As light rail and the Town Center redevelopment promise big changes for Federal Way, the type of housing within these projects has been a frequent topic of discussion.
With so many types of housing floating around, from “affordable” to “low-income” to “subsidized” to the “missing middle,” these conversations can be challenging when it is not even clear what is being referenced.
So what kind of housing does Federal Way have? And what does the data say the city needs?
As of now, the city assessed a need for a total of 11,260 new housing units in Federal Way by 2044. These housing needs are broken down by income using a typical statistic for discussing housing needs: the percentage of Area Median Income (AMI).
The AMI is determined by the the U.S. Department of Housing and Urban Development (HUD) and is often assessed regionally. Federal Way is considered part of an area that includes Seattle and Bellevue when determining this number.
The AMI is the number in the middle of the data set of all of the incomes within this region. This means half of the households in the region bring in more income than the AMI, and half bring in less.
When it comes to housing and affordability, it is usually talked about in terms of a percentage of that AMI. This number also varies depending on the size of the household.
Here are some examples of these current income ranges that apply to Federal Way, according to HUD:
• For a single adult, making less than $60,200 per year (about $28.94/hour working 40 hours per week) is considered low income (80% AMI).
• For a family of four, making less than $68,500 as a household per year is considered very low income.
• One full-time income at minimum wage income in Federal Way is $33,862 a year (at the current minimum wage of $16.82/ hour).
• For a single adult, making less than $47,950 is considered very low income (under 50% AMI).
The Federal Way Chamber of Commerce also provides data about income, employment and housing in Federal Way and has some concerning data about housing costs.
The chamber’s research shows that “Federal Way has the highest rent-to-income ratio of the benchmarking group. This metric indicates a rental market that is potentially out of reach for the local workforce, and particularly problematic in lower wage sectors such as hospitality and retail.”
Similarly, “the relatively high home value compared to income in Federal Way shows that the housing stock is outpacing median household income in the area. With a high value-to-income ratio, housing is more difficult for a majority of households to affordably secure. The poverty rate in Federal Way is 11.77%.”
What is low income housing?
Federal Way needs 3,587 units in the next 20 years for households who make less than 50% AMI. How does that need get met?
“We know that market forces don’t naturally create affordable housing,” said Amanda Santo of the Multi-Service Center. She is nationally accredited as an Affordable Housing Certified Professional and is also the chief operating officer at the MSC in Federal Way.
The base expense of construction and maintenance of housing costs pretty much the same regardless of who will be living there, Santo explained. Affordable housing “doesn’t happen naturally, especially at the lowest income populations. If market rate developers could profit off of low income housing, they’d be out there doing it.”
Some examples of forces that can “create economic incentives for affordable housing to happen” include “government intervention, subsidies, discounted land and the Low Income Housing Tax Credit.”
Without this government intervention, Santo said most developers don’t have the resources or incentive to designate any units as affordable.
For the large scale development project TC-3 in Federal Way’s city center, for example, the city said they “did not include any requirement for housing to be affordable.”
One common misconception is that any time affordable housing is discussed, it is the same thing as subsidized housing. “It’s not that simple,” Santo said.
Santo explained that the best way to understand the different types of housing is to think about “models of housing” vs. “how we pay for them.”
Ways to pay for housing can include both affordable housing and subsidized housing.
Affordable housing typically refers to rental units that have a rent cap that is calculated based on the AMI.
This means the rent prices have nothing to do with the actual income of the person applying — instead they have a maximum cost that is calculated based on average incomes of people in the area.
In Federal Way city code, “rental affordable housing” means dwelling units that are offered for rent at a rate that is affordable to those individuals and families having incomes that are 50 percent or below the area median income (AMI).
Including affordable housing units that will be rent-capped is a way for developers to qualify for tax credits, specifically the Low Income Housing Tax Credit (LIHTC).
Subsidized housing on the other hands means that actual individual household income is assessed and rental costs for that person or household is calculated based on that.
Sometimes subsidized housing qualification is connected to a specific property, available only for a specific population, or is provided via Section 8 vouchers can in theory be used at market rate apartments.
While the King County Housing Authority lists six subsidized locations with a combined total of 166 units within Federal Way, not a single one is accepting applications at this time.
Both affordable housing and subsidized housing can show up in a variety of different models of housing, but “the funding sources help shape and create and define what the housing will look like,” Santo explained.
Models of housing can be structured based on a specific population the housing is meant for, like units that are for veterans or seniors. A model of housing could include who owns it, like a private developer, a nonprofit or a single homeowner.
Current Federal Way development
The city reports new housing construction to the state on an annual basis, and shared with the Mirror that “for April 2023 to April 2024, the city added 197 new housing units and lost 7 units to demolition,” but that “this number is already outdated as the Trouve multi-family project (1st Avenue and South 348th Street) has received nearly all of their occupancies (233 units) after April.”
When it comes to affordability for that property, “5% of the total number of units (12 units) were required to be affordable to those making 50% AMI or less.”
Despite the specific goals around affordability and housing brackets, the city said that overall they “do have information on the affordability of the new units being built in the city.”
Mayor Jim Ferrell said that “at the City of Federal Way, we’re committed to ensuring that we have a full range of housing options. From affordable to at market, our efforts will ensure our community has those options as we plan for the future.”
El Centro de la Raza, MSC and Sound Transit all have plans to add additional housing to Federal Way’s stock, including affordable units.