SNOHOMISH — The city will bump up its sales tax rate as part of a goal to foster more affordable housing in town.
The City Council unanimously approved creating a one-tenth of 1 percent sales tax increase to go toward housing which is affordable to middle-income and low-income residents and for delivering mental health treatment services.
State law limits that the sales tax money must benefit income-qualifying veterans, seniors, people with disabilities, domestic violence survivors and families at risk of homelessness. The income limit is 60 percent of the median income.
The move will increase Snohomish’s sales tax rate to 9.3%*.
The city estimates the 0.1% tax will bring $600,000 or more a year for Snohomish projects. The city will control the revenue and projects it invests in.
The city can use this money to acquire, maintain or construct housing and behavioral health locations under state law. State law requires at least 60% goes toward housing.
The city’s going to have to accumulate money before making meaningful progress on housing, but it’s a start, planning director Glen Pickus commented at the meeting.
Nobody presumes $600,000 a year will construct public housing in a jiffy.
It could, though, help fund many different results: The city could buy land to arrange a nonprofit to put affordable housing on it, for example, or it could give grants to local affordable housing nonprofits.
It also can greatly help individuals with neglected mental health needs by funding their treatment, councilmembers noted.
Securing land is among the biggest barriers nonprofit housing organizations face. The private market can typically outrun a nonprofit’s ability to arrange financing when open land is available for purchase.
People who spoke at last week’s council meeting advocated for the tax increase.
A fund for housing reflects how the Snohomish community cares for others, resident Mark Miller said.
“This is a slam-dunk, you’ve got to take this money,” council gadfly Morgan Davis said. He said it could help the city fund an attempt to buy the county public works yard on Avenue D to place affordable housing there. The Avenue D parcel is going to be sold at market rate by the county.
The city is also investigating the legality of whether it can allow housing on a portion of its 10-acre park space at 2000 Ludwig Road. (It’s a question primarily because special park impact fees contributed to buying the land.) The council has discussed surplussing part of this land for affordable housing.
A county group, the Alliance for Housing Affordability, nudged county leaders to take a similar countywide 0.1% sales tax, but so far it hasn’t. City governments had to wait for whether the county would act by a Sept. 30 deadline before they could pursue their own affordable housing taxes.
State law allows any City Council to set the tax itself without going to voters, formally known as councilmanic authority.
City leaders found it appealing the tax money would directly benefit projects within city limits.
If the county acts on a 0.1% sales tax, it would not interrupt or override city housing taxes.
At the county level, a sales tax like this would generate about $15 million a year, according to 2020 figures from the Alliance for Housing Affordability.
* - CORRECTION:
This article reported that the sales tax increasee would become effective when the ordinance became effective. It does not, because the city must file paperwork with the state to implement the tax change. The affordable housing tax revenue begins being collected in April 2022. The Tribune regrets the error.
