Bill lets housing boom help build homes for poor

OLYMPIA – The state’s booming real estate market may help an unlikely population: Those who are struggling to afford a home.

With Seattle bungalows fetching $1 million and Spokane condos topping $500,000, real estate prices have far outstripped the growth in wages.

State analysts estimate that more than half of Washington’s $1.4 billion budget surplus stems from real estate transactions. Now a bill in the Legislature would use some of that money to build housing for low-income residents.

“This massive increase in values has really highlighted the affordable housing crisis,” said Rep. Timm Ormsby, D-Spokane, a co-sponsor of the bill. “I think it’s our responsibility to try to eliminate some of the accompanying pressure that goes along with it.”

The bill would pay for $100 million worth of low-income housing projects in the next four years. The bulk of the funding would go to the state’s Housing Trust Fund, which has a backlog of $45 million in projects that could serve 2,300 households across the state, housing advocates said. Last year, two-thirds of all applications to the public fund were denied because of a lack of money, advocates said.

“They are applications that are sound, viable and good ideas,” said Megan Hyla, associate director of the Washington Low-Income Housing Alliance. “But the state doesn’t have enough money to fund them.”

At Spokane Neighborhood Action Programs, officials have postponed construction of a 50-unit expansion of Riverwalk Point, a low-income housing development. The nonprofit has already invested more than $70,000 in architectural and environmental reviews of the expansion. Riverwalk Point’s first phase of development won national awards for its design, construction and financing.

SNAP’s application for expansion of the project was denied last year by the Housing Trust Fund.

“The state said, ‘It’s a great project, but we don’t have enough money,’ ” said Ray Rieckers, SNAP’s assistant director. “It appears that without additional resources we will continue to languish.”

Many legislative leaders – chief among them Gov. Christine Gregoire – have urged spending restraint this year, despite the budget surplus. Many remain wary after the state faced a $1.8 billion budget shortfall last year.

“The hot real estate market is great, but once it isn’t great, what happens to these programs?” Rep. Lynn Schindler, R-Otis Orchards, asked. “We’re going to have to find the money from some other place.”

Rep. Mark Miloscia, chair of the House’s Housing Committee, said the bill will be limited to four years. Miloscia, D-Federal Way, called it a “small step” to easing the pressure on low-income residents.

“Life is becoming a lot tougher for people on the bottom,” Miloscia said. “I see it only getting worse.”

In Spokane, the median price of a home rose from $119,000 to $160,000 in the past two years, an increase of more than 30 percent. Seattle’s median home price hit $380,000 last fall.

Rents have also begun to rise in recent years as more and more families are priced out of the market. In Spokane County, a worker must earn $12.19 an hour to afford a two-bedroom apartment – about an 11 percent increase in the past year, according to a national study released last month.

Last fall, the state estimated that Washington’s tax on real estate sales would collect about $1.3 billion.

“A portion of that increased revenue must be used to support affordable housing programs,” Ormsby said.

The bill would also provide some funding for homeless programs, migrant laborers and victims of domestic violence, as well as projects to reduce energy bills by weatherizing older homes.