Riverstone Apartment Complex in Federal Way. Courtesy photo

Riverstone Apartment Complex in Federal Way. Courtesy photo

Federal Way council members raise issues with Microsoft’s affordable housing investment

City did not have a say in purchase of Federal Way apartments, council members say, as they question whether this solution is the right fit for Federal Way.

In an effort to preserve affordable housing, Microsoft Corp. recently invested $60 million to King County Housing Authority, which includes the acquisition of a Federal Way apartment complex.

The effort is part of a the company’s total $245 million investment will protect 1,029 units of affordable rental housing throughout King County, 308 of which are in Federal Way.

But several Federal Way City Council members are concerned about whether the city will have a say in the process as the Housing Authority works to create more, and if this solution is the right fit for Federal Way.

Microsoft said this investment underscores a significant milestone for Microsoft’s $500 million commitment they announced in January toward creating and preserving affordable housing in the Puget Sound region.

For a breakdown, the partnership comes in the form of a 15-year, $60 million loan from Microsoft to the Housing Authority at below-market interest rates, combined with $20 million in low-interest debt and additional credit enhancements provided by King County, and $140 million in bonds issued by the Housing Authority, according to a Sept. 26 press release from Microsoft.

Microsoft’s $60 million investment aids the Housing Authority’s purchase of Riverstone Apartment homes in Federal Way, along with four other residential apartment complexes in Kirkland and Bellevue.

Riverstone Apartments offers housing options from 550-square-foot studios in the price range of $1,065, to 1,150-square-foot three bedroom, two bathroom units for $1,815 per month.

The purchasing of these properties ensures rents will remain affordable long-term and will allow more than 3,000 low- and middle-income individuals to remain in their communities, the release states. Rents will not be subsidized and current Riverstone residents will be allowed to remain at this location.

“Because of their location, these affordable properties were at high risk of experiencing rapidly escalating rents or redevelopment as higher-cost housing,” the press release continues.

“We are committed to maintaining and bolstering strong, vibrant communities here in the greater Puget Sound region,” stated Jane Broom, senior director of Microsoft Philanthropies, in the press release. “Thriving communities include safe, reliable and affordable housing options for people at all income levels. To do this, we all need to come together to not only build more housing options, but also to preserve what already exists.”

Federal Way City Council members weighed in on Microsoft’s investment with mixed reactions.

Mayor Jim Ferrell offered his support of the investment.

“It’s important for our community to have a diverse array of housing options for a variety of income levels, and this acquisition helps fulfill that need,” he said.

However, several officials said they only learned of the affordable housing collaboration after the Federal Way purchase had been made.

Federal Way Council member Mark Koppang said his frustrations arise from the Housing Authority and Microsoft’s apparent lack of transparency in collaborating with Federal Way on such a major issue.

“Remarkably, there’s been very little conversation between the county, Microsoft and Federal Way,” Koppang said.

“Considering the momentousness of King County actually purchasing the property in Federal Way to execute their vision of how to address the homelessness issue — without even having a conversation with policymakers — I would say it’s arrogant and I think it reflects, in my mind, just a continued bias that King County has for doing what they want to do as opposed to really collaborating with Federal Way.”

King County Housing Authority did not respond to multiple requests for comment.

Koppang said the investment demonstrates a regional push to force Seattle solutions into the South King County area, and whether it is a good or a bad thing remains to be seen.

“I want to be a part of the conversation,” Koppang said. “Federal Way really needs to be able to come up with Federal Way solutions.”

The upside is the investment will take a four-decade-old property in need of updating and refurbishment, and bring the property up to standards, said Koppang, who lived at Riverstone in 1986.

“It’s an unknown as far as what the impact would be,” Koppang said. “My concern would be for the security of our citizens, absolutely, in that we have a place that … is not going to bring people into the community [who] are going to cause problems.”

“Are they going to be screening their tenants? Are they going to be doing the things that create safe and viable housing alternatives for people with low- to moderate-incomes?” he questioned. “Or is it going to be run in a way that … may potentially create new problems for Federal Way? That’s the question.”

Council member Jesse Johnson said he was surprised at the amount of money invested into the affordable housing crisis, but he is wary of other factors.

“It’s a huge investment,” Johnson said. “I think it’s just important … that we don’t allow developers to be the ones that benefit the most by being able to build the most amount of complexes, because of how much money is there, without considering the citizens and the local municipalities how they have to policy all of that.”

It will be important for the mayor and the council to monitor the type of housing coming in to the city, the timing of the developments, and how much housing is brought in at any one time, Johnson said.

Johnson, who grew up in Federal Way, said he personally has seen the city’s boom of apartment buildings over the last few years.

“Some of that is a good thing, because we do need housing for people as they move into the city and we want to be a family-friendly city and making sure we’re providing that housing,” he said. “But at the same time, I think workforce housing is very important.”

Workforce housing, by Johnson’s definition, would include housing suitable for seniors, young professionals, working families and more, in addition to the apartment buildings.

“I really am a fan of, for example, the single family homes, town homes in a complex rather than housing that is more vertical — just for our area,” he said.

Johnson would like to see housing options that create more of a neighborhood feel to the city rather than the vertical structures. It is critical the city provides housing that reflects what council members want this city to be, he added.

“We do have a younger city, but we also have a city that has senior citizens as well … We need to have a balance of that and I think the workforce housing model is a really good idea,” Johnson said, explaining two-to-three bedroom condominiums and townhouse-like housing options.

The type of affordable housing brought to the city also has potential repercussions on Federal Way’s infrastructure, schools and tax base, Johnson said.

“I think it’s important we … don’t put too much of a burden on single family [tax]payers or people that own their homes,” Johnson said.

These investments will put more stress on local government and various departments to fund the influx of residents to the city with these new low-income options, he added. He noted the city’s population recently exceeded 102,000 residents.

“For the amount of space that’s in Federal Way, we’re pretty much at capacity,” Johnson said. “What that means is that we’re going to have to start looking at undeveloped land …”

The city will need a strategic plan and course of action for the future of Federal Way’s housing, as the city’s most recent Comprehensive Plan was updated in 2015, Johnson said.

“I don’t have any concerns in terms of people moving into the city,” he noted. “I do think that people moving in is always a good thing for the city as long as it’s monitored well.”

Federal Way Deputy Mayor Susan Honda said the acquisition of the Riverstone apartment complex has many citizens concerned and that “the city did not have a say in this purchase.”

The Riverstone complex is considered affordable workforce housing, which is not considered low-income housing, she noted.

There shouldn’t be any changes to the school impact as families already live there and may continue to live there, Honda stated.

“Federal Way does need a mixture of housing,” Honda said. “This is part of what makes a strong community, having housing for all levels of income.”

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