PORT ANGELES — City voters will consider this November a 0.1-percent sales tax increase for affordable housing initiatives.
The City Council voted 5-0 Tuesday — with Cherie Kidd and Michael Merideth excused — to submit a ballot measure for the general election to raise the local sales tax rate from 8.7 to 8.8 percent.
If approved by voters Nov. 5, the city would be eligible for a 0.0146-percent state sales tax credit for 20 years to encourage more investments in affordable and supportive housing under House Bill 1406.
Council member Mike French pitched the ballot measure after learning about the legislation at a recent Association of Washington Cities conference.
“I think this is an opportunity that we need to take,” French said at the council meeting Tuesday.
“We need to ask our voters, and ideally we can make a real dent in the housing issues that we see around our community if we can get some of these projects rolling.”
The 0.1 percent sales tax increase would generate about $320,000 annually, French has said.
If approved, a $10 purchase within the city limits would cost one cent more and a $100 purchase would cost 10 cents more.
If approved, the tax increase would take effect Jan. 1, 2021.
The 0.0146-percent state sales tax credit would generate about $575,000 over 20 years, Council member Lindsey Schromen-Wawrin said.
“We’re getting a credit against future sales tax liability, which means we simply get to keep that money rather than sending it on to the state,” Council member Jim Moran said.
“They’re not matching it. They’re letting us send less to them.”
The 0.1-percent sales tax increase and 0.0146-percent state sales credit would be used to finance loans or grants to nonprofits or housing authorities to acquire, build or rehabilitate housing or to pay for rental assistance, Peninsula Housing Authority Executive Director Kay Kassinger told the council July 2.
“There are some pretty specific things we can spend this money on,” Schromen-Wawrin said Tuesday.
Revenue from the sales tax increase would be placed into a special housing fund administered by the city.
The lack of affordable and available housing has been the No. 1 priority for the Port Angeles City Council this year.
A recently-completed housing needs assessment found that the city will need 196 new single-family dwellings, 220 new housing units attached to existing residences and 178 new multi-family units by 2020.
“We have heard consistently in public comment, we’ve heard individually and when we’re out and about from constituents about the incredible need,” Deputy Mayor Kate Dexter said of the housing crisis.
“I think we would be remiss in not giving the voters an opportunity to help us take advantage of a mechanism that the legislature has created.”
House Bill 1406, which was co-sponsored by state Reps. Mike Chapman, D-Port Angeles, and Steve Tharinger, D-Port Townsend, provides cities and counties that adopt a qualifying local tax to receive a larger sales tax credit from the state.
The bill was signed into law in May.
“This is exactly what we asked the legislators to do,” Mayor Sissi Bruch said.
“They did it. They’re trying to help us out with affordable housing.”
The council needed to put the sales tax measure on the ballot Tuesday to make a deadline for the general election.
The ballot proposition will cost the city $7,000 to $12,000 to run in November rather than the $70,000 it would have cost in a special election next February or April, Bruch said.
Moran emphasized that the council was voting to put a sales tax measure on the ballot and not imposing a new tax.
“The voters ultimately will decide whether they want to impose this tax upon themselves or not, and I think that’s the appropriate way to handle this,” Moran said.
“So again, we are not imposing the tax on the citizens. We are asking them to impose the tax upon themselves.”
French said the idea behind the measure is to address the root cause of the housing crisis: people cannot afford a place to live.
“By building more housing, we can stimulate markets to bring costs down,” French said.
“It’s really easy for people to get frustrated at the progress that we’ve made because so [many] of the problems downstream have bad solutions, and it’s really hard to swim upstream.
“So I appreciate that this is a bold step that we’re taking, but we are actually trying to solve the problem at its root, and that is going to be expensive and that’s going to be time-consuming and difficult and it’s really going to require all those collaborations that we’ve talked about,” French added.
“But I think this is the thing that will solve the problem.”
City Manager Nathan West said the sales tax increase, if approved, would “provide some significant offsets to those challenges that we’re seeing in the development community right now to actually construct housing.”
West listed some steps the city had taken to address the housing shortage.
According to West, the city has:
• Provided community development block grant funding funding for two Wildwood Terrace projects.
• Provided block grant fund for the Maloney Heights project.
• Co-sponsored the Sea Ridge Phase 1 project.
• Eased regulations for accessory residential units.
• Changed medium- and high-density zones to provide an additional 1,160 square feet of buildable space.
• Developed five new overlay zones that provide more flexibility in development, including cottage-style and infill development.
• Reduced standard residential parking requirements from two to one parking space per unit.
“I could create a much longer list, but I want to emphasize the dedication the city of Port Angeles has already attributed towards housing and how critical housing is to the success of our community,” West said.
Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].