Seattle is the most recent city to see a populist movement get behind social housing.
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Six cities and a county have initiated social housing programs to provide permanently affordable, publicly owned, and controlled housing for lower and middle-income working families.
Seattle, Atlanta, San Francisco, Los Angeles, Chicago, Toronto, and Montgomery County, MD, are the most prominent ones in North America to have passed social housing laws that are being implemented or are in development. All five U.S. cities started their programs in the last four years.
Local Progress, a national network of progressive municipal officials, has released a detailed report on the status of social housing programs in these cities and Montgomery County, not including Toronto.
Some city governments are reluctant to promote social housing because they have limited revenues and little or no surplus to fund it. However, North America’s oldest and most successful entities building mixed-income affordable housing, Montgomeryās Housing Opportunities Commission (HOC) and the Toronto Community Housing Corporation (TCHC), have survived. They are even able to expand because of supportive local governments.
Below are descriptions of how a social housing approach requires time and cooperation from the local government.
Seattle is the most recent city to see a populist movement get behind social housing.
Two competing housing plans, which voters must choose from this February 11, illustrate how establishing one can challenge the marketplace and established public institutions.
The grassroots organization House Our Neighbors (HON) is presenting Proposition 1A (a.k.a. Initiative 137) to the voters. Previously, they put Initiative 135 up for a vote in 2023, which passed with a yes margin of 14% over a no vote.
It established the new public developer, the Seattle Social Housing Developer (SSHD), to create and own social housing in Seattle. The housing would be available to the working class, which includes those earning from zero to 120% of Seattleās area median income (AMI).
Proposition 1A introduces a progressive tax derived from levying a 5% payroll tax. Employers pay it on the amount each employee earns over $1 million a year in compensation. The tax is projected to deliver $50 million a year to SSHD.
With the mayorās support, the city council rejected implementing Initiative 137ās funding plan and instead placed an alternative plan on the ballot, Proposition 1B. It requires no new taxes; instead, it withdraws $10 million yearly from the JumpStart business tax.
Most of that tax already goes to low-income housing, plus some funding for sheltering people experiencing homelessness. The net gain in housing units would be around 10% of what 1A could deliver. The plan would end after seven years unless renewed.
Also, unlike social housing plans, the 1B plan would not include a mix of low-cost and market-rate housing. Such a mix provides an additional revenue stream to continue building affordable housing. Instead, with 1B, every resident must be eligible for publicly funded rent subsidies. As a result, it does not provide a consistent revenue stream to keep its plan operational, produces less housing over a shorter time, and has no plan to continue operating.
If the public wants a long-term approach to providing more affordable housing in Seattle through social housing, as other cities are pursuing, Proposition 1B is not the way to go. Proposition 1A is the path, but if passed, it will require local government cooperation to obtain enough funding and public accountability to succeed in a major city’s housing market.
Two cities demonstrate how Social Housing can successfully work with government support.
Torontoās TCHC started over 20 years ago and has developed over stages. Itās now the second-largest housing provider in North America, with over 58,000 units across 2,100 buildings and approximately 105,000 residents.
Most of its funding is from resident rent payments and subsidies directly from the City of Toronto. However, 89% of its tenants pay rent geared to income, with their median income at 28% of Torontoās AMI, as of 2016 data. The balance of tenants pay market rent or affordable rent rates. Applicants are placed on a centralized waiting list and selected based on their income and housing needs.
TCHC is a municipally owned corporation with independent corporate status as a non-profit. It is managed by a 12-member board appointed by the City Council. The board comprises nine public members: two tenants and three City Council members, one of whom can be the mayor. The board supervises the management of TCHCās business and affairs.
Montgomery Countyās Housing Opportunities Commission (HOC) was formed in 1974. It is a quasi-governmental organization similar to Torontoās public developer of social housing. The HOC is also designated Montgomery Countyās Public Housing Authority and Housing Finance Agency, enabling it to finance construction through essential purpose bonds and State and County subsidies.
The county executive, with the concurrence of the county council, appoints the seven volunteer commissioners and its president/executive director, who conducts daily operations.
In the last forty years, it has developed and owns a controlling interest in new mixed-income housing where 20-50 percent of the residents are low- or moderate-income households. Critical government support has augmented HOCās outreach by passing a landmark law requiring developers to set aside about 15 percent of the units in all new housing projects for households making less than two-thirds of the areaās median income.
HOC established the Housing Production Fund (HPF) in 2021 to fund mixed-income social housing. They partnered with a for-profit developer to build their first social housing project, The Laureate, a 268-unit apartment building with mixed-income housing. Rents from people in higher income brackets help to contribute to the costs of poorer tenants.
Although these two social housing programs are not perfect, they still produce more affordable housing for low and middle-income households than other cities.
Most importantly, they retain ownership or management over their buildings and keep them off the market to keep them permanently affordable. This practice decommodifies housing units, i.e., not making them an unaffordable commodity.
Could Seattle and other cities eventually have similar success?
The Atlanta and Chicago governments initiated and committed funding for their social housing programs, which are directly tied to the city government. San Francisco and Los Angeles went outside the city government by passing initiatives with margins of over 56% to fund social housing. Funding was provided by increasing the real estate tax on high-valued transfers, with more than 90% of transfers, like home sales, not subject to the levy.
The initiativeās voter response shows that residents will support making affordable housing available if an additional tax is levied on those most capable of paying it, e.g., high-income people or businesses. This push comes from renters and small homeowners who need affordable housing near their jobs. Often, these are public employees like schoolteachers and social service providers.
Renters may comprise most voters demanding social housing, considering the percentages of residents who live in these cities: 65% in San Francisco, 55% in Seattle, and 54% in Los Angeles.
Sixty percent of San Francisco renters live in rent-controlled units, where rent increases are limited. However, 17,565 low-income renter households must earn 3.8 times the City’s minimum wage to pay the cityās average monthly rental rate.
In Seattle, 41% of renter households have incomes at or below 50% of the annual median income (AMI). However, less than two-thirds of rentals are affordable and available to them.
Los Angeles has 494,446 low-income renters looking for apartments. They must earn 2.9 times the LA minimum wage to afford the average monthly rent.
Private investors dominate housing production.
Although Atlanta, Chicago, San Francisco, Chicago, Seattle, and Los Angeles have new social housing entities, they have yet to build or acquire a building. It takes time.
Advocates and providers of social housing are playing the long game and preparing the public to understand that producing social housing depends on intermediate steps, not overnight miracles. They face the reality that private investment forces, not government policies or financing, shape the housing market.
Seattle is a perfect example of how private investors dominate housing production. In the first 10 months of 2024, the market produced 12,730 new housing units. Over the past decade, the average increase has been over 6,000. In comparison, only 600 units would be expected to be produced yearly by SSHD and the seven-year Seattle Housing Levy.
Hereās how the numbers work out. Using a low-ball estimate of $250,000 to create each new affordable unit, SSHD can produce 200 with its $50 million; another 400 would be provided by the Housing Levy property tax, which provides $100 million a year.
Seattle has added approximately 200,000 new residents in the last twenty years, and the growth will continue. King County projects that Seattle will need 5,600 new homes annually over the next twenty years. This leaves private investors with the task of filling the need to create 5,000 affordable homes annually that are not covered by social housing. However, the market incentives for producing that number are not there.
Consequently, future years will present challenges for working families looking to live in Seattle, as they do in other cities. By 2044, 44,000 people making less than 30% of the area’s median income (AMI) will need housing. If the percentage increased to 100% of AMI, the need for more affordable housing units would likely double.
This exercise shows that the demand for affordable housing is enormous. It drains the resources of any government entity, and investors will not provide it because they can make more money from higher-end homes.
Until a national party is willing to stop the concentration of wealth that rules the marketplace, the best any city government can do is support social housing programs. SSHD’s additional 200 affordable units produced annually would help address the demand for affordable housing.
The public will benefit if the local government helps the production of social housing through its legislative powers and funding authority. City residents would then have a financially secure and publicly accountable social housing developer.
Accountability is critical to maintaining popular and institutional support.
San Francisco and Los Angeles have a dedicated but limited funding stream for social housing. However, they can tap general obligation or dedicated housing-fund bonds for low-cost construction. In that case, they can use that revenue to operate and maintain their housing while paying interest on the bonds. Meanwhile, Chicago and Atlanta have funds from public bonds to provide low-cost construction loans but have no independent tax dedicated to social housing.
Toronto and Montgomery demonstrate how working with local governments can expand secure funding for operations and new production. Seattle and other cities should collaborate with them and each other to form a network of mutual support. A shared strategy for accessing public resources must be developed to provide permanent, affordable housing for working families.
The key to obtaining broader public support for a social housing developer is involving the existing government bodies, such as the city council or housing authority, in helping to manage their projects. Working with those institutions establishes a level of accountability that engenders public support for future funding of developers that do not create housing units treated as a commodity on the market.
The citiesā social housing developers mentioned have institutional links except Seattleās. All have some resident participation on their boards or oversight committees. However, Seattle is the only one with most board members selected by social housing residents and no institutional representation on its board.
Should Seattleās Proposition 1A pass this February, SSHDās board and new executive director need a long-range plan to secure and maintain public support. Including institutional representatives on its board is critical in obtaining public support.
In turn, the city council and mayor must recognize the publicās demand for creating SSHD to generate social housing. The city government needs to work with SSHD without shifting money away from emergency shelters for people without housing.
Framing social housing as competing with emergency shelters for limited funds is a zero-sum game. That approach will weaken both efforts when each needs to be addressed. Portland has aggressively worked to provide adequate emergency shelters, and Seattle can learn from their approach. However, it does not eliminate the need for more affordable housing.
Passing Proposition 1A is not the only solution; however, as in other cities, it begins a new chapter.
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Nick Licata, a five-term Seattle City Council member, is the author of Becoming a Citizen Activist and Student Power: Democracy and Revolution in the Sixties. He is also the founding board chair of Local Progress, a network of 1,300 progressive municipal officials.