Are You Ready to Pay a Tax in Thurston County to Support Low-Income Housing?


Momentum is gathering for a Thurston County-wide tax — most likely a sales tax — to support low-income housing, but county officials said Friday they are hesitant to move forward without support from city officials.

That's probably a welcome move in Lacey because some city council members there already are concerned about a lack of input into the process.

Olympia already levies a citywide Home Fund tax, which voters approved in 2018. Housing advocates and city officials there have for years called for an expansion of the Home Fund to the entire county, since homelessness and affordable housing issues exist throughout the region.

The Regional Housing Council, a county advisory committee, endorsed a countywide levy by a 3-0 vote on July 28. The body has five voting members but Yelm Mayor JW Foster was absent from the meeting and County Commissioner Carolina Mejia abstained from the vote.

Although the motion was made by Lacey City Council member Carolyn Cox, it was quickly met with opposition from her council colleague Lenny Greenstein, who was concerned about the process.

Greenstein elaborated on his concerns during an Aug. 5 Lacey City Council meeting.

"This was never discussed with council, there was no input from council and here our council member made a motion to have the county go forward with a home fund, which would tax the people of Lacey without us even having a conversation about it," he said.

Cox defended her motion, reminding Lacey City Council that the Regional Housing Council is just an advisory body.

"Again, it's a recommendation," she said.

The Thurston County Board of Commissioners will ultimately decide whether to adopt the policy, which would raise about $4.5 million to $5 million per year, according to information shared during a Friday planning session. During the session, the board chose to hold off taking action on the policy until staff can prepare plans specifying how a home fund would be used.

Once that's complete, the board indicated they would want to see official support from the county's cities before moving forward.

Although one-time federal funds from the American Rescue Plan may be used pay to construct new housing for low-income and homeless people, buildings require ongoing and consistent revenue streams to be maintained.

"It is definitely not over once it's built," said Beth Doglio, a former state legislator from Olympia who also serves as vice chair of the board for Quixote Village, a tiny-house community in Olympia that opened in 2013.

Another factor: The cities of Lacey and Tumwater are no longer receiving as much money as they first thought under the American Rescue Plan, according to information shared with Tumwater Mayor Pete Kmet, who shared it with The Olympian.

Lacey was set to receive about $11 million, but that has now been cut by 40 percent to $6.8 million. In Tumwater, it fell by 51 percent to $2.5 million.

"The reason is a bit technical," Kmet said in an email. "Previously, we were classified as a 'non-entitlement' city; however, in the final allocation we were classified as an 'entitlement' city. That means a different formula was used to calculate our allocation."

Where the Board of County Commissioners stand

The Thurston County Commissioners signaled a desire for more planning and community involvement before adopting a countywide home fund.

During the Friday planning session, commissioners Mejia and Tye Menser indicated that their support for the policy depends on what the local city councils officially endorse.

Mejia said she was generally supportive of funding homeless prevention, but she would want supportive letters from Lacey and Tumwater before moving forward with the policy.

"I of course wouldn't want the county to go on this on its own," Mejia said. "I would want to know that the other city councils would be in support of it. I didn't really get that from the RHC."

Menser floated the idea of holding a public hearing on the proposal and involving the city councils before pursuing the policy. He said he felt glad the RHC shared their perspective, but it did not mean the cities officially endorsed it.

"I agree we have to have that support," Menser said. "This is a regional effort to address a big problem and I'm not going to support it over the objection of the two municipalities involved."

Commissioner Gary Edwards expressed dissatisfaction with the impact of homeless prevention efforts so far and said he was opposed to more taxes during a pandemic. However, he said would support having the public vote on the policy.

"I would ask the public to vote on something like that versus councilmanic, because it actually lets the legislative body know where the support is and if there's support there versus a minority group advocating that there is support," he said.

Mejia told The Olympian she's not against a home fund, but she wants to follow a planning process similar to how the city of Olympia created its Home Fund.

"I want to be able to tell people, 'This is what your money is going to,' whether it be a new construction or just anything," Mejia said.

In the absence of a home fund, she said the board is still considering how federal and state funding sources may be able to support low-income housing.

The commissioners agreed that before going to the city councils or the public, staff should prepare some sort of plan that shows how a home fund could be used to meet supportive housing goals.

Keylee Marineau, homeless prevention and affordable housing coordinator for Thurston County, said the RHC has asked a supportive housing workgroup to construct a strategy for creating 150-200 units of permanent supportive housing in the next three years.

She said this plan will likely be ready by the RHC's September meeting and contain specific ways that a home fund could be used.

For now, the board is waiting to see what comes of this plan and has instructed staff to explore the possibility of holding a public hearing. They also are awaiting more information on the ideal timing for implementing such a policy.

Which cities already have Home Funds?

The cities of Anacortes, Port Angeles, Tacoma, Bellingham, Ellensburg, and Seattle all have sales tax levies that support low-income housing. At the county level, King, Jefferson, and Whatcom counties has sales taxes to support housing.

Seattle has had some version of a housing levy since the 1980s. Tacoma has been debating the issue for decades, finally approving a 0.1 percent sales tax increase in April 2021.

King County has bonded against its fund, raising even more money that it is now using to purchase seven hotels to house people who are homeless.

Olympia is the only jurisdiction in Thurston County with a tax levy that supports affordable housing. City residents voted to increase their own sales taxes in 2018 to create the Home Fund, which generates about $2.3 million per year. Recent changes in state law now allow city councils to create a housing levy without voter approval.

What is the Olympia Home Fund?

Olympia's Home Fund finances construction of housing for people making less than 60% of Area Median Income (AMI), which is about $48,000 for a two-person household in Thurston County, according to the U.S. Census Bureau's 2019 American Community Survey.

About $1 million of Home Fund money each year is put toward low-income housing construction, with the rest going to homeless shelters and services or held as reserves. Unlike state and federal funds, which often come with strings attached and time frames in which they must be spent, local levies can be spent as municipalities see fit.

That money doesn't build anything on its own; rather, it's a way to get some momentum behind projects so they can compete for state and federal low-income housing tax credits, which finance the bulk of construction costs.

Two recent projects — Interfaith Works' 2828 Martin Way and Family Support Center's new development for homeless families in west Olympia, each of which are budgeted at nearly $20 million — are primarily funded by state and federal tax credits.

"We have plenty of plans, all of them call for more permanent supportive housing, and even with all of the funding that's in front of us at this unique moment in time, there's not enough," said Olympia City Council member Jim Cooper, who chairs the Regional Housing Council.

Will the rest of the county go along?

The cities of Olympia, Lacey, and Tumwater all affirmed the need for a permanent source of funding for low-income housing in their respective Housing Action Plans, passed earlier this year.

"Lacey, Olympia, the county, and Tumwater all have plans that call for a number of strategic activities both specific and broadly, and they all need revenue that right now is not here," said Paul Knox, a political consultant who worked on housing policies for the city of Tumwater and is now advocating, along with Doglio, for municipalities statewide to enact Home Funds.

A 2017 survey of residents in Tumwater found that while a majority support subsidized housing, homeless shelters, and rent assistance in theory, less than 40 percent would be willing to pay more sales tax to fund them, and only 1 in 3 residents was ready to fork over more property taxes to help house others.

Tumwater Mayor Kmet said he is aware of the Regional Housing Council recommendation, although he has yet to hear a firsthand account of the meeting from Tumwater City Council member Michael Althauser, the city's representative to the RHC.

He also said the Tumwater City Council has had some discussions about a countywide home fund, but has not taken a position on it.

The city, he said, is committing about $1 million of its American Rescue Plan money to housing, but even $1 million doesn't go very far, given the high cost of construction.

Kmet supports the idea of a countywide home fund, he said. "I think it makes sense to do something on a regional basis," he said.