Seattle City Council Select Budget Committee Hearing on 2027-2028 Proposed Budgets

The Select Budget Committee met on Tuesday, September 29, 2026, from 9:30 AM to 2:24 PM (with a lunch recess from 12:34 PM to 1:35 PM) to review the Mayor's proposed 2027-2028 budgets for the Office of Housing (OH), Seattle Department of Construction and Inspections (SDCI), and Office of Planning and Community Development (OPCD). Chair Dan Strauss presided; 6 members were present at roll call, with 3 arriving later. The committee heard presentations from department directors and the City Budget Office, then engaged in detailed discussions on funding levels, program challenges, and potential impacts of cuts.

Office of Housing (OH)

• Director Kelli Larsen presented the department's proposed budget. OH will receive $140 million in JumpStart Payroll Expense Tax (PET) revenue in 2027 and $139 million in 2028, representing over 30% of annual JumpStart revenues.
• The total OH budget is approximately $347 million for 2027, with no changes to staffing (69 FTE). Key allocations: $235 million for multifamily capital, $61.4 million for agency supports (operating subsidies, resident services, workforce stabilization), $13.6 million for homeownership, $8.8 million for weatherization/home repair, $19.4 million for administration, and $9.4 million for rental assistance (administered by HSD).
• Larsen highlighted rising area median income (AMI) growth—8% annually over the last five years vs. 3% from 2000-2020—which pushes income-restricted rents beyond what low-income families can afford. She noted that 60% AMI studio rents now exceed market rates in some neighborhoods, making 30-50% AMI the "sweet spot" for affordability.
• The department has made progress on the 2023 Housing Levy: 47% of rental home goals (1,600+ homes), 62% of operating/maintenance/service goals, and 34% of for-sale home goals achieved in the first two years.
• OH used $55 million in debt restructuring to save nine buildings from foreclosure, buying down rents and improving cash flow. It also provided $40 million in urgent operating support over two years, which has prevented the collapse of major organizations.
• To manage a $65 million reduction in multifamily rental funds, OH will use forward commitments of future JumpStart revenues, and no current projects or operating contracts will be affected. Housing levy commitments remain unchanged.
• New NOFA criteria require 20% of new units to have two or more bedrooms and 20% to target 30% AMI or below, shifting focus toward family-sized, deeply affordable housing.
• Councilmembers expressed support for maintaining steady investments, highlighted the importance of preservation and stabilization, and asked about community self-determination fund changes (no set line item, but priority maintained) and homeownership program funding (weatherization fully funded; homeownership reductions reflect removal of one-time council additions).

Seattle Department of Construction and Inspections (SDCI)

• Interim Director Sam Steele presented. SDCI is 91% funded by permit fees, with 9% from the general fund. Permit activity has dropped sharply: master use permit applications are projected 60% below 2019 levels, and construction permit applications 15% below. Valuation of projects has shifted to smaller, lower-value work, limiting fee revenue recovery.
• The proposed budget reduces 34 fee-funded positions (27 vacant, 7 filled), resulting in 7 layoffs, to align staffing with workload. Staffing reductions are concentrated in cashiering, payment processing, design review, and internal special projects.
• A 10.7% fee increase for building and land use (including 3.7% inflation) is proposed, generating about $6.3 million annually. The legislation also introduces a new $11 per-unit rental agreement regulation fee to fund enforcement of recent rental regulations.
• SDCI's overall fund balance is projected to fall to roughly $30 million by end of 2026, down from $80-100 million prior to 2024. The building and land use core staffing reserves are nearly exhausted, with projections showing only $1 million in 2027, zeroing out by 2028.
• A new housing ombuds position, funded by JumpStart, will help low-income and community-driven projects navigate permitting, part of Mayor Wilson's housing acceleration executive order.
• Councilmembers raised concerns about the impact of staff cuts on permitting timelines, the depletion of core staffing reserves, and the negative signal of fee increases to developers. Councilmember Kettle criticized the city's "tone" toward development, citing lost projects. Councilmember Rink questioned confidence that no further cuts or fee hikes would be needed; SDCI stated cautious optimism but noted reliance on economic recovery. Councilmembers also praised the housing ombuds and urged stronger customer service.

Office of Planning and Community Development (OPCD)

• The committee heard the OPCD briefing after the lunch recess (from 1:35 PM onward). No detailed discussion was included in the transcript, but the item was heard and no votes were taken.

Key Outcomes

• All three information items (Inf 2957 OH, Inf 2965 SDCI, Inf 2966 OPCD) were heard in committee; no action was taken.
• The committee recessed from 12:34 PM to 1:35 PM for lunch and adjourned at 2:24 PM.
• No formal votes or decisions were made; the meeting served as a briefing and discussion. The committee will continue budget deliberations in subsequent sessions, with final budget decisions expected later in the fall.