Emerging Trends in Pacific Northwest Affordable Housing
Renewed focus, increased lending activity, and deep commitment.
(Originally posted on Affordable Housing Finance)
The Seattle skyline on a clear autumn evening with Mount Rainier in the background.
Scarcely a week goes without another news story about runaway single-family home prices in the Pacific Northwest, notably Seattle. It’s reasonable to wonder if the region’s affordable housing market deals with similar extremes.
The region certainly has its challenges, as Washington state has the nation’s third-highest homeless population. But it’s good to know that affordable housing leaders in the Washington-Oregon-Idaho area are taking encouraging steps to address the area’s daunting affordable housing needs.
One of those leaders is Bob Powers, executive director and Pacific Northwest market leader at JPMorgan Chase Community Development Banking. Powers has a keen understanding of the region’s challenges and opportunities. His team expects to close multiple deals this year, with the focus primarily on tax-exempt bonds. Recently, Powers shared his thoughts on the year ahead.
Washington and Oregon have experienced increased project activity of late, supported by a healthy project pipeline. What is helping power this trend?
It’s partly due to changes at the federal level, notably a permanent fixed 4% floor for low-income housing tax credit (LIHTC) projects, along with increased public sector funding in Washington and Oregon. Construction schedules for affordable housing were largely exempted from shutdowns a year ago, which helped sustain momentum during a tough time.
What factors limit increased activity?
LIHTC availability. For example, Washington state’s 4% volume cap is swamped at a 4-to-1 margin. That means projects that are otherwise fully funded can’t move forward because of the LIHTC impasse. We also face ongoing supply chain disruptions and increased material costs, which also slow deliveries.
What encourages you about the year ahead?
Opportunities for new or infill development are being actively pursued. For example, Seattle up-zoned 27 neighborhoods in 2019 and strengthened affordable housing requirements. There’s now more emphasis on transit-oriented development and coordinated funding with surplus public sites.
In Washington state, LIHTC constraints have brought about a greater focus on the alignment of policy and funding priorities. A clearer roadmap benefits everyone. A new regional homeless housing authority also looks promising.
In Oregon, voter-approved GO (general obligation) bonds were initially limited to public-owned projects. Now LIHTC projects are permitted. Combined with metro bonds and increased state funding, Oregon has resources to ramp up production.
What is JPMC doing to address racial equity?
We recently announced a $30 billion commitment to advance racial equity in Black and Latinx communities. Initiatives under the program include:
Financing 100,000 affordable rental units over the next five years
Providing $14 billion in new loans
Earmarking $2 billion to help construction and rehabilitation of affordable housing for low- and moderate-income households
Investing $300 million in additional financing to Community Development Financial Institutions, as well as an additional $500 million in New Markets Tax Credit investments
All of us in Community Development Banking at JPMorgan Chase are privileged and humbled to assist diverse communities through this deep commitment.