In an effort to bolster funding for affordable housing projects, the Thurston Regional Housing Council (RHC) approved a letter urging state legislators to reintroduce the Affordable Homes Act.
At a meeting on Jan. 22, Olympia's Housing Program Manager Jacinda Steltjes presented a request to the RHC to issue a formal letter to state House Rep. Beth Doglio in support of the reintroduction of the Affordable Homes Act.
The proposed legislation was introduced in the 2024 Washington legislative session but failed to gain traction in the state House last year.
It aims to establish a dedicated funding source for the Housing Trust Fund (HTF) through a 1% increase in the Real Estate Transfer Tax (RETT).
The RHC oversees a request for proposal process that establishes the region's affordable housing pipeline. Many of the projects, especially larger developments, rely on both local RHC funding and state resources, heavily depending on the Housing Trust Fund.
Steltjes noted in recent years, the HTF has seen substantial investment from the state's capital budget. However, this funding has been inconsistent, without a dedicated source. As a result, the demand for the limited resources has far outpaced the available awards.
In 2023, Steltjes mentioned, there was a significant investment in the state's HTF. On the homeownership project, applicants requested $93 million, but only $39 million was available for awards.
She added that for multifamily rental projects, $456 million was requested but only $274 million in awards was provided.
In 2024, homeownership projects requested about $93 million, and there was only $17 million in available award funding. About $335 million was requested for multifamily projects, but only $85 million was awarded.
"What (it) boils down to are the projects, not just in our region, but statewide, that are ready to start construction… ready to make the units available. (But) that is not happening because there is no financing at the state level to help fund those projects," Steltjes told the RHC members.
In the local scene, Steltjes said several affordable housing projects supported by the RHC have faced significant challenges due to the HTF being underfunded and oversubscribed.
For example, the Low Income House Institute's (LIHI) Franz Anderson Permanent Supportive Housing project, with 70 units, and the TWG 228 Olympia project, with 84 units, have scored high in the competitive Housing Trust Fund application process. However, the lack of available funding has meant these projects have not received awards.
A staff report stated that "the projects' development timelines have been pushed back a minimum of a year to permit the developers to seek HTF in future years."
It added, "Thurston County is not unique in this challenge. A permanent source of funding for the Housing Trust Fund is desperately needed to increase affordable housing supply across Washington."
Despite passing out of a House committee, the Affordable Homes Act failed to advance last year. The bill never made it to the House floor or the Senate for a vote.
The Affordable Homes Act proposed an increase to the highest RETT rate, raising it to 4% to 3% for sales over $3 million.
According to a staff report, the change was projected to generate $125 million in the 2025-26 biennium and $250 million in the 2027-28 biennium for the HTF.
The Housing Council also agreed to send the letter to Sen. Jessica Bateman and Rep. Lisa Parshley.
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MrCommonSense
The articles in the JOLT seem to lack a lot of background and detail which is very easy to get.
Most of your readers probably have no idea what Real Estate Excise Tax (RETT) is. The fact is real estate seems to be where taxing authorities look often when money is needed. Because this tax doesn't affect folks until they sell property, they are not even aware of it until a real estate broker gives them an estimate of the cost of selling their property. Surprise!
The tax was increased a few years ago and recording fees at the county auditors offices have increased way beyond the cost of providing recording services, simply to generate tax revenue.
Taxes for affordable housing should be spread over the entire population, not just those who were fortunate to have been able to buy a home or other property. Real estate values are plateauing and it may be difficult for people to sell their homes when selling costs now can be 7% - 10% when adding in the taxes.
Here is the current REET rate schedule:
Less than $525,000.01 at 1.1%
From $525,000.01 to $1,525,000 at 1.28%
From $1,525,000.01 to $3,025,000 at 2.75%
Above $3,025,000 at 3%
Agricultural and timberland at 1.28%
Of the net proceeds to the state:
Beginning July 1, 2023, 1.3% of the state tax collected by counties is retained to cover administration costs.
5.2% goes to the public works assistance account.
1.4% goes to the city-county assistance account.
79.4% goes to the general fund.
The remaining amount goes to the education legacy trust account.
Some of the general fund money should be redirected to housing rather than increasing the tax yet again.
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