Council approves program to boost funding for housing

October 23, 2017

Summary

Credit Enhancement provides better financing terms, lower costs for housing

Story

Projects supported by the King County Housing Authority (KCHA) to acquire or build workforce and low income housing received a boost from today’s unanimous adoption by the Metropolitan King County Council of a $200 million credit enhancement program.

“All King County residents deserve the opportunity to have a safe, healthy, accessible and affordable home,” said Councilmember Jeanne Kohl-Welles, chair of the Council’s Health, Housing and Human Services Committee and sponsor of the legislation. “I am pleased we now have the opportunity for KCHA to provide the means to expand affordable housing options for low-income and infirm residents in King County.”

Today’s adopted legislation creates a new $200 million credit enhancement program for use by KCHA. The new program will be based on the overall financial strength of KCHA as an agency, rather than of an individual housing project, and would be designed to assist KCHA in accessing favorable financing in the municipal credit market. Importantly, though, each project would be proposed, reviewed, and approved based on its individual financial viability.

The new program is projected to help KCHA in acquiring and/or preserving an additional 2,200 units of rental housing.

Credit enhancement is a financing tool through which a borrower improves its credit worthiness, and thereby secures better financing terms, by receiving a guarantee that a third party will loan funds to the borrower if the borrower does not have sufficient funds to make its debt service payments. In return for this guarantee from the County, the affordable housing developer receives more favorable financing terms and lower interest rates. The resulting savings are used to create housing that is priced at more affordable levels.

Over the last two decades, similar financing program has been used by King County to construct more than 2,000 units affordable to households with incomes at or below 80 percent of median income throughout the county.