House and governor’s mansion, to agree to address a 2016 Supreme Court water-rights ruling. That ruling, known as the Hirst decision, put restrictions on new water wells in rural areas, slowing rural homebuilding.
Republicans lost control of the Senate in a special election last fall but still have leverage: Democrats need their votes to pass bonds tied to the capital budget, and continue to link passage of the capital budget and the water-rights bill.
Sen. Jim Honeyford, R-Sunnyside, said Wednesday afternoon that lawmakers were close to an agreement. He declined to comment on the affordable-housing projects that could be scuttled, at least one of them in his district.
Rep. Larry Springer, one of the negotiators on the water bill, said lawmakers may get a bill to the House floor next week. “We’ve got some work to do yet, but we’re getting closer,” he said.
Even if next week’s deadline is blown, other affordable-housing projects would get the tax credits. It is the projects on the lowest end of the income spectrum that would miss out.
The political quagmire in Olympia has left developers scrambling. People desperate for housing can’t wait on agencies to reapply for funding next year, said Patrick Tippy, housing-development manager for Catholic Housing Services of Western Washington, the agency planning the Kent development.
“It’s one year of housing that’s not created, Tippy said. “And in a housing crisis, we can’t afford to wait a year.”
Next Wednesday is the deadline for state-level applications for the federal low-income-housing tax-credit program, a critical funding source for many affordable-housing projects.
To be eligible for the tax credits, developers must have lined up all of their other funding sources, part of the typically complicated financing of affordable housing. Many of the projects applying for the federal tax credits are also counting on money from the state’s Housing Trust Fund.
The Legislature has agreed to fund that at $106.4 million, but it is also in the capital budget and caught up in the political disagreement.
The projects most at risk are also the ones likely to serve clients with the greatest needs — people experiencing homelessness and families with an annual household income of 30 percent or less of area median income. In King County, that’s about $28,800 a year for a family of four, according to the King County Housing Authority.
It appears about 28 projects statewide could be affected if the Legislature does not approve the capital budget before the federal tax-credit deadline passes.
If that happens, the Low Income Housing Institute and Sea Mar Community Health Centers, both nonprofit affordable housing developers, said they each had projects, in Island and Yakima counties, respectively, that could be shelved for the rest of the year.
The institute’s project in Oak Harbor, in Island County, is scheduled to include 51 apartments, with some units reserved for homeless veterans and low-wage workers.
Waiting a year could have serious consequences because construction costs are on the rise and the agency may not be able to buy the property, said institute Executive Director Sharon Lee. “More housing today is better than no housing tomorrow, because people will lose their sites,” Lee said.
The Kent project is also in a bind, Tippy said. It has already received a commitmentfor federal housing vouchers for homeless veterans through the King County Housing Authority. If the project doesn’t move forward this year, that money will go back to the federal government, and there is no guarantee they’ll be available given the political climate in Washington, D.C., he said.
Other projects in rural areas are also likely to be severely affected, because they — unlike King County and Seattle — do not have dedicated local housing levies.
“Rural Washington has no local forms of financing to step in and make up for lack of federal dollars,” said Michele Thomas, director of policy and advocacy at the Washington Low-Income Housing Alliance.
Even if the capital budget passes, there is no guarantee these projects would receive the tax-credit funding. The state housing finance commission typically funds about half of the applications it receives, said commission Executive Director Kim Herman.
If it does not pass, the tax credits could go to projects more likely to serve people with slightly higher incomes.
But Thomas said “nobody is talking about who loses” if a budget isn’t passed by next week. “The poorest people, the most at-risk people in Washington will lose out.”