Utilizing new state affordable housing legislation proves complex

Local leaders are grappling with how to utilize complicated new state legislation to bring in money for affordable housing.

Faith Pettis, a partner at Seattle-based firm Pacifica Law Group, presented to the Island County Council of Governments last Wednesday about the technicalities of House Bill 1406 and how it could potentially be used by counties, cities and towns.

The program allows governments to opt into a tax credit program on the state’s portion of sales taxes. It doesn’t raise state taxes, but local entities wanting to collect the full amount of credit allowed are required to have a “qualifying tax” that raises funds earmarked for housing.

Island County, Langley, Coupeville and Oak Harbor don’t currently have taxes that qualify.

Jurisdictions are still eligible to receive the full amount if they enact a qualifying tax before Dec. 19, 2020. Cities and towns would need voter approval to pass one of these taxes but counties do not. Leaders from Coupeville, Langley and Oak Harbor did not express strong interest in pursuing new levies.

The money from this program can be used to construct new affordable and supportive housing, for maintenance on new facilities and for rental assistance in smaller jurisdictions such as Island County. The funds must go toward programs and projects that serve households earning 60 percent of Island County’s area median income or less.

Each leader acknowledged a strong need for more affordable housing in the county to support its workforce. Previous housing studies performed at the county determined a significant shortage of available units for households earning less than $50,000 a year.

The amount that can be collected each year will be capped at 2019 sales tax revenue, which will be determined in December. Based on 2018’s numbers, Island County would receive a maximum of about $176,000 a year if it enacts a qualifying tax and credits the full amount. Without the qualifying tax, the county would receive a maximum of about $88,000 per year.

Commissioner Helen Price Johnson lamented the fact that no new facility could be built on that revenue stream alone.

“I appreciate the tool, but let’s get real,” Price Johnson said at the meeting.

Housing Coordinator Joanne Pelant, with county human services, said the biggest gap in housing in the county is supportive housing, which provides a place to live as well as behavioral health services. There are no supportive housing units in Island County.

The new legislation also allows counties to pool the money with local housing authorities or certain nonprofits devoted to housing. There are also a number of steps the county must take before it is able to collect any funding.

Leaders from the municipalities and county said they would meet soon to determine how best to move forward and how to structure inter-local agreements for pooling the funding.

“A shared vision is going to be a stronger approach,” Island County Commissioner Janet St. Clair said.

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