Affordable Housing Profile Mountlake Terrace

Affordable Housing Profile Mountlake Terrace Prepared for Mountlake Terrace by the Alliance for Housing Affordability March 2014 i

Acknowledgements Special thanks to all those who helped prepare this profile. City Staff Shane Hope, Community and Economic Development Director Alliance for Housing Affordability Kristina Gallant, Analyst ii

Table of Contents Maps, Figures, & Tables... iv Executive Summary... v Introduction... 1 1 Population and Community... 3 Household Profiles... 8 2 Existing Housing Stock... 11 Subsidized Housing Units... 13 Workforce Housing Units... 15 Market Rate Multifamily Rental Units... 15 Market Rate Single Family Rental Units... 16 Rental Affordability by Household Size...17 Home Ownership... 19 Shared Rental Housing... 22 3 Current Challenges and Opportunities... 23 Maps... 25 Appendices Appendix A. Multifamily Rentals... A-1 Appendix B. Assisted Units... B-2 Appendix C. Single Family Rentals... C-3 Appendix D. Single Family Home Sales... D-4 Appendix E. Affordable Housing Glossary... E-1 Appendix F. Methodology... F-3 iii

Maps, Figures, & Tables Figure 1.1. Total Population for Mountlake Terrace, 1990-2013... 3 Figure 1.2. Housing Unit Tenure, Mountlake Terrace & Snohomish County... 4 Table 1.3. Cost Burden by Income Level and Tenure, Mountlake Terrace & Snohomish County...5 Figure 1.4. Housing and Transportation as a Percentage of Income... 6 Figure 1.5. Mountlake Terrace Population Pyramid, 2000-2010... 8 Table 2.1. Units in Structure by Tenure... 11 Figure 2.1. Tenure Share by Units in Structure... 11 Figure 2.2. Net New Residential Units, City and County... 12 Figure 2.3. New Permit Types over Time, Mountlake TerraceSource: Puget Sound Regional Council... 12 Table 2.3. Subsidized Unit Summary... 13 Table 2.4. Rents by Bedroom Size and Price... 15 Table 2.5. Single Family Rental Affordability... 16 Table 2.6. Median Rent by Size, Single- and Multifamily... 16 Table 2.7. Total Properties with Rent Information by Bedroom Size... 17 Table 2.8. Rental Affordability for Extremely Low-Income Households - 0-30% AMI... 17 Table 2.9. Rental Affordability for Very Low-Income Households 30-50% AMI... 18 Table 2.10. Rental Affordability for Low-Income Households 50-80% AMI... 18 Table 2.11. Rental Affordability for Moderate-Income Households 80-95% AMI... 18 Table 2.12. Rental Affordability for Middle-Income Households 95-120% AMI... 18 Table 2.13. Affordable Home Sales by Size, 2012... 19 Figure 2.4. 2012 Home Sale Affordability Gap... 20 Figure 2.5. Home Sale Affordability, 2007-2012... 21 Figure 2.6. Home Sales by Type, 2007-2012... 21 Table 2.14. Affordable Home Sales by Type, 2012... Error! Bookmark not defined. Table 2.15. Size of Homes Sold by Type, 2012... 22 Table 3.1. Cost Burden by Income Level... 23 Map 1.1. Total Population... 26 Map 1.2. Average Family Size... 27 Map 1.3. Renter-Occupied Housing Units... 29 Map 1.4. Vacant Housing Units... 30 Map 1.5. Homeowners with Mortgages... 31 Map 1.6. Low-Income Households... 32 Map 1.7. Cost-Burdened Renters... 33 Map 1.8. Cost-Burdened Owners... 34 Map 1.9. Housing and Transportation as Percentage of Low HH Income... 35 Map 2.1. Voucher Location and Transit Access... 35 Map 2.2. Age of Housing Stock... 36 Map 2.3. Condition of Housing Stock... 38 Map 2.4. Housing Density... 39 Map 2.5. Minimum Income, Rental Units... 40 Map 2.7. New Single-Family Permits by Census Tract, 2011... 41 Map 2.8. New Multifamily Permits by Census Tract, 2011... 42 Map 2.9. Remodeled Housing Stock... 43 Map 2.10. Average Occupants per Rental Unit... 44 iv

Executive Summary An adequate supply of affordable housing for certain income levels and for special needs housing is hard to achieve in Mountlake Terrace and elsewhere. Currently, Mountlake Terrace has 8,306 households and 3,730 of them or almost 45% are considered cost-burdened. ( Cost-burdened means more than 30% of the household s income is required for housing.) However, housing costs are most difficult for people whose incomes are less than half of the region s median income. In Mountlake Terrace, 2,984 households earn less than the half of the region s median income 1. Because a greater supply of housing helps keep market costs down, the City has taken several steps to increase the housing supply for all income levels. Additional opportunities for increasing the housing supply whether overall or for certain income levels can be considered during the next major review and update of the Comprehensive Plan. The next update is due to be completed by June 30, 2015. A Summary of Mountlake Terrace by the Numbers Population 2 20,160 Total Households 3 8,306 Family 4 Households 5,241 Family Households with Minor Children 2,503 Cost-Burdened Households 3,730 Households Earning Less than 50% AMI 2,948 Median Household Income $58,018 Minimum income to afford 2012 median home mortgage 5 $45,078 Subsidized Housing Section 8 Housing Choice Vouchers 6 Other Dedicated Subsidized Housing Workforce Housing 151 vouchers 161 units 34 units Total Renter-Occupied Housing Units 3,315 Total Owner-Occupied Housing Units 4,991 Total Vacant Housing Units 420 1 Mountlake Terrace is part of the greater Seattle metropolitan region, which includes King, Snohomish, and Pierce counties. 2 Washington State Office of Financial Management, 2013 3 US Census Bureau; American Community Survey, 2007-2012 4 Based on the US Census Bureau s definition of family, which consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption residing in the same housing unit. 5 Snohomish County Assessor, 2013 6 Housing Authority of Snohomish County, 2013 v

Introduction In Snohomish County s General Policy Plan, Housing Goal 5 states that the cities and the county shall collaborate to report housing characteristics and needs in a timely manner for jurisdictions to conduct major comprehensive plan updates and to assess progress toward achieving CPPs on housing. Building on the County s efforts in preparing the countywide HO-5 Report, this profile furthers this goal by providing detailed, local information on existing conditions for housing in Mountlake Terrace so the City can plan more effectively to promote affordable housing and collaborate with neighboring jurisdictions. This profile will present the spectrum of its subsidized and market rate housing stock. The City of Mountlake Terrace is located on the border of Snohomish and King Counties, midway between Seattle and Everett on I-5. In 1949, two developers purchased a retired airstrip and redeveloped the land with modest single family homes, planned as a bedroom suburb for World War II veterans and their families. These origins are still evident in the City s existing housing stock, half of which still consists of single family homes from this original development period. In 1954, the growing community was incorporated as the City of Mountlake Terrace. It continued to grow rapidly until the 1970s, when a major local employer left the area, Boeing cut a significant portion of local jobs, and regional shopping centers developed in nearby cities. Development stalled, and took another hit in the early 1990s when an arsonist significantly damaged the City s small commercial core. In recent years, the City began work to encourage a new, more urban, transit-oriented core, fueled by the future arrival of the northern extension of Sound Transit light rail. Several affordable housing-specific terms and concepts will be used throughout the profile. Income levels will be defined by their share of Area Median Income (AMI). For this report, median income for the Seattle-Bellevue HUD 7 Metro Fair Market Rent Area (HMFA) will be used for AMI because it is the measure HUD uses to administer its programs. Snohomish County is included in this area. The affordable housing field defines income levels as they relate to AMI. These are: Extremely Low Income - up to 30% AMI Very Low Income - up to 50% AMI Low Income - up to 80% AMI Moderate Income - up to 95% AMI Middle Income - up to 120% AMI 7 United States Department of Housing and Urban Development (HUD) 1

When a household spends more than 30% of their income on housing, it is considered to be housing cost burdened, and, if lower income, will likely have to sacrifice spending on other essentials like food and medical care. In this profile, cost burden is used as a benchmark to evaluate housing affordability. 2

1 Population and Community In 2013, Mountlake Terrace was home to an estimated 20,160 people, representing a 1% decrease from its 2000 population of 20,362 8. However, as shown in Figure 1.1, below, the City s population has grown and shrank since 1990 but stayed within a relatively close range, trending gently upward. Figure 1.1. Total Population for Mountlake Terrace, 1990-2013 20,600 20,400 20,200 20,000 19,800 19,600 19,400 19,200 19,000 18,800 18,600 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Washington State OFM The 2011 9 population includes 8,306 households with an average size of 2.4 people, compared to 2.61 for the County. Of these, 5,241, or 63%, are family 10 households. Overall, 30% of all households have children. In Snohomish County overall, 68% of households are families, and 32.5% of households have children. The average family size in Mountlake Terrace is 2.91, compared to 3.12 for the County. Including all households, the average size is 2.4, compared to 2.61 for the County 11. 8 Washington State Office of Financial Management, 2013 9 2011 data is used as, at time of writing, it is the most recent ACS 5-year data available 10 This is based on the US Census Bureau s definition of family, which consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption residing in the same housing unit. 11 US Census Bureau; American Community Survey, 2008-2012 3

As shown in Figure 1.2, the share of renter-occupied housing units is higher in Mountlake Terrace than in the County overall. The share of owned units in Mountlake Terrace has increased very slightly over that same period (From 59.7% to 61.2%) while it remained stable in the County (Dropping from 67.8% to 67%). The City s vacancy rate is 4.8% overall, compared to 6.4% overall for the County. Vacancy for homeowners is 1.4% in the City and 2% in the County. Rental vacancy is 8.5% in the City compared to 4.8% for the County. 20% of single family homes are occupied by renters in Mountlake Terrace, compared to 71% of multifamily units and townhomes 12. Figure 1.2. Housing Unit Tenure, Mountlake Terrace & Snohomish County 100% 80% 60% 40% 20% 0% Mountlake Terrace 2000 2010 Snohomish County 2000 2010 Owners Renters Owners Renters Source: US Census Bureau, 2000; US Census Bureau, 2010 HMFA AMI for Seattle-Bellevue, which is referenced in this report as a standard for AMI, is $86,800. Mountlake Terrace s 2011 median income of $58,018 is lower than both HMFA AMI and that of the County overall, which is $67,777 13. Compared to HMFA AMI and based on 2011 American Community Survey (ACS) 5-year estimates: 1,413 households, or 17% of Mountlake Terrace s total, are considered to be extremely low income, earning less than 30% of HMFA AMI, 1,535, or 18%, are considered very low income, earning between 30 and 50% of AMI, 12 Ibid 13 Ibid 4

2,215, or 27%, are considered low income, earning between 50 and 80% of AMI, and 885, or 11%, are considered moderate income, earning between 80 and 90% of AMI It is worth noting that these percentages are not adjusted for household size due to data constraints. Here, a household consisting of two adults with an income level equal to another household consisting of two adults and three children would both be placed at the same percentage of AMI, even though the larger family would likely be more constrained financially. HUD s AMI calculations include ranges for households sized 1-8 people, and, in this report, sensitivity for household size is used wherever possible, as detailed in Appendix F. Maps 1.7 and 1.8 show the percentage of renter and owner households in each census tract that are housing cost burdened. Overall, 45% of renter and owner households in Mountlake Terrace are housing cost burdened. The share of housing cost burdened owner households ranges from 26% to 52% per tract. For renter households, the share of housing cost burden ranges from 41% to 100% per tract 14. For both renters and owners, households are generally most housing cost burdened around the outer fringes of the city, while those on the western and northern areas of the city are least likely to be housing cost burdened. Table 1.1, below, shows the percentage of each income group that is housing cost burdened in Snohomish County and Mountlake Terrace by tenure. In both the City and County, renters become much less likely to be housing cost burdened as income rises. This trend is more extreme for the City, however, with extremely low-income tenants more likely to be housing cost burdened and middle-income tenants less likely to be housing cost burdened. While very low income City homeowners are more likely to be cost burdened, this percentage drops as income rises, and middle income owners in the City are less likely to be cost burdened than those in the County overall. Table 1.3. Cost Burden by Income Level and Tenure, Mountlake Terrace & Snohomish County Renters Owners All Mountlake Terrace Snohomish County Mountlake Terrace Snohomish County Mountlake Terrace Snohomish County Extremely Low 89% 82% 69% 74% 81% 79% Very Low 63% 67% 72% 62% 67% 65% Low 26% 30% 60% 70% 46% 55% Moderate 13% 15% 42% 47% 34% 39% Middle 0% 4% 26% 39% 20% 31% Source: US Census Bureau; American Community Survey, 2007 2011 14 Ibid 5

HUD s Location Affordability Index uses a number of variables to estimate the affordability of a location including both housing and transportation costs. According to the index, a regional typical household 15 could expect to spend 45% of their income on housing and transportation if they rent or own in Mountlake Terrace, compared to 49% overall for the County. 45% is also proposed as a targeted maximum percentage of income to be spent on housing and transportation combined to be affordable. A very low income household 16, however, could expect to spend 65% of their income on housing and transportation. A single worker making median per capita income would have to devote 79% of their income to housing and transportation. 17 Statistics for housing and transportation affordability for a number of different household types in the City and County overall are presented in Figure 1.3, below. As shown, owners generally spend more on housing and transportation than renters, regardless of location. Additionally, individuals earning median per capita income will be more cost burdened than average size households, regardless of location or tenure. Figure 1.4. Housing and Transportation as a Percentage of Income 120% 100% Median Income HH 80% 60% Moderate Income HH 40% Very Low Income HH 20% 0% Mountlake Terrace County Mountlake Terrace County Mountlake Terrace County Median Income Individual All Households Renters Owners Source: US Dept of Housing & Urban Development; Location Affordability Portal, 2013 15 Defined as a household with average household size, median income, and average number of commuters in Seattle-Bellevue HMFA 16 Defined as a household with 3 individuals, one commuter, and income equal to 50% AMI 17 US Department of Housing & Urban Development; Location Affordability Portal, 2013 6

The 2011 unemployment rate was 5.9% in Mountlake Terrace, compared to 5.7% for the County overall. For employed Mountlake Terrace residents, the mean commute time is 28 minutes, compared with 29.3 for the County. 74.1% of city residents drive to work alone compared with 74% of all County workers. At 34% of the employed population, the most common occupations for Mountlake Terrace residents are in management, business, science, and arts occupations followed by sales and office occupations with 24.3% of the employed population. The two most dominant industries employing city residents are educational services, health care and social assistance with 24.3% of workers, and retail trade, with 12% of workers 18. According to the Puget Sound Regional Council, Mountlake Terrace was home to 6,575 jobs in 2011. Most of these are in the Finance, Insurance and Real Estate (FIRE) and Services sectors. While there are two employment categories within the FIRE sector, their exact employment numbers are withheld because one employer accounts for more than 80% of employment for each. Combined, this sector provides 2,566 jobs in the City. Within the Services sector, numbers are withheld for the Information and Educational Services categories, but together these only account for 126 jobs. The largest employers in this sector are Health Care and Social Assistance, with 587 jobs, and Arts, Entertainment, and Recreation, with 368 jobs 19. While 2011 numbers are presented here because they are used in concert with Census data, it should be noted that the city added 208 jobs between 2011 and 2012. This increase was led by 169 new jobs in the Services sector and 129 new jobs in the FIRE sector, balanced by a loss of 110 jobs in the Construction and Resources sector and a loss of 17 jobs in the Education sector 20. There are.79 local jobs for every occupied housing unit in the City, compared with 1.28 employed people for every occupied housing unit. Including vacant housing units, there are.75 local jobs for every unit. Even assuming all of these people only have one job and only local people are employed locally, this means that a portion of the population must commute to work. In actuality, 63% of City residents commute to King County. The ratio of jobs-housing is.9 for the County overall, with 1.3 employed people for every occupied housing unit 21. 18 US Census; American Community Survey, 2007-2012 19 Puget Sound Regional Council; Covered Employment Estimates, 2011 20 Puget Sound Regional Council; Covered Employment Estimates, 2012 21 US Census; American Community Survey, 2007-2011; Puget Sound Regional Council; Covered Employment Estimates, 2011 7

Figure 1.5. Mountlake Terrace Population Pyramid, 2000-2010 90 + 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Male Female 1,500 1,000 500 0 500 1,000 1,500 2010 2000 Source: US Census Bureau, 2000; US Census Bureau, 2010 The shape of the City s population pyramid, shown in Figure 1.4, offers additional insight into its housing needs and how they may be changing. Mountlake Terrace s population is aging. Accordingly, appropriate housing in the City must be planned to accommodate more older adults and fewer children. At the same time, the number of new births has stayed close to constant over the past decade, as has the number of people in their twenties. While there are fewer children than adults, indicating possible population decline, it is not dramatic, and there is a slight uptick in the youngest cohort indicating possible growth. While it seems some families with young children must have left from 2000-2010, they may have been replaced by others with infants. Household Profiles These are the stories of several actual Mountlake Terrace households who receive some kind of housing assistance. All names and many nonessential details have been changed to respect their privacy. TERESA Teresa is a single disabled woman in her 60s. She receives $700 from social security every month and is unable to work due to her disability. With Assistance 8

With her voucher, Teresa pays $210 in rent and utilities for a one bedroom apartment. This leaves her with $490 per month for other expenses. Without Assistance Without a voucher, Teresa would pay $875 in rent and $145 in utilities for the same apartment. This is $320 more than she makes every month in total. To be able to afford this unit without assistance, she would have to make $3,400 per month, which is $2,700 more than she currently receives from social security. Again, Teresa is disabled, so opportunities to increase her income are likely more limited. If she did not have her voucher, her only more affordable opportunities would be via other subsidy programs, where she would certainly be on a wait list, or by finding a room in a shared home, where she may have difficulty finding an option that accommodates her disability. ASHLEY Ashley is in her 30s and lives with her three school-age children. Ashley works full time and earns $2,560 per month, roughly equal to $16 per hour. With Assistance With her voucher, Ashley pays $662 in rent and $106 in utilities for her two bedroom apartment. This leaves her with $1,792 per month. Without Assistance Without a voucher, Ashley would pay $980 in rent and $106 in utilities for the same apartment. This would be 42% of her total income. To afford this rent, she would have to make at least $3,620 per month, or $23 per hour. This is $7 more per hour than she earns currently, and translates to $14,560 in additional annual income. Ashley s apartment is also two bedrooms while she has the option to upgrade to a three bedroom unit with her voucher, which she may choose to do as her children grow, she would have to pay much more for a three bedroom apartment in the open market. RON Ron and Miranda are in their 40s and live with their three children. Between Ron s employment and the couple s combined social security income, they make $2,150 per month. This is equal to one person working full time earning around $13.40 per hour. With Assistance With their voucher, the couple pays $496 in rent and $149 in utilities for their three bedroom apartment. This leaves them with $1,505 per month. Without Assistance 9

Without a voucher, Ron and Miranda would pay $850 in rent and $149 in utilities for the same apartment, which would be 66% of their total income. To afford the rent, they would have to make at least $3,330 per month, $1,180 more than they earn currently. This would be affordable to them if they both found full time jobs paying at least $11 per hour. LOUISE Louise is an elderly woman who lives alone. Between a pension and social security payments, she earns $860 per month. With Assistance With her voucher, Louise pays $258 in rent and utilities for a one bedroom apartment. This leaves her with $602 per month. Without Assistance Without a voucher, Louise would pay $735 in rent and utilities for the same apartment, which would be 85% of her total income. Her rent would be affordable if she earned at least $2,450 per month, nearly triple her current income. There is nothing available in her price range at market rates. 10

2 Existing Housing Stock Mountlake Terrace s urban history began in 1949, when two developers purchased an abandoned airstrip and developed it with modest single-family homes targeted toward World War II veterans and their families. Today, nearly 50% of the City s existing housing stock is still composed of homes built between 1950 and 1969. For all local single family homes, the average year built is 1964, and this is where the City s initial building boom is reflected. For apartment buildings, on the other hand, the average year built is 1983. As shown in Table 2.1, 85% of the City s homeowners live in detached single family homes 22, compared to 30% of the City s renters. This relationship is shown graphically in Figure 2.1. Overall, 60% of the City s housing units are single family home units. Figures 2.2 and 2.3 provide information on new construction in the City in recent years. Figure 2.2 shows the total number of net new residential units per year from 2001 to 2011 for both the City and County, with the City on the left axis and the County on the right. While new units for the County overall show a peak, steep drop, and early recovery tracing the general trajectory of the recession, the City saw two peaks earlier in the decade, with a deeper bottom. Figure 2.3 shows the share of the City s new units composed of single- and multi-family units. As shown, Table 2.1. Units in Structure by Tenure Units in Structure Owner- Occupied Housing Renter- Occupied Housing 1, Detached 79% 28% 1, Attached 6% 2% 2 0% 3% 3 or 4 4% 8% 5 to 9 4% 17% 10 to 19 5% 16% 20 to 49 1% 16% 50 or more 1% 10% Manufactur 1% 0% ed home Total Occupied Units 4,991 3,315 Source: US Census Bureau; American Community Survey, 2007 2011 Figure 2.1. Tenure Share by Units in Structure 100% 80% 60% 40% 20% 0% 1 2 3-4 5-9 10-19 20-49 50+ Units in Structure Owners Renters Source: US Census Bureau; American Community Survey 2007-2011 22 In this case, single family home is defined as a property where there is only one housing unit in the structure 11

the increase in new permits from 2009 to 2011 has been driven by single family construction. For the purposes of this report, Mountlake Terrace s housing stock is divided into subsidized rental units, workforce rental units, market rate rental units (both single- and multi-family), and home ownership. Subsidized rental units are targeted toward households with the lowest incomes, typically less than 30% AMI. Populations targeted for subsidized rental units often include the disabled, elderly, and other populations living on fixed incomes with special needs. A subsidized property is one that receives funding, perhaps rental assistance or an operating subsidy, to insure that its residents pay rents that are affordable for their income level. Some properties only apply their subsidy to select units. It is also common for subsidized units to be restricted to certain groups like families, the elderly, or homeless households. Figure 2.2. Net New Residential Units, City and County 250 200 150 100 50 0-50 Mountlake Terrace Source: Puget Sound Regional Council 8,000 6,000 4,000 2,000 0 Snohomish County Figure 2.3. New Permit Types over Time, Mountlake Terrace 250 200 150 100 Workforce rental units are targeted to working households that do not earn enough to afford market rents. Workforce rental units and subsidized rental units are both considered assisted, but differ in 50 0-50 several areas. The key difference between Single Family Multifamily subsidized and workforce units is that workforce units have a subsidy built in Source: Puget Sound Regional Council through the use of special financing methods and other tools, allowing (and typically requiring) the landlord to charge less for rent. An example of this would be when a private investor benefits from low income housing tax credits when building a new residential development. In exchange for the tax credits, the property owner would have to restrict a certain number of units to a certain income level for a certain period of time. When the owner is a for-profit entity, this often means that rents on restricted units will rise to market rates when the period of restriction has ended. Nonprofit owners are more likely to hold rents below market after the period of restriction has ended. 12

Market rate rental units are simply the stock of all housing units available for rent in the open market. These are units that are privately owned and whose rents are determined by market supply and demand pressures. A market rate rental unit can also be a subsidized rental unit, as is the case with the Federal Section 8 Housing Choice Voucher (HCV) Program. HCVs can be used to rent any unit, as detailed below. Finally, home ownership includes all single family homes for sale. Shared rental housing arrangements (roommates) will also be discussed as a subset of the single- and multifamily rental and ownership market. Subsidized Housing Units In Mountlake Terrace, the stock of subsidized housing consists of HCVs and four different properties with dedicated subsidies. As of November 2013, there were 151 HCVs in use in Mountlake Terrace issued by the Housing Authority of Snohomish County (HASCO). This is down from 170 HCVs in use in February 2013. Across the four properties, there are 161 units of housing. Families making up to 50% of AMI are eligible for HCVs, however, 75% of these vouchers are limited to those making no more than 30% of AMI. Public Housing Authorities (PHAs) receive federal funds from the US Department of Housing and Urban Development (HUD) to administer the HCV program. HUD sets Fair Market Rents (FMRs) Table 2.2. Subsidized Unit Summary Subsidized Units by Number of Bedrooms Subsidized Units by Income Level Served 1 Bedroom 82 Extremely Low 140 2 Bedrooms 76 Very Low 85 3 Bedrooms 69 Low 3 4 Bedrooms 3 Moderate 2 Source: HASCO annually and PHAs determine their individual payment standards (a percentage of FMR) by unit bedroom size. The tenant identifies a unit, the PHA inspects the unit to make sure it meets federal Housing Quality Standards, and then determines if the requested rent is reasonable. If the unit is approved, the tenant pays rent equal to 30-40% of their income, and the PHA pays the difference directly to the landlord. While the voucher amount is set up so that a family does not need to spend more than 30% of their income on housing, including an allowance for utilities, a family may choose to spend up to 40% of their income on housing. This happens most often when the family chooses a home that is larger than the size approved for their voucher. The two PHAs that administer the HCV program in Snohomish County are HASCO and the Everett Housing Authority (EHA). Vouchers issued by both PHAs can be used in Mountlake Terrace. Because the number of vouchers a PHA can distribute is limited by the amount of federal funding they receive, the wait for a new applicant to receive an HCV can be extremely long and 13

is usually dependent on existing voucher holders leaving the program. At the time this report was produced, the wait to receive an HCV from HASCO was 6 to 8 years. HASCO closed their Section 8 and Public Housing waitlists on December 13, 2013. The four subsidized properties in Mountlake Terrace are East Terrace, Tall Firs, Family Village, and North Terrace. There are 157 units of housing between these properties, with 106 units out of the total providing rent subsidies that allow residents to only pay 30% of their income for rent. East Terrace consists of 40 two- and three-bedroom units, targeted to varying populations. This complex includes one duplex, consisting of two-bedroom units, subsidized with HUD Project- Based Vouchers (PBVs), which provides housing to families including individuals with HIV/AIDS and/or with disabilities that make at or less than 50% AMI. The rest of the complex consists of 12 two bedroom units subsidized with PBVs reserved for at or below 30% AMI homeless families with children that are receiving supportive services from the YWCA, and 26 three bedroom units subsidized through HUD s Public Housing (PH) program, reserved for families at or below 30% AMI. 23 North Terrace provides 12 two-bedroom PH units, owned and managed by HASCO. These units are reserved for families at or below 30% AMI 24. Tall Firs provides 39 one-bedroom units for seniors and senior veterans, and is owned and managed by Senior Services of Snohomish County, a nonprofit organization. Residents must be age 62 or older with incomes at or less than 30% AMI 25. Rent is subsidized by PBVs provided by HASCO. Senior Services used tax-exempt bond financing guaranteed with a Snohomish County contingent loan agreement to acquire the property in 2010. Family Village, formerly known as Victorian Woods Apartments, is owned by the YWCA and provides housing for families. One, two, and three bedroom units are available, with 66 units in total. Fifteen of these units are subsidized with PBVs and provide housing for at or below 30% AMI homeless families with children that are receiving supportive services from the YWCA. 23 Families making up to 50% AMI are eligible for PH, between the PH and HCV program, 75% of the tenants have to be below 30% AMI. 24 Ibid 25 Ibid 14

Workforce Housing Units There is one property with 34 units of dedicated workforce housing in Mountlake Terrace. For this property, rents are held at a level that is affordable to a household at 50% AMI. The Brentwood Terrace Apartments consist of 34 two- and three-bedroom units. The property is owned by the Low Income Housing Institute, which used tax exempt bonds to purchase and rehabilitate the property in 2002. Per the terms of their regulatory agreement, 7 units must be reserved for households with incomes at 50% AMI or lower for 15 years, or until 2018. The Low Income Housing Institute has gone further and recorded a covenant on the property reserving ten units for 50 years for households with incomes less than 50% AMI. As a matter of policy, the Institute currently only rents any of the units at Brentwood to families under 50% AMI with children under 18. Market Rate Multifamily Rental Units There are an estimated 90 multifamily complexes in Mountlake Terrace, ranging in size from 2 to 512 units, 2,950 units in total. This includes 11 condo complexes in the City where one or more voucher holders were renting or one or more units were advertised for rent. Table 2.3 summarizes ACS data on the number of units available at certain rent levels by bedroom size in Mountlake Terrace. No evidence was found of any market rents below $499, despite ACS data to the contrary. This could be because the ACS Sample may include subsidized units and less formal rent arrangements renting rooms or mother-in-law suites in single family homes, renting from family members that are more affordable. ACS housing cost data only includes rental rates and does not include utility costs paid by the tenant. Sharing rent with roommates is an affordable market rate option discussed later in the profile, but this section is strictly concerned with options for households on their own lease. Table 2.3. Rents by Bedroom Size and Price No Bedrooms 1 Bedroom Units 2 Bedroom Units 3+ Bedroom Units Less than $200 0 0 7 0 $200 to $299 0 0 31 0 $300 to $499 0 0 14 18 $500 to $749 0 73 57 44 $750 to $999 0 620 455 104 $1,000 or more 9 102 1013 727 Source: US Census Bureau; American Community Survey, 2007 2011 15

To complement census data, Appendix A contains data on Mountlake Terrace s multifamily rental complexes, compiled from Section 8 tenant data and market research from a variety of rental posting websites and property management companies. The median rents presented in Appendix A include utility allowances, calculated using the same HUD-established standards that PHAs use to estimate utility costs for HCV holders. Affordability for all income levels by apartment and household size is detailed in the following section. These rental research results are limited by the fact that rental rates could not be found for several properties. Market Rate Single Family Rental Units Rent information was gathered for 69 single family homes. Of these, 19 were three bedrooms in size. Six were two bedrooms in size, which is equal to the combined number of four- and fivebedroom rentals advertised. Median single family rents by bedroom size are summarized in Table 2.9 and detailed in Appendix C. Table 2.4. Single Family Rental Affordability Bedrooms Source: AHA staff Median Total Rent Minimum Income Sample Size 2 $ 1,363 Low 13 3 $ 1,599 Low 45 4+ $ 1,918 Moderate 11 Table 2.5. Median Rent by Size, Single- and Multifamily Bedrooms Source: AHA staff Multifamily Median Rent Single Family Median Rent 1 $ 1,051 n/a 2 $ 1,238 $ 1,363 3 $ 1,541 $ 1,599 4+ $ 1,726 $ 1,918 16

Rental Affordability by Household Size Information on rents was obtained for 47 multifamily properties and 69 single family homes in Mountlake Terrace. Using HUD guidelines, utility allowances 26 were added to each of these rents to estimate the total monthly cost to rent each of these units. Next, the median total monthly cost by bedroom size was compared with household maximum monthly housing costs to show rental housing options for households of different sizes and income levels. HUD overcrowding standards were also used to determine the appropriate apartment size range for each household size. These results are summarized in tables 2.4 2.8. (Household size affordability adjustment methods are described in detail in Appendix F.) The numbers in each table represent the total number of houses and multifamily properties with apartments at the specified size that are affordable to households of the specified income level and size. This does not address the total number of units of each size. Please note that there is no table for extremely low-income households, as there were no rents advertised during the research period that would be affordable to extremely low income households while maintaining HUD overcrowding standards. Table 2.6. Total Properties with Rent Information by Bedroom Size Number of Bedrooms 1 2 3 4+ Properties 16 43 58 12 Table 2.7. Rental Affordability for Extremely Low-Income Households - 0-30% AMI Number of Bedrooms HH Size 1 2 3 4+ 1 6% 2 6% 7% 3 12% 3% 4 12% 3% 0% 5 3% 0% 6 3% 0% 26 Based on 2012 HUD standards, average utility allowances, including all utilities, are $171 for a 1 bedroom, $190.50 for a 2 bedroom, $219.50 for a 3 bedroom, and $247 for a 4 bedroom. This will be higher for natural gas. 17

Table 2.8. Rental Affordability for Very Low-Income Households 30-50% AMI Number of Bedrooms HH Size 1 2 3 4+ 1 13% 2 13% 21% 3 23% 5% 4 35% 10% 0% 5 10% 0% 6 12% 0% Table 2.9. Rental Affordability for Low-Income Households 50-80% AMI Number of Bedrooms HH Size 1 2 3 4+ 1 69% 2 94% 60% 3 84% 29% 4 95% 53% 17% 5 69% 42% 6 83% 42% Table 2.10. Rental Affordability for Moderate-Income Households 80-95% AMI Number of Bedrooms HH Size 1 2 3 4+ 1 100% 2 100% 95% 3 98% 83% 4 100% 98% 83% 5 100% 92% 6 100% 92% Table 2.11. Rental Affordability for Middle-Income Households 95-120% AMI 18 Number of Bedrooms HH Size 1 2 3 4+ 1 100% 2 100% 100% 3 100% 100%

4 100% 100% 92% 5 100% 92% 6 100% 100% Home Ownership Between 2007 and 2012, 63% of single family homes sold in Mountlake Terrace were 3 bedrooms in size. 17% of homes sold were 2 bedrooms in size and 16% were 4 bedrooms in size. This includes detached single family homes, common wall single family homes (townhouses), manufactured homes, and condominiums 27. In 2012, the median sale price for a single family home in Mountlake Terrace was $204,000. Assuming a 20% down payment and using average rates of interest, property taxes, and insurance as determined by the Federal Housing Funding Board, the monthly payment for this home would be $982. For a family to afford this payment without being cost burdened, they would require an annual income of at least $39,283, below both Snohomish County median income and the Seattle- Bellevue HMFA median income. The minimum income required to afford Mountlake Terrace s median home sale price is considered very low income for a household three-eight people in size. Appendix D provides high level statistics on sales of single family homes from 2007-2012 as well the minimum income necessary to afford the median sale home by year. Again, this calculation only considers the monthly mortgage payment in affordability. While a 20% down payment is assumed in calculating the monthly debt service, the question of whether or not a household can obtain the funds necessary for a down payment is another important question. Table 2.11 displays the percentage of each size of home sold in 2012 that was affordable to each income group. Not affordable means that the minimum income required is higher than the middle income upper cutoff. All of the percentages specify the portion of homes of that size that someone in the particular income group could afford, adjusting for household size as detailed in Appendix F. Table 2.12. Affordable Home Sales by Size, 2012 Extremely Very Not Total Bedrooms Low Low Low Moderate Middle Affordable Sales 1 14% 86% 100% 100% 100% 0% 29 27 Snohomish County property use codes 111, 112, 116, 117, 118, 119, 141, 142, 143 19

2 16% 74% 96% 100% 100% 0% 113 3 5% 38% 90% 100% 100% 0% 40 4+ 13% 38% 100% 100% 100% 0% 8 Source: Snohomish County Assessor The affordability gap describes situations where there are more households at a given income level than there are housing options affordable to those households. Figure 2.1 displays the percentage of households in Mountlake Terrace at each income level as well as the percentage of all home sales in 2012 that each income level could afford. Figure 2.2 shows how the percentage of sales affordable to each income level has changed from 2007 to 2012. Many of the most affordable sales were likely only so affordable because they were bank sales. 5606 239 th Pl SW, for example, is a 2 bedroom home that the Federal National Mortgage Association sold for $80,000 in 2012. At that price, a household with a minimum income of $15,405 could afford the monthly debt service of around $385. This same home sold for $229,000 in 2006, well out of reach to the household with the minimum income necessary to afford it in 2012. While low priced foreclosed homes can put home ownership within reach for more households, this is accomplished at the expense of previously displaced homeowners. Additionally, these sales contribute to ongoing uncertainty about market home values. Low income home buyers could also become cost burdened by higher property taxes on these bargain homes. Figure 2.4. 2012 Home Sale Affordability Gap 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extremely Low Very Low Low Moderate Middle Households Sales Source: ACS, Snohomish County Assessor 20

Figure 2.5. Home Sale Affordability, 2008-2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extremely Low Very Low Low Moderate Middle 2008 2009 2010 2011 2012 Source: Snohomish County Assessor Figure 2.6, below, shows how sales have been divided between single family homes, condominiums, and manufactured homes over time. Table 2.12 shows how many sales of each type were affordable to each income level in 2012. Figure 2.6. Home Sales by Type, 2008-2012 100% 99% 98% Condo 97% 96% Manufactured Home Single Family 95% 94% 2008 2009 2010 2011 2012 Source: Snohomish County Assessor 21

Table 2.13. Size of Homes Sold by Type, 2012 Bedrooms Single Family Manufactured Home Condo 1-2 28 1 0 3 112 1 1 4 39 0 2 5+ 8 0 0 Source: Snohomish County Assessor Shared Rental Housing A popular market rate affordable housing option is to split housing costs with other roommates. These arrangements include renting a room, suite, or accessory dwelling unit (ADU) from a homeowner living on site. For 8 shared rooms advertised on Craigslist in the City, the monthly cost ranged from $500 to $776, including utilities. While there were more rooms advertised, they did not include an address or cross streets, so it could not be verified that they were actually located within the City. Their rents were generally not outside this range, however. Rents in this range are easily within reach for very low income single individuals, and possibly even extremely low income couples. Individuals seeking roommates are able to discriminate in who they choose to share their housing, however, and often stipulate a preferred gender or bar couples from sharing a room. It may be difficult for families with children and households with disabilities or other special needs to find a suitable shared housing situation. In these cases, a household s ability to find shared housing will likely depend on whether or not they have local connections to help them find understanding roommates without depending on strangers. The City s municipal code technically limits the number of nonrelated persons living in one house to six. In the case of ADUs, this limit is applied to both the principal unit and the ADU combined. 22

3 Current Challenges and Opportunities Mountlake Terrace has a larger share of affordable housing than many cities in our region. 28 Despite this fact, affordable housing for people who don t have high incomes is still difficult to find in Mountlake Terrace. While middle income households in Mountlake Terrace are more likely to be able to afford their housing compared to the County overall, as shown in Table 3.1, this does not apply to households with incomes below 50% AMI. Table 3.1. Cost Burden by Income Level Mountlake Terrace Snohomish County Extremely Low 81% 79% Very Low 67% 65% Low 46% 55% Moderate 34% 39% Middle 20% 31% Source: US Census Bureau; American Community Survey, 2007 2011 More affordable housing is needed. This can partly be addressed by increasing the overall housing supply because a greater supply in the market helps keep costs down. Steps the City has taken in recent years to increase the housing supply include: Code changes that allow accessory dwellings, cottage housing, smaller minimum lot size, more options for townhomes and mixed use, and more flexibility in parking requirements Adoption of a multifamily property tax exemption program that provides an 8-year reduction in property taxes for the construction of more multifamily units Reduction of impact fee rates to keep construction costs down for developers and to encourage more housing to be built. At the same time, Mountlake Terrace has a low supply of vacant land, which makes adding more housing difficult. The additional housing will need to occur in greater amounts on the vacant or underutilized lots that are available. This opportunity is greatest in the Town Center 28 Our region, based on a standard metropolitan area definition, includes all of King, Snohomish, and Pierce counties. 23

and a portion of the Freeway/Tourist District. To some extent, the housing supply can also increase from accessory dwellings being built on existing single-family lots. More market rate housing alone cannot meet the needs of low- and moderate-income households. The cost of construction and the scarcity of financing still keeps the market rate above what many households can afford. Furthermore, with wages that many jobs provide being well below our region s median income level, the housing affordability gap is not likely to dramatically improve. That is why various non-profit and federal agencies are involved with housing sometimes by constructing or owning residential units and then offering them at subsidized rates and sometimes by providing vouchers or other direct financial assistance to help families obtain market-rate housing. Past regional trends have shown households moving further away from the central metropolitan core to outlying areas where the cost of land is less and, therefore, the cost of a home or apartment can be less. However, living further from job centers means that people have to travel longer distances to work and their transportation costs increase. A significant opportunity for Mountlake Terrace is to increase the supply of housing along transit lines, especially near the transit center at I-5 and 236 th Street SW. People who are able to use transit regularly instead of just personal vehicles will have reduced transportation costs, thus keeping their total cost of housing and transportation more affordable. Meanwhile, Mountlake Terrace is a member of the Alliance for Housing Affordability, a relatively new organization that includes Snohomish County, eleven cities, and the Housing Authority of Snohomish County. The Alliance is focusing on providing housing information and ultimately increasing the supply of affordable housing in the Snohomish County area. As it evolves, the organization s work will help Mountlake Terrace address its housing affordability needs. Finally, as Mountlake Terrace updates its Comprehensive Plan both in the 2015 cycle and later other options for increasing the supply of affordable housing can be considered. 24

Maps 25

Map 1.1. Total Population Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Population 808-1054 Cedar Way S 1055-1300 1301-1546 Snohomish SR-104 County King County 1547-1792 1793-2038 City Limits 0 0.25 0.5 1 Miles

Map 1.2. Average Family Size Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Average Family Size 2.76-2.88 Cedar Way S 2.89-3.01 3.02-3.13 Snohomish SR-104 County King County 3.14-3.26 3.27-3.39 City Limits 0 0.25 0.5 1 Miles

Map 1.2. Average Household Size Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Average Household Size 1.87-2.07 Cedar Way S 2.08-2.32 2.33-2.51 Snohomish SR-104 County King County 2.52-2.73 2.74-2.89 City Limits 0 0.25 0.5 1 Miles

Map 1.4. Renter-Occupied Housing Units Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Renter-Occupied Homes 7.5-21.6% Cedar Way S 21.7-35.7% 35.8-49.9% Snohomish SR-104 County King County 50-64% 64.1-78.1% City Limits 0 0.25 0.5 1 Miles

Map 1.5. Vacant Housing Units Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Vacant Housing Units 2.2-4.2% Cedar Way S 4.2-6.2% 6.2-8.2% Snohomish SR-104 County King County 8.2-10.1% 10.1-12.1% City Limits 0 0.25 0.5 1 Miles

Map 1.6. Homeowners with Mortgages Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Mortgaged Homeowners 87.8-89.7% Cedar Way S 89.8-91.6% 91.7-93.5% Snohomish SR-104 County King County 93.6-95.5% 95.6-97.4% City Limits 0 0.25 0.5 1 Miles

Map 1.7. Low-Income Households (<50% AMI) Sources: Snohomish County Information Services, 2012; U.S. Census, 2010 212th St SW SR-99 220th St SW I-5 44th Ave W Lakeview Dr 236th St SW Low-Income Households 19.3-29.6% Cedar Way S 29.7-39.9% 40-50.3% Snohomish SR-104 County King County 50.4-60.6% 60.7-70.9% City Limits 0 0.25 0.5 1 Miles