New apartment complex helps community plan for the future

Members from the Washington State Department of Commerce’s Multifamily Housing Unit and Growth Management Services team hold golden shovels with Robin Corak, chief executive officer of the Multi-Service Center, during the Redondo Heights Groundbreaking Feb. 1, 2023 in Federal Way.

Federal Way complex will be near transit, affordable

Transportation has influenced where humans have lived and worked throughout time. Where populations have sprung up, so too have roads, rails and other methods in and out. From Roman streets to super trains, communities and the paths to them are forever linked.

The rule applies in Washington, too, with the new Redondo Heights Transit-Oriented Development project in Federal Way. The new apartment complex is situated next to the future SoundTransit light rail station at Star Lake and is poised to take advantage of the light rail’s 7.8-mile extension.

Transit-oriented development (TOD) is a city planning approach that creates and sustains compact, walkable communities with access to high-capacity transit.

There is also a shortage of affordable, available rental units for low-income households across Washington. To qualify, people need incomes at or below 50% to 60% of area median income (AMI).

Redondo Heights satisfies both needs.

The Washington State Department of Commerce provided $10.1 million in funding through its Housing Trust Fund and Connecting Housing to Infrastructure Program (CHIP) for the project, which broke ground on Feb. 1. It will have 201 affordable housing units and 131 multifamily renovations.

“This project is vital to this community,” said Robin Corak, chief executive officer of Multi-Service Center, a non-profit organization that manages the community’s resource services for the project. “Actually, affordable housing is vital to every community throughout King County and for other places as well. We know that affordable housing is a huge need and particularly for individuals that are working one job, maybe two or three jobs, but they simply can’t afford the cost of market rate rent.”

It’s important for Commerce and our work across the state, too. A recent study found that Washington needs up to 2.1 million new homes by 2050 to keep up with population growth. That also doesn’t replace the current supply deficit; 120,000 homes are needed now to meet current need.

“We are working with our communities across the state to develop 1,500 affordable housing units and locate them close to transportation,” said Commerce Director Lisa Brown. “This is just the beginning of a long process to change the course of our growth management strategy, which at its core, carves a path for local communities to responsibly and sustainably develop affordable housing.”

Dow Constantine, the King County executive, finishes speaking and the crowd gives a round of applause at the Redondo Heights Groundbreaking Feb. 1, 2023 in Federal Way.

Increasing affordable housing

According to the U.S. Census Bureau, the average medium household income in Federal Way is $72,969, so people living at 50% to 60% of that are taking home less than $44,000 per year. The average rent there is $1,487, which means that most people in that income bracket are spending 41% to 49% of their take-home income on housing. Federal standards recommend spending no more than 30% of take-home income on housing; over that threshold is considered rent burdened.

“This is King County and housing prices are exorbitant here, so to be able to provide 300-plus units is awesome,” said Eric Guida, an associate planner in Commerce’s Growth Management Services. “I mean to think 300-plus people or 300-plus families, and this is a space for them that they might not have that space right now, it’s incredible.”

CHIP granted $2.5 million to King County for the project, which will support utility hookups. CHIP funds must support housing that would be affordable for at least 25 years, Guida said.

While affordable housing is the main feature of the project, plans for construction also include a food bank and a café.

“We started thinking about what would be a good resource for our tenants,” Corak said. The group already runs a food bank that serves about 16,000 people every year, but there are people outside of Federal Way who can’t get there easily. “So, we thought this is something our tenants might need. Something the community may need as well, so we thought it a really good idea to have that satellite location.”

Investing in transit-oriented policy

Snohomish, King and Pierce counties have made a $50 billion investment in transit, and TOD is a backbone of future growth as the light rail expands.

“We need to leverage that investment to provide housing at those station areas,” said Anne Fritzel, the housing team lead in the Growth Management Services at Commerce. “By providing housing at station areas, people can get around without owning a personal automobile, which is a huge part of the budget — particularly of those at the lower income levels.”

It’s also important for environmental impact. Mass transit reduces carbon emissions, and TOD centers transit.

Nate Lichti, managing director for Commerce’s Housing Trust Fund (HTF), said TOD is important to investments in affordable housing because of environmental sustainably and residential empowerment. It’s a priority in HTF’s Evergreen Sustainable Environment Standards (ESDS).

Created in 2005, ESDS is a mandatory building performance standard for all affordable housing projects that receive capital funds through the state HTF. The ESDS contains information that safeguards health and safety, increases durability, promotes sustainable living, preserves the environment, and increases energy and water efficiency.

This policy helps guide the Housing Trust Fund to select projects that are environmentally sound, safe and secure.

“We know access to service goods and community happens when people have access to transit,” Lichti said. “And so, not every community has a light rail. Not every community has a billion dollar infrastructure project that connects them, but across the state, we are always prioritizing that residents have access to those goods and services through public transportation.”

The Federal Way Link Extension is projected to reduce 160,000 vehicle miles traveled and 10,000 vehicle traveled hours each weekday.

Cutting emissions and enacting climate policies are top priorities for the Legislature and governor said Katherine Mitchell, a project and communications coordinator for Commerce’s Housing Trust Fund.

Along with housing, it’s also one of Commerce’s big goals. Building housing alongside transit gives people the opportunity to ride transit, bike or even walk for work and errands, which all have a dramatic effect on carbon emissions, Mitchell said. It also prevents urban sprawl, she said.

“(TOD) prevents other types of development that could create more negative carbon footprint impacts. It’s not just an equity concern, it’s not just a transportation concern — it also has a climate impact. These issues interlock with each other,” Mitchell said.

It’s all a win-win situation for the community, which might explain why Washington’s government codified the ESDS.

Creating vital partnerships

With a project like this, it’s important to have partners across sectors. Notably, this is the first south King County project in which Amazon has made a significant investment, said Corak. It’s an exciting investment, and Corak hopes that there are further investments by Amazon in south King County.

“This project was a classic example of how the original design of how the LIHTC (Low-Income Housing Tax Credit) 1986 legislation was supposed to work,” said Len Brannen, president of Shelter Resources, the lead consultant for securing the multiple channels of funding needed to bring Redondo Heights to life. “A combination of public funding and private funding was certainly evident in the financing model that created the Redondo Heights project.”

In fact, $4 million to $5 million in capital funding was secured in the pre-development period. After securing final financial commitments, the tax credit and equity benefits were sold to private investors in excess of $47 million, which was a large piece of the funding.

The Amazon Housing Fund provided $20 million to fill the final capital GAP financing with a private capital loan. Both public and private capital were essential to help manage accelerating construction costs and the spike in interest rates influenced by the U.S. Department of the Treasury, Brannen said.

Affordable housing is a problem that goes beyond government investment, and private companies are stepping up. In the last four years, there have been pledges from the private sector to support affordable housing in Washington. Microsoft pledged $750 million, JP Morgan Chase & Co. provided $457 million to support the creation of 1,900 units of affordable rental housing across the state, and Amazon has committed $360 million to affordable housing in the Puget Sound as part of its nationwide Housing Equity Fund.

It’s just the beginning

In 2021, the Washington State Legislature changed the way communities are required to plan for housing. Chapter 254, Laws of 2021 (HB 1220) amended the Growth Management Act to “plan for and accommodate housing affordable to all economic segments of the population of this state, promote a variety of residential densities and housing types, and encourage preservation of existing housing stock.” This significantly strengthens the intent of the law, which is encouraging affordable housing.

Commerce is critical to helping meet the needs of communities across the state.

“We’ve worked with the Department of Commerce with many different projects and just really appreciate their understanding of the needs for affordable housing and their commitment to making that happen,” Corak said.

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Washington State Department of Commerce

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