I have never seen a more relentless crusade for money than the one being waged by Seattle based non-profit housing organizations using their political power. They want to tax all new housing in Seattle, they have housing levies at the city and county level, they have money from the document recording fee, and the get money out of the City of Seattle’s general fund. And don’t forget the hundreds of millions they take from the Housing Trust Fund and equity from low income housing tax credits. But it’s just not enough. Now they want to redirect state sales tax dollars into their pockets. I don’t use this word lightly but it is getting disgusting. When one considers the housing needs across the state and servile, unquestioning responsiveness of Democrats to feed the cash addiction the word seems to fit.

Members of the Committee,

Last week I spoke against SB 5646 for three reasons.

It fails to address the costs of regulation — This proposal does nothing to address the leading cause of rising housing costs, lack of supply. A big factor in the inability of both for-profit and non-profit builders to produce housing to meet growing demand are limits imposed by local jurisdictions and the state on housing production. This proposed tax shift does nothing to ameliorate this fundamental problem. Furthermore, non-profit housing costs more per unit for the same reasons: too many costly rules. When we fail to address costs we ensure higher market prices which increases the need for subsidies. This legislation simply puts more money into an inefficient system with no effort to address the deeper problem of needless limits on housing production across the state.

It is unfair to rural communities — This proposal is manifestly unfair to rural counties and cities that have no local money for housing. Meanwhile, this legislation allows cities like Seattle with a city housing levy, county housing levy, a veterans housing levy, general fund money for housing, vouchers from the Seattle and King County Housing Authority, and soon an illegal tax on the production of housing in the form of Mandatory Housing Affordability.

Yet, vacancy rates in rural communities with no access to local resources and little access to vouchers have higher rates of poverty, lower wages, older building stock, lower vacancy rates and almost no investment from the Housing Trust Fund. Kititas County, for example, with lowest vacancy rate in the state has received zero from the HTF in the last decade. Yes, this would allow the shift of some state money to these counties if they imposed the tax, but larger cites, especially Seattle should not be allowed to tap this resource, a shift of state general fund dollars, until they address their own self-imposed housing crisis which is consuming resources from the rest of the state.

Housing Trust Fund Reform — The legislature simply must address the obscene systemic inequity in the distribution of Housing Trust Fund dollars. While Seattle continues to impose more and more regulation on the production of housing, pushing up prices, they also are imposing more and more local exactions, taxes, fees, fines, and regulations. This is a perpetual motion machine of inflation that crushes poor people under a higher cost burden for market rate housing and longer and longer wait lists for subsidized housing.

Yet, the legislature keeps appropriating more and more money to extravagant projects in Seattle with costs as high as $500,000 per unit. The findings of the Joint Legislative Audit and Review Committee (JLARC) confirmed these higher per unit costs. Meanwhile, communities like Grays Harbor County with serious homelessness have received nothing from the HTF in the past decade. Instead of shifting general fund dollars to Seattle, the legislature should be putting more Housing Trust Fund resources into rural Washington.

Can this bill be salvaged?

Maybe.

Exclude Seattle — The City of Seattle must be excluded from accessing this resource unless the legislature conditions this on a preemption of design review and mandatory inclusionary zoning. They simply cannot be allowed to deliberately drive up costs to score political points then devour more state resources. This is inefficient and misgovernment that the legislature would be condoning and enabling by allowing even more resources to subsidize Seattle’s overregulation of housing production. A limit could be placed on Seattle’s use exclusively for vouchers or eviction prevention in the form of one time cash assistance.

Reduce Regulation — Access to these funds must be coupled with an exemption from requirements like impact fees. Another way of accomplishing the intent of this legislation would allow local jurisdictions to keep the whole share of state sales tax collection for housing provided they impose no impact fees, reduce permitting costs, and that limits imposed by the Urban Growth Area be suspended. Other local requirements like design review should also be suspended as a condition of this use of state funds.

Match Sales Tax with Housing Trust Fund in Rural Counties — Since this is a shift of state tax dollars back to local communities for housing, the legislature should favor and help clear the backlog of need in rural Washington. As I said before, rural communities don’t have access to the many local sources of revenue available to larger cities. Connecting the dollars kept at the local level with state housing dollars could create a mix of flexible and and adequate resources for capital projects as well as rental assistance.

We hope that the Committee will consider changes to this bill that reflect the need for more fairness and efficiency in our state’s approach to housing across the state. Thank you for your consideration.