Proposed bill ties affordable housing with sales tax funds

OLYMPIA — Counties could parlay a sliver of sales tax into a mound of dollars for affordable housing under a bill drawn up by an Everett lawmaker.

The legislation sponsored by Rep. June Robinson, D-Everett, would make it possible for each county to receive a share of the tax collected by the state from retail sales within its borders.

That money, which would be provided annually for 20 years, could be spent on buying or building affordable housing, or could be bonded in order to finance larger and more expensive undertakings.

“In our community as in every community around the state, homelessness is a crisis,” Robinson said. “We’re looking for a way to infuse capital into affordable housing in communities. This is a viable path to make that happen.”

Statewide, the change would have generated a total of $42.9 million for the 39 counties based on retail sales in 2017. If those dollars were bonded, it would have enabled issuance of up to $600 million in bonds for projects throughout Washington, according to estimates compiled by the staff of the House Finance Committee.

For Snohomish County, it would have netted $3.5 million, enough to cover $48.4 million in bonds, according to committee staff estimates.

House Bill 2437 is scheduled for a public hearing at 3:30 p.m. Tuesday in the House Finance Committee.

The genesis of this effort came from House Speaker Frank Chopp, D-Seattle, who’s seen the state use this approach to assist rural counties as well as support financing of local infrastructure.

“There is an incredible (housing) shortage and I’d rather have people living in homes rather than dying on the streets,” he said.

Under the bill, Snohomish and 16 other counties would be eligible to receive 0.025 percent of sales tax collected within their respective borders. The remaining 22 counties, which are deemed economically distressed, could receive 0.050 percent.

To get the money, the legislative authority — such as the Snohomish County Council — must opt-in by voting to impose the tax.

However, the sales tax rate will not actually go up. Rather the approved rate, .025 in Snohomish County’s case, would be applied as a credit against the tax proceeds collected by the state. Eventually the state would calculate the value of the credit and send it to the county.

Under the bill, the money can be used for “acquiring, rehabilitating, or constructing affordable housing, which may include new units of affordable housing within an existing structure or facilities providing supportive housing services.”

Dollars also can be used to pay for the operations and maintenance of new units of affordable or supportive housing, or provide financial help to renters, according to the language of the bill.

As envisioned, counties could issue general obligation bonds to carry out projects or provide loans or grants to nonprofit organizations and public housing authorities.

Under the bill, all counties except King County have until July 1, 2020, to opt-in. If they don’t, cities within those counties could sign up instead. The amount of money cities could receive would be tied to retail sales within their respective boundaries. King County must decide by July 2021 otherwise cities within the county could participate.

The legislation also requires any county or city imposing the tax to file annual reports with the Housing Finance Commission detailing how the money is spent.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com. Twitter: @dospueblos.