King County Council considers housing development for middle-income residents

The King County Council is considering a proposal that would build rent-restricted workforce housing for people who make too much to qualify for low-income housing, but struggle to afford rent.

Under the new proposal, put forward by King County Councilmember Girmay Zahilay, the county would use local government bonds to borrow at least $1 billion to build, renovate, or convert buildings into public housing. If given the green light, the rent from those properties would be used to pay back that debt and cover operating costs.

The county’s Executive Office would work with developers and housing authorities to iron out the details and implement legislation surrounding the project by March. The number of housing units has yet to be determined, but the proposal identifies three income brackets it could potentially serve:

• People making 50% area median income.
• People making at or below 80% area median income.
• People making at or below 120% area median income.

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The mixed income levels are what would make it feasible to pay off the debt, Zahilay told KUOW. He added that there’s a great need to create housing across the economic and social health spectrum, including increased shelter capacity, more permanent supportive housing, and his proposed workforce housing.

"Every strategy that exists to push us toward those goals is valid, and I see this as just one thing under the umbrella of options that we have,” he said.

If the county raised property or sales taxes to fund this development, Zahilay said he thinks it would only hurt the people the proposal aims to help.

He also called for the county to help fund local affordable housing projects that have stalled due to developers not having the means to see them through.

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“Our affordable housing developers are in really tough financial situations, because the costs of doing business for them has skyrocketed since the pandemic, and the sources of revenue to cover those increasing costs are dwindling,” he added.

The operation troubles slowing down nonprofit housing developers, combined with high interest rates and few investors, is causing a building slowdown for all residential developers, said Peter Nitze, CEO of the local real estate company Nitze-Stagen. That slowdown is one of the reasons he supports Zahilay’s proposal. Nitze is part of an advisory body, consisting of for-profit and nonprofit housing groups and labor unions, that helped shape Zahilay's proposal.

“The present conditions… affecting both [non-profit] developers and for-profit developers… have dramatically suppressed new housing development,” Nitze said.

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While it's a for-profit company that develops and manages properties, Nitze-Stagen has projects it labels as workforce housing. Some of its apartments are priced for people making from 50%, 80%, and nearly 100% of the area median income —the exact kind of housing this proposal would build en masse.

Seattle has seen a stark downturn in applications for residential permitting in the city in recent years, also signaling a lull in new housing developments.

“Permit applications for new housing have been decreasing overall, but especially over the past year,” a spokesperson from the Seattle Department of Construction and Inspection said in an email. “Many factors can affect how quickly those cycles change, including financing rates, inflation, material costs, and access to labor.”

Zahilay’s proposal will head to the Council's budget and fiscal management committee next week, where it will be voted on.