Information for Prospective Developers

These questions are designed to orient prospective developers of resale-restricted homes to the basic expectations to apply for affordable homeownership development funding.

What kind of homes can be developed with OH homeownership resources?

For new homeownership production, OH funds only the development of permanently affordable homes. Permanently affordable homes for-sale, also referred to in this document as resale-restricted, are homes sold at prices calculated to be affordable to low and moderate-income buyers. OH provides funding to help cover the costs of developing such homes.

Buyers of resale-restricted homes sign a legally enforceable agreement which requires them to 1) occupy their home as their primary residence and 2) if/when they choose to sell their home, work with a stewardship organization sell to another income-eligible buyer at an affordable formula price. Stewardship includes organizations that have experience setting affordable pricing and appropriate resale formulas and developing a legal mechanism to ensure the homes remain affordable during successive resales. They also provide dedicated staff to monitor compliance with owner-occupancy and other requirements and to ensure that homes are sold at affordable prices to low and moderate-income buyers over the long-term.

What does it mean for a home to be affordable to low or moderate-income buyers?

Homes funded for development by OH must be affordable to buyers who make no more than 80% of Area Median Income (AMI) though best practices are to price homes to be affordable to households with incomes of 65% AMI so that there is a range of buyers who are eligible to purchase. These numbers are calculated no more than six months prior to home sale to reflect current AMI and market conditions. Sample affordable prices for a related program, referenced here[HJ2]  to provide general information about past sales, can be found here.

This means that no more than roughly 33-38% of a buyer’s monthly income may be used for housing payments. For example, if a buyer household has an annual income of $60,000 per year after taxes, then their monthly take-home pay is $5,000. Thirty-eight percent of $5,000 is $1,900. So, in this example, the buyer’s total housing costs may not exceed $1,900 per month. Housing costs include things like the mortgage, property taxes, insurance, HOA or condo dues, and any fees charged by the steward.

Is there a long-term commitment associated with being awarded homeownership development subsidy and/or land?

Yes. The applicant team must include a partner with experience successfully stewarding resale-restricted homes to be competitive for an award from OH. Stewardship includes, but is not limited to, setting affordable pricing and appropriate resale formulas; developing a legal mechanism to ensure the homes remain affordable during successive resales; and providing dedicated staff to monitor compliance with owner-occupancy and other requirements and to ensure that homes are sold at affordable prices to low and moderate-income buyers over the long-term. To meet this obligation, the applicant team must include an organization with a successful stewardship program and funded staff dedicated to stewarding the homes for at least 50 years.

Is housing development experience needed to be competitive?

Yes. At least one member of the applicant team needs to have successfully developed housing in the Seattle area previously to be competitive for an award from OH. If you have not yet developed housing in the Seattle area, we encourage you to partner with an experienced developer of affordable homes.

Are there other ways developers can create resale-restricted homes?

The Mandatory Housing Affordability (MHA) performance option allows you to incorporate affordable units into your proposed development in lieu of paying the MHA fee. When you choose the performance option, you must follow the design and locational standards in the code and document compliance in the plans and Housing Agreement. A recent change to the land use code provides a new Design Review Exemption for projects that meet MHA requirements by selecting the performance option to provide units on site.