The URL can be used to link to this page

Home My WebLink About01/14/2025 03.G. Discussion of 1406 Funds (Retained Sales Tax for Affordable Housing) i4 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 3.G. For Meeting of: January 14, 2025 ITEM TITLE: Discussion of 1406 Funds (Retained Sales Tax for Affordable Housing) SUBMITTED BY: Sara Watkins, City Attorney SUMMARY EXPLANATION: City Council directed staff to bring to them at a study session information regarding the 1406 funds that the City has retained since enacting the ordinance that allows the City to retain a portion of sales tax money already being collected for affordable housing. These funds are commonly referred to as 1406 funds. Staff will provide a power point presentation addressing the funds as well as additional funding options and strategies that could provide money to help address homelessness. ITEM BUDGETED: N/A STRATEGIC PRIORITY 24-25: A Safe and Healthy Yakima RECOMMENDATION: ATTACHMENTS: Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM.pdf City Activities &Actions_1406 Funds.pdf 85 1/2/25,4:40 PM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM Sections: 7.92.010 Purpose. 7.92.020 Applicability. 7.92.030 Affordable housing requirement. 7.92.040 Incentive program for water and/or wastewater connection charges. 7.92.050 General requirements. 7.92.060 Additional requirements for mixed-income developments. 7.92.070 Report to city council. 7.92.010 Purpose. There is a demonstrated need in the city for housing which is affordable to persons of low and moderate income. This chapter provides an incentive program for developers in exchange for the public benefit of providing multifamily affordable housing units within the city. (Ord. 2022-003 § 1 , 2022). 7.92.020 Applicability. The incentives listed herein for low-income households may be utilized for multifamily housing projects with a minimum of ten units, including cottage and/or manufactured housing communities, in applicable zoning districts. The housing project must include a minimum threshold of affordable units allocated for low-income households and other criteria as specified in this chapter. Development proposals must meet all other standards for development outlined in the Yakima Municipal Code, state and federal laws. (Ord. 2022-003 § 1 , 2022). https://www.codepub!ishing.com/WA/Yakima/#!/Yakima07/Yakima0792.html#7.92 1.86 1/2/25,4:40 PM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM 7.92.030 Affordable housing requirement. (a) Minimum Requirement. All applicants creating ten or more new dwelling units shall provide at least fifty percent of the units as affordable housing units and comply with the provisions of this chapter as established herein if the applicant wishes to take advantage of the incentive program outlined in this chapter. (b) Rounding. The number of affordable housing units required is determined by rounding up to the next whole number of units. (Ord. 2022-00 § 1 , 2022). 7.92.040 Incentive program for water and/or wastewater connection charges. (a) There is created an incentive program for applicants meeting the affordable housing requirement in YMC 7.92.030 wherein applicants may apply for a grant from the incentive program fund to pay for some or all of the connection fees for water and/or wastewater utilities. (b) Applicants may apply for a grant for the entire water and/or wastewater connection fees if the development is one hundred percent affordable housing, as defined herein. (c) If the development is less than one hundred percent affordable, the applicant may apply for a grant for a percentage of the water and/or wastewater connection fees which is the same or less than the percentage of units in the development that are affordable, as defined herein. For example, if fifty percent of the units are affordable, then the applicant may apply for a grant to pay for up to fifty percent of the water and/or wastewater connection fees. (d) The incentive program is funded in part by sales and use tax retained pursuant to YMC 3.78.065. The city council may place additional funds into the incentive program when it deems appropriate. There is no guarantee that there will be funds available in any given year for the incentive program and applicants are not entitled to participate in the incentive program. (e) The incentive program is available on a first-come, first-serve basis. There will be no opportunity to put a project on a "wait list" or otherwise try to save funds for certain https://www.codepub!ishing.com/WA/Yakima/#!/Yakima07/Yakima0792.html#7.92 2.87 1/2/25,4:40 PM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM projects. (Ord. 2022-003 § 1 , 2022). 7.92.050 General requirements. (a) Affordable Housing. For purposes of this chapter, "affordable housing" or "low- income housing" means housing wherein the households earn fifty percent or less than the Yakima County median household income, adjusted for family size. Further, the monthly rent for an affordable unit may not exceed thirty percent of the income limit for the affordable housing unit. (b) Duration of Affordability. Applicants taking advantage of the incentive program must ensure that the affordable housing units remain affordable for fifty years. (c) Lien and Covenant to Be Recorded. To ensure affordability is maintained, the property owner shall sign a recorded lien and covenant running with the land, binding all the assigns, heirs and successors that the units will meet the affordability requirements for the fifty-year period. The recorded lien and covenant must provide that if the property is converted to a use other than for affordable housing as defined in this chapter within the required affordability duration, the property owner must pay the applicable water and/or wastewater connection fees in effect at the time of the conversion. The recorded lien and covenant may also include other requirements associated with the project, including, but not limited to, reporting requirements regarding affordable units and/or other methods to ensure the units remain affordable and allow for enforcement of the covenant by the city. The affordable housing units shall be rented, sold, or resold to income-qualified households or a nonprofit housing provider through the end of the required affordability duration. (d) Monitoring Continued Affordability. The city of Yakima community development department shall be the responsible party to monitor the continued affordability of the affordable housing units. The department, with the city manager's consent, may contract this work out to a third party. (e) Annual Report. The applicant shall submit an annual report on or before November 30th of each year to the community development director which outlines the number of 88 https://www.codepub!ishing.com/WA/Yakima/#!/Yakima07/Yakima0792.html#7.92 3._ 1/2/25,4:40 PM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM affordable units (itemized by type of unit) and the rent that will be charged for each type of unit in the upcoming calendar year. (Ord. 2022-003 § 1 , 2022). 7.92.060 Additional requirements for mixed-income developments. The following requirements apply to mixed-income developments, in addition to the requirements outlined in other sections of this chapter: (a) Construction of Affordable Housing Units. For mixed-income developments constructed in phases exceeding twelve months, a proportional amount of affordable housing units must be completed at or prior to the completion of related market rate housing units. (b) Location/Appearance of Affordable Housing Units. When affordable housing units constructed under the provisions of this chapter are intermixed with market rate housing, the general exterior design and appearance of the affordable housing units shall be compatible with the market rate housing units within the project. (c) The affordable housing units shall consist of a range of number of bedrooms that are comparable to units in the overall development. (d) Size of the Units. The size of the affordable housing units should be the same as the units in the overall development. If the size of the affordable housing units is smaller than the other units with the same number of bedrooms in the development, the housing units must be approved by the community development director or their designee. In no case shall the affordable housing units be more than ten percent smaller than the comparable dwelling units in the development, based on number of bedrooms. (Ord. 2022-003 § 1 , 2022). 7.92.070 Report to city council. An annual report shall be forwarded to the Yakima city council as part of the budgeting process that provides details on all the projects that utilized the provisions of this chapter. The report should include, but is not limited to, the total number of housing units https://www.codepub!ishing.com/WA/Yakima/#!/Yakima07/Yakima0792.html#7.92 4.89 1/2/25,4:40 PM Chapter 7.92 AFFORDABLE HOUSING INCENTIVE PROGRAM constructed, an itemization of type of unit (by bedroom number) and the number of those units which are affordable. (Ord. 2022-003 § 1 , 2022). The Yakima Municipal Code is current through Ordinance 2024-039, passed December 3, 2024. Disclaimer: The city clerk's office has the official version of the Yakima Municipal Code. Users should contact the city clerk's office for ordinances passed subsequent to the ordinance cited above. City Website: https://www.yakimawa.gov/ City Telephone: (509) 575-6037 Codification services provided by General Code https://www.codepub!ishing.com/WA/Yakima/#!/Yakima07/Yakima0792.html#7.92 5.90 ITY AACTIVITIES AND ACTIONS • Overview of Point in Time data • YMC 7.92 (1406 money) • Filing Fee Money • Affordable Housing Tax • Temporary Emergency Homeless Encampment Ordinance • Collaboration and Education -,c--": II 1\111. ) . 'l \C-):-..... 1...?1 •,e 91 An overview of data This data is from the Point in Time counts conducted by Yakima County. The 2024 count was done throughout Yakima County, including reaching people staying at Camp Hope and the UGM. The PIT counts and reports can be found here: https://www.yakimacounty.us/2867/Annual-Point-in-Time-Information Data PIT Totals Chronically Homeless 600 100% 90% 500 80% 400 70% 60% 300 I 50% 40% 200 30% 20% 100 10% 0 0% 2021 2022 2023 2024 2021 2022 2023 2024 •Unsheltered 0 Emergency shelter oTransitional Housing ■Unsheltered 0 Emergency Shelter Chronically homeless in the PIT is defined Total homeless counts: as an individual with a disability who lives 2021: 553 2023: 520 either in a place not meant for human 2022: 554 2024: 453 habitation or in an emergency shelter. 92 Selected PIT Data 2024 Top 4 Reasons Cited as 2024 Top 4 Reasons Cited by Age Group Cause for Homelessness Participants could select more than one Participants could select more than one Evicted/Loss of Housing 100% 90% 80% 70% Alcohol or Substance Abuse 60% 50% 40% Family Crisis 30% 20% 10% 0% Job Loss Evicted/Loss of Alcohol or Family Crisis Job Loss Housing Substance Abuse 0 20 40 60 80 100 120 ❑YA 18-24 ❑Adult 25-64 ❑Senior 65+ 93 The CityAdopted HB 1406 Sales Tax Retention for Affordable Housing State Statute regarding use of the funds Construct Housing [ . . • Acquiring, rehabilitating, or constructing affordable housing, 1-1 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 1 • Funding the operations and maintenance costs of affordable 1 or supportive housing Rental Assistance in •• Provide Rental Assistance to tenants [ 94 The CityAdopted 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. 95 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 tenor 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. 96 The CityAdopted H B 1406 Sales Tax Retention for Affordable Housing • City has collected funds from 2020 through 2024 T- , • Total Revenue to date: A „I ,, a $806,837.74 ake , .:,� . El Milt st. _ • — __* ---4—A -., _ N8ONIONTNOW.00M 5:34am 50° el O .2? ., 1101 i r , : , n •-.0 Iwo ri. r „ f.,, J. _ : , , _ __ -_ N. -� i� _. ____ ... ... 97 FilingFee Money RCW 36.22.250 provides that there is a surcharge of $ 183.00 per instrument, with some limited exemptions, charged by the county auditor for each recorded document. • 30% of that, or $54.90, is retained by the County. • Of that, at least75%, or $41.17, must be retained and used to accomplish the purposes of its local homeless housing plan. • The County's local homeless housing plan is the 5 Year Plan, which is about to be updated through the Yakima Homeless Coalition. • The County Commissioners currently allocate the filing fee money, through a competitive process, but the Commissioners always have the authority to allocate as they determine appropriate. 98 FilingFee Money RCW 43.185C.080 allows cities to operate their own local homeless housing program. The percentage of the surcharge assessed under RCW 36.22.250 equal to the percentage of the city's local portion of the real estate excise tax collected by the court shall be sent to the city. • City can assert responsibility for . homeless housingwithin its borders if r .1: it so chooses. ; 1�!hI r • If the City does so, the City's - percentage share of the 75% retained by the County ($41.17) would be .� ; : .1 it transmitted to the City to be used by .i lot !. op, the City in accordance with its own 1 .` I ,:.-: ` local homeless housing plan. ,,,; ,.!..l •'; I Q.'' �;� i 99 FilingFee Money What would the City have to do to get, allocate and maintain the filing fee money? • To get the funds the City must: ■ The City is obligated to do the following if - Assert responsibility for it wants the funds: homeless housing within the - Adopt a local plan to address citylimits homelessness that is specific to the City. A homeless housing plan is a - Forward a resolution to the 5 year plan developed to address County stating its intention and housing for homeless persons. commitment to operating a - The plan must be consistent with separate homeless housing the statewide Department of Commerce guidelines. program - Create a homeless working group • Once that is done, the County shall to provide support and help send the City's percentage of the develop the plan (although the City document recording surcharge to it can designate the Coalition as its work group) 100 FilingFee Money How much money is anticipated to be received and how can it be spent? • According to the County, over the ■ The City can retain 10% of what is past years, the City would have collected for administrative costs. received the following: Last year that would have been - 2020: $802, 713 approximately $48,000. - 2021: $906,632 • Funding must be spent on items - 2022: $673,834 in the 5 year plan. - 2023: $480,137 • Administration of the funding - 2024 (through Nov.): $484,076 would include administering the RFP, or otherwise, provide • It should be noted that filing fees reimbursement, and provide data are down significantly this year, to the Department of Commerce which may be the trend. as necessary. 101 FilingFee Money What programs or projects are currently funded by the County and which come from filing fees? Note, some of these may include funding from other sources. • Outreach ■ Emergency Shelter - Grace City Outreach $29,331 + - Grace City Outreach $225,000 $58,589 - Generating Hope $60,000 - Generating Hope $5,623 - Rod's House $10,890 - Rod's House $70,000 - YNHS $19,158 - Triumph $100,000 • Coordinated Entry - UGM $430,584 - YVFWC $12,334 - YNHS $34,838 - YNHS $14,655 + $6,912 - Rod's House 18,600 102 FilingFee Money What programs or projects are currently funded by the County and which come from filing fees? Note, some of these may include funding from other sources. • Extreme Winter Weather Shelter • Capital Improvements - Yakama Nation $250,000 - Grace City Outreach $38,912 - YVFWC/NCAC $37,500 (Laundry) - YNHS $30,040 - Grace City Outreach $71, 726 (Shower) • Domestic Violence Shelter - Rod's House $60,000 - YWCA $75,000 - Triumph $38,938 - The Lighthouse $30,000 - YNHS $210,000 103 Affordable Housing Tax RCW 82.14.530 allows cities to impose a sales and use tax to be used for housing and related services. • At least 60% of the funds collected • Programs may only be provided to must be used for constructing or persons with behavioral health acquiring affordable housing or disabilities, veterans, senior citizens, homeless, unaccompanied homeless acquiring land for these purposes; youth or young adults, persons with constructing behavioral health related disabilities, or domestic violence facilities or acquiring land for these survivors whose income is at or below purposes; or funding operation and 60% of the median income of Yakima maintenance costs of new units of County. affordable housing where housing- related programs are provided. • The remaining funds may be used for operation, delivery, or evaluation of Nis behavioral health treatment programs and services or housing-related services. 104 Affordable Housing Tax RCW 82.14.530 allows cities to impose a sales and use tax to be used for housing and related services. • Income limitations are population groups ■ To adopt the tax, City Council has two whose income is at or below 60% of the options: median income of Yakima County. - Per the US Census, the median - Pass an Ordinance imposing a household income is $68,015 sales and use tax of 1/10 of 1% - Per Data USA, the median earnings which would go into effect no for men is $43,061 sooner than 75 days after the Department of Revenue receives - Per Data USA, the median earnings notice of the change and on the for women is $32,188 first day of January, April or July. • 60% of the median household income is - Send the tax proposition to the $40,809 voters for the 1/10 of 1% tax • There would be some calculations based on income and family size to determine ■ Council evaluated passing an qualifications. ordinance in 2021 but it did not receive a supermajority of votes. https://www.census.gov/quickfacts/fact/table/yakimacountywashington/INC110223 https://datausa.io/profile/geo/yakima-county- wa#:—:text=The%20most%20common%20employment%20sectors,3.62%25 105 Temporary Emergency Homeless Encampments Under YMC 6.92, religious organizations are allowed to operate temporary emergency homeless encampments (indoor or outdoor, tiny homes or vehicle safe parking lots) if they meet the requirements of the code. • Code Requirements: ■ Could amend the YMC to provide - Religious organization additional opportunities - Obtain free permit - Could allow non-profit 501(c)(3) organizations and governmental - Operate no longer than 275 days in organizations to also operate one location per calendar year facilities unless there is a MOU and it is on city-owned property - Add security plan requirements - Meet fire and life safety - Evaluate length of operation requirements • Revisit tiny home pilot project wherein - Hold a neighborhood meeting faith based organizations housed a small number of tiny homes on their church sites 106 Collaboration & Education • City Council and staff participate • Website additions: Pages for resources in the Yakima County Homeless and information about homelessness in Coalition including upcoming Yakima work on the 5 year plan • Education campaign regarding • City Council and staff participate homelessness and non-profits helping in the Homeless Network of the homeless? Yakima County • Education to the community r regarding *,,-...-e-_,41... - IN il v1.; their opportunities to donate? Handouts �' THE �1 - Don't Helpw� _ F KEEP �E "�- cHAN .may7....\ : �e ' GIVE safely through - `;",:;-' '- :" DouglasHasHeart.org """"" 0 , r, '^"'lm"r Don t Support _ i�� q�, ifi- �. PanhaJ1dling ' {, Ir ii �` ;:;aN G rve w a L cai Cr.a.ry ` fp ram, MI , FOR SOME THIS IS 0 — ' , K— INDOOR ADVERTISING. For help CALL HEART „o ................... .__ ' i _- - Your cp l V1Y RViin ANGE enforcement tan•303.4$O.7301 p ONPg04wucu,r :, . li .i �NIT ! 107 N EXT ST E PS ■ Review YMC HB 1406 Use policies ■ Filing Fee fund allocation ■ Temporary Emergency Homeless Encampment Ordinance Review ■ Affordable Housing Tax ■ Education Plan and Outreach *JIM _ 108