Good afternoon. Welcome to
Vancouver City Council. Today
is Monday, August 10th, 2026.
We have two workshops this
afternoon. Affordable housing
fund. The administrative plan
funding and then the
multifamily tax exemption code.
Changes concerning House Bill
1491. So City Manager, Deputy
City manager, is there anything
you'd like to say to kick this
off?
>> Thank you, mayor. Members of
Council, just to note that
you'll hear some changes from
Sam and Ian today that we hope
are responsive to the questions
and discussions we heard from
the council last spring when
this issue was before you.
>> All right.
>> Hello, I'm Samantha Whitley,
the housing programs manager,
and I'm joined here this
evening by Ian Allgor, our
project planner. And we will be
happy to talk to you about the
affordable housing fund
activity to date. A little bit
of background on where we're at
now, and then some of the
proposed changes that we'd like
to bring to council to make the
plan better and help some
projects start moving. And then
we'll lastly follow up with the
next steps for plan updates and
future awards. So the
affordable housing fund since
2016, we've awarded $67.6
million. And to achieve these
outcomes that are on the slide
2034 total housing units. That
includes affordable units,
units that are above 50%, Army
units that are preserved, and
the homeownership units. So
that is all of the housing
units and projects that funding
has been invested in. We've
also served over 2000
households with rental
assistance, and these are
households also that earn below
50% of the area median income.
And then we've also provided
funding to assist emergency
shelter. And that funding has
served over 1200 households to
date. So one thing that I
wanted to mention with the 2034
total housing units, if you
divide those total units over
the past ten years by the 67
million, that's about a $23,000
investment per housing unit
that's been created or
preserved in our community. So
our current administrative plan
divvies up the $10 million a
year, as shown in the pie chart.
Circle chart to the left, about
500,000 per year is used for
city expenses, staff costs and
administrative costs, and the
levy that was adopted in 2024
allowed us to serve homeowners
and home buyers up to 80% of am
I. So we set aside 500 000 per
year just for that, and that
can include new construction or
home buyer assistance. It could
also include homeowner
rehabilitation, but there has
not been any projects funded
under that. $1 million per year
is set aside for temporary
shelter, and this can include
operation of a shelter. It can
also include construction of
shelter beds or preservation of
existing shelters. And then 2
million a year goes to rental
assistance, and that's
primarily administered by the
Council for the homeless, who
has a consortium of partners
that serve different
populations. So Janice Youth is
one of the partners and share
is a partner. Odyssey World
International is a partner. So
even though we only have the
one contract primary contract
for rental assistance, that's
many, many different partners
that are serving rental
households. And everybody in is
under the rental assistance
category. And that serves
people transitioning out of
safe stay and into affordable
units with case management. And
then the majority of our
funding goes towards rental
housing preservation or
production. And that's $6
million per year. And we now
require that any unit that we
invest in stays affordable for
40 years. So since 2016, when
we first had a housing levy, we
invested 75000 per rental unit.
And it started out as 20 years
affordability. So we in 2024,
we made updates to extend the
affordability period. But then
we were finding that because
our assistance amounts were a
flat, flat amount of 75000 for
any unit, we were seeing a lot
of studio units being created
and not as many 2 or 3 bedroom
units. So our housing advisory
committee recommended that we
adjust our assistance amounts
down to 5000 for a studio, but
up to 100,000 for a 2 or 3
bedroom, leaving the one
bedroom assistance amount at
75000 for the for the past ten
years for preservation of
rental assistance units, that
has been $40,000 per unit
preserved and. If a project is
100 units, that doesn't mean
that we'll put housing
preservation funds into every
single unit. That means that
we'll fill a gap to help them
make the project successful.
But. And will those units,
based on the assistance amount,
will be have a covenant
recorded against them for 40
years. But we don't typically
fund a every unit in a project.
The rental assistance does not
have a dollar amount per
household that it's limited to,
but we do ask the providers to
limit their assistance to 12
months for anyone household.
And when we look at the number
of households that have been
served based on the amount and
looked at that compared to the
amount of funding that has been
awarded, we found that each
household's average is about
$6,000 for eviction prevention.
I mentioned before that shelter
can be operations or new
construction, so we have helped
shelters at a rate of 25,000
per bed that's created or
preserved. We've helped the
share House and the Safe Choice
shelter. We've also helped
Valley Homestead, and we've
helped with site improvements
for two of the safe stays using
affordable housing fund. And
then lastly, the homebuyer
assistance. When we adopted
that category of funding, we
set the limit at 75,000. And
our partners have to date
averaged about 5000 per unit of
assistance. This is similar to
a slide you saw at the workshop
last week about our pipeline
and how we have affordable
housing funds that have been
awarded to projects that
haven't yet been able to move
forward. So those projects
aren't solely consisting of
affordable housing fund units,
but other units too. And so
it's holding up both affordable
and units that are above 50% of
Ami. We are working hard with
the state to try to access
additional funding to come to
Vancouver and help these
projects get underway as well.
So. This slide is showing that
we have about 6 million a year.
Just to look at the top line
for new housing rental
construction in 2024, we
committed a little more than 6
million. Knowing that the
projects wouldn't all spend
within 2024. And four of the
five projects that we awarded
in 2024 have been able to move
forward and are either in
progress or completed. There
still remains 1.4 million from
2024 in a project that has not
been able to get started yet,
and then in 2025, we made a
little bit over $6 million in
awards. And these are primarily
projects in the Heights, as
well as Smith Tower
Preservation. And Claudius
Place is a senior housing
project, and so far, all of
those projects were also
applying for Housing trust fund,
and none of them were. Claudius
place was successful, but the
other projects were not
successful, and all of them are
still waiting to get underway
and applying for the state
funding again this fall. Then
also shows the 2026 funds. I'm
sorry, those were also awarded
in 2025. We looked at all the
projects that were going to
that wanted to get started and
wanted to get state funding,
and we mapped out when they
would likely spend the money.
So we forward committed those
dollars. So that those projects
would know that they had a city
commitment and they could apply
for other funds. So all
together with rental housing
creation or preservation,
there's 16 million that's
unspent. Now, our rental
assistance providers, the
Council for the homeless that I
mentioned before, they were
awarded 1.2 million for the
everybody in pilot. And that
was meant to be for one year.
But because the program was new
and there were limited housing
units available, it was slow to
get started. And we extended
that contract through 2025 will
likely extend it into 2026.
They still have about $900,000
available. So that rental
assistance is we're going to
continue to let that contract
stay with them while they spend
it. And then the consortium
project that I mentioned with
all the partners and Council
for the homeless received 1.9
million for 2025. And at this
point in the year, they've
spent less than half of that.
And so we anticipate that that
contract will also be extended
into 2027. And so we have
committed no additional 2026
rental assistance funds, since
there's about 2.9 million
that's been awarded and is
still being spent in the
community. Our temporary
shelter line, that program
because it's operations and
there's always the ongoing
staffing and shelter costs.
Those do get spent down there.
Right on track for 2025 awards.
We made those awards at the end
of 2025, so they're spending
them throughout 2026. And
there's about 500 000 to get
them through the end of the
year. And we plan to make
additional shelter awards at
the end of this year that will
provide them with operations
for 2027. And then lastly, our
homeownership partners, we have
both Habitat and Proud Ground,
who are great partners, and
they've both received funding
through this through the
Affordable Housing Fund, and
they are both on track for
their spending. The 2026
funding that was awarded to
habitat as part of a larger
construction project, not just
homebuyer assistance. So I
think that one will take a
little bit longer as they get
all of their other funding and
permits, and the construction
projects usually take a lot
longer. And I will turn it over
to Ian here.
>> Great. Thanks, Sam. Now that
we've reviewed the background
for the affordable housing fund
and the present situation where
multiple projects are stalled
without state funding, and
we're sitting on some
undisbursed funds, I'm going to
walk through the proposed
changes to the administrative
plan, which is going to include
some new per unit funding
limits, pre-development loans
and other minor changes to
streamline the management of
these funds. This slide places
the funding limits and
production goals in the context
of a changing housing market. H
f has provided $75,000 per unit
for production and preservation
since 2016. As Sam said, in
2024, we adjusted those amounts
by bedroom size, but the
average remained the same.
Meanwhile, over the same ten
years, the cost of housing has
risen 80 to 100%, depending on
how you measure it.
Construction costs have
increased from 125 to $175 per
square foot to two, 25 to 500
per square foot. Total
development costs have doubled
from 200 to $400,000 per unit,
and median home prices have
climbed from 300,000 to
$600,000. And these are numbers
that we've pulled from the
Vancouver area and from the
state of Washington. While
costs have risen, state and
federal funding has not kept up.
When most. When the most recent
levy was passed, the outcomes
that were proposed were
projected based on assumptions
that were becoming outdated.
Based on what we now know about
rising development costs, high
interest rates, and constrained
sources of outside leverage.
The production goals for the
current levy will not be
realistic to achieve. And then
the last bullet point here is
that while we only fund 50% Ami
units, projects that have a mix
of units are fully stalled. So
that means that other units are
also getting held up because of
this gap in funding. This slide
shows the proposed increase in
funding limits to try to
account for that financing gap
that projects are experiencing.
This is intended to account for
the change in costs and also
the limited state funding we're
recommending to double the
limits for constructing new
units in order to maximize our
flexibility. As you can see
here, that means doubling the
studio rate from 50,000 to
100,000. The one bedroom, one
bedroom and two bedrooms from
75 to 150,003 bedrooms, plus
from 100,000 to 200,000. And
then we're only proposing to
modestly increase the housing
preservation per unit amount,
since we haven't quite seen the
need be quite as large for
those projects. The goal
wouldn't be to max out the
eligible award for any given
project, so we're not proposing
to immediately double
everybody's awards projects
that showcase an ability to
finance their project with a
smaller amount of AF would be
more competitive, but
ultimately, these increased
limits will give us more room
to problem solve for projects
that have a gap resulting from
the constrained resources at
the state level. This slide
shows how we propose revising
the ten year production goals
based on the new market and
funding conditions. These
numbers are highly speculative,
but based on what we've seen so
far, we propose modifying the
annual goal for rental
production and preservation
from 80 AAF units and 240 total
units shown in the second
column, down to 40 units and
215 total units per year. Shown
in the fourth column. We're
prioritizing getting production
started now and decreasing the
long term goal from 2400 total
units down to 2150 total units.
As Sam mentioned earlier, we
don't fund all the units in a
project with affordable housing
funds. So that's why you're
seeing the A-F unit total
decrease to half, but the total
project amount, we still expect
it to be pretty similar to what
we're already seeing by
investing more money in fewer
units, we'll have fewer AAF
units. And the total, we're
hoping that the total project
size will still be fairly
similar, a little bit smaller,
and we'll continue to work to
exceed these goals. Of course,
as I mentioned, projects that
showcase the ability to achieve
more units for at lower cost
would be would score higher on
future applications. And then
meanwhile, we also showcase the
affordable homeownership goals.
We are not proposing to change
those at this time. Like Sam
mentioned, we're on track
between the contracts with
habitat for Humanity and Proud
Ground. All right, moving on
from the funding limits, this
slide outlines our plan for
pre-development loans for
affordable housing projects,
structured as an early advance
on the project's award
financing. Pre-Development work
is one of the major challenges
for real estate development
projects, particularly
affordable housing projects
that experience a extended
pre-development period where
they need to secure all the
necessary financing sources to
fully fund a project.
Developers typically spend
around 1 to $2 million to
design engineer, do the site
feasibility studies, pursue
land use entitlements, all the
things that they need to do
before they even have the final
certainty that the project will
proceed with full financing. By
providing low cost
pre-development loans, the city
can help projects lower their
risk and progress through the
pre-development phase. We're
proposing to take $3 million
from ARF program income,
consisting of loan repayments
and interest income. To make
these loans, we'll cap the
loans at $750,000 per project,
or 25% of their ARF award,
whichever is lower. The
interest rate will be 0 to 4%,
depending on a risk assessment,
and the loan will be secured
with promissory notes, loan
agreements and an assignment of
contracts and work product so
that if the project goes south,
we can reassign those contracts
and designs to another
developer. These loans will be
short term loans, typically 12
to 24 months repaid through the
Affordable Housing Fund Award
at closing on their
construction financing when
they're getting ready to start
construction. Besides the
funding limits and
pre-development loans, we have
some other, more minor changes
that will align the plan with
program processes. The first
two listed here concern the
City Bridge shelter. We're
formalizing the $400,000 annual
set. Aside from the temporary
shelter category for the bridge
shelter operations and making
it clear that the city is an
eligible recipient for those
funds in the rental assistance
category, we are capping the
amount that used to be for, or
that we are capping the amount
that will be used for staff and
support costs and clarifying
what costs are eligible. The
application process for each
category of funds is slightly
different, so we've added some
clarity there, allowing us
flexibility for timing the
applications based on state
funding availability. And we
have also added some
information about project
completion, including
requirements for final cost
certification on construction
projects and reconciling any
cost savings that they
experience across their capital
stack. All right, I'll pass it
back to Sam.
>> All right. So pending this
conversation tonight, we'll you
can bring back proposed changes
to the administrative plan on
August 24th. And then if we're
able to make additional awards
to existing partners, and we'll
also have some new awards
planned, we've started
accepting applications and
we've and we've finished
accepting applications because
we had such a short timeline.
We'd like to bring awards back
to council in mid September so
that those can be made, if
possible, before the Washington
State Housing Trust Fund
application closes at mid
September. Now we're open for
questions.
>> Thank you. Councilors.
Councilor Fox.
>> Thanks for all this
information. And just one of
the questions I had was looking
at those unit types for the
shared units. Just wondering, I
feel like maybe we've never
heard of those units being
created in all of the years of
reports. Is that true? Have we
had any of those unit types?
>> Yeah, sure. Community roots
has a model. They've when they
did the Fruit Valley, the train
station turned into a four
person group home and then
their O Street project. They
put, I want to say eight tiny
homes. But they also converted
the church there into a 13 room
group home, shared living.
>> Okay, that those I knew
about the projects, but I
didn't didn't remember about
the shared spaces. Okay, so I
guess I'm wondering then at the
changes to the proposed changes
to the amounts to support them.
That one isn't changing. Is
there a reason for that?
>> We we haven't seen a huge
demand for that. That's and
there's not a lot of people who
want to live in a group home
setting. That's more of a
transitional housing model. And
yeah, that seems to meet the
needs for those projects at the
awards that we've currently
made.
>> I was kind of wondering when
you said earlier that changing
the rate for the two bedroom or
three bedroom or higher, you're
hoping that there would be more
of those units produced. So I
was kind of wondering if that
logic would also apply to the
shared units. You know, if if
you had a higher rate, would
that entice more projects of
that type?
>> It surely could. But right
now we have nobody that's
that's proposed or applied for
that in our pipeline that's
stuck in our pipeline.
>> I guess I keep hoping we're
going to get some of those
projects like I've seen in
other places, you know, like
I've seen in Seattle, you know,
they have these kind of condos
where folks own their unit just,
which is just a living room.
And then they share pretty much
everything else. But those kind
of shared living types. I keep
wondering if we're going to
start seeing or could see
something like that down here
someday. But again, that's kind
of why I'm asking about the
incentive or the I guess this
isn't really an incentive, but
our support system on the
grants, if it was higher, would
it spur some creativity around
that? Okay. Not yet. All right.
Thank you. That's all I had.
>> Councilor Perez.
>> Thank you. I have a couple
of questions. Just to clarify,
you said there were no at the
very beginning that there were
no projects funded under the
home buyer at 80%, am I? And
you listed several categories.
Can you elaborate on that? And
then also and that was on slide
four, the eight existing
projects that are sold. So if I
understand correctly, by
changing or by increasing the
funding limits, we will remove
why they're stalled and they
will no longer be stalled. Or
is that the assumption here?
>> We'll have more flexibility
to adjust their awards to help
them get their gap to get
started. And the I'm not sure
what you heard about the home
buyer that in 2024 is when they.
The state law allowed up to 80%.
So we could do home buyer with
our old levy, but we couldn't
find any projects that could
serve home buyers at 50%. So
it's really taken off since
2024 with the new levy and
going up to 80% of area median
income.
>> Okay, so there, there you
couldn't find any projects to
fund at the 80% AM.
>> I know, I'm sorry, at 50% of
am I with the 2016 levy?
>> Gotcha. Thank you for that
clarification. And then on
slide six, you listed off
several places. Is there a way
to go ahead and send those
places? So we know you said
Claudius place and heights. And
so I'm interested in what those
places are. If you could send
us a list of those places, I
would appreciate it.
>> The project addresses.
>> Yeah. The actual places. And
as far as the applications to
Washington State Housing Trust
Fund, is that how many all of
them at once, or are you
prioritizing the top three?
What's your thought on that?
>> So the city does not apply
for housing trust fund. The
developers independently decide
when and how much to apply to
for the state, but the state
does check in with us and ask
us for our priority list, and
we consult with them and
provide that information with
each funding round.
>> Do we have a priority list?
>> We do. Yes, and we can share
that with you for sure.
>> That would be great. Thank
you. That is all my questions.
Thank you, thank you.
>> Hello, Council member
Harless. I had questions too
about the home ownership limits.
They're currently at 75 K and
there's we're not considering
increasing them.
>> That's correct.
>> You know, given that they
are performing better, is there
any reason to not increase them?
I would rather see, you know,
more home ownership. And so if
there's no if we're proposing
increasing the caps for rental
units, I would definitely want
to see that increase at the
home ownership, especially
since they're performing a lot
better.
>> This current state of
affairs with the state has been
less competitive for home
ownership. So our home
ownership partners have
received trust fund funding
that they pair with our funding,
and they're typically only
using up to 50,000 of AAF funds
to help home buyers get into
housing, paired that with the
state funds, and that is enough
to bring home buyer at 80%
payment down low enough that
they can continue to afford it.
So that's oh.
>> I just also add the most
recent contract for home buyer
programs with H. F was with
habitat for humanity for their
cottages project, which is 32
units, and they only needed
$500,000 from us. So that's
around $15,000 per unit. So I
guess all that to say, we we
think the $75,000 per unit
limit is working okay. Right
now for the homebuyer program.
Exactly. For what Sam said,
housing Trust Fund separates
the rental funding from the
homeownership funding. And our
local partners have had pretty
good success getting that
funding from the state.
>> That's good background. And
I think this was kind of what
Pro Tem Fox was getting at to
is about incentivizing, even if
they are performing or they're
getting state funding. I know
that there is a lot of interest
in making sure we're also doing
more homeownership. And so
maybe there would be more
applications for if we also
increase the cap on this one to.
And for equity purposes, I
would like those to match like
rental units versus home
ownership, especially when
we're talking about
generational wealth and all the
things that come with
homeownership. So that would be
my interest. And I'd be curious
how other my colleagues think
too.
>> Councilor Paulson.
>> Thank you, mayor, I have a
couple of clarifying questions,
and then I'll weigh in on the
question that was just raised
by Councilor Harless. So for
the projects that are committed
but unspent, is there a process
by which we eventually just
decommit those funds, or how
does that what does that look
like? Is there a clock ticking?
What is our thought process on
that?
>> There is a clock ticking. We
gave them two years from the
award, and so many of those
awards will expire in May. If
they don't have all their other
funding in place. May 2027.
Okay.
>> And related to that, these
new standards, would they be
retroactively applied to prior
applications or in the scenario
you just described, if they're
committed but unspent and they
expire, would they then reapply
under the new minimums? Or what
is your current what's your
thinking on that, how that
would work?
>> I think if we increase the
total unit award amount that we
amount, that we can award, then
the existing partners that have
requested funding but haven't
reached that limit could
receive an additional award.
But then in 2027, if they don't,
the the two year timeline is
not to spend all the funds.
It's to get all of your other
funding in place and get under
contract so that we know that
you're going to construction.
And so they would have to
reapply after their initial
award expired if they didn't
have all their other funding in
place.
>> Okay. Thank you. And then
would you elaborate a little
bit on what you see as the
outcomes of the low cost
pre-development loans? Is it
going to be speed to market? Is
it going to be increased
production? Is it going to be
both of those something else?
What are you thinking with the
outcome of that loan program?
>> Well, it's just for our
affordable housing fund
partners. And so we have heard
from them that, that there's no
really other source of
financing that they can find.
The VHA used to provide a lot
of pre-development loans to
smaller developers, and they're
with their federal cuts that's
made that more restrictive. And
then there are philanthropic
partners that sometimes provide
pre-development loans, but it's
really hard to get it through a
private financial institution
or maybe it's really expensive.
And so this was a need that we
kept hearing, both for the
costs and for getting the
project underway while they're
waiting for all the other
financing.
>> So speed to market would be
the primary benefit based on
what you just said, right. And
ultimately more production
because we're getting it to
market more quickly. Correct.
Okay. On the other question of,
should the limit be
reconsidered for ownership and
whatnot? You know, one of the
things that I'm thinking about
when that discussion is taking
place is I think we've all
gotten an appreciation for how
these funds are commingled with
many other funding sources. And
so ultimately, what we're
trying to do is maximize the
multiplier effect of our
funding through other funding
sources, whether it be the
state or philanthropic or
federal sometimes. And what I
heard in your response to the
questions from the other
council members was that the
funding limits that we have in
place, the limit itself is
adequate for the requests that
we've gotten, because there has
been enough other funding
available that we're
multiplying those funds, but
we're also funding projects.
And so raising the limit itself
probably wouldn't get us much
more production. And if we
wanted to incentivize it. We
would have to increase the
allocation of that funding
rather than raising the limit
of the funding. And so I wonder
if you could comment on that.
>> I think that's correct. And
I think we would like to, if we
could shift that allocation to
be higher, especially knowing
that we have a 90 unit
homeownership development.
Looking forward to the future
in the Heights, right?
>> So I think ultimately, you
know, looking at the allocation
amount rather than the per unit
amount would be the answer to
getting the ultimate goal of
more ownership in the community
would be my comment then. Thank
you. Okay.
>> Yes. Councilor Hanson.
>> Thank you. Taking a look
here at some of the projects
that were not completed in
allocating or budgeting money
towards those projects, it
considered the idea of maybe
working unilaterally with
Vancouver Housing Authority to
work on a project in between
understanding that they had
some federal cuts on as well.
But just to get a little bit
more surety that some of these
projects will have something
built. Okay.
>> So the Vancouver Housing
Authority is a partner on three
of these projects that are
stalled.
>> And if we were to increase
that, would they have the
funding to match that and
perhaps build what I'm looking?
It's if we have this many
projects that are just not
going through, what could we do
to get some sort of surety that
we will get some projects
completed? And in the end,
who's going to manage that
project? So that's kind of
where I'm heading with this.
But thank you.
>> Yeah. I don't think that the
VHA has any additional funds
that that they could commit,
but we are hoping that this
will unlock additional state
funding. And then either the
developer, in partnership with
the VHA or the VHA would manage
the project through the
construction.
>> Thank you.
>> Sam, you mentioned the
Housing Advisory Committee.
That is not one of our 26
boards and commissions that we
have, and we have four other
advisory groups aviation,
lodging, parking and Parks and
Rec. Who is on your housing
advisory?
>> It's a mix of community
members, and I'd be happy to
share that list of people.
>> Thank you. Any additional
comments, Councilor Fox?
>> Yeah, I was I forgot to ask
about. So the Predevelopment
loan piece of this, I was just
wondering the the interest rate
first is why that particular 0
to 4% was chosen instead of
perhaps a higher maybe to match
the prime rate or something
along those lines. And then
also the second part of that
would be what type of risks are
you basing that rate on?
>> Sure. So we took our time
reviewing a large number of
other public predevelopment
loan programs, such as in
Portland, the state of Oregon,
the state of Washington,
several CDfi programs as well,
and they ranged in philosophy
from going 0% to some that were
higher, 7 or 8 more, more on
the CDfi side. That's where you
kind of saw that. And so we
tried to kind of shoot for for
the middle where we are
recovering the value of our
loan fund against inflation,
but not trying to add excess
cost where ultimately this loan
is going to get repaid from
probably the affordable housing
fund award, right? So it's kind
of just taking money from one
pocket and putting it in the
other. So we didn't really want
to raise the interest rate
beyond that. And the reason for
the range, I expect we we try
to aim for 4% on most projects,
but we do have some smaller
partners where they might not
be able to support that extra
amount. Or it could be the
difference where we can shave
off a little bit of cost for
them and help to make their
their project pencil. So we're
giving ourselves that
flexibility, but I would expect
that it would typically tend
towards the 4% side. Things
that we're looking at in terms
of risk would be, you know, the
size of the agency, their
balance, their balance sheet,
you know, their ability to, to
handle that cost. Looking at
the overall project, the size
of the project, what other
funding sources they're looking
at, and just general project
feasibility. And yeah, we've,
we've written some steps into
our program guidelines that
would help us determine the
rate on a project by project
basis.
>> When you actually surprised
me when you said if they were a
smaller organization that maybe
didn't have a lot of experience,
you'd go less on the interest
rate. You would you would have
thought if they were a riskier
loan, that we would have a
higher rate.
>> Yeah. And this is one of the
tricky things that we've gone
back and forth on developing
this program. On the one hand,
when you're administering a
loan fund, you want to minimize
your risk. And one of the ways
to do that is to charge more
interest or to use a deed of
trust or other collateral. And
the more that we started going
down that risk protection route,
the more we started to hear
from from feedback from the
developers, stakeholders, who
we were also, you know,
workshopping our ideas with the
more that we start to function
like a bank, the, the less
helpful that it becomes as a
tool for reducing the risk for
developers that are trying to
make these difficult,
affordable housing projects
work. So I do think that this
tool ultimately is a balance
that we're trying to strike of
sharing a little bit of the
risk with a project that we
believe in, because they've
undergone the scrutiny of ARF
application process. They've
been approved by council. We
see their underwriting, and it
looks like it's going to work,
but taking a little bit of the
risk and sharing it with them,
securing it with the note loan
agreement and the assignment of
contracts and work product. But
the farther we go down that
spectrum of making the loan
more and more secure, the less
useful it becomes to our
partners. So we're hoping this
is a a good balance that we've
struck here.
>> Okay. Thank you. And then to
respond to Councilor Harless
thoughts too, is, you know,
really just at all, I guess
maybe to emphasize just sending
kind of a message out to the
world that, you know, we're we
want to be flexible, we want to
be supportive. And if it means
increasing these potential
levels, fine. If it means we
are going to adjust kind of the
pie of our total funding that
we're going to allocate every
year even better. So I'm, I'm
open to staff coming back with
an idea on that, just to ensure
that we are sending the message
that we're looking for
innovation and, and more of
these other types of housing
types as well. So thank you.
>> Councilor Perez.
>> I, I am happy to see the
proposal for the
pre-development loans, and I
think that is a good approach
to help this environment that
we're in. Is there a specific
category that those funds would
be coming out of for the
pre-development loans, or does
it matter at this point?
>> So the pre-development loan
funding will come out currently
from loan repayments and
interest income on the AF
reserves. So one of the
realities of having those
Undisbursed funds is that
there's interest being
generated that we can then use
for this program. And so
ultimately, we've looked over
the ten year period of the levy,
3 million should should leave
still some buffer as well, and
it will be a revolving
allocation. So they're going to
pay off their loan. It goes
right back into the loan fund
and can be paid for the next
project.
>> Okay. And then on slide six
for the unspent since 24. And
now really we're looking at 26
and just a little bit concerned
about the amount that's unspent
and wanted to hear from you on
why it's what are you hearing
from the folks who are still
have the funds there?
>> Yeah, the primarily the
primary category of unspent
funds is the new housing
construction, which has been
stalled by the interest rates
in the state funding and just
the construction costs. We have
heard from our rental
assistance providers that
there's not enough affordable
units for them to help people
move into. And so that has also
seen slower spending.
>> All right. And then in terms
of the home ownership
allocation, I too am supportive
of looking at the allocation
and hearing what you have to
bring back to us to further
look into that. Thank you.
>> Okay. Thank you so very much
for bringing the Affordable
Housing Fund forward. Let's
jump into the multifamily tax
exemption code change.
>> Right in the middle. Good
afternoon, mayor, city Council,
I am Patrick Quinton, the
director of Economic Prosperity
and Housing, and I'm joined by
Kim Chun Co, who is a real
estate project manager with the
MPH team. And we are here to
begin the conversation about
the implementation of of what
we referred to as HB House Bill
1491, which was passed by the
Washington State Legislature in
2025 and has now become law.
And we are now required to
implement the requirements as
we'll get into. Vancouver is
the first jurisdiction in the
state to implement this new set
of requirements. There we go.
So we'll provide.
>> Hold on just a moment.
Spolar can you bring it up on
this side?
>> Oh, sorry.
>> Thank you.
>> You got it. You good? Thank
you. So we'll provide some
background on on the
legislation and kind of what
its intent and and requirements
are. And then we are going to
talk a little bit about what
impact we think this might have
on development activity in the
impacted areas. And then we'll
get into the steps that we need
to take to implement the
requirements. And they do. They
impact both our MFTE program,
which is the multifamily tax
exemption program. And it also
requires us to make some
additional code changes in
title 20 to attach these
requirements to particular
parcels. So so we're going to
be talking through so HB 1491,
as I mentioned, was passed in
2025. And what it does is it
mandates affordability in
parcels around high capacity
transit. So and it applies to
both light rail fixed, you know,
fixed light rail as well as bus
rapid transit. And so the
intent really, I think, came
out of the Puget Sound area,
where they're spending billions
on new light rail. That's
that's cutting across many,
many communities to make sure
that all those communities were
actually building affordable
housing near transit. The way
it applies to us is that
because we have bus rapid
transit, that all of our bus
rapid transit stations are are
impacted by this. And for bus
rapid transit, it impacts any
parcel within a quarter mile
walk shed. So we actually
measure how long it takes to
walk within a quarter mile of
all of our bus rapid transit
stations. And what the law does
is it mandates that that
residential development within
this for our case, quarter mile
walk shed of bus rapid transit
has units that are affordable
for 50 years. And then the.
We'll get into the details here
and. But then what the bill
does is it authorizes a set of
incentives to, to try and, and
provide enough financial
incentive for that development
to occur. And the main tool is
that they've added a 20 year
multifamily tax exemption on
top of our existing multifamily
tax exemption tools. And just
like our multifamily tax
exemption program is authorized
by the state. So we only offer
what the state allows us. Up
until now, we've only been
offered allowed to offer
exemptions up to 12 years. So
the 20 year is what they've
granted to us. So the actual
requirements are that all
residential development within
this quarter mile walk shed of
bus rapid transit stations must
include one of these three
scenarios. So, so 10% of the
units must be affordable for 50
years at rents, affordable to
households at 60% of area
median income or Ami, or 20% of
the units are affordable at 80%
Ami for 50 years, or 10% of the
units are affordable at 80% Ami.
If at least ten, at least 10%
of the units are two bedrooms
or larger. So it allows you to
meet that affordability
requirement with the larger
unit size. And then so what
that means is that we then and
all the impacted cities, we
have to go through and identify
every single parcel that meets
this quarter mile definition
and, and add that required
affordability to our zoning
code. So that's the title 20
change that we talked about. On
the incentive side, what the
what the statute authorized, as
I mentioned, is that is that it
allows us to offer a 20 year
property tax exemption through
our existing multifamily tax
exemption program. And then it
has it adds some other
incentives, which. Some of them
we already we already allow. So.
But but it requires you to
reduce impact fees for these
these projects, the projects
that have the 50 year
affordability allow higher
density on all these parcels.
And then on top of that, it it
authorizes additional density
for affordable housing or mass
timber. Projects. As you can
see in the parentheses, it's
all the impacted parcels. And
then it requires you to remove
parking minimums for all the
impacted parcels. As you know
from the years you've spent
working through our comp plan,
we've actually checked off
pretty much all of these things.
And we'll get into kind of the
differences between where we're
at and what this is requiring.
But what we have is really a
new requirement. And the main
additional tool that was given
to us is the 20 year tax
exemption. Since the other the
other incentives really are
things that we're either
already offering, we're already
offering or now offering
through the comp plan. So that
brings me to this point here,
which is HB 1491 is really a
form of inclusionary zoning.
And that's a big topic that's
been discussed for many years.
And inclusionary zoning is, is
exactly what we've just
described. You're mandating
affordability within, within
certain types of residential
development. And the real
conversation around
inclusionary zoning is whether
it's funded, meaning whether
the cost of providing that
affordability is offset by
financial incentives. And, and.
In places that have had
inclusionary zoning and these
areas have been studied, the,
the area, the, the areas that
that have had successful
inclusionary zoning, meaning
they've, they've been able to
add the affordability
requirement without reducing
the amount of development. They
really are fully funded,
meaning they figured out a way
to match the cost of
affordability with the
financial incentives. Our
analysis of HB 1491 is that
it's only partially funded,
which means it's it's kind of
almost as good as not funding
it because it will it will
actually decrease overall
development in the impacted
areas and will push development
away from from the transit
stations where they really do
want to see development happen.
So if you can imagine any of
our, our, our vine stations, if
a developer is looking at
parcels near vine Station, they
will, when this is in place,
they will pick a parcel that is
outside of the quarter mile
impacted zone as opposed to
something that's inside of it,
because they won't have that
same requirement. So we we
believe that. And we'll get
into kind of the some of the
mitigations we have, but we
believe that it will actually
decrease investment around
transit, direct investment away.
And then the the last point on
here is, is kind of a nuance,
but it really is relevant for
us in that we are undertaking
redevelopment. And the Heights
is the greatest example where
we are master planning,
basically a transit oriented
development over many parcels.
We will we have committed
ourselves to producing 50% of
all the units as affordable.
This actually would discourage
development on the parcels in
the Heights. That would not
necessarily have affordable
units. So if we have a fully
affordable project on one
parcel, we don't get credit for
that affordability on the next
parcel. So. So even when
communities are trying to do
the right thing, this type of
requirement is a little bit too
much of a kind of a of a blunt,
blunt tool. So thankfully, they
built into the legislation. And
then the way that the
Department of Commerce is
implementing this, they've
allowed communities and you
have to. And I'm just going to
restate, we are the first
community who's doing this. So
commerce is actually learning
at the same time that we are
learning. And so Chekhun is
going to talk next. He's going
to he can share with you his
experiences. But and truly
commerce is being very helpful.
But we are really learning real
time on the implementation of
this. So, so we are the first
community to submit exclusions.
So our exclusions are one, you
can exclude any area that was
previously prior to January 1st,
2025, meaning prior to the
adoption of our comp plan. If
the if it was already zoned to
meet this minimum F.a.r,
meaning a minimum of of density,
those areas are presumed to
already meet the standard and
they're excluded. So when we
first saw the map, we were like,
this is all a downtown is
included. We get to exclude
most of downtown because it's
already. It was already zoned
prior to the comp plan. And so,
so, so most of downtown does
does not have to meet this
requirement. And then within
each of the station areas, we
get to select 25% of the
parcels to pull out of of the
requirements. And so we have
actually gone through the
entire city. And you're going
to see the maps in a second and
picked out the parcels that we
believe are the most
significant development parcels.
Once again, not to, not to, to
say that we don't want
affordable housing there, but
to, but to actually allow us
more flexibility in how we and
how we implement our
development plans. And so, for
example, we pulled out some of
the parcels in the Heights so
that we would be able to
continue to move forward on the
heights like that. And then the
same thing is true of some some
development parcels up and down
the mill mill, plain and and
forth plain corridors. And I
also, I'm going to hand it over
to Jim now, but I just want to
emphasize that pulling out
parcels that we think will
develop, even if they don't
develop affordable housing, is
like we've decided that's a
better outcome because there
won't be development on that
parcel otherwise. So so I just
want to we can come back and
talk about that. But that's the
trade off we're trying to make
is that if we if we don't pull
it out, it's likely not to see
development for a long time. We
want to see parcels along along
those corridors develop. And so
our goal was to pull out the
ones, exclude the ones that had
the highest potential for
development. So with that,
Champine is going to talk you
through the implementation
requirements and next steps.
>> So Jim Orjiako speaking. So
Vancouver, as Patrick mentioned,
is one of very few
jurisdictions outside of the
Puget Sound that has mass
transit. We are the first to
implement Spokane will have to
implement next year. And then
the Puget Sound cities are
going to have to implement in
2029. So we are really the only
ones thinking about this right
now besides commerce, who is
implementing the state
requirements. So it was
required to be implemented with
the adoption of the comp plan.
And we are the majority of of
the requirements we are in
compliance with. We are just
needing to update the
affordability mandate and the
MFTE portions. And we are in
the process of working with
Commerce on a substantially
similar request, because our
previous code and current code,
neither of them regulate via F,
a R or floor floor area ratio.
The law is written based on
floor area ratio, so we have to
translate our code to FAR get
Commerce to sign off on that,
and that drives the exemptions
based off of our previous code
as well as our compliance with
the density requirements under
the for our comprehensive plan
as well. So here we have kind
of the existing map of MFTE
where our multifamily tax
exemption applies. So this,
this area is, does follow a lot
of the corridors and a lot of
the bus rapid transit. But as
we go look at the impacted
parcels of this law, it doesn't
cover all of the areas. So we
do need to add an additional
mapping process map to the MFTE
to allow allow it in a larger
area and different area than we
have previously allowed. So the
state has adopted a preemptive
code that went into effect on
June 30th, which was after our
comprehensive plan adoption,
but that fully implements the
law superseding any local
jurisdiction law if we aren't
in full compliance. So the
affordability mandate and the
MFTE are technically in effect
based off of this preemptive
code. We still have to are
technically on the hook for
implementation despite our
local code not not being
adopted yet, and they are in
the process of working on
guidebook and implementation
tools, which they're expecting
to have completed in the fall
of 2026. We are coordinating
with them on on what those look
like and kind of what resources
we need, and they have provided
feedback as we work, as we
identify it. And once we and we
are going to be bringing to you
the MC changes for the
affordability mandate and MFTE.
And once those are fully
adopted and once Commerce
agrees to hopefully our
substantially similar request,
we will be in full compliance
with the state law. For the
MFTE changes. We plan to amend
the MFTE to allow or to be
utilized in all of the impacted
stations and parcel areas, so
that way, multifamily tax
exemption can be applied to the
impacted area. The amendment
needs to include a 20 year
exemption for parcels that meet
the affordability requirements
outlined in 14 HB 1491, which
are is a 50 year affordability
>> Mandate at those three
affordability levels, and we
have to allow a 50% exemption
for impact fees for any project
utilizing the 20 year
multifamily tax exemption.
>> Just as currently, we we
don't allow those two programs
to mix. So if you have MFTE,
you can't have an impact fee
reduction and vice versa. The
state is going to require us to
do both.
>> So specifically for projects
that meet the affordability
levels outlined in this law and
are within the station areas.
So we don't have to apply this
MFTE to anywhere beyond the
station areas at this time. But.
Yeah. Additionally, we will
need to bring title 20 changes
for the to implement the
affordability mandate. The
comprehensive plan is already
compliant with the rest of the
required code changes,
specifically, the density
requirements. Our stationary
overlay is already in excess of
the state requirements based in
this law. And we've already. We.
We have no density maximums, no
building heights within station
areas, and we've already
removed parking minimums for
residential. So those are
already aligned.
>> Okay. So the next steps are
we're keeping the MFTE in title
20 code changes paired together.
And so there will be planning
commission will take a look at
the title 20 changes next month.
And then assuming they sign off
on these then we will bring the
package back to you either
later in September or early
October. And so you'll act on
both both sets of code changes,
and then we'll be fully, fully
compliant. And hopefully we'll
have the full definition of
impacted areas and exempted
parcels so that anybody coming
to us with a development
application will know exactly
what their requirements are.
And then I just want to
highlight that, that if you
recall, I certainly haven't
forgotten about it, but we
talked about updating MFTE with
the adoption of the comp plan.
We still would like to do that,
but the the timeline for this
implementation is, is too short.
So we, we can't do both. So we
still would like to go back and
revisit the map in general and
come back. But just given
timelines, it's sometime next
year, we would like to come
back and talk more about how we
once again, make sure that the
MFTE program is supporting the
objectives of the comp plan and
the and the areas where we're
trying to promote development.
So unfortunately, it'll just be
two parts. So.
>> Okay. Thank you. Counselors.
Counselor Paulson.
>> Thank you, mayor boy, that's
frustrating to listen to that
presentation because it works
against our objectives. I'm
still processing that. A couple
of questions. So the fee the
impact fee reduction, does that
apply to all impact fees or is
it specific to only certain
types of impact.
>> It's specifically
transportation.
>> Transportation only. Okay.
So not schools or parks or
effectively our cost recovery.
>> No. Yeah. Just just
transportation.
>> Okay. Thanks for that
clarification. The the 20 year
MFTE that's in this bill that's
specifically targeted towards
these defined areas, a quarter
mile from a BRT station. Is it
available in other MFTE areas
for us or is it only available
in those very specifically
defined areas?
>> Yeah, it's only in the
specific areas.
>> Okay. So it wouldn't be
necessarily another tool that
we could apply more broadly if
we wanted to.
>> I don't believe so. We can
double check and confirm.
>> And then if it is, would it
also be coupled with that 50
year requirement. And that
would obviously be part of be
part of the decision making
calculus.
>> Right. So right now we if it
was available, you'd have 20%
of your units or 80% am I you
can have it for 12 years with a
12 year exemption or 50 years
with a 20 year exemption. I
just don't think there would be
any uptake. No one.
>> Would, I agree. Yeah, I
agree, but it's worth exploring
if there's a way that we can
have one without the other.
That's right. Because we have
been seeing some renew. So
having a longer.
>> And that's the thing. Like
we actually have this on our
legislative agenda. Like we
still think this bill needs to
be cleaned up. We'd like the,
the, the incentives to match
the time frame. But right now,
you're right, we can actually
do 24 years of affordability
with 24 years of tax exemption
if you choose. So we're kind of
we're kind of getting there.
And it's a and unfortunately,
that's a better deal for
developers, right?
>> Yeah. It feels to me like
the thinking behind this was a
little bit misguided. It's, you
know, good intentions, but bad
policy implementation. If you
partially fund an EIS, it's
been proven to dampen, not
accelerate housing production
at exactly the time when we
need to be accelerating housing
production, not dampening
housing production. Thank you.
>> Councilor Fox.
>> Just sharing the frustration.
I don't I will say again, I
work for Commerce, but I don't
work on this particular team
that will be making this
decision. I wish I kind of
could, but I don't, which is a
good reason that I don't. But
sharing frustration that the
state coming in and imposing an
unfunded mandate on the city,
and hopefully, as some of these
bills have been working their
way through the state, more of
them should be not making it to
the governor's desk, because I
do wonder if well, I don't need
to wonder. I doubt that any
type of math was done on this
fee reduction for the city,
because, you know, those
improvements for these projects
still need to be done to our
streets. And who's paying for
those transportation
improvements if you just gave
them a discount? So I guess I
would say supporting any type
of communication back to the
state, if there is any
proposals to put forward a
request request, like what is
it called from this desk? From
my desk, it's called agency
request legislation. Do we call
it the same thing as if we're a
city proposing a request to
legislation?
>> It's a legislative agenda.
>> Okay.
>> It's on the I've given Aaron
Lande and Brian.
>> Just our lobby requests.
Okay.
>> HB 1491 is on the
legislative priority list to
revisit.
>> Yeah. Okay. Well, you can
tell where my mind is the other
40 hours of the week, but I
totally support moving forward
with a request to change that
particular piece, given that
the legislature shouldn't be
just arbitrarily reducing
giving fee reductions without
any calculations on how that
impacts the city. So that's all
I wanted to say. Just share my
frustration on this one and
appreciate staff coming back.
Actually, I did have a question.
Sorry, I wrote it down and
almost ignored it. As you're
looking at the 25% of these
areas that could be exempted,
what Ticular methodology are
you looking at?
>> Yeah. So I think the law
only allows us to exempt 25% by
station area. So unfortunately,
just with how and it's only of
otherwise nonexempt properties.
So I think depending on the
size of parcels, the number of
parcels, we don't always get up
to the 25% exemption each time,
but we essentially did some. We,
we identified kind of weighed
properties by size, development
potential, proximity to the
transit station, and based off
of a weighted average, they
were put in order of priority.
And then there was an
optimization algorithm run to
try to get us as close to 25%
as we could.
>> So I guess I'm not hearing
what the actual criteria is
that weighted one property
higher than another.
>> It was a combination of kind
of property size and distance
development potential and
distance from the transit
center or transit station.
>> So you weighted a property
higher if it was a larger
property and higher if it was
closer to the transit stop or
further away.
>> Oh, sorry. Yes, larger
properties were weighted higher.
More development potential was
rated higher and closer to
transit was rated higher.
>> Okay. Thank you.
>> Sorry for that.
>> Jouwsma.
>> Perez Councilor Diana Perez
here. I am looking forward to
whatever information we could
put together on our legislative
agenda when it comes to this
bill, I think a one size fits
all is problematic. In
particular in this case. That
was just one important aspect
that I wanted to ensure that we
do put this up front and center
on our legislative agenda and
start talking about it, at
least amongst ourselves. Some
of the other things that are
interconnected with this circle
that we're facing here as far
as the housing production and
housing availability. Thank you.
>> Okay. Thank you very much
for all the information.
>> Thank you.
>> Counselors will go ahead and
excuse ourselves. Grab a quick
bite to eat. We're going into
executive session concerning
the collective bargaining. RC W
42.3, 0.144. And for a half
hour it is 526. Let's meet at
530. Thank you