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Home My WebLink About10/07/2025 09.C. Discuss Affordable Housing Fund (HB 1406) and YMC 7.92 Affordable Housing Incentive Program i4 =+ ',t'1,`'k`OAA`l VD . BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9.C. For Meeting of: October 7, 2025 ITEM TITLE: Discuss Affordable Housing Fund (HB 1406) and YMC 7.92 Affordable Housing Incentive Program SUBMITTED BY: Sara Watkins, City Attorney SUMMARY EXPLANATION: The Washington State Legislature passed HB 1406 allowing municipalities to retain a portion of the State sales tax to support affordable housing solutions. City Council adopted YMC 7.92: Affordable Housing Incentive Program taking action to retain the sales tax and set guidelines for the use of the funds. City Council directed staff to bring back to a meeting information regarding how the City could utilize the affordable housing tax credit and examples of what other jurisdictions are doing with their affordable housing tax credit funds. ITEM BUDGETED: N/A STRATEGIC PRIORITY 24-25: A Thriving Yakima RECOMMENDATION: ATTACHMENTS: Affordable & Supportive Housing Sales & Use Tax Report.pdf 1406.October.2025.pdf 157 Jurisdictions' use of funds Approximately 49 participating jurisdictions spent revenue on new or existing projects. Fourteen jurisdictions (shown in Table 3) used revenue for rent assistance programs. Twenty-three jurisdictions used revenue for capital projects (shown in Table 4), 21 used revenue to support operations and maintenance costs of new units of affordable housing (shown in Table 5), and six used revenue for other expenses (shown in Table 6). State fiscal year 2023 spending summary: O Jurisdictions spent a total of$18,061,726.88 O They spent $738,989.02 on rent assistance O They spent $12,614,031.98 on capital projects O They spent $4,708,705.88 on operations and maintenance O They spent $113,572.04 on other expenses Table 3: Rent assistance expenditures by jurisdiction Jurisdiction Total spent Total households Priority population served served Those recovering from the pandemic that have exhausted all other rental assistance options and will be able to sustain timely rent payments Arlington $55,518.00 25 moving forward as well as those that are now over-housed as a result of rental increases who need assistance finding and obtaining more affordable housing. Covington $33,488.00 36 No data Dayton $14,754.66 22 Low-income Enumclaw $35,000.00 No data We distribute the funds to Plateau Outreach Ministries who offer that funding for rental assistance and utility assistance vouchers. Garfield County $14,101.00 No data No data Kirkland $68,372.91 170 No data Longview3 -$58,500.004 -31 No data Mercer Island $57,141.95 34 Residents of Mercer Island with household incomes below 80%King County AMI at elevated risk for eviction or homelessness. Mount Vernon $55,000.00 No data Homeless,immigrants Poulsbo $2,250.00 6 Very low income,disabled SeaTac $154,577.01 150 Low Income(at or below 60%area median income(AMI)) Shoreline $64,759.60 28 Low-income Stanwood $31,828.22 No data No data Tukwila $26,747 24 60%or less AMI. Whatcom County $125,450.67 56 Singles,families with children,young adults ages 18-24 Total $738,989.02 3 The city of Longview corrected their reporting from 2022.They reported $58,500 for Rent Assistance for 31 units last year,but noticed this was reported in error and the funds they reported were for another funding source. Longview did not spend any of their Affordable &Supportive Housing Sales and Use Tax in the 2022 or 2023 reporting periods. 4 Not included in the total reported this year. 2023 AFFORDABLE AND SUPPORTIVE HOUSING SALES AND USE TAX 10 158 Table 4: Capital project expenditures by jurisdiction Jurisdiction Total spent Activity New projects and units Anacortes $712,495.00 Construction 41 units under construction Burlington $401.81 No data 45 units to house our homeless population Chelan City $19,453.47 Rehabilitation Heritage Heights at Lake Chelan Memory Care Remodel $17,505.45 was used on rehabilitation Clark County $34,900.55 projects;$17,395.10 was used on a 12 units under construction new construction project Everett $13,845.83 No data No data Fife $103,335.55 No data No data ILA(ARCH-A):Bothell,Clyde Hill, Kenmore,Newcastle,Redmond, $5,500,000.00 New construction 260 units under construction Sammamish,Woodinville,Yarrow Point ILA:Chelan County/Douglas County $156,589.07 No data No data ILA:Jefferson County/Port Townsend $451,238.00 Construction No data King County $2,000,000.00 Construction 40 units under construction Lakewood $33,223.02 Rehabilitation 3 single family households at or below 60%AMI Building permit for a low-income Leavenworth $8,505.68 Rehabilitation approved apartment complex to do a remodel of the facility. Pierce County $3,527,000.00 Construction 87 units under construction Port Orchard $41,700.00 Rehabilitation No data Poulsbo $11,344.00 No data No data Total $12,614,031.98 2023 AFFORDABLE AND SUPPORTIVE HOUSING SALES AND USE TAX 11 159 Table 5: Operations and maintenance expenditures by jurisdiction Jurisdiction Total expenditures Units supported Bremerton $100,000.00 10 Burlington $579,417.08 45 Cashmere $5,780.29 22 Clark County $430,656.60 40 ILA:Jefferson County/Port Townsend $251,441.00 107 King County $226,551.56 92 Lake Forest Park $16,344.00 No data Lincoln County $8,750.16 8 Moses Lake $75,357.24 38 Mount Vernon $55,000.00 No data North Bend $32.75 0 Pacific County $40,059.94 16 Poulsbo $13,594.00 6 San Juan County $41,821.78 2 Seattle $1,071,702.31 92 Skagit County $129,837.99 70 Spokane City $422,909.11 123 Stanwood $999.35 No data Vancouver $1,179,896.49 40 Whatcom County $58,554.23 27 Total $4,708,705.88 Table 6: Other expenses reported Jurisdiction Total expenditures Use of funds Clark County $13,781.21 Administration costs Enumclaw $35,000.00 Distributed to Plateau Outreach Ministries who offer that funding for utility assistance vouchers. Kittitas County $69.35 Postage,minimal salaries. Funds were distributed to the King County Regional Lake Forest Park $16,344.00 Homelessness Authority to provide emergency housing through a severe weather shelter. Mason County $47,568.75 Needs assessment Whatcom County $808.73 Administration costs Total $113,572.04 2023 AFFORDABLE AND SUPPORTIVE HOUSING SALES AND USE TAX 12 160 AFFORDABLE HOUSING TAX CREDIT `y ,iiil ___ _ If --. ff 1,0 ‘ q• I.:: 'ei,V 'Ik,, kPoRATED 161 On January 14 , 2025 . . . . . ■ A presentation was provided regarding the 1406 funds, the Point in Time data, and other funding sources. ■ 1406 funds consist of a portion of the state sales tax that the City is allowed to retain . These funds previously were sent to the state but can now be retained by cities who choose to do so. The tax can be retained for 20 years and will expire in 2040. ■ The presentation went over the state statute and the City of Yakima ordinance regarding use of the 1406 funds. It also discussed what the funds could and could not be used for in the current ordinance. ■ Councilmembers took no action at that time. 162 The City Adopted HB 1406 Sales Tax Retention for Affordable Housing State Statute regarding use of the funds Construct Housing r • Acquiring, rehabilitating, or constructing affordable housing, which may include new units of affordable housing within an existing structure or facilities providing supportive housing services under RCW 71.24.385 Supportive Housing • Funding the operations and maintenance costs of affordable 1 or supportive housing Rental Assistance il • Provide Rental Assistance to tenants imesi 163 The City Adopted HB 1406 Sales Tax Retention for Affordable Housing Eligibility ■ Housing and services provided with the 1406 funds can only be provided to persons whose income is at or below 60% of the median income of the city imposing the tax. According to census.gov, the median household income in the City of Yakima is $59,228. 60% of the median household income is $35,536.80. ■ If funding is going towards the development of owner-occupied affordable housing, the funds can only be provided to persons whose income is at or below 80% of the median income of the city imposing the tax. 80% of the median household income is $47,382.40. ■ The 1406 tax retention amount expires 20 years after the date on which the tax is first imposed, so approximately 2040. ■ In determining the use of funds, the city must consider the income of the individuals and families to be served, the leveraging of the resources made available, and the housing needs within the jurisdiction. RCW 82.14.540. 164 The City Adopted HB 1406 Sales Tax Retention for Affordable Housing Current Ordinance: YMC 7.92: Affordable Housing Incentive Program • Applicants can use funds to pay for some or all of the connection fees for water and/or sewer utilities if the applicant is creating ten or more new dwelling units and 50% of those units are affordable. • If 50% are affordable, grant can be used for 50% of the costs. If the project has 100% affordable units, then the City can grant 100% of the costs. • Affordable housing means housing wherein the households earn 50% or less than the Yakima County median household income, adjusted for family size. • Units must remain affordable for 50 years, and record a covenant against the property. • To receive CHIP grants, the City was required to have a program associated with the 1406 funds. 165 TheCity AdoptedHB 1406 SaTax Retention for Affordable Housing s41°L.1 • City has collected funds starting in 2020 • Total Revenue to date: 1st • 1 • to Q � ' $887,219.93 ake U. i N. -st 5:34 am 50°�MTN°W°°M _ ■ None has been spent 5:3 3 - Li_ • . . loo `- - r Y;i �• 166 1 Compare : tate and LocaI UseOptions RCW82 . 14.540 YMC7.92 • Acquiring, rehabilitating, or constructing ■ Constructing or rehabilitating affordable affordable housing. housing, specifically with regards to - Can include new units of affordable payment of connection fees for water housing within an existing structure and/or wastewater services. or facilities providing supporting • 10 or more dwelling units in a multi-family housing services under RCW housing project, including cottage and/or 71.24.385. manufactured housing communities. • Funding the operations and maintenance • If not all units meet affordability costs of new units of affordable or requirements (and there are more than 10 supportive housing. units) then the % of units that are • Providing rental assistance to tenants. affordable is the % of cost the grant can cover for connection fees. • 10% Administrative costs to the City for ° administration. ■ 50% or less AMI • 60% AMI, or 80% AMI for owner occupied. • Units must remain affordable for 50 years. • Must consider income of those served, • Annual report on affordable units. leveraging of the resources available from • Specific rules for mixed income projects. the tax, and the housing needs within the jurisdiction. • Geared towards large multi-family projects 167 Possible Amendments ■ Change the affordability period to 25 years, which is the same as the CHIP grants ■ Increase the AMI to 60% or less than the Yakima County median household ■ Expand the uses of the money to other statutorily- allowed uses in addition to connecting affordable housing to city water and/or sewer 168 N EXT STE • Review YMC HB 1406 Use policies • Ordinance changes if necessary • Creation and execution of ordinance policies/program i #Vilir"- - ' IIILI -A--- :---;:‘11. 15 .� - _� � _