New fund aimed at increasing local supply of affordable housing
Cities and counties around Puget Sound are launching an initiative to build homes for low-income residents. The partnership, known as the Regional Equitable Development Initiative (REDI) would lend developers money to buy land or existing apartments near transit stops.
The low-interest loan program, seeded with $21 million, stems from a framework created by the Puget Sound Regional Council and modeled around programs in use in several metropolitan regions. Like those programs, PSRC envisions a transit oriented development (TOD) equitable development fund that would include public capital plus private capital from banks, community development finance institutions and mission investors.
Such funds achieve "leveraged value from the investment of limited public resources" according to PSRC. Loans to developers are provided on a revolving basis, thereby achieving ongoing public benefit and magnifying the one-time public investment.
Under this program to increase the supply of affordable housing, homes would be reserved and priced for people earning less than 80 percent of the area median income.
Region wide, the picture for affordable housing is one of insufficient supply and growing demand, PSRC notes. Its research shows 43 percent of households region wide earn less than 80 percent of Area Median Income (AMI) and 25 percent of all households earn less than 50 percent of AMI.
In its 41-page Business Plan Framework for the Central Puget Sound REDI Fund, authors stated a fund of $20-$25 million "is a scale that could justify the cost of the funds, achieve proof of concept, and most critically have enough capital to address the size of loans needed in the market." Proponents also believe it could provide lending across a full range of locations and housing types.
"Once the fund is established and successfully deployed to fund projects, the model described in this paper would allow for gradual ramping up of both public and private investment to meet identified unmet market demand with capacity to utilize a larger fund," the authors added.
Commending the initiative, The Seattle Times editorial board said the REDI fund could be an effective tool for this region to build affordable housing and "also demonstrates the importance of regional collaboration to tackle widespread challenges."