Council Approves $29 Million Bond to Finance Affordable Housing

Herbold sponsored the budget item as an alternative to Sawant’s $160 million plan.

This afternoon, the Seattle City Council voted to add to its budget a plan to take out a loan of $29 million to pay for affordable housing development. The move represents a compromise between a much bigger financing package proposed by socialist councilmember Kshama Sawant and budget hawks who objected to the high cost of repaying interest on a loan. There is not yet a specific plan for how that money will be used.

This fall, Mayor Ed Murray’s plan to build a new $160 million North Seattle police precinct got paused under public pressure from both anti-incarceration activists and people who objected to the project’s unprecedented price tag. Murray planned to use real estate tax revenue and bonding (that is, taking a loan from investors) to pay for the new precinct. Sawant was one of the precinct’s main opponents on council. But she was intrigued by its funding structure, which she believed could be used to pay for the construction of 1,000 units of affordable housing. Non-partisan council staff agreed: by shuffling around different pots of money, they wrote in a memo, the council could circumvent state rules against bonding to pay for housing.

Sawant introduced an amendment to the budget that would do just that. It failed to gain enough support to get on the budget. But District 1 (West Seattle) councilmember Lisa Herbold proposed a lesser alternative: $29 million in bonds to pay for affordable housing.

Today, that budget item got voted onto the council’s final draft of the budget. Sawant seconded the motion to introduce it, and the only councilmembers to vote against it were Tim Burgess (position 8, citywide) and Debora Juarez (District 5, North Seattle). Both objected in part because they believed the cost of repaying interest on the loan outweighed the benefits of using bonded money to build affordable housing units as soon as possible. Both previously voted in favor of the north precinct financing package.

We asked Burgess why he voted against both Sawant’s and Herbold’s housing finance plans but previously voted in favor of using a similar plan to finance the north precinct. He says the key difference is where the money for repaying the bonds comes from. “The north precinct money uses the city’s flow of [real estate tax revenue] that is designed to be used for capitol projects and city projects,” says Burgess. “Councilmember Sawant’s proposal does not do that, and relies on general fund money, which is the same reason I voted no on Herbold’s $29 million.” Because the proposals lack specific funding sources to repay the bonds, says Burgess, they could eat into the city’s general fund and sap funding from elsewhere in the budget. In other words, Burgess says, he opposed Herbold’s and Sawant’s proposals “not because I don’t want to build more affordable housing, but because that kind of debt financing will force us to take money away from other programs.”

The final vote on the budget will be on Monday afternoon at City Hall.

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