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HomeMy WebLinkAbout5541RESOLUTION NO. 5541 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AUTHORIZING THE MAYOR TO TRANSFER FUNDS COLLECTED UNDER THE AFFORDABLE AND SUPPORTIVE HOUSING LOCAL SALES AND USE TAX ACT AND CITY OF AUBURN ORDINANCE 6732 TO THE SOUTH KING HOUSING AND HOMELESSNESS PARTNERS WHEREAS, the 2019 State Legislature enacted SHB 1406 (Chapter 338, Laws of 2019, "Affordable and Supportive Housing Sales and Use Tax Act") which allows cities and counties to recapture a portion of Washington State sales tax when it is used to support affordable housing initiatives; and WHEREAS, on September 9, 2019 the Auburn City Council enacted Resolution 5454 and Ordinance 6732 which authorized a recapture of Washington State sales tax, which should generate approximately $150,000 per year for the next 20 years; and WHEREAS, on February 19, 2019 the Auburn City Council enacted Resolution 5408 which authorized the Mayor to enter into an Interlocal Agreement (ILA) with 8 other south King County cities and King County to form the South King Housing and Homelessness Partners (SKHHP); and WHEREAS, Resolution 5408 states that "the Parties have determined that the most efficient and expeditious way for the Parties to address affordable housing needs in South King County is through cooperative action and pooling public and private resources"; and WHEREAS, all 9 member cities of SKHHP and King County have taken action to enact the sales tax recapture provisions established in SHB 1406; and Resolution No. 5541 August 17, 2020 Page 1 of 4 Rev. 2019 WHEREAS, on November 22, 2019 the SKHHP Executive Board took unanimous action to adopt SKHHP Resolution 2019-06 which urges each of the 9 member cities and county to pool 100% of the funds collected under the provisions of SHB 1406; and WHEREAS, if all 9 cities pool the maximum amount of collected SHB 1406 funds, the estimated revenue would total approximately $1,000,000 per year for a 20 year period - - -- --_W_HEREAS,- while _-$1.50,000-is_a-valuable- revenue stream that _can_be-used_in Auburn to support various affordable housing initiatives, transfer of the collected funds to the SKHHP Housing Capital Fund will stretch the funds much further and make a far more meaningful impact on the availability of affordable housing in South King County. WHEREAS, HB 1406 funds may be used for the purpose of acquiring, rehabilitating, or constructing affordable housing; funding the operations and maintenance costs of new units of affordable or supportive housing; and WHEREAS, cities that have a population of less than 100,000 may also use the funds for providing rental assistance to tenants, however, using the funds in this manner will likely exceed Auburn's estimated annual revenue collection since a rental assistance program requires city staff to review personal income information of individuals who request access to funds, account and audit the use of funds, and meet annual reporting requirements; and WHEREAS, the City of Auburn is projected to exceed a population of 100,000 within the 20 year window set forth in SHB 1406 which will prohibit Auburn from using funds for the purpose of providing rental assistance; and Resolution No. 5541 August 17, 2020 Page 2 of 4 Rev. 2019 WHEREAS, counties and cities that enact the provisions of SHB 1406 may issue general obligation or revenue bonds, and may use moneys collected under SHB 1406 for the repayment of bonds; and WHEREAS, on December 16, 2019 the Auburn City Council adopted Resolution 5476 that directed the transfer of funds collected pursuant to SHB 1406 funds to SKHHP -if _all -other -member cities _take -similar -action to -direct -a-proportionate-amount-of their collected funds to SKHHP; and WHEREAS, in response to the coronavirus pandemic some SKHHP member cities have directed SHB 1406 funds to rental assistance, which action prevents the City of Auburn from directing its SHB 1406 funds to SKHHP due to the restriction in Resolution 5476; and WHEREAS, it remains the City of Auburn's desire to appropriate and expend the funds allocated to the city under SHB 1406 to SKHHP for use on capital projects that address housing affordability. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, RESOLVES as follows: Section 1. As long as the City of Auburn remains a member of SKHHP, the Mayor is authorized to contribute all of the revenues collected by the City under SHB 1406 and Ordinance 6732 to the SKHHP Housing Capital Fund according to the provisions of the SKHHP Interlocal Agreement adopted by resolution 5408. Section 2. This authorization is contingent upon two or more SKHHP cities both taking action to contribute to the SKHHP Housing Capital Fund a share of the tax receipts received pursuant to SHB 1406. Resolution No. 5541 August 17, 2020 Page 3 of 4 Rev. 2019 Section 3. The Mayor is authorized to implement those administrative procedures necessary to carry out the directives of this legislation. Section 4. This Resolution will take effect and be in full force on passage and signatures. Dated and Signed: August 17, 2020 ATTEST: Shawn Campbell, cMM, City Clerk Resolution No. 5541 August 17, 2020 Page 4 of 4 CITY OF AUBURN KIM APPROVED AS TO FORM: Kendra Comeau, City Attorney Rev. 2019 CITY OF Memorandum Y - WASHINGTON To: City Council Members - - From:Jeff-Tate,-Director-of Community -Development - -- CC: Mayor Nancy Backus Date: August 17, 2020 Re: Resolution 5541 - Pooling of HB 1406 sales tax credit funds with SKHHP BACKGROUND The 2019 State Legislature enacted SHB 1406 which allows cities and counties to recapture a portion of Washington State sales tax when it is used to support affordable housing initiatives. On September 9, 2019 the Auburn City Council enacted Resolution 5454 and Ordinance 6732 which took the requisite actions necessary by a local legislative authority to take advantage of the sales tax revenue recapture. As a result of these actions, the City of Auburn is expected to collect up to $154,992 per year for the next 20 years. SHB 1406 allows these funds to be used for: 1. Acquiring, rehabilitating, or constructing affordable housing. 2. Funding the operations and maintenance costs of new units of affordable or supportive housing. 3. Jurisdictions that have a population of less than 100,000 may provide rental assistance to tenants. The City Council took a separate action on February 19, 2019 to adopt Resolution 5408 which authorized the Mayor to sign an Interlocal Agreement (ILA) with Burien, Covington, Des Moines, Federal Way, Kent, Normandy Park, Renton, Tukwila, and King County. The ILA officially formed the South King Housing and Homelessness Partners (SKHHP). SKHHP was formed for the purpose of advancing affordable housing initiatives in South King County. Anticipated initiatives include assisting cities with comprehensive plan updates, data collection and housing trend analyses, and establishing a housing capital fund to support purchase, rehabilitation, and/or development of affordable housing. An essential principle of the SKHHP ILA is that the 10 member jurisdictions are better able to deliver successful outcomes by working collaboratively and pooling resources. In support of this principle, on November 22, 2019 the SKHHP Executive Board unanimously adopted Resolution 2019-06 which urges each member jurisdiction to pool funds collected under SHB 1406 to a SKHHP Housing Capital Fund. The pooled funds have greater potential to leverage other public and private funds and will go further than the individual dollars collected by each city. Collectively the revenues are estimated to exceed $1,000,000 each year for 20 years. On- December 16,201.9_ the _City -of Auburn -enacted _Resolution _5.476_to declare _support -to _pool SHB 1406 funds by directing the funds to SKHHP, provided that all other member cities also agreed to pool funds. While the majority of SKHHP member cities have pledged commitment to pool SHB funds with SKHHP, two of the smaller SKHHP cities have responded to the economic impacts of the coronavirus pandemic by directing SHB 1406 funds to rental assistance. Due to the restriction in City of Auburn Resolution 5476, this action prevents the City of Auburn from directing its SHB 1406 fund to SKHHP. The cities that have directed funds for rental assistance have done so on a short-term basis and expect to revist the allocation of these funds towards the end of 2020 or beginning of 2021. RECOMMENDATION City of Auburn staff recommends that the Auburn City Council approve Resolution **** which would pool SHB 1406 funds to a SKHHP Housing Capital Fund even if not all SKHHP member cities commit to pooling funds. This recommendation is based on the following: 1. A fundamental premise in the formation of SKHHP is the power of a coordinated effort and pooling of resources. SHB 1406 and Ordinance 6732 offer a unique opportunity to achieve the goals and objectives of SKHHP. 2. The majority of SKHHP cities remain committed to pooling SHB 1406 funds, those that have allocated SHB 1406 funds to rental assistance have done so as short-term decisions in response to the unforeseen impacts of the pandemic and these allocations will be revisited at the end of the 2020 or beginning of 2021. 3. While not an insignificant amount of money, it will be difficult for Auburn to use the estimated $150,000 per year to realize the intended uses of SHB 1406 funds. 4. SHB 1406 establishes administrative monitoring requirements for how the money is used. By directing funds to SKHHP, the SKHHP Executive Manager will be assigned the responsibility of fulfilling this requirement. 5. The cumulative funding level achieved by SKHHP cities pooling SHB 1406 funds provides substantially more leverage for other public or private funds than the individual dollars collected by each City and collectively these funds will make a greater impact on the housing affordability needs in South King County. 6. While the economic impacts of the coronavirus pandemic have increased the need for rental assistance, using the funds for rental assistance pose a number of challenges: a. The City would have to set up a program and administrative procedures for deliver of this option. Staff resources would need to be allocated to oversee the setup and management of the program (meaning that staff will either need to be redirected from current responsibilities or additional staff will need to be hired). b. Rental assistance is not a long lasting sustainable solution. It provides one time funding assistance and spending money on rental assistance does not leave a lasting footprint. c. Only cities that are less than 100,000 in population are eligible to use the money for rental assistance. The City of Auburn will exceed a population of 100,000 at about the midpoint of the 20 year duration that SHB revenues are collected. NEXT STEPS -The -proposed Resolution -will supersede Resolution_ 5476_ and will enable the City_ of Auburn to move forward with actions necessary to pool SHB 1406 funds with other SKHHP cities. Upon approval of this resolution, in collaboration with SKHHP member cities the SKHHP Executive Manager will draft an Interlocal Agreement that will execute the pooling of SHB 1406 tax receipts. The Interlocal Agreement will need to be approved by each participating city's legislative body and will include specifications on allocation decisions, agreement duration, procedures for termination of agreement, and withdrawal procedures.