Verity Joins Equity Housing Project to Help Bridge a North-South Divide
July 14, 2021
Although the dividing line between what is Seattle’s north and south sides is somewhat subjective, the differences, especially as they related to diversity, are clear, says Verity Credit Union COO Justin Martin.
In 2010, the 98118 zip code on Seattle’s south side was the most diverse in the city, according to U.S. Census data. But a light rail station that opened in the zip code in 2009 contributed to a decline in diversity, and by 2020, Census data indicated the zip code was the fourth-most diverse in the Seattle area.
“With the light rail comes development,” Martin says. “With development tends to come gentrification and displacement. The cost of living goes up. All these things can have negative effects on the people who have historically lived in a place and made it a vibrant community.”
Development for the Community
Development bubbled up around the light rail station, but forward-thinking groups staked out their claim, too. In 2016, the city sold a 3.2-acre tract of undeveloped land to a group of nonprofits that earmarked the land for development in support of community needs.
According to Martin, the nonprofits spent two years holding community forums and asking local residents how they’d like to see the land developed. By 2018, an especially interesting request emerged: The community wanted to bring a credit union into the fold.
“One of the things the community specifically asked for was a credit union,” Martin says.
Although some big banks did operate in the area, the community wanted a credit union to bring a values-aligned approach to financial services.
In 2018, the group asked Verity to establish a presence in the quickly developing area. Before agreeing, Verity spent six months gathering information, from running traditional market analysis to attending community forums and other meetings. Through its due diligence, Verity learned two things. First, traditional market analysis stated a branch here would be less profitable than other potential locations. Second, it shouldn’t open a branch unless it could offer something to the community.
“There were some innovative things happening here that we wanted to be a part of,” Martin says. “But we didn’t want to say yes to our involvement unless we could bring value to the community.”
An Equity Model
The Othello Square project, as it’s called, will comprise four buildings and support more than 350 living-wage jobs. Construction is ongoing, but the development will include a multicultural center, a school, medical services, affordable housing, and retail space. It also will include a Verity branch.
“Before we became otherwise involved in the project, we wanted to show the community we were committed enough to have our boots on the ground,” Martin says.
But it was the affordable housing element of this project that caught the credit union’s eye. The building that houses Verity’s branch will contain 68 limited-equity co-op housing units. Someone earning less than 60% of the area’s average income can buy into the co-op by purchasing a unit, which range from one to three bedrooms. Every year, the unit will appreciate in value to a capped percent, which allows the owner to accumulate equity while maintaining an affordable resale price for future buyers.
“Homeownership is one of the pathways to building generational wealth,” Martin says. “We wanted to do our part in that.”
Martin had not seen the limited equity model deployed within the city before, especially not to this scale, and as fate would have it, the developers needed a financing institution.
The average home price in Seattle is slightly less than $800,000, according to Martin. And although the final pricing is being finalized, he anticipates the largest units in the Othello Square development will land between $60,000 to $70,000. Considering the amount of work that goes into a single mortgage approval, it’s understandable that a local financial institution might balk on a return that is, at most, 10 times less. However, the model offers tangible community benefits, so Verity considered it a project worth exploring and has committed to financing every unit in the development.
COVID-19 forced delays in the project and pushed back the groundbreaking, but Martin expects to see demand when the units are listed. For now, however, the viability of the project gives Verity hope this will be the first project of its kind, not the last.