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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 9.
For Meeting of: March 3, 2020
ITEM TITLE: Report on Status and Recommendations for Revenue of HB 1406
(Affordable Housing Funding)
SUBMITTED BY: Joan Davenport, Community Development Director
Sara Watkins, Senior Assistant City Attorney
Steve Groom, Finance Director
SUMMARY EXPLANATION:
Community Development will provide a presentation on HB 1406.
ITEM BUDGETED:
STRATEGIC PRIORITY:
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
ATTACHMENTS:
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L aft background e e 1/7/2020 backup Material
C PP /24/20 0 a r Memo
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CITY OF YAKIMA
LEGAL
DEPARTMENT
200 South Third Street,2nd Fl. I Yakima,WA 98901 P: 509.575.6030 I F: 509.575.6160
PRIVILEGED AND CONFIDENTIAL: COVERED BY THE ATTORNEY-CLIENT AND
ATTORNEY WORK PRODUCT PRIVILEGES
MEMORANDUM
January 12, 2020
TO: Honorable Mayor and Members of the City Council
Alex Meyerhoff, Interim City Manager
FROM: Sara Watkins, Senior Assistant City Attorney
SUBJECT: 1406 fund uses
At the November 12, 2019 Study Session on homeless issues the City Council asked that
research be done on the following matters with regards to SHB 1406, specifically:
1. Can 1406 funds be used for temporary housing?
2. Can 1406 funds be used for motel vouchers?
3. How would 1406 funds be used for rental assistance?
4. How would 1406 funds be used for rehabilitation of units/houses?
5. Are there partners interested in working with the City on rehabilitation?
This memo first outlines the specific language used in 1406, then answers those questions as
best as possible. It should be noted that 1406 is a new law and cities have not yet received any
money associated with it. Therefore, there are no current case studies, examples, or
challenges that can be evaluated from other cities to help determine how or whether certain
activities qualify or not. Yakima will need to rely on the language of the law to determine if an
activity qualifies.
Information about 1406—what can funds be used for and who qualifies for funding?
A. What can 1406 funds be used for?
Under Section 6 of the law, cities with a population of less than 100,000 people may use 1406
funds for the following:
1. Acquiring, rehabilitating, or constructing affordable housing, which may include
new units of affordable housing within an existing structure or facilities providing
supporting housing services under RCW 71.24.3851;
2. Funding the operations and maintenance costs of new units of affordable or
supportive housing; or
RCW 71.24.385 addresses specific mental health services,treatment and behavioral health organizations.
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Memorandum to Honorable Mayor and Members of the City Council
January 12, 2020
Page 2
3. Providing rental assistance to tenants.
B. Who qualifies for 1406 funded affordable housing?
Pursuant to Section 7, the affordable housing or services provided (i.e. operational and
maintenance services or rental vouchers) can only be provided to people whose income is at or
below 60% of the median income of the city imposing the tax. According to the U.S. Census
Bureau, the median household income in the City is $42,092.00.2 Assuming this number is
correct, those persons whose income is at or below 60% of that, or $25,255.20, would qualify
for housing or rental vouchers from 1406 funds.
C. Guidance from the State Department of Revenue
I contacted the Washington State Department of Revenue contact person to inquire about how
the money could be used. She indicated that there was no guidance other than the language of
the bill. Since the bill is new, and cities will just start using the money and provided the required
reporting to the State in 2020, there are a lot of questions. She stated that after reporting has
started the legislature may find a need to clarify how the money is used. At this point, however,
there are no clarifications or guidance other than the words of the bill.
Council questions from the November 12' Study Session
A. Can 1406 funds be used for temporary housing?
As I read the law, the money must be used to acquire, rehabilitate or construct housing units.
Those housing units can be rental units or owned units, but must be new units. I do not believe
that the money can be spent on homeless shelters, encampments or other housing that does
not result in an affordable housing unit.
The law is silent on the idea of constructing transitional housing (housing that one is in for 24
months or less after which they transition into other housing). However, it seems that the intent
of the bill may be to create long term affordable housing units within the City. As such, since a
transitional housing development would not be long term for residents, it may not qualify for the
funding.
B. Can 1406 funds be used for motel vouchers?
The bill states that a City of under 100,000 people may provide "rental assistance to tenants."
People using motel vouchers for a few nights in a motel are not "tenants" and therefore, could
not use the vouchers.
2}zttp5 1www.census aovlquickfacts/vakimacitvwashington
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Memorandum to Honorable Mayor and Members of the City Council
January 12, 2020
Page 3
C. How would 1406 funds be used for rental assistance?
The legislation specifically states that the funds can be used "for providing rental assistance to
tenants." The plain language of this implies that current tenants could apply for rental
assistance if the funds were used for such a purpose, but it may not be used for new tenants.
This makes sense because of the use of the term rental "assistance" rather than rental
"voucher" or "payment." The implication by the language used is that the money would assist
current tenants who may have a break in employment, or an unforeseen medical event, which
creates a situation where they cannot pay rent for one or two months. The 1406 funds may be
able to help those who meet the income qualifications to stay in affordable housing, avoid
eviction, and get back to paying rent through their own resources after a short period of time.
D. How would 1406 funds be used for rehabilitation of units/houses?
The legislation specifically allows for rehabilitating affordable housing. The housing that is
rehabilitated is subject to the income requirements listed above. Because the City does not
have any of its own housing units to rehabilitate, it may contract with other entities to
rehabilitate affordable housing units. Units could be currently used for affordable housing but in
conditions that could be improved. Abandoned buildings could be turned into affordable
housing rental units by non-profits. There are many possibilities here, but all ideas need to fit
within the legislative language of authorized uses, and the City must ensure that the income
requirements are met.
E. Are there partners interested in working with the City to use these funds?
Once the Council determines its priorities for how the funds are to be used, City staff can reach
out to partners to work with them on specific projects for the use of the funds. Some potential
partners who already work in the area of affordable housing include, but are not limited to,
Habitat for Humanity, Yakima Housing Authority, and Catholic Charities. New partners might
include non-profits looking to create housing for specific groups of people who would meet the
income qualifications.
Next Steps
The next step for Council is to determine the City's policies on the use of the 1406 funds.
As an example only, the City Council could choose to use all of the money for construction of
new units by non-profit entities. If that were the case, the City staff would then formulate the
process and application for non-profits to apply for and receive that money.
The City Council could prioritize the use of the funds, or allocate percentages to different uses.
As a reminder, the estimated funding received each year to the City is $140,000.00.
HB 1406
STATUS AND RE
Yakima City Council
1� co., "1 f1'*, March 3, 2020
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Items to Cover Today:
■ HB 1406 Recap from last presentation
■ Funds received so far and projected funding
■ City Council Policy Decisions
What is Affordable Housing?
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The ity's Role nd Future Opportu n ities
HB 1406
1406 Process: Council passed Council sets policy for use of funds within the
legislation already to retain the tax requirements of the bill.
• Pass intent to reta i n
IDEA 1: Construct Housing
• Use the money to provide funds for affordable
• Adopt resolution . housing projects of other organizations
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1. Affordableseof1406 Ho Funds
using Units
1406 Funds can be used to acquire, • Acquire: Purchase or obtain property
rehabilitate or construct affordable for use in affordable housing. It is
housing, which may include new likely that under HB 1406 and 3SHB
( units of affordable housing within 2382 the City could acquire property
an existingstructure or facilities for affordable housing, then surplus
and sell it to a non-profit to
providing supportive mental health rehabilitate or construct the
treatment services (qualifying under affordable units.
RCW 71.24.385. • Rehabilitate: Funds can be used to
restore properties formerly used as
affordable housing, or restore
properties and create new affordable
housing.
Use of 1406 Funds
1. Affordable Housing Units
1406 Funds can be used to ■ Construct: Use the funds to build (by
acquire, rehabilitate or construct granting the funds to another entity,
( affordable housing, which may likely a non-profit housing entity)
include new units of affordable new affordable housing units.
housing within an existing ■ IMPORTANT NOTE: The housing
structure or facilities providing provided under this provision can
mental health only be provided to persons with
supportive
incomes at or below 60% of the
treatment services (qualifying median income of the city of
under RCW 71.24.385. Yakima, or approximately $25,255
(based on data indicating median
family income of S42,092).
Use of 1406 Funds
2. Funding O&M Costs
1406 Funds can be used to fund • Can be used for current units of
the operations and maintenance affordable or supportive housing to
costs of new units of affordable help with maintenance of the
facility, or operations costs of
or supportive housing. operating the facility.
• IMPORTANT NOTE: The housing
provided under this provision can
only be provided to persons with
incomes at or below 60% of the
median income of the city of
Yakima, or approximately $25,255
(based on data indicating median
family income of $42,092).
Use of 1406 Funds
3. Rental Assistance
1406 Funds can be used to ■ Rental assistance must be for
provide rental assistance for "tenants" which means people in
tenants. landlord/tenant relationships.
■ Motel vouchers for homeless would
not qualify under the plain language
IMPORTANT NOTE: The housing of the bill.
provided under this provision can only ■ Administration costs of such a
be provided topersons with incomes at program are not contemplated to be
or below 60% of the median income of
the city of Yakima, or approximately paid from the oft funds in the
$25,255 (based on data indicating plain language the bill.
median family income of $42,092).
1406 funding A u l
So far, here is the revenue
■ The State estimated gained:
that the City of December, 2019: $ 2.79
Yakima would receive January, 2020: $266.67
approximately
$ 140,000.00 per Numbers for each month are
year from the determined at the end of the
0.0073% portion of month. As you can see, based on
sales tax. this rate, the City will likely not
collect $140,000 in 2020.
Council Options—Next Steps
• HB 1406 Use policies
- Do you need additional information before determining which course(s) you would
like staff to explore? If so, what?
- Which of the course(s) would you like staff to more fully explore?
us In that exploration, staff can sit down and discuss the strategies with possible
community housing partners.
• Staff could also create RFP/RFQ documents if applicable
- What is your timeline for a follow up presentation after staff work is completed?
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