The redevelopment of the 70-year-old public housing project Yesler Terrace has been fraught with debate.
Now, there’s a new one: Critics say Seattle Housing Authority, which owns and operates Yesler Terrace, is poised to raid a cache of public funds set aside to build more affordable housing units.
By allowing SHA to use money from a 2009 housing levy, housing advocates say the city will be diminishing opportunities for others to grow the city’s stock of affordable housing.
“We don’t believe they need a subsidy,” said Sharon Lee, executive director of the Low-Income Housing Institute. “They have cash on hand. They have cash equity.”
The Seattle City Council’s Yesler Terrace Committee last week approved a massive legislative package that allows the Seattle Housing Authority to tear down the public housing development and rezone the area for high-rises holding a mix of low-income residential units, market-rate condos and apartments, offices and retail space.
The housing authority will sell the land in order to build replacement housing on a smaller footprint. It’s a public-private partnership that means millions of dollars for SHA’s new public housing development and the complete transformation of one of the oldest existing public housing complexes in the country.
But even though it is selling this property for some $140 million, SHA still claims to need money from the city. SHA is seeking $7.62 million from a 2009 levy meant to expand public housing.
It’s just a fraction of the project’s $200 million price tag, and it will help SHA acquire a $30 million grant from the federal government.
But competing affordable housing providers say SHA is attempting to take money from the wrong place, tapping a source meant for new, not replacement, housing.
“SHA has sufficient resources and they don’t really need the money,” Lee said. She said SHA is choosing not to use its own funds even though the agency turns a profit.
Not so, said SHA Executive Director Tom Tierney. The housing authority cut 5 percent of its staff just last year and faces the same financial woes as other public agencies, he said. Besides, the plan will replace the existing 561 units at Yesler Terrace that are at the end of their useful life, he said.
“SHA is the single-largest provider of housing to extremely low-income people,” Tierney said. “Why wouldn’t we be eligible for the use of the housing levy?”
SHA seeks matching money from feds
Voters passed the housing levy in 2009, which included $104 million for low-income rental housing. The city gets about $15 million each year. SHA wants a total of $7.6 million, which it would collect in three lump sums, for three different portions of the Yesler Terrace project.
A little money from the city now means a lot more from the federal government later. The Department of Housing and Urban Development (hud) is offering a $30 million grant for the project, but requires an investment from the city to show the community wants the project. Under the hud deal, $1 of investment from the city amounts to $4 from the federal government.
Lee said it’s still not a good investment. After the housing authority replaces the 561 existing units, the redevelopment calls for just 100 more units for the poorest residents. Other agencies could build up to 300 units of housing for homeless people with that $7.6 million, she said.
Besides, Lee said, SHA has underestimated how much money it will make off the sale of the land.
The housing authority expects to sell Yesler Terrace for about $195 per square foot, based on numbers from Heartland, a real estate consulting firm.
Lee crunched her own numbers. She hired James Tjoa & Associates, which estimated the city could collect as much as $270 per square foot, bringing in more than $50 million beyond SHA’s estimate.
Sending mixed messages
Back in 2010, the city considered adopting language that would restrict SHA from using levy dollars, but Tierney said such legislation was a waste of time. SHA didn’t even want the money.
“We have never used it in the past,” Tierney told the Seattle City Council on April 14, 2010. “We’ve been told that the reason for the additional language is to send SHA a message. Respectfully, we don’t need a message.”
Tierney was proven wrong on both counts. SHA had already used levy funding to redevelop public housing in southeast and southwest Seattle. And then in 2011, SHA changed its position on the levy funding.
In meetings with the city, SHA requested financial support for infrastructure at the new Yesler Terrace. Beset by budget cuts, city leaders instead gave the organization the levy dollars Tierney had insisted SHA didn’t need.
Setting a precedent?
SHA will get the funding. The entire council sits on the Yesler Terrace Committee, which supports the funding, so it will likely vote the legislation into law Sept. 4.
Not everybody is enthusiastic about it, however. To prevent SHA from asking for even more money from the levy, Councilmember Nick Licata drafted an amendment creating an open process, which would require SHA to compete with other nonprofits for future funding.
Just a few hours after agreeing to the legislation Aug. 16, Licata still questioned the entire project. He said giving SHA the funding sets a bad precedent.
Tierney said SHA needs the money. Lee said they don’t. Without a deep look at the inner workings of the housing authority, Licata said, there’s no way to know for sure who’s speaking the truth.
Is selling off land to private developers really the way to shore up an aging public housing project?
Licata still doubts it, even though he voted for it.
“On the face of it, it seems hard to believe that that’s the only option,” he said.
Seattle City Council passed several amendments Aug. 17 to add accountability to the document that rezones a 30-acre area, which replaces and expands the 561 low-income units that exist there now.
The legislation to be approved Sept. 4 now includes the following provisions:
- SHA cannot consolidate all the low-income housing in one portion of the neighborhood or preserve views of downtown and the Puget Sound for market-rate developers
- All the proceeds for the sale of the land will go into low-income housing. If SHA receives additional funding, it must write a proposal to the city council for how it will use the funding.
- SHA must build 100 additional units of housing for the people living below 30 percent of the area median income. Before, SHA had planned for the housing, but now the legislation requires it.
- SHA will work with community organizations that assist women- and minority-owned businesses.