Cities and counties in Washington state have received more than $25.3 million in tax credit funds to support affordable housing initiatives over the last year. 

In the fall of 2020, elected officials across Washington were busy figuring out whether to enact the sales tax credit created by HB 1406. The bill allowed municipalities to collect a small sales and use tax, which was then deducted from the state sales tax. 

The Morning Wire: Keeping you informed on politics, policies, and personalities of Washington State.

The tax credit was adopted by all 39 counties and 85 cities across Washington. For each of these, the money can be used to buy, build or rehabilitate affordable housing, as well as for maintaining new units. Smaller cities and counties can also use the money for rental assistance. 

To date, more than $25.3 million in distributions has been sent back to counties and cities, said Emily Grossman, policy advisor for the state’s Department of Commerce. That figure doesn’t include all of fiscal year 2021 yet. Just under $2 million has been spent by local jurisdictions, with roughly half being used for rental assistance. 

The update on the tax credit was delivered at an Oct. 20 Senate Housing and Local Government Committee meeting. Representatives from three Washington cities provided testimony on ways they are using funding and trying to address the housing crunch in their communities. 

Bruce Tabb, mayor of Ellensburg, said his city has almost no vacant apartment units. The median income for Kittitas County has risen 15% since 2012. Over the same period, rent has increased by 24% and housing has increased 47% in Ellensburg. The city needs an average annual production of 281 units a year to meet its 2037 population target, but is currently producing an average of 107. 

It’s not a unique position, as a 2020 report by Up For Growth found that Washington State has been under-producing housing units for decades. Even between 2010 and 2015, the state should have created an additional 225,000 units. 

Tabb said Ellensburg is focused on using the funds to build capacity and leverage funds. The city sales tax funded $765,000 towards the Stuart Meadows project, which includes 18 single-family homes being built on surplus property. The project is also a community land trust, which will ensure permanent affordability of the units. 

On broader state funding issues, Tabb said much of the focus from the state prioritizes homelessness over affordability. But in a city like Ellensburg with relatively low levels of homelessness and growing housing affordability, giving more latitude for local governments to use funding could help address both issues. 

“One of the keys for us as a community is really to recognize that local communities understand their needs,” Tabb said. 

Peggy Sheehan, neighborhood liaison for the city of Vancouver, said additional funding for job training would help increase incomes. 

“I really believe that if we tried to focus some more on jobs and job training we would be able to help a lot of people that are currently falling through the cracks,” Sheehan said. 

Nathan West, city manager for Port Angeles, said increasing regulatory restrictions is difficult for his city and building contractors to keep up with. 

“We simply can’t keep up with it, and it’s having a major impact on the cost of development in our community,” he said. 

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