This week, King County Councilmember Girmay Zahilay proposed a new “Regional Workforce Housing Initiative” and requested that King County study issuing a billion-dollar bond to support the construction of housing geared toward working class families. Many of the details are still to be hashed out, including the unit mix and affordability ranges, but Zahilay is bullish on the prospects of producing thousands of permanently affordable homes using King County’s excess debt capacity — estimated at more than $9 billion — and its sterling credit rating.
Zahilay is hoping to produce reasonably-priced multi-bedroom homes to serve a major gap in the market. The initiative would seek to work with existing public housing authorities in the county and create mixed-income buildings, with the vision that rents, especially from the portion of tenants with incomes near the county median, could create a revenue stream that pays off bonds. In fact, if all goes well, Zahilay hopes that rents could not just pay off the bond and cover operations, but also create an ongoing revenue source for more housing construction within the program.
“This initiative is about ensuring that the people who power our economy can afford to live near where they work,” Zahilay said. “By leveraging King County’s financial resources and partnering with both public and private entities, I believe we can create sustainable, affordable housing solutions for thousands of workers around the region.”
In a less rosy scenario where rent revenues are too low to cover bond payments, the County would be on the hook to cover them with other funding, potentially impacting the general fund or requiring new revenue sources.
While Zahilay has used the term “workforce housing,” the intended product meets most definitions of social housing and shares much in common with Seattle’s fledgling social housing development authority, which Seattle voters approved in early 2023. One difference is Zahilay’s initiative, albeit in its infant state, has so far garnered big business and establishment support.
Zahilay’s motion asks the County Executive to come up with a plan by the end of March. The County Council could authorize the bonding without needing to go directly to voters.
King County Councilmembers Teresa Mosqueda and Rod Dembowski signed on to Zahilay’s motion as cosponsors. The initiative had its first hearing on Wednesday at the Budget and Fiscal Management Committee, which Zahilay chairs. Zahilay also outlined his proposal in an op-ed that The Urbanist ran on Monday.
“We need more housing to increase affordability,” Dembowski said. “As interest rates have risen, projects have stalled or been shelved. Similar to the successful revolving fund models launched in recent years by the private sector, King County can and should use our financial strength and low-cost borrowing capacity to massively boost the production of housing in our region. We have done so before in partnership with the King County Housing Authority, with great success. This proposal offers the potential for a game-changing level of investment by King County, at a time when it’s needed more than ever.”
The proposal has garnered support from nonprofit homebuilders and organized labor, with Zahilay rolling out the proposal at the Kent headquarters of IBEW Local 46, which represents electricians. Ironworkers Local 86 has also backed the proposal, with member Heather Kurtenbach issuing a statement in support of the measure.
“Affordable, quality workforce housing is a critical need in King County,” Kurtenbach said. “This motion has the potential to bring hundreds of jobs to our region and help union members afford to live close to where they work. By supporting ironworkers and others who are pivotal to our workforce and daily life, we can build stronger and more vibrant communities for all.”
Workers in the building trades are bracing for a slowdown in the construction sector, which has already seen office construction plummet in the work-from-home era and is seeing new housing starts drop significantly. A housing slowdown could also mean rent hikes for tenants and fewer options for homebuyers.
“Our affordable housing developers are really struggling right now,” Zahilay told The Urbanist. “I haven’t seen them in this dire of a state since I’ve been in politics, and that’s because their costs are going up dramatically for many reasons, and the revenues that they’re seeing are going down. And so we need to get creative about how we use the financial tools in front of us to fill in the gaps and make sure that we keep building housing and that we keep stimulating our economy and keeping our construction workers employed. And I really do think this model pays dividends over time.”
Zahilay does not anticipate setting up a new agency to administer the program and disburse the funding awards to builders, and instead aims to house the program within the Department of Community and Human Services (DCHS).
“I don’t anticipate setting up a new entity,” Zahilay said. “I think the actual distribution of the contracts and determining how the partnerships work could just go through the executive branch, probably through DCHS, but the actual property ownership and management, I think, should be done by our existing housing authorities. And King County Housing Authority is very excited about this model. They’re supportive.”
Robin Walls, President and CEO of the King County Housing Authority or KCHA, echoed that sentiment in her statement.
“The King County Housing Authority is strongly in support of this motion requesting that Executive Constantine increase the excess debt capacity to increase the supply of workforce housing,” Walls said. “KCHA has been deeply appreciative of the support of King County council in our shared ongoing efforts to increase housing supply, as one of the main mechanisms for addressing the ongoing housing affordability challenges facing the residents of King County.”
Zahilay also boasted of support from the Seattle Metropolitan Chamber of Commerce. Chamber members like Amazon and Microsoft have already pledged billions for workforce housing, although not necessarily with permanently affordable projects on publicly owned land.
“We have the support on this initiative of the Seattle Chamber of Commerce, and my hope is that they can pull in some of our business partners, like Amazon, to really maximize the impact and leverage the strengths of both the public and the private sector.”
Amazon spokesperson Jared Axelrod testified at the Wednesday committee hearing, voicing support for the proposed initiative and bringing up Amazon’s own $3.6 billion housing equity fund, launched in 2021 and serving the Puget Sound region, Washington, D.C. area, and Tennessee — the three areas where Amazon has the largest corporate footprint.
“Today, our commitments from the housing equity fund have created or preserved more than 8,600 homes in the Puget Sound region through investments totaling more than $780 million we’re proud of the impact this has had today,” Axelrod said.
Unlike local public housing authorities, Seattle’s new social housing development authority is not named in the proposed legislation, but Zahilay said it could potentially receive funding down the road.
“I do give flexibility to the executive to find other partnerships, and if that entity is a good opportunity for a model like this, then I think the executive should write that implementation plan,” Zahilay said.
Effectively what Zahilay is describing is a form of social housing. Public ownership, permanent affordability, and mixed-income communities are three of the four pillars that House Our Neighbors laid out in defining their brand of social housing in their successful ballot campaign. The fourth pillar, tenant leadership in building management, has yet to be broached by the Regional Workforce Housing Initiative at this early stage.
Seattle Chamber’s Director of Policy Sarah Clark testified in favor of the initiative Wednesday, praising the proposal for using bonding rather than new taxes to fund new housing. The chamber has opposed Seattle’s social housing funding measure, Initiative 137, which relies on a high earners tax hitting individual annual compensation in excess of $1 million. Despite clearing the signature-gathering threshold this July, I-137 will go to Seattle voters in a February 2025 special election, after the centrist-dominated Seattle City Council declined to put it on the November ballot and instead continues to plan a competing measure.
The chamber also brought a legal challenge attempting to block the JumpStart progressive payroll tax, which has raised hundreds of millions for affordable housing, and has suggested raiding JumpStart funds to help cover Seattle’s $260 million budget hole.
While a billion-dollar bond could launch a sizable countywide social housing building effort, sustaining and growing such an effort to truly meet the scale of need is likely to require a dedicated ongoing revenue stream, not just sporadic bond issuance. Whether corporate partners continue to support such an effort once that bill comes due remains to be seen. Councilmember Mosqueda brought up that tension in her comments Wednesday.
“If community partners, especially corporate partners, want to see us do more along the lines of what they said, I really hope that that means that collectively, we will be advocating in the halls of Olympia for additional revenue tools in our toolbelt to allow for us to do things like a payroll tax county wide, if not statewide,” Mosqueda said. “And I hope that that also means that corporations like Amazon are no longer lobbying to siphon funds away from JumpStart progressive payroll taxes in Seattle, which is dedicated in the vast majority of the funds to go to affordable housing. I hope that that means that they will be protecting affordable housing investments through JumpStart and also not trying to eliminate that tax and revenue source in addition to having those dollars be used for something else in the budget, because we need those investment dollars in Seattle to complement what the County is trying to do.”
The scale of housing need is quite large; the County’s Regional Affordable Housing Task Force estimated in a 2019 report that the region needs to create 244,000 net new affordable home by 2040, far beyond its current pace of production.
County Councilmember Claudia Balducci co-chaired that task force, and ended up suggesting a little more time to bake and vet the proposal. Councilmembers Sarah Perry and Jorge Barón also favored doing another committee hearing to dig into the proposal. Zahilay agreed another committee hearing on the initiative was wise before advancing it to full council.
“I would ask that we defer taking action today,” Balducci said during the Wednesday committee meeting. “It’s a wonderful proposal, and it’s really important and really big, and some of us are just hearing about it for the first time today. That was a super brief report. I think it’s very important that we get it right. I personally have a number of questions and possibly some amendments, but I’m not prepared to bring them today. There was just a press conference on this yesterday, and this report is all I have. So it seems really like it would benefit from one more committee meeting.”
Balducci brought up her experience with the affordable housing task force, and the challenges inherit in building and managing housing, especially at the hard-to-serve lower segments of area median income (AMI) where the gap is largest between rent revenue and costs.
“In 2020, we took the what was then the five-year plan to create housing to meet the need, and that five-year plan said that we needed to construct, preserve and operate 44,000 homes at zero to 50% AMI, so at the lower levels of affordability in about five years,” Balducci said. “And we costed that plan out. That plan, at the time — and will have gone up significantly since then — was costed out at $20 billion: $18 billion of capital, $2 billion of operating, of which we could identify $3 billion in existing revenue, and the rest needed to be new revenue.”
Balducci flagged the issue of risk, which the County would be taking on in bonding off uncertain rent revenue, and the need to lay out the fall back option to cover bonds and account for operational costs in the housing model.
“I’d like to suggest that we include the possibility of considering or trying a pilot first and then building up to scale, just to get a sense of how this could work before we sort of then vote to commit a billion dollars worth of debt and risk,” Balducci said.
In office since 2009, County Executive Dow Constantine is not expected to pursue a fifth term, but both Balducci and Zahilay are rumored to be mulling runs for his seat should he vacate it. Owning the issue of housing could end up being an important factor in that future race.
Doug Trumm is publisher of The Urbanist. An Urbanist writer since 2015, he dreams of pedestrianizing streets, blanketing the city in bus lanes, and unleashing a mass timber building spree to end the affordable housing shortage and avert our coming climate catastrophe. He graduated from the Evans School of Public Policy and Governance at the University of Washington in 2019. He lives in East Fremont and loves to explore the city on his bike.