Financing affordable housing, especially on a large scale, can be a complex and expensive undertaking. Developers often find themselves falling short, unable to fill the final funding gaps. This roadblock can be what stops the realization of affordable housing.
However, the Evergreen Impact Housing Fund (EIHF), an investment fund managed by Seattle Foundation has taken an approach that covers these funding gaps to projects through their first-of-its-kind model.
One of EIHF’s newest collaborations is with the Inland Group, on the Polaris apartments in Totem Lake, Kirkland, expected to open by 2026. This will be the second project EIHF and Inland Group have worked on together.
The 440-unit apartment complex will provide affordable housing to people with various mixed incomes.
Polaris will include 260 units for households earning 50-60% of the area median income (AMI), 40 units for households earning 30-50% (AMI) and 140 units that are market rate.
Area median income (AMI) is the midpoint of a specific area’s income distribution and is calculated annually, according to the Department of Housing and Urban Development (HUD).
Low income is at or below 80% of the AMI, very-low income is at or below 50% of the AMI, and extremely-low income is at or below 30% of the AMI, according to HUD.
The Polaris apartments will include one-bedroom, two-bedroom, three-bedroom and four-bedroom units. Of the 260 low-income housing units, 182 of them will have two bedrooms or more, said Kris Hermanns, chief impact officer at Seattle Foundation.
The fund focuses on accelerating the financing of large-scale affordable housing projects, specifically to address the shortage of family-sized units in Washington. Hermanns said there is a preponderance of studios and one-bedroom apartments in King County, but the most vulnerable are families and households in the 50% to 60% AMI.
Dialing in on the kind of critical housing needed is not an easy task — for developers to build larger units is complex and expensive, Hermanns said. EIHF tries to lessen the financial blow by incentivizing more developers with low-interest, long-term loans to fill financing gaps and make affordable housing projects possible.
Polaris will also provide wrap-around services. Individuals and families living in the new development can access resources through the nonprofit Hopelink, including onsite behavioral health providers to support resident transition.
The apartment complex will be located next to multiple public transportation outlets; grocery stores accessible by foot, bike or bus; resource services and medical centers; and schools and open spaces such as Totem Lake Park.
Polaris is one of the five developments the Evergreen Impact Housing Fund has supported financially to help the developer’s project come to fruition since the fund’s inception in 2020.
Call to action
The EIHF was created in response to the current housing crisis Washington state is experiencing.
According to the 2023 Washington Department of Commerce report, 1.1 million homes will need to be added within Washington over the next 20 years to keep pace with population growth. Over half of these homes will need to accommodate low-income individuals and families.
Though the Eastside includes some of the wealthiest households, Hermanns said the Eastside needs affordable housing like the rest of King County and Washington state.
It is important to have affordable housing across the continuum from households that fall in 0% to 120% AMI, Hermanns said.
“With the growth of jobs and economic opportunities on the Eastside, we need to be sure that working families have access to homes that are near those opportunities.” She said. “It’s really important for us to be able to couple [economic and job growth] with affordable housing, so working families have access to those same opportunities.”
Of the households that live in Bellevue, Kirkland, Redmond and Issaquah and fall within the 80-100% AMI, about 33% report as cost-burdened. Cost burden is defined as a household who spends more than 30% of their income on rent, mortgage and other housing needs, according to the King County key housing affordability indicators data. Data shows this average continually rises as households’ AMI drops.
“There just has to be new and different ways of building more affordable housing because what we’re currently doing isn’t enough. If we don’t try things, new, innovative and bold, we’re not going to get different outcomes,” Hermanns said.
The EIHF model is unique in a few ways.
Initially, developers go to the Washington State Housing Finance Commission to apply for bond cap and low-income housing tax credits, which is the primary public source for funding high density affordable housing.
If also developer also aligns with EIHF eligibility and goals, then EIHF will fill the financial gaps of the project. The project must include affordable housing and additional elements to help residents thrive in the community.
Some priorities include family-sized units, high-density transit locations, easy-to-access community benefits facilities, schools, green spaces, child care and grocery stores, according to the EIHF website.
The EIHF fund holds another unique element within its funding. The fund stacks private and philanthropic investors and public partners to help fund the projects financial gaps.
Microsoft has invested in EIHF since its inception, committing $50 million to the fund, and in addtion will support other various stages of the Polaris project.
The Solera apartments, the first project EIHF helped fund, expected to open in Renton in 2025, was in collaboration with local credit union investors such as BECU, Sound Credit Union, Verity Credit Union, and Washington State Employees Credit Union to ensure the realization of the Solera apartments.
“Ultimately, it’s the partnership with investors like Microsoft and our local credit unions that are working alongside the Washington State Housing Finance Commission and Evergreen Impact Housing Fund with developers that are really making this happen,” Hermanns said.
In November, Hermanns said the first finished development will start welcoming families to move in. The Aries development, located in the Bitter Lake neighborhood of North Seattle by Bellwether Housing, will have 200 affordable homes.
Hermanns said they are continuing to find opportunities to lend their hand to developers inside and outside of King County.
“So in the near term, we are talking with a number of folks in Spokane, in Snohomish County, in Pierce County and in King County,” she said. “We are in discussions with a developer for another Eastside project as well as in Pierce County.”
Hermanns said just like the developers are looking for additional partners, so is the EIHF — the model brings a cross-sectional approach.
“Given the significance of the crisis that we are facing it is so important that we are doing this work in collaboration with private nonprofit developers, with private and philanthropic investors and with public partners,” Hermanns said. “Without this kind of partnership, we wouldn’t be able to accomplish what we’ve accomplished in a short time. I am just really excited about the Polaris Project getting underway.”