City planning to collect sales tax for affordable housing

City council adopts resolution to allow the city to collect.

During the Nov. 4 meeting, the Mercer Island City Council unanimously approved a resolution declaring its intent to adopt legislation to authorize a sales and use tax that would fund affordable and supportive housing within the community.

The bill that was passed by Legislature — HB 1406 — is an attempt to encourage cities and counties to invest in affordable housing by providing a share of the state sales tax revenue to participating local governments. The sales tax credit will be available for 20 years and will provide housing services to those at or below 60 percent of the city’s median income.

It is estimated that Mercer Island will receive about $36,000 in annual revenue from the tax credit and council members were briefed on ways the funds could be used.

There are three options for how the revenue garnered from the tax can be spent: One option is to contribute funds to Arch Housing Trust Fund, which helps fund housing in east King County.

Another option is to use the funds to help support the Youth and Family Services Emergency Assistance Program. The program provides emergency rental assistance and utility assistance to families in crisis. Usually, the money is limited to $1,000 per year or people use it as a one-time support system.

Council members also have the option to utilize the funds to construct affordable housing on Mercer Island. For example, the city could accumulate $36,000 per year until there is enough to construct some form of housing units or structures.

Although Mercer Island has until July 28, 2020, to enact the sales and use tax, the sooner the ordinance is adopted, the earlier the city can begin collecting the new tax revenue. The council approved to forgo a second read and adopted the ordnance. Further discussions will take place on the specifics of how the sales and use tax funds will be used at a later time.