The Affordable Housing Task Force along with members of the Poulsbo City Council and Mayor Becky Erickson met last week to begin discussing ideas for the use of funds made available through HB 1406, as it relates to creating affordable housing.
House Bill 1406 is an initiative passed by the House during the last legislative session which encourages cities and counties in Washington to make investments in affordable and supportive housing. HB 1406 created a sales tax revenue sharing program that allows cities and counties to access a portion of the state sales tax revenue (one-tenth of one percent) to make local investments in affordable and supportive housing.
Washington state has made a 20-year commitment to share over $500 million with local governments who will invest in affordable housing. For the City of Poulsbo, this would come out to about $36,000 annually, if not, more over the next 20 years.
The Affordable Housing Task Force was created in September to consider how funds should be spent. The funds can be used to acquire, rehabilitate or construct affordable housing, pay for the operations and management costs of new units of affordable and supportive housing as well as provide rental assistance to those at or below 60 percent Area Median Income (AMI).
At its first meeting, the task force was asked by members of the Poulsbo city council to establish HB 1406 related goals and general affordable housing goals and to ensure the recommendations of members have a real impact but do not go beyond the city’s means.
The task force needs to come up with solid ideas to present to the full city council before Jan. 31. By that time the council will need to approve a resolution of intent to participate in the Affordable Housing Sales Tax program so it may adopt a sales tax ordinance in July 2020.
The task force includes Kim Hendrickson, Mayor Becky Erickson, Charmine Doherty, Tom Nordlie, Bridget Glasspoole and John Koch of Kitsap Homes of Compassion, Patti Dudley of Fishline, Tom Duchemin of Gateway Fellowship, Stuart Grogan of Housing Kitsap, Patrick Steele of Coffee Oasis and councilmembers Connie Lord, Jeff McGinty and David Musgrove.
The Dec. 3 meeting was the third meeting of the task force and the first meeting in which members were able to present ideas based on research conducted at the last two meetings. It should be noted that these ideas are in no means finalized or decided upon, but are areas of interest and potential avenues for addressing housing in Poulsbo.
Some of the ideas that came from the meeting were:
• Providing emergency rental assistance
• Preservation of existing affordable housing
• Working with faith-based communities with land to construct housing (i.e. tiny homes)
• Build a support mechanism for folks that are on the verge of homelessness
• Bonding
• Inclusionary zoning
“One of the City of Poulsbo’s obligations, under the Growth Management Act, is to achieve a mix of housing types to meet the needs of owners and renters at various income levels.” Hendrickson read from a draft preamble for the group. “This includes an obligation to provide and preserve affordable housing, particularly for individuals with very low income (0- 60 percent median income), individuals with very low income who experience crisis and individuals with very low income who require long term supportive care. The City of Poulsbo will use HB 1406 funds in 2020 to create and preserve affordable housing for these three target populations — with a goal of 20 units of shelter or housing created and/ or households assisted.”
The draft preamble also states the group will pursue broader housing and revenue initiatives as well and that it will rely on relationships with the private, nonprofit and faith-based sectors of the community in this endeavor.
Some of these ideas are also separate from the funds that would come from HB 1406, particularly the bonding and inclusionary zoning. These would be alternative revenue sources for addressing housing affordability.
“The bonding is basically just like a mortgage … Effectively what you’re doing is you are borrowing money to build something, to do something with it. Effectively you will be leveraging that money [$36,000] knowing that that money is coming in for 20 years…obviously, you could borrow quite a bit of money for that amount … We could go to our bank and say we could borrow this money because we have a guaranteed income stream of this $36,000 that we know that we’re going to get every year,” explained Erickson.
She also clarified that if the city went this route, it would have to be for something physical and concrete, like a building, not for operations and management costs and also emphasized that it was just one option available.
“I would never recommend supporting using borrowed money for operational expenses. If you’re going to borrow money you better have something physical … you’re going to build something,” Erickson said.
The alternative option would be for the city to create inclusionary zoning, meaning it would require developers of multi-family housing to make a certain number of units affordable. Recognizing that telling a developer what they must do, could drive prospective builders away, the city could also accept a fee in lieu of affordable units, meaning the developer could build the housing the way they wanted but would have to pay the city a pre-determined fee.
That fee would be considered an impact fee that would need to be used by the city within seven years of receipt.
Another way discussed by the group, would be to create an incentive for developers to create affordable housing units, by reducing the cost of development fees.
“When you’re telling a developer that they have to do something, that’s another restriction on their ability to do their work and the more restrictive you become, the bigger the incentive is not to do anything at all, you can really inhibit building in your community, which exacerbates the problem of affordability,” Erickson said.
Regarding the use of the money from HB 1406 in the coming year, it seemed apparent to the task force members that addressing the needs of those in immediate need of housing would be the best use of the funds while building up a longer-term strategy alongside it.
“I think with a small amount of money … in my mind, you ‘put out the fire’ that’s happening,” Dudley said, referencing the need for emergency shelter and housing. “Then, when you pile on other money, you start planning for the other track as well.”
