2022 Spring Issue - 45

Expanding Affordable Housing Using
Public/Private Partnerships
Multifamily Tax Exemption Program makes housing affordable to more renters.
As urban centers grow, the need for
housing is increasing dramatically. Affordable
housing arguably presents the greatest
gap between supply and demand, and its
incorporation in Vulcan Real Estate's market-rate
projects is a high priority.
According to the April 2021 Market
Rate Housing Needs and Supply Analysis,
commissioned by Seattle, the city faces a
shortage of nearly 21,000 rental units that
are affordable and available to households
earning 80 percent or less of the area
median income (AMI). Demand for rental
housing for these households is growing
rapidly and continues to be underserved.
No single tool will solve the affordability
crisis, but replicable strategies exist that
work to produce housing that can help
change the current trajectory.
Public/Private Partnerships
In Seattle's Yesler Terrace community, for
example, 20 percent of Vulcan's rental
apartments are affordable to households
earning 65 to 80 percent of AMI.
Completed in 2018 and 2019, Batik and
Cypress, the company's first two projects
at Yesler, are connected to the surrounding
neighborhood and designed to bring
neighbors and residents together, making it
a place where people of all incomes, ages,
and cultures are welcome. From the carefully
selected artwork that celebrates diversity
to the ground-level apartments with
stoops, the community offers opportunities
for residents of the 432 homes to interact
within an immersive, multicultural
environment.
A third project, Wayfarer, broke ground
in early 2022 and will add 261 homes with
a similar ratio of affordable units. A fourth
site now in design will bring Vulcan's Yesler
portfolio to more than 1,000 apartment
units, including over 200 units of affordable
rent- and income-restricted housing.
Immediately east of Seattle's central
business district, Yesler Terrace was originally
developed in the 1940s by the Seattle
Housing Authority (SHA) as the city's first
ADA M. HEALEY
Public/private partnerships allow developer Vulcan to build projects like Jackson Apartments, located in
Seattle's Central District and featuring 532 market-rate apartments, 20 percent of which are affordable.
publicly subsidized housing community.
When the existing 561 low-income housing
units were at the end of their useful life,
SHA began to master plan the 30 acres (12
ha) as a mixed-income, transit-oriented
neighborhood that would provide attractive
new housing for residents across a broad
range of incomes.
The Yesler Terrace Development Plan
included upgrading neighborhood infrastructure,
replacing dilapidated housing
with new low-income apartments, and
expanding the community to some 5,000
residential units. Vulcan was selected by
SHA as the first private developer to invest
at Yesler through its purchase of three sites
in the master-planned community.
By overlaying a city program known as
the Multifamily Tax Exemption (MFTE) Program,
Vulcan was able to expand the affordability
of some of the dedicated units, from
80 percent of AMI to 65 percent.
Incentive Programs
As urban land prices surge and construction
costs mount, for-profit developers are
finding it increasingly challenging to generate
market rates of return when including
affordable housing in their projects.
Designed to support mixed-income
development and to ensure increased
affordability as the city population rises,
MFTE is a voluntary program that provides
developers with a property tax exemption
for a set period during which a portion of
the units are offered at below-market rents
determined by the Seattle Office of Housing.
The exemption helps offset the lower
net operating income attributable to belowmarket
rents for the affordable housing and
helps the developer achieve a market return
on its investment.
Nearby, Vulcan partnered with the city of
Bellevue and other stakeholders to suggest
updates to stimulate participation in that
city's MFTE Program. Unanimously approved
by the City Council and adopted in 2021,
the revised MFTE Program provides sufficient
incentives to encourage the development
of affordable housing and paves the
way for Ondina, Vulcan's first mixed-income
residential project in Bellevue.
Participation in the MFTE has enabled
Vulcan to meet its affordable housing production
goals throughout Greater Seattle.
To date, 20 percent of its 2,860 market rate
units are affordable to households earning
65 to 85 percent of AMI.
Affordable housing is not an easy problem
to tackle, but through creative partnerships
and strategies that provide adequate
incentives, developers can improve the
supply of and access to equitable housing
opportunities. UL
ADA M. HEALEY, chief real estate officer of Vulcan, is
former co-chair of Seattle's Affordable Middle-Income
Housing Advisory Council under Mayor Jenny A. Durkan
and former president of ULI Northwest. She is a member
of ULI's Urban Development and Mixed Use Council.
SPRING 2022 URBAN LAND
45
LARA SWIMMER

2022 Spring Issue

Table of Contents for the Digital Edition of 2022 Spring Issue