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07/16/2019 12 Use of City's Annual Retail Sales Tax, per Substitute House Bill 1406, on Affordable Housing Opportunities ti i..asxntntj kd d g$Ag x°'naa.x,,4n BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 12. For Meeting of: July 16, 2019 ITEM TITLE: Resolution expressing the City Council's intent to adopt legislation authorizing the imposition of the maximum capacity available from the City's annual taxable retail sales and use tax, as provided for in Substitute House Bill 1406 effective July 28, 2019, to be used for the provision of affordable housing opportunities within the City SUBMITTED BY: Jeff Cutter, City Attorney SUMMARY EXPLANATION: The 66th State legislature passed Substitute House Bill 1406 on April 28, 2019. The Governor signed the Bill on May 9, 2019 and the Bill will be effective on July 28, 2019. The Bill provides an opportunity for participating cities and counties to retain up to a maximum amount of 0.0146% of the retail sales and use tax otherwise collected by and paid to the State to be used for purposes supporting the provision of affordable housing in the participating jurisdiction. The actual amount that is permitted to be imposed by each jurisdiction is determined by the application of several factors established by the terms set forth in the Bill. In order for the City of Yakima to be eligible to authorize, fix and impose this tax for the benefit of the City's affordable housing efforts the City Council must 1) pass a resolution within six months of the effective date of the legislation indicating its intent to impose the maximum capacity of the tax and 2) must pass legislation actually imposing the maximum capacity of the tax within one year of the effective date of the legislation. The amount of the sales and use tax retained by the City in accordance with S HB 1406 may be used by the City for acquiring, rehabilitating or constructing affordable housing, including new units of affordable housing within existing structures or facilities providing supportive housing services, or for providing rental assistance to tenants. The affordable housing assistance is available to persons whose income is at or below sixty percent of the City's median income level. ITEM BUDGETED: STRATEGIC PRIORITY: 2 APPROVED FOR City Manager SUBMITTAL: STAFF RECOMMENDATION: Adopt resolution. BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D Sales Tax Retention-Affordable Housing per SHB 1406 7/2/2019 Resolution 3 RESOLUTION NO. R-2019- A RESOLUTION expressing the City Council's intent to adopt legislation authorizing the imposition of the maximum capacity available from the City's annual taxable retail sales and use tax, as provided for in Substitute House Bill 1406 effective July 28, 2019, to be used for the provision of affordable housing opportunities within the City. WHEREAS, The residents of the City of Yakima are subject to a retail sales and use tax of 8.2%for retail goods and services purchased within the City; and WHEREAS, the City of Yakima does not impose any of the "qualifying local taxes" identified in Section 1(1)(e) of Substitute House Bill 1406; and WHEREAS, Substitute House Bill 1406 provides the opportunity to a city to legislatively authorize, fix and impose a sales and use tax in the maximum amount of up to 0.0146% of the taxable retail sales occurring in the City; the maximum amount available to the City is determined by a number of factors that include whether the City is within a County that also elects to impose a similar tax; and WHEREAS, the City has been advised by Yakima County staff that Yakima County is uncertain whether it would choose to impose the tax opportunity within the County; and WHEREAS, the tax imposed under Substitute House Bill 1406 must be deducted from the amount of tax otherwise required to be collected or paid to the Department of Revenue, as authorized under RCW 82.08 and RCW 82.12, and retained by the City; and WHEREAS, the tax revenue that the City is authorized to retain under the operation of Substitute House Bill 1406 may only be used for acquiring, rehabilitating or constructing affordable housing, including new units of affordable housing within existing structures or facilities providing supportive housing services, or for providing rental assistance to tenants; and WHEREAS, the housing and services provided pursuant to the use of the taxes retained under the operation of Substitute House Bill 1406 may only be provided to persons with incomes at or below 60% of the median income of the City; and WHEREAS, the Yakima City Council is keenly aware of the need in the community for opportunities to provide affordable housing assistance to the residents of the City who are experiencing low income, as well as the fact that there is a shortage of good quality affordable housing within the community; and WHEREAS, the City Council finds that it is in the best interests of the City to take advantage of this opportunity to retain the maximum amount of the sales and use tax revenue collected within the City to enhance the affordable housing opportunities to low income residents of the City, Now, Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City of Yakima shall initiate legislation to authorize the opportunity provided by Substitute House Bill 1406 to retain the maximum capacity of up to 0.0146% of the retail sales 4 and use tax collected within the City from the Department of Revenue for the purposes of acquiring, rehabilitating or constructing affordable housing, including new units of affordable housing within existing structures or facilities providing supportive housing services, or for providing rental assistance to tenants, only for the benefit of persons with incomes at or below 60% of the median income of the City; the legislation necessary to authorize the retention of these revenues shall be adopted no later than one year after July 28, 2019. ADOPTED BY THE CITY COUNCIL this 16'h day of July, 2019. ATTEST: Kathy Coffey, Mayor Sonya Clear Tee