A countywide tax for affordable housing may be
discussed in 2021
SNOHOMISH COUNTY — County elected leaders are being asked to enact a new sales tax to help pay to construct subsidized housing.
It’s one of many avenues that may get considered next year as the county’s affordable housing gap continues to grow.
A county taskforce on affordable housing identified a countywide property tax for housing, dedicating a portion of new construction property tax revenues to affordable housing, lobbying for grants, and many others, as ideas earlier this year.
Any property tax would go before voters. Almost two-thirds of the task force voted against further studying the property tax as a solution.
The Alliance for Housing Affordability (AHA) is asking for a countywide 1/10th of 1 percent sales tax as one solution, and is asking the County Council to enact the tax legislatively, using what’s called a councilmanic tax.
This sales tax would generate about $15 million a year in grants for affordable housing nonprofits to be better capable of purchasing land and building new subsidized housing.
The coronavirus’s impact on the economy, though, makes some decision-makers rethink hesitantly about any tax request.
The alliance petitioned the county council and County Executive Dave Somers in October.
The council might not put it on its agenda until early next year, said County Councilwoman Megan Dunn, who’s on the alliance board.
Any county council member can introduce the item as an ordinance for further study.
County Council Chair Nate Nehring said he supports the goal, but said a tax like this “ought to be decided directly by the voters.”
In an interview, Nehring said this is an “inappropriate time to raise taxes on people.” And, he wants some assurance government spending will make sense in solving affordable housing.
Nehring is more interested in making sure all levels of housing is being discussed, he said. He wants to make sure the conversations on housing “don’t leave out mid-market housing, and that hasn’t been a big part of (these talks).”
No County Council member the Tribune reached spoke out against AHA’s core idea for more housing.
The County Executive is weighing multiple options for funding, the administration’s communications director said.
“There is no question that more affordable housing is needed across the county and region, and the (alliance’s) proposal is one possible avenue that the Executive is considering. Of course, the economic crisis brought on by the COVID-19 pandemic argues for being very careful about the timing of such an action, but there is no question about the need. The county is aggressively working with its partners to find ways to reduce regulations and otherwise encourage more private sector development at all price points. We appreciate all those who are working with the Executive and the county’s Housing Affordability Regional Task force to come up with more ideas. Undoubtedly, 2021 will be a year of an even greater housing crisis, and we will need everyone working together on the challenge,” said Kent Patton, the County Executive’s spokesman.
One of the simplest solutions — to simply build more housing that is affordable housing — is no easy feat, those in this arena say.
Steep land prices and a hot market have strangled affordable housing groups. The private market can outrun them on property deals faster than housing authorities can arrange financing.
After financing, local zoning laws favoring single-family housing is the next biggest hurdle, said Mark Smith, the head of the Housing Consortium of Everett and Snohomish County.
Government grant makers won’t give money unless you own the land, Smith said. And debt lenders won’t loan money unless all the project details make sense.
So when the tenants of affordable housing are paying subsidized and specifically low rent prices, penciling things out to show the project can pay for itself is tough.
A county affordable housing tax would let nonprofits leverage the grants to apply for loans from lenders.
“It would make a huge impact, frankly,” said Duane Leonard, the head of Housing Authority of Snohomish County (HASCO). There is federal money and a little bit of state money for nonprofits, “but there’s not really a lot of local resources.”
State law says 60 percent of the money collected must go toward constructing new affordable housing, behavioral health or to help pay for maintenance to existing affordable housing stock.
That 60 percent equals about $9 million. The money would be disbursed through grants for affordable housing organizations. The other 40 percent must go to operations for behavioral health or affordable housing programs.
A funding source like this tax might also let affordable housing groups step in to buy properties that are subsidized housing that are up for sale.
The Pilchuck Ridge Apartments in Snohomish is one example. In 2018, its new owners changed from subsidy-based rentals to market-rate rentals, leaving a community of about 50 residents on Section 8 and disability income largely unable to pay the rent.
Could it have been kept as affordable housing with a grant typified by the proposed sales tax? “Absolutely,” Leonard from HASCO said. “That project is a perfect example — we’re losing housing out the back door while we’re building in the front.”
Some suggest groups could buy and rehabilitate existing buildings, but there’s a lot of money pits out there, by how Smith explained it. It’s why this rarely happens: The properties cheap enough that nonprofits can afford are often too expensive to rehabilitate, Smith said.
“If the county is serious about its affordable housing crisis, it needs to build more homes, and that means private subsidies. The developer community can’t build those houses,” Smith said.
In October, the alliance’s board of elected officials voted 8-1 to make the ask. Board member Scott Bader, an Everett City Council member, voted no. Earlier this year, Bader raised concern that the city should not support this sales tax measure on the risk it could interfere with Everett’s own possible tax initiatives. The city has weighed creating a municipal parks tax and a regional fire tax.
Mukilteo Mayor Jennifer Gregerson and Snohomish City Council President Linda Redmon are also on the alliance board.
“Housing affordability and homelessness is an epidemic in our County which has been exacerbated by the COVID-19 pandemic,” County Councilwoman Dunn wrote by email.
About one-third of Snohomish County families are cost-burdened by housing, meaning more than 30 percent of their incomes go to housing. The disparity is greater for Black, Hispanic and Hawaiian households, a 2019 study by the United Way of Snohomish County found.
This would “give the County the critical resources needed to address our housing crisis, especially as we can look ahead to see that the sunsetting of the eviction moratorium will further exacerbate our homelessness and housing crisis,” Dunn wrote by email. “Snohomish County had the highest unemployment in the State, we need to be able to support the housing needs for our neighbors who are struggling to meet their own basic needs.”
A recent change to state law also lets cities and counties set up a revenue stream for local grants for affordable housing projects; most cities today have taken the step to do so, including Snohomish and Everett.
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