King County set to bring in tax-free housing fund

New funding source was created by the Washington state Legislature during the 2019 session.

King County will begin receiving millions of dollars this biennium to help fund affordable housing from a source that was created by the Washington state Legislature during the 2019 session.

The funds stem from the state’s HB 1406, which passed in April. It allows cities and counties to receive a state sales and use tax credit, which can be invested into affordable housing. The King County Council approved a pair of ordinances on Aug. 20 that will allow the county to begin receiving the funds.

As per the state law, cities and counties had until this coming January to adopt a resolution of intent and until July to pass an ordinance officially allowing the state money to begin coming in. However, King County ratified an ordinance first, which allows them to collect at the maximum rate of .0146 percent. Statewide, HB 1406 is making some $500 million available over the next 20 years. The money will be used to serve people making less than 60 percent of the area median income, approximately $42,000 for an individual and $60,000 for a family of four.

King County is set to bring in $4.2 million in the 2019-2020 biennium, which will increase to $7.2 million and $7.8 million over the next two bienniums, according to the ordinance. In total, the county is expected to bring in around $100 million over the 20-year timeline. Taxes in the county will not increase because of this change, as the revenue is essentially kicked back from state coffers.

The county officials reported that between the county and cities, some $200 million could be invested into affordable housing, permanent supportive housing and rental assistance over the next two decades.

Councilmember Joe McDermott expressed his appreciation for the new source of funds to help address the housing challenges in this region.

“A safe and secure home is so important for people to be healthy, thrive and feel connected to their communities, but it’s not news that the price of housing can quickly grow out of reach for King County residents,” he said in a recent statement. “With this legislation, we are taking advantage of the opportunity to use these resources in a targeted manner to address an urgent need that people face on a daily basis. This is a great example of our state government providing King County with tools that we need to better serve residents, and I want to thank the state legislature for providing King County with this opportunity.”

For larger cities and counties, the funds can be used to buy, construct and remodel affordable housing. For smaller communities, it can also be used to provide rental assistance.

“It affords us an enormous opportunity,” said King County Council member Jean Kohl-Welles. “We’ve had tremendous success in our county, economic success, we’re really doing well. But with our successes have come enormous challenges.”

This includes dramatic increases in rent, housing displacement, income inequality and a rise in homelessness. On Vashon, during the process to create the most recent Community Service Area Subarea Plan, it was estimated that Vashon needed between 100 and 120 new affordable dwelling units to meet demand. The latest homelessness count on Vashon, completed in January, tallied nearly 100 people.

The Regional Affordable Housing Task Force recommended last year that 244,000 new housing units were needed in King County by 2040 to address the housing crisis. The task force developed a five-year plan to build or preserve at least 44,000 affordable housing units, an ambitious goal.

The housing task force report noted that countywide, communities of color and renters were more likely to be severely cost-burdened, or spending more than 50 percent of their income on housing costs. Some 56 percent of black households, roughly half of Hispanic households and 35 percent of white households were severely cost-burdened. Renters are also more likely than homeowners to be spending upwards of 50 percent of their income on housing.

Additionally, those under the age of 25 and seniors were the most likely to be cost-burdened. Younger residents can’t save for homes and seniors struggle to find places to live on fixed incomes while shelling out cash for health care.

However, the 20-year investments allowed under HB 1406 may be a drop in the bucket for the county, as the task force report noted that around $306 million of public money has been spent on building or preserving affordable housing each year in King County. The federal government hasn’t been funding its low-income housing tax credit program to keep pace with increased need.

The housing pinch has been felt all over; nine South King County cities recently formed the South King Housing and Homelessness Partnership to help struggling residents in the historically less expensive regions south of Seattle. Housing prices in Kent, for example, increased by 33 percent from 2012 to 2017, according to the task force report. And it was a similar story in surrounding communities.

On top of this, a significant portion of new housing being built is geared toward single renters and couples and not families, which hits immigrant and refugee families especially hard.

County officials say the focus recently was on passing the ordinances and there are no concrete plans in place yet for how the funds will be used, but it will be the Department of Community and Health Services that will administer the funds in the county, in consultation with the King County Council.

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