While many larger cities are trying to figure out how to create more affordable housing in the midst of a housing shortage, the city of Covington says it is working proactively to create a solution before the problem begins.
“Obviously it affects us,” City Manager Regan Bolli said. “It’s a larger issue regionally .. but it’s definitely something of important here.”
Step 1 – Attract more apartments
Bolli said the city started tackling the issue a few years ago by helping developers create the Polaris apartments and the Affinity apartments.
Polaris opened two years ago and is 200 units of 100 percent affordable housing. Residents who choose to rent there must not make more than 60 percent of King County median income. The county’s median income is $73,035 a year. So to qualify for one of the Polaris apartments, a resident must only make $43,821 a year or less.
“That’s been a great resource for us,” Bolli said.
The Affinity Apartments is a 55-plus community for seniors and 20 percent of the units are defined as “affordable.”
These apartments were the result of the city trying to diversify the city’s residential stock, as Bolli put it. Covington, which was only incorporated as a city 22 years ago, was largely single-family units that were annexed in from the county, many built before the city became official. A lack of apartments and other types of living situations could create an issue with housing for residents, Bolli said.
“Five years ago when we started talking about this, there wasn’t a lot of apartments or town homes,” Bolli said. “Prior to that we had the Covington senior apartments, but we worked on Allegro apartments … and those are all in the downtown. But out of the downtown are Novo, which opened up across from Home Depot.”
Bolli said a pre-application has been turned into the city for a mixed-use development which would include some apartments. The city is also working on the Lakepoint development.
The Lakepoint Urban Village development was approved by the Covington City Council in 2017 and will be located off of State Route 18 on the Lakeside Gravel Mine area. The Lakepoint Development will include retail, hotel and office spaces, and 1,500 homes.
Step 2 – ‘Challenge Seattle’
Covington isn’t alone is trying to create better housing options for every King County resident. Bolli said Covington is working with an initiative called “Challenge Seattle” which is meant to help develop more middle-income housing options.
Challenge Seattle is lead by CEOs of 15 companies and two philanthropies, according to information provided by the city.
“It’s kind of new thing,” Bolli said. “They are working to raise fund with private companies … and really what the goal of Challenge Seattle is … we have so much going into homelessness and affordable housing but we are missing this invisible middle sector, our nurses, teachers and laborers, are being pushed out too.”
Once funding is obtained, the initiative group will create initiatives cities like Covington to create incentives for developers to build housing for those with “middle-income” in the range of $50,000 – $70,000 a year.
Initiatives like Challenge Seattle are important for cities like Covington, which is primarily new development since the city is so young.
“We are kind of getting to the cusp where we are ready for redevelopment,” Bolli said. “In what was a single-family home with a lawn, we know we have to create this differently. The city has come up with incentive packages to attract Polaris and Affinity.”
Those incentives included waivers or discounts on impact fees.
The city is also participating in the South King Housing and Homelessness Partners initiative (SKHHP). The idea around SKHHP is how Seattle is receiving a lot of funds for affordable housing and homelessness, but South King County has a larger population if the cities combine their numbers. So cities who choose to participate in the partnership contribute financially to help the whole half of the county fight the housing crisis.
“The goal now … is hiring staff that will begin raising money to start funding some of those needs in our communities,” Bolli said.
SKHHP includes Auburn, Burien, Covington, Des Moines, Federal Way, Kent, Normandy Park, Renton, Tukwila and King County.
Step 3 – Bring back sales tax revenue
The latest move to increase housing affordability in Covington happened at the Tuesday night, Oct. 8, Covington City Council meeting when the council voted unanimously to declare an intent to adopt legislation to authorize a sales and use tax for affordable housing. The move was in accordance with substitute house bill 1406.
During the 2019 legislative session, the legislature approved SHB 1406 which would allow cities to receive back some of the sales tax the state collects to be used strictly to help create affordable and supportive housing.
“It’s not an additional tax but a reallocation from the state to the local government,” City Finance Director Casey Parker told the council. “Our sales tax rate would stay the same, we are just stealing a little bit from the state.”
Cities are required to declare the intent to adopt an ordinance by January 31, 2020 and to create and adopt an ordinance to take a portion of the sales tax by July 27, 2020.
“The city or county may use the tax for acquisition, construction or rehabilitation of affordable housing or facilities providing supportive housing,” Parker said. “And for the operation, maintenance and cost of this housing.”
For cities like Covington with a population under 100,000, the tax money can also be used to provide rental assistance those making less than 60 percent of King County’s median income.
Covington is eligible for a 0.0073 tax credit rate, which would generate a possible $42,860 each year. The tax credit rate would be in place for 20 years. The city could generate more money if more tax sale revenue is generated.
Councilmember Joseph Cimaomo Jr. was excited for the idea and said it would be a great way to help Covington. He said there is a chance the city could obtain at least $857,200 in 20 years, if not more.
“We are telling the state we want to keep our money to help our residents,” Cimaomo said.
The council voted unanimously to state an intent to collect. Another vote on the exact ordinance to collect the money will happen in a future council meeting.
Bolli said the amount of money from the tax reallocation is just a drop in the bucket for Covington, but it can be used to create a bigger fund for the county.
“If each city that is a part of SKHHP puts these funds into SKHHP, it would bring in over a million dollars a year,” Bolli said. “That’s a way to move the needle a little bit.”
Bolli said all the city’s efforts are a way to be proactive and not try to fix something after it breaks.
“It’s really a regional issue we are trying to be involved in,” Bolli said. “The issue of homeless hasn’t hit Covington, not that it isn’t an issue, but it hasn’t hit us like our neighboring cities. Our proactive approach is to get involved regionally so we can be prepared for what may be coming and so we can stem the tide.”