Snohomish County proposes 0.1% sales tax for affordable housing

EVERETT — Snohomish County will pursue a 0.1% sales tax that would fund much more affordable housing in a region where rents have skyrocketed.

The tax could more than double the number of new units the county was projecting to fund in the next five years.

County Council members could approve the tax increase without a vote of the people before the end of the year — though the two Republicans on the council want voters to have a say.

Housing Hope CEO Fred Safstrom said the impact would be hard to overstate.

“I’ve been directly working in this field for 15 years,” he said Wednesday in an interview with The Daily Herald. “And this is the most important thing that’s happened in those 15 years.”

When it comes to building new low-income housing, Safstrom said, local dollars have been the weak link. Getting state and federal matching grants, he said, first requires local funding. And without it, larger organizations are less likely to do work in Snohomish County.

Local jurisdictions are allowed to adopt the tax thanks to a state law passed last year, specifying the money be spent on affordable housing and mental health services. If approved swiftly, the county tax would go into effect in April. It could raise more than $23 million per year that could go to a range of housing options, from hotel shelters with “wraparound” services to newly constructed family units.

“Too many of Snohomish County’s residents are worried about being forced onto the streets because they have been on the losing end of the affordable housing crisis,” Snohomish County Executive Dave Somers said in a statement.

The proposal proved contentious at a council meeting Wednesday.

State House Bill 1590, said Councilmember Nate Nehring, created a “loophole” to sidestep voters. He said he’ll introduce an amendment to send it to the ballot.

“I just don’t understand the reason why this needs to be rushed through and voted on right before Christmas,” Nehring said.

Council Vice Chair Megan Dunn said the new state law is the only tool the county has to reliably get money for housing.

“We’ve talked about this as a council before, that there is no permanent, sustainable funding source to have housing in our county,” Dunn said.

Snohomish County officials suspect the number of residents living unsheltered has increased over the course of the pandemic. In 2020, a point-in-time count reported 1,132 people living unsheltered. And currently, more than a third of local households are “cost-burdened,” meaning they spend more than 30% of their income on housing costs.

Mark Smith, executive director of the Housing Consortium of Everett and Snohomish County, expects the tax could fund even more units than the county projected — if it’s leveraged effectively with state and federal dollars.

“Snohomish County doesn’t have a significant source of funding for affordable housing,” Smith said. “Yet we’re the third-largest county in the state, and we certainly have a significant need.”

If approved, the tax would align Snohomish County with several other jurisdictions that have since adopted the 0.1% sales tax. That includes King and Skagit counties, as well as the city of Snohomish, which unanimously adopted the tax earlier this month. That gave the city of Snohomish control over the money, because it passed its measure before the county did. The county tax would not add to any city taxes imposed under House Bill 1590.

Lynnwood city leaders anticipated the county’s move, sending a joint letter to the County Council, urging it to avoid a sales tax.

The sales tax rate across Snohomish County ranges from 10.5% in Lynnwood — one of the highest in the state — to a low of 7.8% in some unincorporated parts of the county.

Stephanie Wright, whose County Council district includes Lynnwood, said the new tax is necessary to help people without homes or those on the verge of losing their homes.

“It is a moral imperative that we take action,” she said in a news release. “And this is another important step in protecting our residents and ensuring that we create healthy communities where all can thrive.”

The Lynnwood letter also called the sales tax regressive, a critique echoed by county Councilmember Sam Low this week.

“I always hear people say (about other taxes), ‘This is a regressive tax,’” Low said. “But when it comes time to vote on these taxes, I never hear the same people talking about ‘regressive taxes’ and how it hurts the most vulnerable in our community.”

The housing consortium director, however, said he doesn’t expect the flat tax to harm extremely low-income residents, especially those who spend the bulk of their budgets on rent, groceries or transportation, which are not subject to sales tax.

“My response to that,” Smith said, “is that there’s nothing more regressive than homelessness.”

Claudia Yaw: 425-339-3449; claudia.yaw@heraldnet.com. Twitter: @yawclaudia.