Report to the Legislature - Affordable and Supportive Housing Tax Credit (December 2020)
Summary
Affordable and Supportive Housing Tax Credit, a December 2020 report on the collection and use of revenues pursuant to RCW 82.14.540(11), a report to the Legislature from the Community Services and Housing Division of the Washington State Department of Commerce, with Lisa Brown as Director. The executive summary states that 77 jurisdictions had passed resolutions of intent to implement the tax credit and adopted legislation. The data overview states that total Department of Revenue distributions statewide during fiscal year 2020 were $9,511,495, and that no jurisdiction reported spending or committing funds toward capital projects. Appendix A is Chapter 365-240 WAC.
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Affordable and Supportive
Housing Tax Credit
REPORT ON THE COLLECTION AND USE OF REVENUES PURSUANT TO RCW 82.14.540(11)
December 2020
COMMUNITY SERVICES &
HOUSING DIVISION REPORT TO THE LEGISLATURE
Lisa Brown, Director
2.4
Acknowledgments
Washington State Department of Commerce
Diane Klontz, assistant director
Community Services and Housing Division
Emily Grossman, policy and strategy advisor
Community Services and Housing Division
COMMUNITY SERVICES AND HOUSING DIVISION
1011 Plum St. SE
P.O. Box 42525
Olympia, WA 98504-2525
www.commerce.wa.gov
For people with disabilities, this report is available
on request in other formats. To submit a request,
please call 360.725.4000 (TTY 360.586.0772)
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT
Table of Contents
Executive Summary ..................................................................................................................................... 2
Agency Roles and Activities ......................................................................................................................... 3
2020 Data Overview ..................................................................................................................................... 4
Appendix A: Chapter 365-240 WAC Affordable and Supportive Housing - Sales and Use Tax ........................ 7
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 1
Executive Summary
Overview
The 2019 Encouraging Investments in Affordable and Supportive Housing Act (RCW 82.14.540) authorized a
new state-shared local tax to be used for investments in affordable and supportive housing. It authorized a
local sales tax option that is a credit against the state sales tax rate of 6.5%. The maximum rate imposed may
not exceed either 0.0146% or 0.0073%. Jurisdictions can receive Affordable and Supportive Sales and Use Tax
revenues for up to 20 years. Counties and cities implementing the tax must report annually to the Department
of Commerce (Commerce) on the "collection and use of the revenues." Commerce completed rulemaking on
April 13, 2020, to prescribe the contents of those reports.
According to RCW 82.14.540, Commerce will prepare this report annually to update the legislature on how
participating jurisdictions use the funds (see Introduction for RCW text). All reports to the legislature prepared
pursuant to RCW 82.14.540 conform to the requirements of RCW 41.01.036.
Participating Jurisdictions
Out of 283 eligible jurisdictions (244 cities and 39 counties), 77 had passed resolutions of intent to implement
the tax credit and adopted legislation as of Oct. 1, 2020. Seventy-four jurisdictions were receiving distributions
from the Department of Revenue. The deadline for jurisdictions to adopt the necessary legislation to
implement the tax was July 28, 2020.
Allowable Use of Funds
Affordable and Supportive Housing Sales and Use Tax revenues are available to provide housing and services
to persons whose income is at or below 60% of the median income of the city or county imposing the tax.
Counties over 400,000 population and cities over 100,000 population may use the revenue for only the
following activities:
(i) Acquiring, rehabilitating, or constructing affordable housing, which may include new units within an existing
structure or facilities providing supportive housing services under RCW 71.24.385 (behavioral health organizations); or
(ii) Funding the operations and maintenance costs of new units of affordable or supportive housing.
Counties under 400,000 population and cities under 100,000 population may also use the revenue for providing
rental assistance to tenants. Jurisdictions may finance loans or grants to nonprofit organizations or public
housing authorities. Jurisdictions may pledge the tax proceeds to repay bonds under debt limitations imposed
by the state constitution or statute. Additionally, they may enter into an interlocal agreement with other cities,
counties, and housing authorities to pool and allocate the revenue.
Fiscal Year 2020 Data
Commerce collected fiscal year 2020 spending data from jurisdictions in Oct. and Nov. of 2020. Most
jurisdictions have not begun spending Affordable and Supportive Housing Sales Tax revenue.
No jurisdiction reported spending or committing funds toward capital projects.
Eight jurisdictions reported utilizing revenue for rent assistance programs.
Thirty jurisdictions are working toward the formation of interlocal agreements for pooling and joint
distribution of revenue. These jurisdictions are all located in the Puget Sound area: North King County,
South King County and Thurston County.
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 2
Agency Roles and Activities
Department of Revenue
The Department of Revenue (DOR) interprets and implements RCW 82.14.540 and administers the tax credit to
jurisdictions. DOR calculates the maximum tax distribution participating jurisdictions receive each fiscal year.
The tax is not officially "collected," as this is a state-shared tax credited against the state portion of the sales
and use tax. Jurisdictions receive the tax distribution monthly. DOR collects minimal information from
jurisdictions to administer the tax credit but does provide Commerce with data on jurisdictions' "collection" of
the tax for the required annual legislative report.
The maximum authorized tax distribution is based on the jurisdiction's taxable retail sales in the fiscal year
2019 multiplied by the authorized tax rate (0.0073% or 0.0146%). For example, if a city's taxable retail sales
were $1 million in fiscal year 2019, the maximum amount the city may receive is either $73 or $146 per fiscal
year, depending on its authorized rate. If that city had taxable retail sales of $50,000 for a particular month and
was eligible to receive the 0.0073% rate, it would receive $3.65 in tax distribution for that month.
The tax rate is based on three factors: the date of adoption, the presence of a qualifying local tax (cities only),
and whether the corresponding city or county is a participating jurisdiction. In some circumstances, counties
and cities share revenue. If the county elects not to participate, cities within that county that have not enacted
a qualifying local tax will not receive Affordable and Supportive Housing Sales Tax revenues after the first year.
Department of Commerce
Participating jurisdictions must report to Commerce on the "collection and use of the revenues" annually.
Pursuant to RCW 82.14.540, Commerce conducted rulemaking in 2019 and 2020 to prescribe the content of
those reports.
Commerce filed a Preproposal Statement of Inquiry CR-101 on June 27, 2019, and conducted informal
consultation with stakeholders for six weeks. Commerce distributed a draft rule on Oct. 21, 2019, and filed the
Notice of Rulemaking CR-102 in Nov. 2019. The department held a formal hearing in Dec. 2019 and the final
rule with the Code Reviser in Jan. of 2020. The final rule was adopted Commerce adopted on April 13, 2020
(See Appendix A for the final rule).
According to RCW 82.14.540, Commerce will collect information from jurisdictions on the collection and use of
Affordable and Supportive Housing Sales Tax revenues and prepare this report annually, to update the
legislature on the collection and use of funds statewide.
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 3
2020 Data Overview
Participating Jurisdictions
Data is reported for fiscal year 2020 (July 1, 2019, through June 30, 2020). As of Oct. 1, 2020:
77 jurisdictions have passed resolutions of intent to implement the tax credit and adopted legislation
74 jurisdictions received distributions from the Department of Revenue (DOR) during fiscal year 2020 (29
counties and 45 cities)
The total DOR distributions statewide during fiscal year 2020 was $9,511,495.
Table 1: Participating Jurisdictions and FY 2020 Distributions
Total Fiscal Year Total Fiscal Year
Counties 2020 Distributions Cities 2020 Distributions
Asotin $14,862.55 Auburn $59,243.97
Chelan $72,751.56 Bainbridge Island $11,659.97
Clallam $23,223.59 Bellevue $171,982.75
Clark $154,931.08 Burien $31,225.50
Columbia $2,400.15 Carnation $1.21
Cowlitz $82,528.68 Covington $12,883.89
Douglas $26,356.92 Dayton $207.58
Garfield $527.29 Des Moines $8,391.75
Grant $72,361.52 Duvall $4.70
Grays Harbor $58,498.39 Edmonds $32,446.37
Island $82,748.83 Ellensburg $31,735.70
Jefferson $13,797.69 Enumclaw $5,495.78
King $1,883,983.26 Everett $281.20
Kitsap $263,662.24 Federal Way $39.220.24
Klickitat $114.67 Forks $1.90
Mason $61,071.71 Issaquah $152.03
Okanogan $5,745.91 Kenmore $10,546.80
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 4
Total Fiscal Year Total Fiscal Year
Counties 2020 Distributions Cities 2020 Distributions
Pacific $22,898.85 Kent $250.80
Pend Oreille $2,761.14 Lacey $26,154.23
Pierce $712,787.04 Lakewood $106.90
San Juan $21,404.00 Leavenworth $7.38
Skagit $106,559.65 Marysville $13,591.92
Snohomish $589,123.77 Mercer Island $11,363.67
Spokane $469,483.64 Mill Creek $6,341.09
Thurston $145,942.29 New Castle $2,882.59
Walla Walla $32,133.68 Olympia $58,593.01
Whatcom $266,929.85 Port Angeles $4,054.93
Whitman $32,696.76 Port Orchard $13,714.50
Yakima $212,875.58 Poulsbo $13,248.31
Puyallup $10,429.54
Redmond $66,253.61
Sammamish $13,751.27
SeaTac $5478.44
Seattle $2,434,341.92
Shoreline $28,274.50
Snohomish $18232.86
Spokane $56,154.45
Spokane Valley $12,865.22
Tacoma $481,091.88
Tukwila $75,386.92
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 5
Total Fiscal Year Total Fiscal Year
Counties 2020 Distributions Cities 2020 Distributions
Tumwater $20,279.56
Vancouver $212,206.92
Wenatchee $11,929.92
Woodinville $2897.12
Yakima $60,961.82
Jurisdictions' Use of Funds
Most jurisdictions have not begun spending their Affordable and Supportive Housing Sales Tax revenue. No
jurisdiction reported spending or committing funds toward capital projects. Eight jurisdictions (shown in Table
2) reported utilizing revenue for rent assistance programs.
Table 2: Spending on Rent Assistance by Jurisdiction and Target Population
Total Spent on Rent Total Households
Jurisdiction Assistance Served Priority Population Served
Income-eligible Bainbridge Island
Bainbridge Island $11,659.97 13
residents*
Ellensburg $31,735.70 17 Income-eligible Ellensburg residents
Enumclaw $5,495.78 15 Income-eligible Enumclaw residents
Port Angeles $4,054.93 9 Income-eligible Port Angeles residents
COVID-19-impacted, income-eligible San
San Juan County $21,404.00 38
Juan Island residents
Shoreline $24,000.00 19 Income-eligible Shoreline residents
Tukwila $67,848.23 61 Income-eligible Tukwila residents
Whatcom County $70,513.26 40 Income-eligible Whatcom County residents
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 6
Appendix A: Chapter 365-240 WAC
Affordable and Supportive Housing - Sales and Use Tax
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 7
AFFORDABLE AND SUPPORTIVE HOUSING TAX CREDIT 8
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