♪♪
-Hello, I'm your host, Brian Callanan.
Seattle voters passed Prop 1A in February
to pay for social housing,
an affordable housing model for people of mixed incomes.
1A's proposal to use a payroll tax on high earners,
scored a definitive win at the ballot box.
But the future of this new housing program
is still surrounded by questions.
Seattle voters said yes to establish
a social housing developer in 2023.
A vote on how to pay for it came this February.
The Social Housing Act that gets Prop 1A,
a new payroll tax on high earners
went against up the smaller scale 1B,
a plan to use existing taxes promoted by city leaders
and the Seattle Chamber.
-We are not opposing social housing.
We are saying, yes on 1B,
because we think it more responsible way.
-But Prop 1A won out with 63% of the vote.
Giving a new mandate to Seattle's elected leaders.
-Voters responded, they want housing,
they want social housing.
We want to make it successful, that's the bottom line.
-But how long can Seattle retain businesses
with a new tax in place?
And how will the city reconnect with social housing leaders
after a bruising election?
-This is a question for the mayor and the city council.
-Hear from the CEO of Seattle's Social House Developer
about how he plans to navigate a new program
through the city's complex affordable housing system.
-What we're really looking at is stalled real estate deals.
-Opening the door to what's next for Seattle's
social housing plans.
Coming up on "City Inside/Out."
♪♪
Welcome once again to "City Inside/Out"
on the Seattle Channel, I'm Brian Callanan.
And I am joined by a panel of people leading the way
on social housing in Seattle, which includes Tiffani McCoy,
the co-executive director of House Our Neighbors,
which led the campaign for Prop 1A.
Thanks a lot for being here, Tiffani.
-Thanks for having me. -Also with us Roberto Jiménez,
the CEO of the Seattle Social Housing Developer.
Roberto, great to meet you and thanks for being here.
-Thanks. -Alright, let's jump into it.
And, Tiffani, I wanted to talk to you about this.
I think a lot of political observers,
me included, were surprised by the result
of the special election in February.
This was a double-headed question,
which could be a little confusing for some people.
But 72% of voters reaffirmed their support of social housing.
And 63% of the vote was in favor of Prop 1A.
Were you surprised by that result?
What did this election say to you?
-Yes, I would be lying if I didn't say I was surprised,
especially because on election night we were up by 15 points.
So it took a while for it to actually settle in for me,
but there was like excitement, enthusiasm,
tears around in the room.
It was really, really beautiful and then,
yeah, we got up to this 26 point margin.
So, as you said Brian,
this reaffirms Seattlites support for social housing.
They want to fund it with a lot of money.
They agreed that there's good governance
of the Social Housing Developer,
they like the board composition,
they trust Roberto Jiménez and the vision
that Seattle voters already reaffirmed in I-135.
And they want to see this new housing model take off.
So we were just super happy to have that,
especially in the face of an opposition that spent,
you know, $600,000 in like 21 days.
And where we had the mayor of Seattle
put his face on all of the opposition mailers, so.
We were very surprised,
but also like just really excited about what's
to come with this money.
-And can you talk to me
about what House Our Neighbors role is now
with this whole situation?
-Yes, very important points.
So, as I said in the debates before that you've hosted,
I, Tiffani, speak for House Our Neighbors,
we led I-135 and Proposition 1A.
And we do education and advocacy,
but I do not speak for the Social Housing Developer,
I'm not on the board, I don't dictate anything to them,
but I'm just here as an advocate of social housing
to make sure that the city lives up
to what the voters requested of them.
-And I appreciate your background on this too.
Roberto, I wanted to bring you in here,
you started this job in the fall of last year,
full time in September there.
Were you nervous about the February election here,
I mean,
this double-headed vote
that voters would maybe pull back their support
of public housing.
I mean, this is your job we're talking about here.
-Yeah, I'm not politically engaged in Seattle,
we had to sit on the sidelines.
So it was never clear to me what the vote was going to be.
My board members were confident that it was going to pass.
But we were all really surprised by the margin that it passed by.
I am a believer in social housing,
I am a convert recently, in the last couple years,
I got the, studied that.
-Yeah, tell us about your background, please.
-I'm in affordable housing for the last 20 years as a CEO.
So I've been leading rural and urban housing.
-In California you were --
-Most recently in California, in Sacramento.
-Okay, okay. -Where we were, at this point,
that organization is the third most productive
affordable housing developer in the state.
-Got it. -So.
-In terms of what you think you're bringing
to this position, this isn't a job interview,
but tell me about that, please.
-Real estate development is big.
When I left Mutual Housing California
we had $500 million in active real estate deals
within the Sacramento County area.
So we're very productive.
But also, community engagement
and very people-centric, community based.
The organization actually started
as a social housing organization.
But didn't take off because of the tax credit program,
so kind of killed the model.
But we also kept true to a number of the tenants of it.
And, so 60% of our board was residents
who live in our housing.
-Okay, got it.
And I want to get into some of the questions
that I think people have,
kind of what's next with this whole situation.
And, Roberto, let me start with you because,
the push back on Prop 1A I heard during the election
and even maybe more so now that its passed is this.
Levying a new payroll tax on businesses
with employees making over $1 million per year,
is going to drive businesses out of town.
A number of jobs are getting moved over to Bellevue
from Seattle already.
This new tax is going to make that issue even worse.
How do you respond to that?
-I don't take a position on where the money comes from,
this is what was proposed.
I was brought into administer the organization.
And so if the money doesn't come from here,
then it needs to come from some place.
But this is desperately needed,
I think this can be a major factor
in the affordable housing situation.
And just middle income housing situation,
their shortage here in Seattle.
-Right, because it covers both of those things.
Tiffani, do you have some thoughts on that?
I'm sure you've heard that critique too.
-Yeah. I do and I would say
that I would just point to like what the article
from the Puget Sound Business Journal
have shown for the past year.
We're seeing Apple moving to Seattle and investing big time,
we're seeing Meta announced
that it's going to do complete renovation
of its buildings in South Lake Union.
You see tech startups
that are moving here from the San Francisco area.
So I think we have to make a holistic view of businesses
that are coming and going
and just recognize that's part of business.
We can't dictate their business model,
but it would be a really big shame
for these businesses to leave.
Because they're going to have a workforce that is stably housed.
Or families can live and grow up in Seattle
and not have to move the outskirts
because of housing costs.
So, I think that more businesses are going to be flocking here
once Roberto and the team
are able to sustain social housing with this money.
-Got it.
A followup here, I read a Cascade PBS piece recently.
You said, in that piece,
you were concerned maybe someone of the business community
might file a lawsuit to stop this tax from being collected.
How real is that fear?
I just want to try to get real about this,
how do you prepare a social housing system for success
when that kind of possibility might be having over it?
-Yeah it's, like, I can imagine it's really challenging,
that's definitely more of a question for Roberto,
but as far as the lawsuit.
Like, we were prepared from day one,
we've seen the business community
in this city fight tooth
and nail against any new progressive revenue.
And for us it was never about nay of their so-called concerns.
It was always about making sure
that the biggest businesses in our city
did not pay a $1 more to address the housing crisis.
So, we've been prepared for this
and we wanted to prepare the public for this too,
because even though this money has been won
by a resounding margin,
there are lots of ways that elected officials
and the business community can still mess this up.
And we will see how long it takes
for this money to be given to the Social Housing Developer.
I'm sure we'll get into some --
-Yeah, yeah, I suppose so.
Roberto, any fears about that, lawsuits, et cetera,
what's on your mind?
-You know, certainly it lingers in the back of my mind.
But until we have something certain,
I'm not going to worry too much about it,
I'm focused on growing the organization.
-Okay, well let's talk about how this might work.
So, as I understand it,
this tax that has been approved with this measure
is retroactive til January of this year.
The city would start collecting it at first in 2026.
And then it would be on a quarterly basis after that, so.
The money's going to be coming in here
in less than a years time.
Maybe you can tell me about your top priority right now.
-Yeah.
The top priority is I think three.
The first is, building strong governance and hiring staff.
The second is, laying out the model for development.
Right?
And the third is really building the internal workings,
the systems within the organization.
-Got it.
And part of that is an annual spending plan.
Can you touch on that part please?
-Yeah.
We don't have much money at this point in time.
-Right.
-And so I am the only staff person,
we have a very active board of directors.
But they're very engaged
and very involved in the strategic planning.
-Okay. -So it's moving forward.
-Okay.
And in terms of,
I know everyone's probably asking you this question,
are you going to start building stuff next year,
when are you going to start,
start seeing some social housing in Seattle?
What do you tell people?
-We are looking at several different models.
So, the model that I think may come first
is acquisition of existing housing.
-Yeah.
-And typically in the affordable world,
that means distressed housing. -Okay.
-That's not what we're looking at.
-Can you describe what distressed housing is?
-Yeah. Underperforming properties,
which haven't had proper maintenance and upkeep,
or aging properties.
-Okay.
-In the neighborhoods
that are indeed of more community development.
-Mm-hmm.
-But what we're really looking at is stalled real estate deals.
-Okay, okay.
-Mostly because they're stalled
because of high interest rates. -Okay.
-And then we'll also be looking at new construction
and that's the place we want to be most.
Where we can design
and develop housing in the context of communities.
And what the needs in communities are.
-Okay, okay.
And I'm going to dive into that a little bit more in a minute.
But, Tiffani, I wanted to go back to you
in terms of the dollars that are going to be coming here.
It's a new payroll tax, the city hasn't collected before.
It's different than JumpStart,
which a few people are aware of,
this is the 5% tax levied on the salary amount
over $1 million that a person earns.
This goes to the company here.
The company's paying this.
So for a person making $1.2 million,
the employer would pay $10,000.
So I've heard these estimates,
this could bring in $50 million, maybe more, maybe less.
Do you have a concrete idea of what this tax
would actually bring in
when you consider businesses might try to get around too,
some thoughts on that.
-Yeah, I mean that's always a given
that businesses going to get out of trying to pay taxes.
But what we see with JumpStart is that,
that has always been bringing in way more than projected.
So, we took a very conservative projection approach,
there were two different economic models
that we compared.
And both of them actually came to about $50 million a year.
So that's what we put forth to the voters,
it could be more, it could be less,
especially given like how much people sell of
like capital gains year-to-year.
So, but I think that it'll be a good start for the developer
and then after they get some assets in,
some buildings going, the building, the bond.
Which we've talked about so much during I-135.
-You're bonding against that money,
I see what you're saying, okay.
And, yeah, some thoughts on that piece of it, Roberto?
Did you want to add to that?
-Yeah, the bonding process
to get to is probably can take about five years.
-Okay.
-So we want to building in the meantime.
But we also need to be building a balance sheet.
-Okay.
-So it's going to be a measured development,
balancing between saving, right,
then having that revenue on hand for the future.
And also, acquiring and building new properties.
-Got it. Can you take me through this process, Roberto,
because I'm thinking about dollars coming in in 2026
and then quarterly after that.
As I understand it, you're the only employee so far
for the public development authority.
Do you borrow money from the city to get staffed up now
or what happens over the next several months here?
-That's a conversation we just initiated.
-Okay.
-In an ideal world that will be the case.
-The state had some help last year and the year before that.
Sorry interrupt, that might be a piece to it too maybe.
-Yeah. I'm not familiar.
That all happened prior to my arrival.
-Okay. -So I'm aware that it occurred.
-Okay.
-Maybe Tiffani can fill us in on that.
-Yeah, yeah.
Do you think that might be part of the answer here?
I know you can't speak for the Housing Authority here
but, excuse me, yeah.
-We do have a lot of support at the state level.
But honestly I think that this is a question for the mayor
and the city council.
From what I understand just from like public record is that,
the mayor and city council
have not fulfilled the 18 months of income startup support
that I-135 dictated.
So they have not given the last six months
of any kind of support to the Social Housing Developer.
So, why is the mayor and the city council
not fulfilling the voter mandate of I-135.
I think that those questions need to
be teased out of it more.
And then as with JumpStart we know
that the city was able to start spending those revenues,
even though they were not collected until a year later.
So we're really hoping
that they're able to honor that same agreement
to the Social Housing Developer
so that they can start acting quickly.
The voters just made very clear
that they want social housing to happen now.
-Got it.
I am trying to think about this big chunk of money
coming in though,
Tiffani, and I know you heard this criticism
on the campaign trail too.
Social housing gets this big chunk of money
without much of a plan,
or even a staff in place to figure out how to spend it.
How do you see 2025 panning out?
Are you concerned about a lack of staff for Roberto
when the developer right now?
-My biggest concern is what
this administration is going to do to try to stall
out the social housing developer to not get --
-The federal administration?
-Sorry.
We need to talk about the federal too, no,
the mayoral, the president or --
so Mayor Bruce Harrell what he's going to do to stall this out.
Or the city council.
As my organization talked about,
like the mayor after this 26 point victory
didn't even mention social housing in his state
of the city speech.
So, that's my biggest concern,
is that they're going to do what they can
behind closed doors to not fulfill the mandate of voters.
Especially when we have the mayor putting his face
on opposition pamphlets, like that speaks volumes.
But then, yes, we have to be very cognizance
of the federal level too.
Like, we just saw that the Trump administration
is rolling back all of the retrofit gains
that were made two years ago by HUDD and by Congress.
And they're looking to cut HUDD stuff by like 50%,
even talking about cutting here so.
This is actually the best time to be doing what we're doing.
Because we cannot rely on the federal government
at all right now to meet our housing needs.
-Yeah, I saw you nodding your head over there, Roberto.
I have to think though on the back of your head,
you're thinking about some of these concerns
from the Trump administration.
Tariffs maybe they're in place, maybe they're not,
I mean, there's a lot going on right now.
Can you talk about that
and how that's going to influence your work
to get properties online?
-Yeah.
I mean, I took a leap of faith believing
that this would happen.
And also because I was very concerned
about Trump administration and what they had done prior in 2016
around tax credits.
And it could really be destructive
to the affordable housing industry.
The, what's currently happening, which makes me doubtful
that new construction is going to be affordable for a while.
The tariffs on timber,
on steel and aluminum are significant
and that will directly impact that ability
to build new construction.
-Got it, you were saying,
you're really trying to focus on maybe some existing --
-That's right.
--- things that are in place right now.
And I'll touch on that in just a second.
But I did want to make sure I moved into this piece.
And, Tiffani and Roberto, maybe you can both enlighten me here.
I'm just trying to figure out how the work of the developers
going to fit in with the Seattle Housing Levy,
for example, or other programs
that are also focused on affordable housing.
Is social housing going to be competing with them
to build these projects,
or how do you look at that working out?
-Kind of kicked that one over to
and I'll add in from my perspective.
-Yeah, yeah.
-The way the charter is written,
we're not trying to compete.
And that was important to me
and it was certainly a consideration having spent
the last 19 years in affordable housing.
I understand that industry.
Seattle Social Housing doesn't want to compete,
we want to be additive to the local housing environment.
We believe we can do that.
-Okay, got it. Did you have some thoughts on that?
-Just let me -- we in the charter for Initiative 135
that created the developer made very clear
that the in-kind support could not come from
existing affordable housing funds.
So we also created an environment
where this was never going to be competing with one another.
And I think that that's maybe what galvanized some
of the affordable housing developers
to get onboard with 1A.
Is that they saw it with the city and the mayor
that the ones that were trying to take money from them,
to give to social housing, even
though we live in one of the wealthiest cities in the world.
-Yeah.
Let me keep going down that path if I could,
because I think it's important to point out that,
the competing measure in the February election
was not from some other housing provider,
it was from city leaders,
it was from the metro chamber of commerce there.
So now that 1A has won,
how do you rebuild that relationship
with elected leaders,
business leaders who were not in support
of what you were proposing back in February.
-And that might be something that just tells our neighbors,
it's not going to be successful,
maybe that's something that Roberto and others can do.
But, I mean, we also want to be building these relationships
in the long term regardless.
And we hope that people get onboard
and I think that as bad
as it to say the Trump administration does present
potentially some opportunities to show local leaders,
like we can't rely on the federal government
to meet our housing needs.
What can we do here to be innovative?
And I think I even heard from council member Moore recently,
like, she actually talked to someone in Vienna.
And she's starting to become more interested in this model.
So I think that this is a,
I hate saying, I feel like an opportunity to show that,
like, we need more local control,
we need more local investment.
Otherwise we are just going to see homelessness
and the housing crisis just increase exponentially.
-That local funding piece is a really important part
of what social housing.
-That's why other jurisdictions are also looking
to this more rapidly than ever.
Like, we've talked about
how this is a national movement for social housing.
But I think we will start seeing
other jurisdictions looking to the ability
to do this cross subsidization.
So that we're able to build more housing.
-Where the higher renters are helping pay for
the lower renters out there.
-Yeah.
-Roberto, I want to make sure I draw you in here.
I know you haven't been here that long.
And thank you for your work in the space here.
But since the vote have you found champions
for your cause within the city council, the community,
tell me about that work.
Haven you been able to build some of those relationships?
-Yeah.
I mean, I had a great list of business leaders,
affordable developers, policy folks.
And folks from the city
that I started meeting with from day one.
And so that list keeps growing.
And we've, I believe, converted some people who were skeptical.
And given comfort to some who really want to support
but weren't certain whether they could.
And I think that's part of why the margin was so wide.
So, I continue to meet with people
and starting a couple of weeks, go with council members.
-Okay, alright, there's going to be some work
that's happening there. I want to jump back if I could,
just the whole concept of social housing,
it is new for so many people.
Maybe Tiffani I can start with you.
So you brought this up a second ago.
The basic idea is,
no one pays more than 30% of their income
for this kind of housing.
People renting more expensive units
would essentially subsidize the lower income units.
What's the strategy, I guess,
to make sure people at all income levels
are going to get help,
especially people with the most need.
I know that was a push back.
Hey the people with most need aren't getting enough help here.
Can you talk about that whole strategy
of social housing please?
-Yeah, it's just a way
to not have to rely on the federal government
for meeting our housing needs.
That's what Montgomery County shows us,
is you're able to just within a house,
you're able to make buildings pencil.
To make project pencil by the cross subsidization model.
And you don't have to rely on tax credits or section eight,
or different project base vouchers.
So what, and you're also able to produce as many
low income housing units
as you would if you use federal government resources, so.
Why are we not rolling this out as quickly as we can
when we see what's happening in our streets?
And we see the displacement happening here in Seattle.
So, this is a tool that works,
it's also internationally proven model.
And now we have someone who did take a big chance,
if I may, leaving your job with a for sure income,
to come to Seattle to help spearhead this.
And I'm just incredibly grateful
and look forward to what we can do.
We just, as House Our Neighbors, it is just incredibly important
to for the voters to be diligent and to keep their eyes open
and to see how our city government is propelling
this forward or hindering.
-Okay.
Roberto, maybe you can help me out with this.
Just making sure that social housing is doing the work
that it needs to do and not displacing people
who might be most in need.
I think there's been some concern about that too.
Help me out with this.
I think this model is tough for some people to understand
and I just want to make sure that you speak to the point
that I was trying to raise with Tiffani, please.
-Yeah.
So, this is not a homeless organization.
The problem with homelessness
is that more people are falling into homelessness
faster than we can move them out.
And in a lot of communities,
the affordable developers whether they are a for-profit,
or non-profit,
like Sacramento have been able to move a significant number
off the streets and into housing.
Really significant number.
The homelessness rates start to drop,
but then more and more people are falling into homelessness
at a faster rate.
So this middle income housing is designed to keep people housed
and from falling into homelessness.
And it's far easier to keep them housed
and less costly to keep them housed
than it is to try to move them from homelessness
back into housing.
-See the metaphor I've heard a few times,
let's build a fence at the top of the cliff
rather than a hospital down at the bottom.
Thank you. A few ways to look at that.
At any rate, we do need to wrap up here
and, Tiffani, maybe I can start with you to do that.
I'd like to discuss two parts here.
Maybe the biggest hurdle you're seeing ahead for social housing
over the next couple of months.
And where do you see this program five years from now?
-Yeah.
So the biggest hurdle is the mayoral administration,
making sure to give this money to the developer
as quickly as possible. As you said, it is retroactive.
We already know a lot of the companies that would pay this,
my understand that there's education and awareness
that needs to happen,
but there's no reason
that the city cannot be loaning at no interest to the developer
against those future assets, we know that those are coming.
So we as House Our Neighbors will be making sure
to be on that and to educating the public
if the mayor or the city council are hindering that.
And then five years from now,
I mean, I'm very excited to go celebrate and have a party
outside of the first social housing development with voters.
But I, like I said to you in our last debate,
I have full faith in Roberto and in the model.
And I just look forward to them
doing what they can in these trying times
of the federal administration that is all over the place.
But I believe in the model,
I believe in Roberto
and we'll do everything that we can as an advocacy organization
to push that forward.
-Alright, Roberto, other than Tiffani's party.
I wanted to talk about what you're looking forward to,
maybe next couple months and five years from now too.
-The next couple of months I'll be starting to hire staff.
So, we were actively planning for that
yesterday doing budget planning and staff instructors.
We also in the process of recruiting new board members,
so we expect we'll have several new board members on the board
in the next probably several weeks.
So that's most immediate.
And we are also scouting for properties and getting a lot
of phone calls from others who have property
that they would like us to look at it and consider.
So it's really about the revenue.
But I also want to say that, this is a sustainable model.
The goal here is to build a significant revolving loan fund.
That will be invested in the properties
and then cycle back into the loan fund.
And that loan fund keeps growing over time.
So it's sustainable in a way
that the low income housing tax credit model is not.
That's a one-time investment each time money is received.
And the other is, that this is not subsidizing people,
this is subsidizing assets.
And that's really core to the success of the program.
It's public investment in public assets, the same as schools.
The same as parks, the same as highways,
all the things we need to have a healthy vibrant community.
-Okay, thank you both for this.
And we will be right back.
What are people saying on social media
about the plan to use a payroll tax on high earners
for social housing?
One person writes...
Another person comments...
We'd like to know what you think.
Send us an email at contact@seattlechannel.org.
Or find us on social media.
Great to get that input, and I'm very thankful.
Roberto Jiménez, Tiffani McCoy,
really appreciate you being here.
-Thank you. -Thank you.
-Alright. I'm Brian Callanan.
We'll see you next time on "City Inside/Out."
♪♪