Title
Approval of an Ordinance Imposing the Maximum Sales and Use Tax for Affordable Housing Permitted by SHB 1406
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve on second reading the ordinance imposing the maximum sales and use tax permitted by SHB 1406, which permits the City to receive 0.0146 percent of the State's 6.5 percent sales and use tax collected within the City of Olympia, as permitted by SHB 1406 for affordable and supportive housing purposes.
Report
Issue:
Whether to adopt legislation authorizing the maximum capacity of the sales and use tax for affordable and supportive housing as provided by SHB 1406.
Staff Contact:
Cary Retlin, Housing Manager, Community Planning & Development, 360.570-3956.
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
Background and analysis has not changed from first to second reading.
During the 2019 legislative session, the State approved a local option for cities and counties to receive a portion of the State's existing sales tax revenue (6.5%) for specific affordable housing uses by cities and counties. This local sales tax authority is a credit against the State's sales tax, so it does not increase taxes locally for the consumer.
SHB 1406 incentivizes cities and counties to pass local levies like Olympia's Home Fund and rewards cities that have already taken that step. Because Olympia has passed a "qualifying local tax" in the Home Fund, the City can claim the higher increment of 0.0146 percent of the State's portion of local sales and use tax for up to 20 years.
The revenue derived by the proposed ordinance must be used for acquiring, rehabilitating, or constructing affordable housing; operations and maintenance of new affordable or supportive housing facilities; and rental assistance. The funding must be spent on projects that serve persons whose income is at or below 60 percent of the area median income. Cities...
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