Legislation to provide significant and diverse funding streams to meet the housing needs of the most vulnerable in our state in the next 20 years is critical. There have been a few proposals introduced this session, including the Governor’s bold bonding bill, a new local and state real estate excise tax (REET), and the short-term rental tax to help fund affordable housing in our vacation destination cities. Importantly, bills that will create a new funding source for the state are considered “necessary to implement the budget” (NTIB) and can miss cutoff deadlines to continue to be considered.

The budgets will start coming out this week and will shed light on the fate of the Governor’s bonding proposal. An element of this companion bill, HB 1149/ SB 5202, that is often overlooked are the provisions that would provide funding to create workforce housing—a housing need across the state. The bill would create the Workforce Housing Accelerator Revolving Loan Program to construct housing with low interest loans for households between 50-80% of the area median income. Notably, this section of the bill does not need to be approved by the referendum tied to the bonding sections of the bill; however, the funding and effective date is tied to the bonding piece.

Another bill that is NTIB and is languishing in committee is the Affordable Homes Act – HB 1628. We sent out an Action Alert directly to city leaders’ inboxes on March 15 urging you to reach out to your legislators to support this REET bill:

We need you to ask your legislators to:

• Advocate for funding of affordable housing, specifically HB 1628.
• Contact their leadership and tell them that this is a priority for them.

Search House Representatives by district and by city.

Additional talking points:

• Let your representatives know that cities support HB 1628—the Affordable Homes Act. Include the letter of support when you urge them to move the bill forward.
• Let legislators know how much a REET 3, if passed by your council, could raise for affordable housing in your city each year.

HB 1628 provides two new REET sources dedicated to affordable housing:

1. Local – Creates a new .25% councilmanic local option REET (REET 3) that can be used to fund affordable rentals, affordable home ownership, and infrastructure to support housing.
2. State – Creates a new state REET tier, increasing the current tax for the portions of property value exceeding $5 million by 1%. That provision is projected to raise $200 million per year for state housing programs.

Finally, a bill that would give cities the option to add an excise tax on the sale of lodging of short-term rentals to fund the operation and capital cost of housing programs. Here’s what SB 5334 proposes:

• Allows a city to impose an excise tax on the sale of lodging of short-term rentals through a short-term rental platform at a rate of up to 10 percent.
• Authorizes a city to offer exemptions from the tax for one short-term rental property based on the property owner's age or income.
• Revenue from the tax must be used exclusively for the operating and capital costs of affordable housing programs, including but not limited to, homeless housing assistance, temporary shelters, and related services.
• Revenue may be used to make grants, loans, or to let contracts to nonprofit organizations or public housing authorities for services related to affordable housing programs.

This tax would not be considered when determining whether the lodging tax limit has been exceeded, including for determinations made when a city changes a sales and use tax rate.

Although the bill had a close vote to get out of the Senate, it is on the committee fast track and expected to be voted on this week. Reach out to your legislators to support this bill if you have a significant amount of short-term rental housing in your city.

Dates to remember

SB 5334 is scheduled for public hearing in the House Local Government Committee on Tuesday, March 21 at 10:30 am, and is scheduled for a vote in the same committee on Friday, March 24 at 10:30 am.