The Kenmore City Council voted unanimously at its Sept. 16 meeting to adopt an ordinance that authorizes a new sales and use tax option for affordable housing.
The ordinance works in conjunction with the recently adopted substitute house bill 1406, which encourages investments in affordable and supportive housing in Washington.
By passing the ordinance, the city has opted to retain 0.0073 percent of the state’s share of local sales and use tax. This specific percent amount is selected for cities without qualifying local taxes or counties within non-participating city limits.
The tax money received by the city will go toward A Regional Coalition for Housing (ARCH). King County’s ARCH chair had previously sent a letter to the council recommending the implementation.
“My intentions with these receipts is to establish a separate account for [ARCH]…during either the budget amendment or budget discussions, we can determine for sure how you want to allocate those,” Joanne Gregory, Kenmore’s finance director, said to council at the meeting.
The substitute bill became effective July 28 in the wake of the state’s most recent legislative session.
The ordinance, 19-0496, additionally adds a new article to Chapter 3.30 of the Kenmore Municipal Code. The article enables the adoption and imposition of the sales and use tax for housing.
“We’re taking a share of what the state would normally get,” Gregory clarified. “So it’s not an additional tax — it’s a piece of what would normally go to the state that is now coming to the city for this purpose for 20 years.”
Gregory added that through the ordinance, Kenmore is estimated to annually receive around $20,000 for housing, with $430,000 over a 20-year period. The city, according to Gregory, will begin receiving receipts for the tax in January 2020.
According to the meeting’s business agenda, the maximum amount of sale and use tax the city can collect is limited by how much taxable retail sales are cultivated in the 2019 fiscal year times the appropriate rate. The tax will expire 20 years after its adoption.
The passage of the ordinance meets council’s third goal, which is to preserve and increase affordable housing stock options in the area. According to the resolution document, 17 percent of households in Kenmore spend more than 50 percent of their income on housing, with 38 percent of the city’s households and 42 percent of renting households paying more than 30 percent of their income on housing.
For information on the ordinance, go to its agenda item document.