Clallam County to divert tax to housing

No increase in taxes for residents

PORT ANGELES — Clallam County commissioners have voted to divert a portion of state sales tax to affordable housing initiatives as allowed under House Bill 1406.

Commissioners voted 3-0 Tuesday to approve a new code chapter titled “redirection of existing sales and use tax revenues for affordable housing.”

The action does not increase the amount of sales tax that county residents will pay.

It simply allows the county to redirect a 0.0073 percent share of the existing state sales tax to fund programs that reduce homelessness and generate affordable housing, Chief Civil Deputy Prosecuting Attorney David Alvarez said in a memo to the board.

“The public should know that adopting this ordinance does not increase the sales tax rate and will NOT lead to an increase in the current sales tax rate as is explained in the ‘whereas’ clauses, clauses not typically made part of this county’s ordinances,” Alvarez wrote in his memo.

‘Qualifying local tax’

House Bill 1406, which was co-sponsored by District 24 state Reps. Mike Chapman, D-Port Angeles, and Steve Tharinger, D-Port Townsend, and approved by the Legislature in 2019, allows cities and counties to double their share of diverted sales tax by establishing a “qualifying local tax” for affordable housing.

Port Angeles voters approved such a tax in November — a one tenth of 1 percent sales tax increase from 8.7 percent to 8.8 percent — for affordable housing initiatives.

The 0.1-percent Port Angeles sales tax increase qualifies the city for the full 0.0146-percent state sales tax credit to encourage more investments in affordable and supportive housing under House Bill 1406.

Like the county, the cities of Sequim and Forks each have redirected 0.0073 percent of state sales tax under House Bill 1406, deputy prosecuting attorney Elizabeth Stanley said in a Tuesday interview.

Clallam County’s participation in House Bill 1406 enables the cities of Sequim and Forks to continue to collect the sales tax credit, Stanley added.

Port Angeles City Attorney Bill Bloor spoke in support of the county ordinance during a public hearing Tuesday.

No other public testimony was made.

“The city of Port Angeles, the City Council in particular, thinks that the issue of affordable housing is a very serious and important issue for our community,” Bloor told county commissioners.

“The city has gone ahead with a qualifying tax, and that’s been on the ballot and it was successful. So the city does plan to use all of those funds to address the issue of affordable housing and on that basis, they encourage you to go ahead and adopt this law.”

Bloor said the city of Port Angeles had waited to levy its sales tax to allow the county to collect the full amount under House Bill 1406.

“If the city were to levy the tax prior to the county, then the county’s revenue would be decreased, and we don’t want to do that,” Bloor said.

“We want everybody in the community to get the maximum amount. And so we’ve been waiting for the county to go ahead.”

Revenue that Clallam County receives from diverted state sales tax will be placed into a special fund for affordable housing, according to the ordinance.

Commissioner Randy Johnson suggested that the county work with the three cities to leverage affordable housing projects to maximize the redirected sales tax revenue.

“It may make sense in this particular case to think about what the city of Port Angeles is doing, city of Sequim, city of Forks and the county together, and maybe possibly bond that so you actually have the wherewithal to do something more significant,” Johnson said.

“In other words, put it all together, if that is possible.”

Commissioners Bill Peach and Mark Ozias agreed, directing Johnson to convene a working group with the three cities.

”I think that it’s appropriate for the county to try and provide that initial leadership,” Ozias said.

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].

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