A mix of state and local sales tax funding could generate enough money to build 240 housing units over 20 years for low-income individuals and families in Skagit County. But how the funding would be allocated among participating cities and the county still needs to be worked out.
State House Bill 1406, approved this year, allows counties and cities to set aside .0146% of sales tax revenue — half retained from the state’s share of sales tax revenue, the other half generated by voter-approved ballot measure — for affordable housing. The legislation expires in 20 years.
The state’s share, which would be available to Anacortes beginning this fall, would amount to an estimated $42,136 a year for 20 years. A voter-approved sales tax to support affordable housing would double that annual amount to about $84,272 — more than $1.6 million over 20 years.
If the county and all eight cities and towns in Skagit County participate, an estimated $267,938 a year would be generated countywide — more than $5.3 million over 20 years. County officials want all jurisdictions to team up in an interlocal agreement, saying that the combined resources could yield more bonded revenue for affordable housing construction and rental vouchers.
There’s a process: The City Council must approve a resolution of intent to retain the state’s share of sales tax revenue for affordable housing. Then, if the council wants to pursue the sales tax increase, called a “qualifying tax,” it must put a measure on the ballot in 2020. If voters turn down the sales tax increase, the city would still receive the state’s share.
Kayla Schott-Bresler, assistant director of Skagit County Public Health, gave a detailed presentation Monday to the City Council, including the advantages in all jurisdictions working together. According to her presentation, 70 low-income rental units are proposed in Mount Vernon, 20 housing units for veterans are proposed in Burlington, and the Anacortes Family Center proposes a 14- to 20-unit expansion. An affordable housing sales tax could bolster funding for those and other projects throughout the county.
The City Council will continue discussion of a resolution of intent on Aug. 25, Mayor Laurie Gere said.
According to the legislation, the funding would benefit those who earn 60% or less of the county’s median income. In Skagit County, that’s $31,920 for a single-person household and up to $49,260 for a five-person household. One-fourth of Skagit County households qualify, Schott-Bresler reported.
According to Schott-Bresler’s presentation, more than 1,633 Skagit County residents were homeless in 2018, including 606 children.
Brian Clark, executive director of the Anacortes Housing Authority, spoke in support of the legislation. The housing authority owns the Bayview Apartments, Harbor House Apartments, The Wilson Hotel and several townhouses in the city.
“It’s a great opportunity to raise dollars for much-needed affordable housing in our community,” he said. The housing authority recently purchased a 9,000-square-foot lot on 19th Street, where it proposes building 10 townhomes for low-income and working families. It also plans to bring in a development partner this winter for the Olson Building, which was built in the 1890s. Plans are to restore it and make it available for low-income apartments, much like the Wilson Hotel.
The Olson Building could be project-ready “fairly quickly,” Clark said.
City Council members saw advantages to teaming up with other jurisdictions rather than going it alone, but had a lot of questions: What happens if local voters turn down a sales tax increase? If the city signs an interlocal agreement, how will funds be allocated?
Schott-Bresler said an allocation plan would have to be developed. Allocation could be based on projects that are ready to be built.
“I do hope that over the course of the next many months, that these conversations continue and a lot of that would be worked out amongst the elected officials,” she said.
County Commissioner Ron Wesen said he was sure all three commissioners will be open to housing solutions the city proposes.
“Certainly, those kinds of things need to be worked out going forward,” he said of a funding allocation plan. “One of the things the county is trying to do is get more housing available in the whole community … It’s important we do all we can — to do what we can — for the homeless [and] the workforce housing that we have out there.”
Councilman Matt Miller said he wanted to wait a week before voting on a resolution of intent. He said there was “little or no risk” in the first step — taking the state’s share of sales tax revenue for affordable housing. The risk was in asking voters to approve the qualifying tax.
“When we’ve passed things like this before, we’ve had specific objectives,” he said. “We need to have ‘No kidding, here’s a project’ that we will put this money into.”
Councilman Ryan Walters, former assistant planning director of Skagit County, agreed.
“We need to have projects lined up before going down a complicated path,” he said. “There’s a lot more analysis to be done on the path that I would advocate exploring, which is the idea of going after the first increment of sales tax, and going after the second increment by virtue of putting a qualifying tax before voters.
“There are three projects that would benefit from the pot of money that we could access if we did that and that’s the Housing Authority’s project on 19th Street, possibly a fourth building at the Anacortes Family Center and possibly saving the Olson Building … I am less certain what we could do if we only opt into the first increment.”