Seattle Mayor Jenny Durkan has signed new legislation into law that would allow the city to retain a portion of its sales tax to support affordable housing. 

"I'm really excited to bring forward this legislation today," said Seattle City Councilmember Teresa Mosqueda ahead of the city council’s passage of the legislation on Aug. 12. "I know it sounds like it's policy wonk, with a lot of sauce on it, but it's really exciting. This is a legislation that the state Legislature initially passed this last session, House Bill 1406, which allows for municipalities to be able to access tax dollars that are already being collected and actually invest them into affordable housing."

Mosqueda said that the tax revenues will generate about $4.5 million a year and support those that make less than 30 percent of the area median income.

This is a 0.0146 percent sales-and-use tax the state Legislature approved allowing cities with housing levies to impose through Substitute House Bill (SHB) 1406, which passed last session. The tax is credited against the state’s sale-and-use tax, resulting in no increased cost to consumers. If all goes to plan, the funds will be available during the first quarter of 2020.

The legislation also aims to build upon that revenue stream, through the use of the city's capability to issue bonds.

"This (legislation) gives us one more tool to allow for us to bond and get capital dollars in hand," Mosqueda said. "At a minimum, we are talking about bonding to be able to get $50 million to invest into housing."

Councilmember Lisa Herbold reminded the council that the generation of the $50 million is a measure that can only be done this year, and the city will have to find additional revenue sources in years to come if it wants to duplicate this measure's efforts.

Councilmember Kshama Sawant said she was in support of the legislation because it works toward affordable housing, which is one of her goals. However, she objected to some of the literature that came out of Durkan's office. In particular, she didn't want the potential $50 million to give large corporations a pass on paying taxes that could also support low-income housing.

"In the mayor's press release announcing this bill, she said it would raise $50 million, which makes it appear that it is replacing the Amazon tax that was repealed by the mayor and the majority of this council," Sawant said. "However, in the fine print…it is only raising a few million each year and the city could make $50 million of those funds one time if it paid off that $50 million over the next 20 years."

Mosqueda agreed that the bill would only alleviate a small potion of the need for affordable housing in Seattle.

She said it is critical that the city obtain the needed funds in coordination with its county partners to ensure the most effective timing and implementation of the monies, especially given the scope of the affordable housing deficit in the city.

"We recognize that this (legislation) does not meet the scale of the crisis that we have in terms of the need for new revenue," Mosqueda said. "Just as a reminder, we have the need for 156,000 units of affordable housing that we need to meet the need for today."

She said this figure doesn't include individuals who may come here as immigrants and refugees; people who are coming here as economic refugees seeking better opportunity; or folks who are coming here as climate refugees seeking a more stable climate.

"More people are going to come to this region, so we must build the housing to make sure that everybody in our region has a place to call home and people aren't getting pushed into the street, or pushed out of our city limits," Mosqueda said.

Sawant also emphasized the work that this legislation will leave on the table, even after the $50 million is generated, again setting her aim on big business.

"Relying on sales tax is going to be completely insufficient, not to mention completely unjust," Sawant said. "If we are to have a city hall that actually addresses the housing and homelessness crisis, then we cannot duck the question of taxing big business to build affordable housing in the thousands every year, not in the dozens, and we will also need rent control."

The legislation allows for the council to start retaining funds on Oct. 1, following a 30-day notice to the Department of Revenue that will be issued Sept. 1.

Though the legislation is simply taking advantage of state House Bill 1406, Durkan's administration is touting the measure as a win in support of her Housing Seattle Now initiative.

"I applaud the City Council’s quick work to pass this bill," Durkan said in a news release. "Now, we can seize the chance to be among the first cities in the state to seize this opportunity to invest more in housing for our neighbors living outside.”