Holding out for a hero
Nearly all Squire Park Plaza apartments rent for below market-rate. Tenants hope a new owner will keep it that way.
For the past month, residents of Squire Park Plaza fought the sale of their building to a for-profit developer who they feared would raise rents.
Then, on July 9, they received an email from Deputy Mayor Hyeok Kim with a piece of seemingly good news: The for-profit developer had backed away from its deal to buy the 59-unit apartment building in the Central Area.
But some residents wonder if any buyer will be able to save the debt-ridden property.
Tenants team up
In June, tenants heard that Central Area Development Authority (CADA) was selling the building, located at 17th Avenue South and South Jackson Street, due to financial problems. Unsure how their rents would change, tenants met to come up with a strategy.
“When we went to that first meeting, no one knew each other,” said Linda Johnson, who led the group.
As tenants talked, they started noticing a pattern: those who paid less than the required rent for someone making 80 percent median income were having trouble renewing their leases, Johnson said. That made them suspicious.
Then, in letters to residents CADA CEO George Staggers said he had received offers for the building from two nonprofits and one for-profit developer, and he had chosen to sell to the for-profit company.
“All of the non-profit options are hoping the city or other public financing will take over the $2.8 million [HUD loan] — and that is neither likely, nor available,” Staggers wrote. “With the choice for covering the loan with private funds that are being offered versus public funds that are not available, we are choosing responsible financing.”
Residents feared the rents would rise as a result. A for-profit developer, they reasoned, would have no motive to retain more than the minimum affordable units required by law. And those requirements will eventually expire, making Squire Park Plaza another example of a city-wide trend in which affordable housing is sold to developers, who convert the buildings into market-rate apartments (“As rents rise, low-income tenants are forced out of Seattle and into cheaper suburbs,” RC, May 7).
In 2013, Seattle lost at least 304 affordable units this way, up from 118 in 2012, according to the Department of Planning and Development. The units were converted, remodeled or torn down.
Meanwhile, the Low Income Housing Institute (LIHI) came forward as a possible buyer of the building. Executive Director Sharon Lee said no tenants would be displaced under LIHI’s ownership. In fact, some rents would be lowered further, to accommodate people making less than 50 percent median income, and LIHI would commit to preserving affordability for the next 50 years.
On July 9, building residents, with help from the Tenants Union, held a press conference to voice their opposition to a for-profit owner. Councilmember Kshama Sawant and Frank Video, an aide to Councilmember Nick Licata, urged CADA to sell to a nonprofit instead.
When they heard later that day that the for-profit developer had backed out, some residents declared a victory.
“I believe the for-profit knew they were getting a sweet deal and it wasn’t right,” Johnson said. “No one wants to be in an area where people are looking at you and saying, ‘How can you do this?’”
But the building’s future remains unclear.
Over the past seven years, CADA has struggled to manage the Squire Park Plaza. The building includes retail space on the bottom floor, and some of it has never been occupied, residents said. (CADA’s CEO George Staggars did not return calls for comment.)
In a February letter to Councilmembers Sally Clark and Licata, building managers said CADA hadn’t made enough revenue to repay its debts and asked for financial help from the city.
In August, the building’s owner will have to start repaying an $8.3 million Chase Bank loan and a $2.8 million loan from the U.S. Department of Housing and Urban Development (HUD), according to the letter.
Squire Park Plaza was part of the city’s effort to create affordable housing. In 2007, the city of Seattle gave CADA a parcel of Central District land and money to develop it, on the condition that 31 of the development’s 59 units be affordable for people making less than 80 percent of median income.
The apartments were built with $9.7 million in federal loans, tax exemptions and grants from nonprofits, according to the Tenants Union.
In return, CADA set aside the required number of affordable units and more. The nonprofit designated an additional 12 units for people making 60 percent of median income, tenants said.
Karin Black, communications director for Seattle’s Office of Economic Development, said LIHI and another nonprofit interested in the building assume they’ll get funding from the city to help finance the deal.
“It’s our understanding that both nonprofits are saying, ‘Hey we need a little help from the city,’” she said, but added that the city hadn’t seen the nonprofits’ financial plans.
Still, Lee said financing the building would be no problem for LIHI. She said she plans to use a $5.5 million loan from Seattle’s Office of Housing, originally intended to finance the Jackson Workforce Housing development, which LIHI owns.
But Lee’s ability to do that isn’t clear.
“She can choose to forgo that loan,” said Todd Burley, communications director for Seattle’s Office of Housing. “But we can’t guarantee that money will be transferred to another project.”
For now, Squire Park resident Ron Walker wonders if he should start looking for another place to live.
“We only have little pieces and rumors,” said Walker, who is disabled and depends on federal assistance to pay his rent at Squire Park Plaza. “We’re still in the dark.”
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