New Funding for Housing in Pierce County

New Funding for Housing in Pierce County

According to the Puget Sound Regional Council, in our region “about 30% of homeowners and 45% of renters are cost burdened or severely cost burdened.” Almost half Pierce County. (PSRC, 2018)

– Derek Young, Pierce County Council

This Monday the Council’s Rules Committee will consider a bill I sponsored, Resolution 2019–95. It signals the County’s intent to take advantage of a sales tax revenue sharing program created by the State with . If all goes well, I expect a final vote on August 13th.

HB 1406 is something worked on in Olympia over the last couple legislative sessions on behalf of Washington Counties. As our region’s job growth exploded, housing construction hasn’t been able to keep pace. We also have seen a decades-long divestment from the federal government in housing supports. Combined with stagnant wages and the need has rippled through the market stressing household budgets and increasing the number of people experiencing homelessness.

This bill is the Legislature’s most significant effort to fill the funding gap.

One thing I want to make crystal clear since the mechanism in the bill could be confusing— this does not increase the sales taxes you pay. Here’s how it will work:

  1. The Council will pass a resolution declaring our intent to take advantage of the new funding for housing.
  2. The Council passes a subsequent ordinance increasing our sales and use.
  3. The state will simultaneously decrease their portion of the sales and use tax by the same amount.

The maximum rate we can charge is .0146%. Yes, that’s an odd amount, but the original bill was for .02% and was whittled down during budget negotiations.

Over a 20-year commitment, the state will be “sharing” more than $500 million with local governments. Broad discretion is given to local governments to expend the funds according to the needs of each community, as long as actions target housing and programs serving those below 60% median income.

Funds can be used for acquiring, rehabilitating, or constructing affordable housing as well as operations and maintenance of new affordable or supportive housing facilities. We’re permitted to bond the revenue to supply a larger amount of capital up front. And finally, the legislation encourages cooperation between different jurisdictions, agencies, and private entities to maximize the benefit.

Cities may take part, as well. All are entitled to the request up .0073%, and cities that have imposed certain qualifying taxes themselves (e.g., mental health tax, housing levy) can keep the full .0146%.

Tacoma is already taking steps to enact their own legislation, which makes sense since they have their own housing authority and already operate in that policy space. It’s less clear if other Pierce County cities will want to participate and the good news is that they don’t have to take on that work to benefit. The County would exercise that on their behalf, similar to other housing programs, social services, and public health.

We don’t yet have a firm estimate of the amount of revenue this will generate, but in the area outside of Tacoma, it should generate over $1.5 million per year (my rough estimate based on other sales tax collections).

What’s the plan for spending it? That remains to be seen. I would expect that we’ll work with the Pierce County Housing Authority and a broad group of experts to come up with a strategy. I see a few opportunities that interest me:

  • Unlike our peers in other counties, we don’t have a behavioral health tax. That means we also lack supportive housing — the long-term housing with wraparound social and health services for chronically unhoused and seriously disable — and I think we should make some investment there.
  • Affordable housing projects often involve braided funding from multiple partners like private developers, philanthropic groups, and state/local dollars. Conflicts in rules between those sources and small gaps create insurmountable roadblocks for construction financing. So-called gap financing could stretch a relatively small amount of money a very long way.
  • Pierce County’s Housing Division has seen massive success with our diversion program. It’s labor-intensive because it requires in-depth interviews to explore a person’s housing barriers, whatever they may be. But as a result, we can also re-house a greater number of people for a smaller amount of money. I’m inclined to give additional funding to such a successful program if our experts feel it would continue to have that high return on investment.

This is just the beginning of the discussion, but the crisis is so large it’s crucial we embrace every tool we have at our disposal and address it with the urgency it deserves. I also know that our legislators, led in part by the Pierce County delegation, expect us to get these dollars on the street to serve our shared constituents. I’m grateful for their leadership, and now it’s time for the County to go to work.