Seattle Mayor Ed Murray is opposing City Councilmember Lisa Herbold’s proposal to issue almost $30 million in bonds for affordable housing.
City Councilmember Lisa Herbold is pressing ahead with her proposal that Seattle issue almost $30 million in bonds to help create more affordable housing, while Mayor Ed Murray is opposing the plan.
The mayor doesn’t like the strategy, partly because it would involve cutting some police-department funding in order to pay back the bonds.
Last week, Herbold and four colleagues said they wanted to consider selling limited tax general obligation bonds next year to combat Seattle’s housing crisis, including rising rents and people camping outside.
The council members suggested that $29 million could produce hundreds of housing units and said the bonds would be paid off over 30 years.
Initially, they didn’t explain how the city would fund the strategy. But Herbold later laid out her preferred solution during a budget-committee meeting.
The principal and interest on the bonds would total $1.4 million next year and $1.9 million annually starting in 2018, according to Herbold.
Under her plan, Seattle would pay the debt service in 2017 and 2018 by trimming funding for a new or improved North Precinct police station.
Starting in 2019, under one option Herbold has talked about, the city would divert a percentage of property-tax revenue from new construction into a “growth fund” and use those dollars for the debt service.
Councilmembers Sally Bagshaw, M. Lorena González, Rob Johnson, Mike O’Brien and Kshama Sawant backed the introduction of Herbold’s plan for discussion.
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Whether they’ll vote for it as the council tweaks Murray’s budget remains to be seen. Tim Burgess, who chairs the council’s budget committee, opposes it.
Herbold and her allies cited a housing-industry expert who said the money could yield as many as 500 units. Burgess says that’s overly optimistic. The budget committee next meets Wednesday.
Murray says the city is already using other, better strategies that don’t involve borrowing. Seattle voters recently passed a $290 million housing levy and the council may approve upzones requiring developers to help create low-income housing.
“The city should not take on irresponsible debt,” the mayor said in a statement.
In a letter, Murray’s budget director further questioned Herbold’s plan.
Bonds make sense for one-time projects such as the new Elliott Bay seawall, director Ben Noble argued.
Noble warned against diverting property-tax revenue into a growth fund because the money would no longer be available for other things.
The city is experiencing a building boom now, but new construction won’t always generate as much tax revenue.
In a response Tuesday, Herbold and some other council members said borrowing now would be smart because housing will cost more to build in the future.
Murray put the city’s $149 million new North Precinct police-station project on hold this year after critics said it would cost too much and hurt community-police relations.
Even so, his budget includes $15 million for a new or improved station. Herbold’s plan would leave $11.7 million — $100,000 next year and $11.6 million in 2018.
That’s not enough because the city must at least improve the existing North Precinct station next year as more police officers are hired, Noble said.
Sawant has called for scrapping the police-station project altogether in favor of a bond sale that could construct h 1,000 affordable units. The council has yet to consider her plan.