Home AEC Bellwether Taps into Crowdfunding to Finance Affordable Housing Projects in Seattle

Bellwether Taps into Crowdfunding to Finance Affordable Housing Projects in Seattle

Bellwether Housing, Seattle, Susan Boyd, Tech 4 Housing, Ethan Goodman, SEC, Regulation Crowdfunding

By Meghan Hall

The task of building even market-rate housing in Seattle has become a challenge as new residents and employers flock to the region, crowding out those who, traditionally, had been able to afford housing on a minimum or fixed-income. And, while non-profits such as Bellwether Housing face numerous challenges when it comes to development, funding always remains an issue. However, together with Tech 4 Housing, an advocacy organization, Bellwether is taking advantage of updated Regulation Crowdfunding rules to fund affordable housing projects throughout the region. The Registry spoke with Bellwether’s CEO Susan Boyd and Tech 4’s Executive Director Ethan Goodman, to understand how crowdfunding can be a new and effective way to engage the wide Seattle community on housing issues.

Susan, based on your experiences in direct social service, policy analysis, law and now development, what is your current perception of the Seattle housing market? How have changes in the market made the issue of affordable housing more prevalent?

SUSAN: When I first moved to Seattle 30 years ago, I was making a very modest wage as a front-line worker in a downtown human service organization. I could afford a decent apartment in a nice Seattle neighborhood. I even saved enough money so that in five years, I was able to buy my own home, which cost $112,000. 

Many of the people I served were disabled and living on incomes of less than $500 per month. Part of my job was to help them find permanent housing they could afford. While this was not always easy, it was possible. There were apartments affordable to people at this income level.

Today, neither of those stories is a reality. Young people starting out with minimum wage jobs cannot come close to affording market rents in Seattle. And the notion that someone on SSI, which now pays $771 per month, could afford housing in the market is absurd. Instead, people working minimum wage jobs spend hours of their day commuting to Seattle from more affordable suburbs, making it impossible for them to do much more with their lives than drive and work. And even more despairing, many people who were living in housing at the bottom of the market now have no housing options and are living outside, in emergency shelters or in their cars.

I do this work because I believe, as a region, we can and must do better. 

Please tell The Registry a little bit about Bellwether Housing. How has the organization become increasingly important in a time when development in Seattle is taking off?

Susan Boyd, Bellwether Housing

SUSAN: Bellwether Housing is Seattle’s largest nonprofit provider of affordable housing. We own and operate 2,100 homes in 30 buildings throughout the city. Our residents are very diverse, but what they have in common is that they cannot afford market rents in the city. They include seniors and people who are disabled living on fixed incomes; people caring for children and elders; artists and musicians; and people who work in restaurants and grocery stores.

The average rent for a for a one-bedroom apartment in Seattle is $2,100. It’s much higher for a home that will work for a family with children. Minimum wage workers would have to work 80 hours a week to afford a typical 1-bedroom. A family of four needs to make over $100,000 a year to afford the average rental home. Bellwether’s rents are 25 to 50 percent of market rents, which makes them affordable for households earning 30 to 60 percent of our region’s median income.

How can organizations such as Bellwether continue to have a meaningful when acquisition and development is becoming increasingly expensive?

SUSAN: In this time of a housing affordability crisis, Bellwether is building more housing than ever. We’re building 750 homes in the next three years, and have a strategic plan to more than double our portfolio by 2025. To do this, we are leveraging our unique strengths as an organization.

First, we are building at scale and using other innovations in our approaches to construction to build as efficiently as possible. For example, in 2020, we will break ground on our largest development yet, adjacent to the new Link Light Rail station in the Roosevelt neighborhood. It will include over 250 homes, many of them rare 2- and 3-bedroom apartments for families, a child care center that will prioritize serving lower income families, public outdoor space, and ground floor retail. By bringing density into this incredible neighborhood with great schools, access to a transit system and proximity to major job centers, we ensure that low- and modest-income families continue to have a place in this city and have access to all the opportunity the region has to offer.

Second, we are partnering with faith communities, public agencies and other nonprofit organizations to access new development opportunities. Next year, we will break ground on the first ever high-rise to be developed in Seattle by a nonprofit housing organization. This development, which will be located at the corner of Madison and Boylston in the First Hill neighborhood, is possible because of partnerships. Sound Transit made surplus land available for affordable housing at no cost. We’re developing the project with Plymouth Housing to pool resources and maximize site density. Together with Plymouth, we will create over 360 units of affordable housing in this opportunity-rich neighborhood. The first five floors will be owned and operated by Plymouth and house over 100 formerly homeless individuals and provide them with the services they need for stability. The upper 12 floors will be owned and operated by Bellwether Housing and provide much needed affordable homes for people earning modest wages working in nearby health care and educational institutions, restaurants and downtown businesses. 

Finally, we continue to use our first-of-its-kind impact investment model to bring new sources of funding to affordable housing. We have raised low cost capital from local families, individuals and corporations who care deeply about our affordable housing crisis and have been willing to put their money to work to solve it. In fact, we are mid-way through raising $4.5 million of impact funds to help us build those 750 homes I talked about before. Investors receive a 2 percent return on their money and contribute to creating a more inclusive city by helping us build more affordable housing. 

What additional challenges, other than affordability, does Bellwether face when striving to accomplish its mission in the region?

SUSAN: We need neighborhoods throughout the region to embrace density and affordability. We can no longer afford for communities to say that they support affordable housing, just not in their backyard. We have had incredible support from neighborhoods such as Roosevelt, Tukwila and First Hill, who have embraced both increased density and deep affordability. That support has made all the difference in the development process and will be critical to the residents that will one day call those projects home.

And we need continued investments in the infrastructure and services that allow lower income families to access opportunity, be healthy and build wealth: public school systems in which all kids thrive, regardless of their race, zip code or income; high quality, easily accessible public transportation; affordable, quality child care; and readily accessible quality primary and behavioral health care. 

In June, Bellwether launched its Building Opportunity Fund, which seeks to raise $4.5MM to build 750 affordable homes in Seattle. Where did Bellwether get the idea to crowdfund to raise the money for these homes? How do new federal securities rules allow Bellwether to move forward with its crowdfunding campaign? Do you think this will be a successful endeavor? Why or why not? 

SUSAN: Tech 4 Housing approached Bellwether back in 2017 with the idea of using the new Regulation Crowdfunding rules to open up affordable housing investment to everyone. There had previously been impact investment campaigns by nonprofit housing developers, including Bellwether, but participation had been restricted to already wealthy accredited investors. The new crowdfunding rules, which had just been approved by the SEC, made it possible for the first time for everyday people to invest in affordable housing in their communities. 

Do you think the ability to crowdfund will greatly alter the way that organizations like Bellwether raise funds in the future? Why do you think it will be successful? 

Ethan Goodman, Tech 4 Housing

ETHAN: At Tech 4 Housing, we’re excited about crowdfunding as a new way of engaging the tech community on housing issues. Tech workers are already volunteering with and donating to housing organizations. But unlike volunteering or a one-time donation, an investment is an ongoing relationship. The fund isn’t just about dollars raised, it’s about building a cohort of people who have real skin in the game and a long-term commitment to these issues. Over time we hope that we can further educate and engage the investors on the deeper policy issues that drive the housing crisis.

We think there’s a compelling pitch that wealth should be doing work for the community. The Building Opportunity Fund is an investment, like holding stocks or bonds, but unlike traditional investments, you can see your money making a tangible difference in your community. It’s not something abstract—you can point to the homes as they’re being built and know that your investment helped make that possible.

At Bellwether, crowdfunding is exciting to us because it allows our entire community to play a direct role in the creation of affordable housing and as a result, a more inclusive region. If we are going to address our region’s housing affordability challenges, we need to engage everyone in solutions. Crowdfunding has been a platform for us to do that and to show our community that the solutions are not complex – they involve building more, which requires more resources. I am proud that Bellwether has led these efforts to engage our community in solutions. We will continue to do that for as long as it is needed.

Where does Bellwether plan to construct the 750 units? Why were these sites interesting to Bellwether for development? 

SUSAN: These 750 homes will be developed on four sites – three in Seattle and one in Tukwila. I described two of the developments earlier – our high rise on First Hill that we are developing in collaboration with Plymouth Housing, and our development adjacent to the Roosevelt transit station in northeast Seattle. In addition, we have over 180 homes in development in the Rainier Beach neighborhood and 103 homes in Tukwila, just a couple of blocks from the light rail station there. 

We selected each of these sites because of they allowed us to build at scale, they provide great access to local and regional transit, and they are all close to schools, libraries and other important public amenities. They also each bring with them an opportunity for us to have a significant impact through partnerships with other organizations. For example, our Rainier Beach development will include a new home for Muslim Housing Services, an organization that primarily serves immigrants, refugees and other people of color who are facing challenges in finding housing. This is an opportunity for us to deepen our relationship with that organization, provide a space in which they can continue to grow, and ensure that their clients have access to the housing they need. Our Roosevelt development will include a partnership with Children’s Hospital and Mary’s Place with 17 homes set-aside to provide homes for families who have become homeless amidst their efforts to care for their chronically ill children. 

Can you elaborate on how Tech 4 Housing’s mission aligns with that of Bellwether Housing, and how the two organizations are working to address the regional housing crisis?

ETHAN: Tech 4 Housing organizes the tech community to advocate for affordable, sustainable and equitable cities. Fundamental to that vision is the kind of housing that Bellwether provides: affordable homes in high-opportunity, transit-rich neighborhoods for educators, caregivers, artists and working families of all kinds.

Are there any projects that Bellwether has in the works that you are particularly excited about? If so, why?

SUSAN: Bellwether has a goal to create another 2500 homes by 2025. We grew by an average of 50 units a year during our first 35 years, so this is a radical increase in our rate of production. It will require us to expand our geography outside Seattle to urban centers throughout King County, find new ways to fund our work, and invest heavily in acquiring buildings in communities where existing residents are at risk of displacement from ever-increasing housing costs. It will require us and others who want to see our region remain a place for people of all income levels to advocate for policies and resources to support these developments. And it will require us to be an innovative and adaptive organization that embraces growth as well as sustainability. These are all incredible challenges, but we must strive for this to ensure that our region is a place in which all people, regardless of income, can thrive.

Is there anything else you would like to add that The Registry did not mention?

SUSAN: If readers would like to learn more about how they can directly participate in the creation of more affordable housing for our region through our Building Opportunity Campaign, they can read more here.