Community
and Economic Development Needs
Creating Economic Opportunity for All Seattle Residents
Not all of Seattle’s
residents are able to participate in the City’s economic mainstream which,
despite the economic downturn, continues to produce opportunities for
employment and wealth creation. The
soft economy and increasing housing prices have exacerbated the financial
distress of low- and moderate-income earners, meaning that portions of the
City’s population are increasingly unable to maintain residency in
Seattle. Publicly funded economic
development programs aimed at the City’s low- and moderate-income residents and
distressed communities address the needs of these populations. These programs allow more residents to
become financially self-sufficient and share in the economic prosperity now
enjoyed disproportionately by some segments of the population.
The City of Seattle
employs a community economic development strategy with the aim of increasing
opportunities for all residents to benefit from Seattle’s economic growth. Community Development Block Grant (CDBG)
dollars are utilized as the principal funding source for the city’s economic
development efforts targeted at low- and moderate-income populations. The previous version of Seattle’s Consolidated
Plan helped guide the City’s activities under this goal area from 2001 to
2004. While progress was accomplished
during this period, specific community needs persist.
Three general strategies
are employed to meet the overarching goal for Seattle’s CDBG-funded work
promoting economic growth to enhance the viability of low- and moderate-income
neighborhoods. Workforce development
and small businesses foster wealth creation and are directed citywide, to whomever
qualifies for assistance. The physical
development of particularly distressed neighborhoods is a place-based strategy
to bolster the economic vitality of these communities. These three strategies are interlinked: combined they work to enhance the diversity
and vitality of our communities and provide opportunities for businesses,
employees and housing that serve neighborhood needs.
Context
The growing gap
between the wealthy and poor.
Figure 3-36 shows that Washington suffers from an income gap which has
only widened as wealthier families have seen their incomes increase more than
poor families. These figures (adjusted for inflation) show
the average family income for each quintile, averaged over the years 1999 to
2001, and the percentage change from 1988 to 2001. Real income for families in the poorest quintile was $17,012,
dropping 9.4% from the late 1980s. The
average income for the wealthiest quintile by contrast was $176,636, rising 36%
over the same time period. The rich got
richer while the poor got poorer.
The race
gap. The gap between rich and poor in our
community is paralleled by a race-based gap which has persisted over time, as
shown in Figure 3-37. This wealth gap
is evident in home ownership, which is similarly disproportionate. Table 3-39 shows that whites are much more
likely to own their home than members of other races.
Figure 3-38 - Socio-Economic Characteristics of Seattle’s Targeted
Neighborhoods
All Seattle Residents Have an Interest in Maintaining Seattle’s Diversity
and Decreasing Segregation of the Wealthy and Poor
Seattle’s Distressed Communities
Many Seattle residents
are not able to participate in opportunities generated in the City’s mainstream
economy. Moreover, these economically
marginalized individuals are concentrated in particular Seattle neighborhoods,
which have become centers of economic distress. Detailed characteristics of Seattle’s distressed communities,
listed as Targeted Neighborhoods,
are described in Table 3-38 on the previous page and in the tables and the maps
found in Appendices Q1-Q5, Maps: Targeted Neighborhoods. Non-Targeted Neighborhoods include all other
communities in the City.
|
Table
3-39 - Home Ownership In Seattle by Race
|
|
White non Hispanic
|
51%
|
|
Black
|
36%
|
|
Asian/ Pacific Islander
|
46%
|
|
Hispanic
|
25%
|
|
Native American
|
27%
|
|
Other
|
29%
|
|
Source: Census 2000
|
The populations of targeted
neighborhoods are disproportionately less educated, less employed, and less
prosperous. They are also
disproportionately composed of immigrants and non-whites who may also face
barriers to economic well-being such as discrimination and language
difficulties.
·
While 51% of adults 25 or older have a bachelor’s degree elsewhere
in the City, only 26% in the targeted neighborhood population has this level of
education.
·
At 9%, unemployment in targeted neighborhoods is nearly double
that of the non-targeted population (5%).
·
Approximately one quarter of the City’s low-or moderate income
population lives in these neighborhoods.
·
While 42% of individuals in non-targeted areas of the City are considered
low- or moderate-income, fully 51% of the targeted area population is so
categorized.
·
Foreign born individuals constitute 30% of targeted area
population, versus 14% of the non- population in non-targeted areas.
·
Non-whites make up 65% of the targeted area population, compared
to 22% of the non-targeted areas.
Richard Florida is a
researcher and author who asserts there is a strong correlation between the
presence of art, culture and diversity in a region and the presence of a
successful knowledge-based economy. His
work cites Seattle as one of the cities that manifests this valuable
relationship and ranks Seattle as the U.S. region with the fifth highest
“creativity” score according to Florida’s Creativity Index.
Unfortunately, his research
also shows that “rising social and economic inequality” appear to be a negative
externality that accompanies a successful and creative economy. Florida reports that income “inequality is
highest in the creative epicenters of the U.S. economy.” His concerns about income inequality – and
unaffordable housing that exacerbates it – very much apply to the Seattle
economy as reflected in data throughout this document.
Seen in this regard, a crucial component
of Seattle’s community and economic development efforts should include
strategies that nourish Seattle’s racial and cultural diversity. Florida argues
that economic inequality harms the economic prospects of all residents,
regardless of their social or economic status.
In particular, he asserts that racial, cultural, and economic diversity
is a central component of a successful creative economy and, as such, necessary
for the continued prosperity of all residents:
“Our work finds that places open to immigrants, artists, and
gays, and which are less segregated, do best. These places mobilize existing
creative energy in their cities and attract creative energy from outside by
allowing people to be themselves and validate their identities.”
Wealth Creation Through Workforce Development
King County has experienced tremendous
wage growth over the past decade, particularly in very high wage jobs paying
above $24 an hour. These high paying jobs often require levels
of education, skill, and experience that are out of reach for adults living in
Seattle’s distressed communities.
There is a clear need to enhance the
education and skill of portions of our population to enable them to move into
higher-wage work. While employment
opportunities with little or no education or training requirements are prevalent,
their low rate of pay does not allow financial self-sufficiency and many do not
offer benefits or opportunities for advancement. A lack of appropriate skills not only limits employment
opportunities for job seekers, but also has negative impacts on employers and
the economy as a whole.
Wage and cost of living data for Seattle
and King County reflect an even more pronounced income gap than described above
on a statewide level. The average wage
in King County for the top 10% of wages paid is 11.6 times greater than the
bottom 10%. This figure – well above statewide ratio of 9.6 – represents the
greatest wage disparity in the state.
The cost of living in Seattle is also disproportionately high compared
to other areas of the state. A family
of three needs to earn a minimum of
$37,807 to get by without any additional assistance, taking into account
minimal costs for healthcare, food, transportation, housing and childcare.
Education
and Training Increasingly Required
An individual’s ability to gain
well-paying employment is increasingly tied to education and training. Figure 3-40 clearly shows the relationship
between increasing education levels and increasing pay. As the survey results summarized in the
Needs Assessment indicate, low- and moderate-income residents empirically
understand the connection between their economic well-being and success in the
workplace. They reported “help getting
jobs” as the highest rated activity the City should fund with its Community
Development Block Grant resources.
The move towards a more educated
workforce is expected to continue in the future. According to the Workforce Training and Education Coordinating
Board (WTECB) publication titled Washington’s
Economy (revised April 2003 with results of the 2002 employer survey), “The
economic future is not bright for workers entering jobs that typically require
little or no training. There will be
jobs, but not good ones.”
The 2004
Washington State Employee Survey (WTECB) states that, “Forty-eight percent of firms reported that the skills
required to adequately perform production or support jobs had increased over
the last three years.” Moreover, “skill
requirements will continue to increase. As a result, about a third of all firms
reported their need for workers with postsecondary training would increase
over the next five years.” Table 3-41
shows the percentage of employers who expect to hire
additional workers at given education levels.
Figure 3-40 – Share of October 2003 Vacancies
for Seattle/King County
By Education Requirement and Average Hourly Wage
Rate
Source: October
2003 Washington Job Vacancy Survey, ESD
|
Table 3-41 – Percent of Washington Employers Expecting
an Increased Need of Future Employment by Educational Level
|
|
Educational Level
|
|
|
Neither a high school diploma or
GED
|
12%
|
|
High school diploma or GED
|
17%
|
|
Some college course work
|
27%
|
|
Vocational certificate
|
35%
|
|
Vocational associate degree
|
30%
|
|
Academic associate degree
|
30%
|
|
Baccalaureate degree
|
34%
|
|
Master’s, doctoral, or
professional degree
|
24%
|
|
Source: 2004 Washington State
Employee Survey,
WTECB
|
Need for
Additional Training
The opportunity exists to close the gap
in education which increasingly prohibits those with less education from
securing better paying employment.
Seattle/King County job vacancy numbers show that 42% of jobs paying $10
to $19.99 an hour require an education achievement beyond high school or the
GED. Of jobs paying $15 to $24.99,
fully 66% have such a requirement. While these jobs require education beyond
high school, they do not necessarily require a college degree. The median wage offered for a position
requiring some college, but not a completed degree, is $13.45.
Not only do jobs requiring slightly more
education pay more, but these positions are also more likely to be full-time
and permanent as illustrated in Table 3-42.
This contributes to more stable households and neighborhoods.
Table
3-42 – Current Job Vacancies in Seattle/King County
|
|
Required Education Level
|
Estimated Job Vacancies
|
Percent of Specified Jobs
|
Median Wage Offered
|
Full-Time Openings
|
Permanent Openings
|
Requiring License or Certificate
|
Requiring Related Experience
|
|
No Requirement
|
2,984
|
18%
|
$9.00
|
68%
|
78%
|
10%
|
38%
|
|
High School or GED
|
3,791
|
22%
|
$10.00
|
67%
|
82%
|
18%
|
55%
|
|
Some College
|
557
|
3%
|
$13.46
|
81%
|
92%
|
14%
|
80%
|
|
Associate or Vocational Degree
|
1,199
|
7%
|
$18.19
|
80%
|
97%
|
61%
|
81%
|
|
Bachelor Degree
|
6,006
|
36%
|
$23.24
|
97%
|
99%
|
14%
|
94%
|
|
Graduate Degree
|
1,196
|
7%
|
$24.38
|
93%
|
98%
|
26%
|
90%
|
|
Other
|
1,175
|
7%
|
--
|
74%
|
64%
|
62%
|
70%
|
|
Not Specified
|
3,972
|
--
|
$11.00
|
63%
|
80%
|
28%
|
46%
|
|
Seattle-King
Total
|
20,881
|
100%
|
--
|
78%
|
87%
|
23%
|
67%
|
|
Source: October 2003 Washington
Job Vacancy Survey, ESD
|
Need for a
Stepwise Program
While many of Seattle’s growth industries
feature highly skilled, highly paid jobs, they also include middle rung
jobs. These jobs could be accessed
through additional education and training targeted to those industries.
Workforce development programs are needed
to increase education and training aimed at industries with middle rung jobs,
such as manufacturing and construction, in order to progressively move
individuals into better paying, more competitive work roles as their skills
and experience increase. Known in the field of workforce development
as a “stepwise” program, the movement up the job ladder created by such a
program also serves to free up entry-level positions for others in earlier
stages of career development.
Workforce development programs function
well to serve this niche, as many well-paying jobs do not necessarily require a
college degree: “The greatest number of
new family-wage job opportunities will be in occupations that require
postsecondary education but not a four-year degree. Over the next decade, there will be approximately more than
28,000 annual job openings
for technicians, paralegals, health care workers, salespeople, and other
occupations that require more than one year and up to, but less than four years
of postsecondary education”.
Employer Needs
A labor pool comprised of individuals
with diverse skills and salary expectations supports Seattle’s ability to
attract and retain diverse employers.
This maintains vibrancy at all levels of the economy and benefits both
high- and low-skilled individuals who secure employment with these businesses.
As job-seekers need an increasing level
of education or training, employers have a corresponding need for more skilled
workers. Specific sectors, such as
health care (detailed in the sidebar at right), are facing an acute workforce
crisis, and a range of industries is being negatively impacted by a skill
shortage of appropriately qualified job seekers.
The material that follows draws from the 2004 Washington State Employee Survey
published by WTECB. The survey asked
employers to consider hiring difficulties they experienced over the previous
twelve months. Forty-five percent of
Washington State respondents attempting to hire reported difficulty finding
qualified job applicants. For Seattle/King
County, the figure was even higher at 54%.
These complaints occurred at a time of high unemployment, with a large
available labor pool to draw upon.
These shortages may only be expected to worsen as the economy improves
and workforce availability tightens. In
2001, for example, 60% of respondents attempting to hire in Washington State
and 71% in Seattle/King County reported difficulty finding qualified job
applicants.
A Shortage of Skilled
Workers
The problem is
not a general shortage, but a scarcity of workers with postsecondary
training. “Among employers attempting to
hire workers with a vocational associate degree or a baccalaureate degree…
about 67% reported difficulty finding qualified applicants. In contrast, among employers attempting to
hire workers with only a high school diploma, only 24% reported difficulty”.
|
Table 3-43 – Employer
Difficulty Finding
Applicants by Education Level
|
|
|
Employers
|
|
|
Attempting to Hire
|
|
Educational Level
|
at That Level
|
|
Neither a high school diploma or
GED
|
19%
|
|
High school diploma or GED
|
24%
|
|
Some college course work
|
35%
|
|
Vocational certificate
|
53%
|
|
Vocational associate degree
|
67%
|
|
Academic associate degree
|
60%
|
|
Baccalaureate degree
|
68%
|
|
Master’s, doctoral, or
professional degree
|
68%
|
|
Source: 2004 Washington State
Employee Survey,
WTECB
|
Of those
employers reporting difficulty finding qualified applicants with specific
skills and abilities in Washington State, 91% reported that they could not find
job seekers with occupation-specific skills:
“Employers were looking for skills that many of the unemployed workers
and new labor market entrants did not have.
The shortage is greatest for jobs requiring postsecondary education,
especially for vocationally trained workers from our community colleges,
apprenticeship programs and private career schools”.
Negative Economic
Impacts
This skill
shortage has negative economic impacts on both affected employers (shown in
Table 3-44) and to our state’s economic in general (reflected by impacts listed
in Table 3-45).
|
Table 3-44 – Employer Response to the Shortage of Qualified Applicants
|
|
Response
|
Percent of Employers Who
Had Difficulty
|
Percent of
All
Employers
|
|
Increased recruiting efforts
|
72%
|
15%
|
|
Hired a less qualified applicant
|
62%
|
13%
|
|
Increased overtime for employees
|
50%
|
10%
|
|
Did not fill the opening
|
41%
|
9%
|
|
Increased wages to attract
applicants
|
34%
|
7%
|
|
Outsourced work to another firm*
|
28%
|
5%
|
|
*This does not necessarily
involve outsourcing overseas; the other firms could be in Washington or
another state.
|
|
Source: 2004 Washington State
Employee Survey,
WTECB
|
|
Table 3-45 –
Economic Impacts of Skill Shortages
|
|
Impact
|
Percent of Employers Who
Had Difficulty
|
Percent of
All
Employers
|
|
Reduced production output or sales
|
70%
|
16%
|
|
Lowered overall productivity
|
69%
|
16%
|
|
Reduced product or service quality
|
56%
|
13%
|
|
Prevented firm from expanding its
facilities
|
31%
|
8%
|
|
Prevented firm from developing new
products/services
|
31%
|
7%
|
|
Caused firm to move some
operations out of state
|
4%
|
1%
|
|
Source: 2004 Washington State
Employee Survey,
WTECB
|
Wealth Creation Through Small Business Support
Small businesses play a
critical role in the Seattle economy.
Table 3-46 illustrates small business contributions to employment and
payroll in the Seattle-Bellevue-Everett Metropolitan Statistical Area according
to the 2001 Economic Census data.
Table 3-46 – Small Business Contributions
|
|
Employment
|
Annual Payroll
|
|
Employees
|
Total
|
Percent of Total
|
Total
|
Percent of Total
|
|
Less than 100
|
441,389
|
35%
|
$15 billion
|
26%
|
|
Less than 500
|
615,901
|
48%
|
$22 billion
|
39%
|
The Small Business
Administration states that small businesses account for 60% to 80% of net new
jobs added to the national economy.
Moreover, small businesses tend to be stable employers, laying off fewer
workers in downturns. “Large
businesses, which by definition can take better advantage of economies of
scale, may have more to gain by boosting productivity, particularly when demand
drops off. Small manufacturers, to take
one example, are unlikely to ship production work overseas because they simply
do not have the resources to assure quality control and quickly adjust run
rates”.
The City’s investments
in small business support complement its workforce development efforts. Small businesses serve both to create
financial gains and opportunities for entrepreneurs and as employment
opportunities for job seekers including many from Seattle’s low-income
population.
Important Source of Employment and Income for Less-Skilled
and Low-Income Individuals
Small businesses
contribute to the range of jobs available in Seattle, creating additional
employment opportunities for those with less education and skill, who might be
otherwise unable to find work in larger businesses. According to the Washington
Job Vacancy Survey jobs in larger firms were more likely to have education
or related experience requirements.
While 48% of vacancies larger firms require a high school diploma or the
GED, only 26% of those firms with less than 250 employees did so. Similarly, while 68% vacancies in larger
firms require related experience, only 41% of those in firms smaller than 250
employees did.
In addition, small businesses create a
greater number of opportunities for low-income job seekers. “Small firms employed more individuals on
financial assistance (money, excluding loans, received from friends or relatives
not living in the same household) and on public assistance (assistance received
from government sources, excluding food stamps and Social Security payments)
than did large firms”.
Particular Challenges
for Minority Small Business Owners
Minorities now own nearly
15 % of American businesses, of which 99% have fewer than 100 employers
(compared to 98% for non-minorities). “Measured by receipts size, black-owned
businesses in particular were much more likely to be small: black-owned firms constituted more than 30%
of the minority-owned firms earning less than $25,000 in receipts, but just 10%
of those earning $500,000 or more.
Hispanic and American Native-owned firms also had somewhat larger shares
of the firms in the smaller receipts size categories”.
One explanation for the
small size of many minority-owned businesses is that difficulties accessing
capital are particularly acute for minority business owners. “Lack of financial capital is one of many
impediments to the survival of small firms and minority-owned firms in
particular”. This difficulty may not only restrict the
size of minority-owned firms, but also what industries they focus on: “The fact that minority-owned businesses
tend to be more prevalent in industries with lower entry costs may – at least
in part – reflect more binding liquidity constraints and generally less access
to startup capital among prospective minority business owners”.
Difficulties
Accessing Capital and Technical Assistance
The two most significant factors in
successful businesses are being large enough to have employees and having
$50,000 or more in start-up capital. Businesses with easier access to early stage
capital have a greater chance at success than firms with limited access to
resources.
The Report to Congress on the Availability of Credit
to Small Business (2002) states that “23% of respondents indicated that
they had forgone applying for credit when they needed it because they feared
denial.” Furthermore, “Among small
businesses (less than 500 employees) larger firms were more likely than smaller
firms to have their loans approved.”
Small firms may
frequently be considered nonbankable by traditional lenders. These businesses are often seen as
high-risk, particularly given that they have “less collateral to pledge as
security, and are more informationally opaque”. Additionally, given the relatively high
costs of evaluating and monitoring these firms, “loans to small businesses
[are] less attractive for many lenders, especially because, when expressed as a
percentage of the (small) dollar amount of the proposed loan, these
non-interest costs are often quite high relative to loans to middle-market or
large corporate borrowers”. While unattractive to traditional lenders,
these same businesses may be very appropriate candidates for specifically
designed loan products offered by alternative lenders. The higher interest rates charged by these
lenders are appropriate given the increased risk and carrying costs of these
loans.
Loan products offered by
alternative lenders often include a technical assistance and business planning
component. This support is needed by
those small-business entrepreneurs who are less experienced and perhaps less
educated and less able to access other resources. This assistance enhances the likelihood of success for small
business owners, creating a more stable base of wealth, employment and service
provision in neighborhoods.
Community Economic Development
The City’s place-based community economic
development efforts constitute a robust community revitalization strategy,
stimulating the economic and community vitality of Seattle’s distressed
communities. These efforts, targeting
communities with concentrations of low employment, low income populations and a
high presence of immigrants and minorities, address multiple inter-related
community needs including the need for jobs and small business opportunities
described above. Additional needs
discussed below include:
·
Few
commercial services
·
Lack
of population density to support commercial development
·
Contribution
to meeting regional development goals
·
Lack
of affordable housing options for the working poor
·
A
market gap preventing private development
Catalytic
Development Requires Public Involvement
The challenge is to take land otherwise
considered “undevelopable” and create housing and commercial space that will
generate the greatest positive impact on the local community but not
necessarily the greatest profit for the investor. Over the long-term, success in this can change the local
economics enough to stimulate private housing, commercial and mixed-use
development without public sector involvement.
Given these challenges, public
involvement is required to make these projects happen, both in terms of project
support to bridge the market gap and operating funds to support the
organizations that engage in this work.
The market gap. Mixed use and
multifamily development projects are needed in Seattle’s distressed
neighborhoods. Mixed use projects
fulfill both commercial and housing needs, and their high density population
and pedestrian- or transit-friendly orientation meets goals of the Growth
Management Act and existing Neighborhood Plans.
The markets in some Seattle
neighborhoods, however, are not mature enough to independently make this type
of desired development financially feasible for private developers. As shown in Figure 3-47, which uses real
market value and costs for a project proposed for the Rainier Valley, the
numbers simply don’t “pencil” without direct public participation.
Figure 3-47 – Market Gap
Source: Rainier
Valley Community Development Fund Real Estate Financing Tools, a
presentation by the National Development Council; April 8, 2004
In order to achieve the desired
development – a mixed use project in the example above – the public sector must
play a role to bridge the market gap.
Market forces alone would leave this land undeveloped, or create less
desirable lower-level development.
This market gap may be addressed through
direct project subsidy, or through other community development activities, such
as rehabilitation of existing buildings and improvements to building facades,
that create safer, more attractive neighborhoods. Such efforts attract businesses, shoppers, and private
development – as well as the related jobs, entrepreneurial activity, service
provision and private investment dollars.
Economic Integration of Low-Income Neighborhoods
The Brookings
Institution recently conducted a literature review of U.S. research on
neighborhoods of concentrated poverty.
Their review concluded that concentrated poverty in distressed
neighborhoods has a strong negative impact on the health, education and
employment opportunities of low-income families. The Brookings Institution further concluded that integration into
the mainstream economy is the essential element of any strategy attempting to
overcome the negative impacts of concentrated poverty. Specifically, they recommended
multi-dimensional strategies that create communities in which people of lower
incomes can both find “a place to start and, as their incomes rise, a place to
stay”.
The Seattle
neighborhoods that are home to the highest concentration of low-income
residents have long articulated the same need for “economic integration” cited
by the Brookings Institution. For
example, planning documents conducted for the Rainier Valley over the last
decade promote the development of housing at a variety of income levels and the
diversification of employment, wage and salary levels as important elements of
the revitalization strategies recommended by the people who live and work in
these neighborhoods.
The City of Seattle
employs Community Development Corporations (CDCs) as key partners in the
implementation of “place-based” economic development strategies for the
Targeted Neighborhoods summarized earlier in Table 3-38 of this Section. These CDCs report a critical need to support
mixed-use, multi-family developments targeting the economic and housing needs
of the working poor: those in low- and moderate-income brackets up to 80
percent of the area median income. They
report that private development provides market-rate housing for higher income
households and publicly subsidized housing typically focuses on the needs of
the very poor.
Descriptions of this gap in funding for
low- and moderate-income housing is supported by the research of Impact
Capital, a Seattle based non-profit working in conjunction with LISC to enhance
the capacity of CDCs to develop and manage quality housing and economic
development strategies. Their research
shows that working households are often locked out of subsidized affordable
housing opportunities because they earn “too much” (i.e. more than 50% area
median income). In theory, households
earning less than 80% AMI are eligible to live in subsidized housing. In practice, however, subsidy awards are
very competitive and heavily weighted to families below 50% AMI. Affordable housing developers know that
projects targeting higher median income residents are not as likely to be
funded. The result is a de facto “cut
off” of public source money at 50% AMI, a situation that is not expected to
change in the near future.
The
Operating Gap
The catalytic projects described above –
in which desirable development is stimulated in immature markets – are by their
nature expensive and time-consuming to implement. High costs stem from extensive efforts around community
involvement, predevelopment, environmental regulations, and land assembly. Financing costs are also high and timelines
are long given the complexity of these deals.
As rents will not support a mortgage
large enough to cover a significant portion of the purchase and development of
the property, and because nonprofit developers typically do not have large
unrestricted cash reserves, affordable housing projects require subsidies to
fill financing gaps. In a typical
affordable housing deal, this subsidy comes from four to six sources. Each of these sources has a separate
application process with infrequent application windows. The application and approval process for the
four to six sources may demand two to three years simply to assemble the
financing for an affordable housing project.
This timeframe and financing complexity greatly increase both carrying
costs and staff costs required to complete a project.
Developer fees do not cover the full
costs of the organizations doing this community-changing work. The high carrying costs described above and
long timeline for development necessitate the use of public funds to support
successful completion of catalytic real estate projects undertaken by
community-based development organizations within Seattle’s distressed
neighborhoods.
Provision
of More Commercial Opportunities and Services
Residents of Seattle’s distressed
neighborhoods currently face a dearth of local services and are forced to go
outside the community to meet their shopping needs. A survey conducted by the Rainier Valley Community Development
Fund in Southeast Seattle reported that more than 60% of respondents expressed
a need for more local businesses. This
demand covers both retail goods and services (groceries, clothing, books, and
restaurants) and professional services (insurance, law, and accounting). The respondents noted that availability of
more and more varied services would limit retail leakage into neighboring
Renton and Tukwila, decreasing wealth flows out of the local community.
Additional commercial space and commercial tenants not only
address otherwise unmet service needs of the community. They also provide additional opportunities
for entrepreneurship and employment, contributing to the economic prosperity of
the low- and moderate-income population which lives in these neighborhoods.
There is a link between commercial
development and housing, with desired commercial development dependent upon the
presence of a base residential population.
Until a threshold residential population is established, private
investors – and small business entrepreneurs – will not risk investing in
development of services in distressed neighborhoods. Building a local residential population is supportive of
development of services and attracting private investment.
Affordable
Housing for Seattle’s Low- and Moderate-Income Populations as a Wealth-Creation
Strategy
Housing is integrally connected to the
targeted economic community development strategy described in this section, as
well as to the wealth creation efforts described in the sections above. Housing is a needed component in development
of commercial services as mentioned above, and affordable housing is essential
to maintaining the cultural and economic diversity of Seattle’s population.
Despite the economic downturn, housing
prices in Seattle continue to be high and housing is becoming less affordable
to the working poor. Seattle’s
distressed communities provide a significant share of the city’s affordable
housing options, providing 30% of apartments that rent for less than $400 a
month, 19% of those less than $600 and 11% of those less than $800. However, housing in these areas is becoming
relatively less affordable. The gap
between rents in these areas (for which the combined average rent is $848) and
Seattle ($965) and King County ($854) has been narrowing: the average rent in the areas in question
was 89% of the County average in 2003; in 2003 it was 99%.
As a result of increasing housing costs,
many working families – schoolteachers, nurses, landscapers, waiters, bus
drivers and others – are forced to seek housing further and further from their
place of employment while paying more and more for rent. Families spending more than 30% of their
income on housing costs are five times more likely to lose their homes than
families spending less than 30% on housing costs. The reason is obvious: a
family with a lower housing burden can better weather temporary cash flow
crunches, most frequently caused by health issues, than a family with a higher
housing burden. Affordable housing contributes to household
and neighborhood security and stability.
Without public investment in affordable
housing, the City’s economic development efforts would constitute a de facto
displacement policy: as the City’s
economy grows and as neighborhoods develop, housing costs increase, effectively
pushing out low- and moderate-income populations such as the family described
above. Affordable housing options ease
this pinch and enable a more diverse population to maintain residency in the
City, near to their place of employment.
Conclusion
Examining Seattle’s
distressed communities reveals a web of interrelated needs, requiring
coordinated programmatic responses across a range of disciplines including
workforce development, small business assistance and community economic
development.
The combination of a
soft economy with high housing prices has exaggerated the strain on the City’s
unemployed and low-income earners.
Programmatic responses to these needs should grow the economy at all
levels and maintain a spectrum of affordable housing, allowing more individuals
to participate in Seattle’s economic prosperity and to live within the City,
close to their place of work.
U.W. Northwest
Policy Center, “The State of Working Washington”, September 2001: http://depts.washington.edu/npc.
