The job tax unanimously approved by the Seattle City Council in May was purportedly intended to fund affordable housing efforts. Although the tax has been repealed, the housing problem remains.
Now, some state and regional leaders are looking at a possible regional strategy that includes waiving impact fees for certain projects and reviving a legislative proposal from this session that would allow counties to retain portions of the sales tax revenue to pay for affordable housing projects.
According to the Puget Sound Regional Council (PSRC), central Puget Sound home prices have increased by 94 percent since 2012. However, King County holds a disproportionate amount of that boost in value, with a $648,000 median house price. At the same time, it had the lowest housing affordability for first-time buyers of all four counties in the region (Pierce, Snohomish and Kitsap). For King County, PSRC reports that the “price of the typical home surpassed levels affordable to the typical family in early 2016, and affordability has continued to erode since then.”
The Seattle job tax would have ostensibly paid for the construction of low-income housing over five years, among other things. However, it provoked strong resistance among the business community as soon as it was proposed, though industry members say the backlash stemmed from long-term frustration with the City Council.
Emails obtained by Lens through a public records request show that in the weeks following the ordinance’s passage and prior to its repeal, officials with King County, the state Department of Commerce, the Office of Financial Management and Governor Jay Inslee’s Office contemplated possible ways to improve housing affordability at a regional and state level.
Those conversations came after a phone conference between Inslee and Seattle Major Jenny Durkan on May 3 discussing the head tax.
Durkan Spokesperson Stephanie Formas told Lens that the call focused on current state efforts to improve housing affordability. “Even predating the head tax, Durkan focused a lot of her campaign on regional solutions.”
According to a June 6 email, a regional official proposed using existing tax revenue to fund homeless programs, such as King County’s hotel tax, once the revenue is freed up from paying the costs for CenturyLink Field, while soliciting private contributions in the meantime.
“This might give the Seattle City Council room to re-evaluate and repeal the head tax,” a state official wrote in the June 6 email.
Also discussed was the possibility of passing a revised version of HB 2437 next session. Introduced this year by House Appropriations Vice Chair June Robinson (D-38), it would have allowed cities and counties under certain conditions to impose a local sales tax that would be credited against the state sales tax to pay for affordable housing. Those jurisdictions would have also had to offer matching funds. Although it cleared the House with some Republican support, it was referred to that chamber by the Senate Rules Committee after passing through Ways and Means.
A state official estimated that if all eligible cities and counties participated, it would take $50 million from the General Fund – State, the primary account for funding the operating budget.
“We feel a package for local jurisdictions that provides incentives for more affordable housing development is appropriate,” a state official wrote in a June 6 email. The individual wrote further that if those developments require additional infrastructure, the state could amend the public works assistance account to defer loans and lower interest rates under specific conditions. That account is used to help local governments pay for infrastructure needs through a revolving loan program.
“This would provide ‘reasonable measures’ for achieving affordable housing per buildable lands (SB 5254) as well as gain communities affordable units near transit,” the state official wrote.
Other proposed ideas included grant opportunities for local governments that waive the impact fees for affordable housing; HB 1398 passed in 2012 gave cities that authority. However, a state official wrote in an email “it is difficult for jurisdiction to absorb that cost, as often the impact fees provide services such as schools, parks, and emergency services.”
Changes could also come to the State Environmental Policy Act (SEPA) by streamlining the process within an area that has received funding for remediation work. Known as “brownfields” these properties have hazardous materials that require removing or sealing before they can be used again.
According to the email, a meeting was scheduled to discuss the ideas with Inslee on June 12, the same day the Seattle City Council repealed the head tax.
Also looking at ways to improve housing costs is the state Joint Legislative Audit and Review Committee (JLARC). Its study on cost-effective solutions is expected to be released in December.
Another way to make housing more affordable is by lowering the costs for developers to build them. That’s according to County Manager Mike Pattison with the Master Builders Association for King and Snohomish Counties. Last month, he told Lens that a drawn-out permit process for residential project results in a higher price tag when it’s sold.
“It’s the time that’s associated with it that is so costly,” he said. “Since the recession, many planning departments haven’t fully ramped up, and…the review of a permit is far more complex than an outsider might think there is.”
He added: “Some jurisdictions are more committed to faster turn-arounds than others. It’s how much of a priority permitting is to each jurisdiction.”