City considers sales tax hike for affordable housing after county passes on measure

A new sales tax will cost the average Spokane family an extra $16 a year and generate about $5.8 million a year to help fill the city’s growing gap in affordable housing and mental health services.

That’s according to some preliminary math presented this week to the Spokane City Council’s Urban Experience Committee about the potential costs and benefits of implementing House Bill 1590 in the city.

The bill, signed into law this spring, allows counties to impose a sales tax of up to 1/10th of 1% and requires them to spend 60% of the money generated to create housing for a number of specified groups, including veterans, domestic violence victims and low-income, disabled, elderly or mentally ill people. The rest of the money would be used to fund mental and behavioral health programs that would support residents of the new housing.

While the bill gave counties an Oct. 1 deadline to adopt the tax, the Spokane County Board of Commissioners unanimously declined to do so in July.

That vote came against the recommendation of the county’s Department of Housing and Community Development, according to Kathleen Torella, the department’s director.

Tim Crowley, the department’s program manager, said commissioners had “quite a bit of discussion” about taking the proposal to the voters and letting them decide, though they ultimately decided there wasn’t enough time to do so before October.

With the county declining to take up the measures, the city of Spokane now has a chance to do so instead.

A staff report offered during Monday’s meeting of the Urban Experience Committee helped get that process started.

While all Council President Breean Beggs will commit to so far is that the city is “definitely going to consider” the measure, he did tout what he views as its benefits.

As the price of housing “has gone through the roof,” he said, “wages and income have not at all. So there’s now thousands of people who can’t afford their housing.”

The targeted sales tax revenue, he said, “would help fill a lot of that gap” and help provide “housing for families … at a price they could afford.”

He said staff are “looking at different models” for the kinds of housing it may invest in.

A briefing paper prepared for the Urban Experience Committee outlined what some of those models might look like.

“Applying this new funding stream in a smart and strategic way,” the paper said, “can help developers and nonprofit agencies design and build infill and ‘missing middle’ housing in a variety of forms: accessory dwelling units (‘ADUs’), cottage homes, mixed income multifamily developments, townhomes, and attached single family homes – these can all meet the variety of housing needs of single households, families with children, people with disabilities and senior households.”

Councilwoman Karen Stratton, chair of the Urban Experience Committee, called the measure a “good idea.”

“We have been talking about affordable housing in this community for a very, very long time,” she said. “We have talked to this thing to death.”

While she said the bill represents an opportunity to take action and build “affordable and diverse” new housing, Stratton also struck a note of caution about ensuring the public is on board with the tax hike that will pay for it.

“I just want to make sure it’s presented right to the community,” Stratton said. “These are tough times. And we all have to be very aware and accepting of the fact that it is an increase.”

It’s imperative, she said, “people know what that money is going to pay for.”

And Stratton is concerned that message might not reach residents by Oct. 5, the date City Council has targeted to enact the measure.

If it’s passed that day and signed by Mayor Nadine Woodward by Oct. 15, the city can begin collecting the new tax on Jan. 1. If council delays, the tax wouldn’t be collected until April 1.

If the tax collection is delayed, the city would be “leaving an estimated $1.45 million on the table,” according to Ben Stuckart, executive director of the Spokane Low Income Housing Consortium. That money could pay for some 25 new housing units that could house up to about 75 people, Stuckart added.

Stuckart said his group and others have reached out to many local organizations and earned “broad-based support” for the tax.

But Beggs said there’s work to be done before it comes to the council for a vote.

“We haven’t defined what our process is going to be for considering” adoption of the measure, Beggs said. “But staff has been working on it.”

Beyond whether the city should adopt the tax, there are other lingering questions – namely, how the program would be administered and who would decide which projects get funded.

“We’re much closer to the beginning of (the process) than the end,” Beggs said.