• In 2016, the City’s Affordable Housing Fund (AHF) was created through a voter-approved property tax levy to provide permanent affordable housing to households experiencing very low-income authorized under RCW 84.52.105.
• The AHF tax levy authorized the City to collect $6 million per year from 2017 to 2023. The City anticipates committing all $42 million available under the current levy by the end of 2023.
• Despite progress made by AHF-funded projects, the City of Vancouver is still experiencing a housing crisis and a deficit of approximately 5,600 housing units due to the underproduction of housing units and strong population growth.
• Households experiencing low-income are particularly at risk of housing insecurity and homelessness due to the housing crisis.
• The levy supporting the AHF will sunset at the end of 2023 unless a new ballot measure is approved by Vancouver voters prior to sunset.
• The City established an AHF committee to analyze the performance of the AHF from 2017 to 2023 and to make a recommendation for the future of the AHF. The committee concluded that the AHF is an effective tool in addressing the housing crisis and recommends pursuing a new ballot measure to replace the AHF.
• In October 2020, RCW 84.52.105 was revised to allow affordable homeownership, owner-occupied home repair, and foreclosure prevention programs for low-income households
• Under RCW 84.52.105, City Council must declare a housing emergency in the City and develop an Affordable Housing Fund Administrative and Financial plan to move forward with pursuing a new ballot measure for the AHF.

The City of Vancouver’s Affordable Housing Fund (“AHF” or “Fund”) was created in 2016 to invest in projects providing affordable housing to very low-income households. The Fund was established through a voter-approved property tax levy that authorizes the City to collect $6 million per year from 2017 to 2023. The City anticipates committing all $42 million available under the current levy by the end of 2023. All AHF investments, regardless of funding category, must serve households who earn 50% or less of the area median income (approximately $53,250 annually for a family of four).

The AHF has successfully built or maintained more than 1,000 rental units that will remain affordable for 20 or more years. The AHF has also helped more than 1,600 Vancouver residents with rental assistance to prevent or end their homelessness. Finally, AHF funding helped create or support staffing for over 400 temporary shelter beds, serving thousands of individuals during the 7-year levy term. 

Despite these successes, there is still a huge need for affordable housing in Vancouver. From 2016 to 2022, the Fair Market Rent for a two-bedroom unit increased 44%, from $1,208 to $1,735, while the median value of a single-family home rose from $271,000 to $423,000, an increase of 56%. Clark County’s 2022 one-day Point in Time count found a 31% increase in homelessness from the 2020 count, with 1,197 people experiencing homelessness, 625 who were unsheltered. While Vancouver continues to recover from the pandemic, its population has been steadily growing, increasing demand for housing, particularly affordable units. The combination of historic underproduction of housing units and strong population growth in Clark County has created a deficit of over 5,600 housing units within the City of Vancouver, with a substantial component of that deficit representing units affordable to households earning less than 80% of area median income (AMI). The continued growth in the city’s homeless population is also symptom of the affordable housing deficit.

The levy supporting the AHF will sunset at the end of 2023 unless a new ballot measure is approved by Vancouver voters prior to sunset. Vancouver City Council, if it chooses to seek to replace the AHF levy, has a range of options for structuring a new levy. This memo summarizes the relevant background information on the Fund as well as the options available to City Council as it considers replacement of the levy.

AHF History and Background

The AHF was established pursuant to a state law (RCW 84.52.105) that allows for a property tax levy for the purposes of funding affordable housing projects. The City may impose a levy of up to $0.50 per $1,000 of assessed value each year for a maximum of ten years for the purpose of “financing affordable housing for very low-income households, and affordable homeownership, owner-occupied home repair, and foreclosure prevention programs for low-income households.”

The effort to establish an affordable housing fund, as allowed by Washington State RCW, began in April 2015 when Vancouver City Council established an Affordable Housing Task Force (AHTF) to analyze the affordable housing market and make recommendations for the City to respond to the crisis. In crafting the original ballot measure, City Council selected an annual levy cap of $6 million and term of seven years. State law in 2015 limited assistance of AHF funds to serving households with very low income (at or below 50% AMI).

Since the AHF tax levy creation in 2016, the City has awarded $36,041,884 to support 52 projects with construction, rehabilitation, acquisition, and preservation of affordable housing and temporary shelter creation and support for Vancouver residents earning less than 50% AMI. AHF funds are leveraged with tax credits and other funding to support a total housing investment of $286,774,473.

In October 2020, the state legislature updated RCW 84.52.105 to allow AHF assistance to households earning low-income for affordable homeownership, owner-occupied home repair, and foreclosure prevention programs. The state defines low-income as households as those earning up to 80% of area median income.

Levy Advisory Committee and Community Outreach

In the summer of 2022, City staff convened an advisory committee comprising local housing professionals to review the current levy’s revenue and outcome performance, assess current and future housing needs, and make a recommendation to City Council about a potential action to replace the levy.

In their analysis, the advisory committee concluded that the AHF levy is effective in producing affordable housing for households with low-income and providing housing services to vulnerable residents. The committee identified a continued need for creating housing opportunities for households earning at or below 50% AMI. Additionally, they noted that the AHF levy rate had a lower impact on taxes than projected, as the actual AHF levy rate initiated at a lower rate than proposed in the ballot measure ($0.36 per $1,000) and has declined significantly since 2016.

The AHF advisory committee made the following recommendations:

• Levy Amount: Despite significant need for additional investment in affordable housing options, an incremental increase in the range of $7-9 million per year is most likely to be approved by voters given cost of living increases and other tax levies.
• Levy Term: The committee agreed that the levy should be replaced for the maximum of 10 years.
• Timing: February 2023 was favored by most given the timing of planned tax increases; this timing also provides an opportunity for another ballot measure if the initial measure fails.
• Target Populations: General agreement that AHF should continue to focus on very low-income households (50% AMI and less); homeownership programs could focus on repair financing for existing homeowners in this income bracket.

Both the advisory committee and Council recommended additional outreach to community members with lived experience and those working directly with people who need housing assistance. In August, staff compiled data and recent feedback and reached out to interview service providers to inform the creation of an updated Affordable Housing Fund administrative plan. Engagement efforts identified:

• Community housing needs
• Gaps in current services and supports
• Community insights, from providers and those with lived experience
• Short-, medium- and long-term community priorities for Affordable Housing Funds
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Levy Replacement Considerations

State law sets the maximum AHF levy rate at $0.50/$1,000 assessed value, and the maximum levy term is ten years. The recommended 2024 levy amount, rate and term is a request for $10 million per year for ten years, which equates to a rate of approximately $0.30/$1,000. This recommendation was informed by many factors:

• The successful outcomes of the current AHF levy with funding of $6 million over 7 years.
• Feedback from local housing developers and professionals, who recommended $7-9 million over 10 years.
• The current high need and demand for increased affordable housing resources.
• The impact of rising inflation rates and ongoing economic recovery challenges faced by Vancouver residents.
• Increased labor and supply costs, and increased building timelines in the construction industry.
• Consistent feedback from partners and Council that February 2023 would be a good opportunity to place the levy on a special ballot, with a second chance to ask voters for replacement in November 2023 if not approved in February.
• The capacity of local developers and nonprofit service providers to carry out housing activities.

Additional Levy Scenarios

In both the August 1st Workshop and September 12th Public Hearing, City Council explored alternative levy scenarios to address concerns about loss of levy revenue purchasing power over time. As a result, a larger levy amount and two shorter-term levies were considered. A graduated levy was also considered but ruled out due to uncertainty as to whether such a structure met legal requirements for ballot language.

Below is a comparison of alternative levy scenarios showing the outcomes that would be achieved and the cost to voters compared to both the existing AHF and proposed levies. The two alternative scenarios are: 1) a $12 million annual levy for 10 years, and 2) a $10 million levy for 5 years followed by a $15 million levy for 5 years.

Existing Levy Outcomes Compared to Potential Levy Outcomes

Observations regarding the above comparison include:

• Ten million annually is a meaningful and measured increase in affordable housing funding that will continue to leverage increased investment of private, state and federal dollars in Vancouver.
• Dollar amounts higher than $10 million push the levy rate and annual household cost toward amounts that may have a significant impact on homeowner budgets.
• A series of five-year levies would allow for an increase in the dollar amount to address changes in purchasing power during the first five-year term. This scenario carries the risk that the second five-year levy is not approved. A ten-year term, even at a fixed dollar amount, provides long term predictability of funding, which is critical for project planning for development partners.
• To address concerns about diminishing purchasing power with a long term levy, the City could explore potential supplemental council or voter approved revenue options prior to the expiration of an existing levy.

City Council expressed interest in potentially exempting senior and lower-income property owners from the levy, as it did for Proposition 2.  However, this will not be possible because, unlike the state law authorizing levy lid lifts, the state law governing affordable housing levies does not authorize such an exemption.

2024 Levy Replacement

In order to replace the levy supporting the AHF, City Council must:

Adopt a resolution to place a new measure on the ballot to be voted on prior to 2024;

Adopt an updated Emergency Housing Declaration; and

Adopt an updated Administrative Plan

When adopting a new ballot measure, City Council has the option to change the size and term of the levy as well as the target populations to be served by the levy investment. An updated Administrative Plan provides Council the opportunity to update investment priorities.

• AHF is a proven tool to increase the supply of affordable housing and housing services to Vancouver's most vulnerable residents.
• AHF has increased the capacity and effectiveness of local affordable housing developers and is a critical funding source for many projects.
• AHF unlocks significant additional investment in local housing projects from federal, state, local and private sources, expanding new production beyond units funded by AHF dollars.