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City Attorney's Explanatory Statement

Explanatory Statement

Proposition Number 1 would authorize a seven-year property tax increase to finance low-income housing, and otherwise provide for the housing needs of low-income households. The proposition defines low-income households based on guidelines published by the United States Department of Housing and Urban Development. Most programs funded by the proposed levy serve households earning less than $17,700 for a single person and $20,250 for a family of two, or 30 percent of Seattle area median income.

Some form of housing levy has been in effect since 1981. The last housing levy passed in 2002 and expires this year. If approved, Proposition Number 1 would increase taxes levied in 2009 through 2015 and collected in 2010 through 2016. It would authorize Seattle to raise up to $145 million in additional property taxes over the seven-year period to pay for levy programs. The City could levy no more than $20,714,286 in additional taxes each year.

Proposition 1 includes a list of anticipated levy programs. These are:

  • Rental Production and Preservation. The City anticipates spending $104 million to construct or preserve an estimated 1670 affordable rental housing units. At least 60 percent of the program funding would be reserved for households at or below 30 percent of area median income. In 2009, 30 percent of area median income for a family of two is approximately $20,250. In addition, no more than 10 percent of program funding would be used for households earning 61 to 80 percent of area median income.
  • Operating and Maintenance. The City anticipates spending $14.4 million to assist an estimated 220 low-income households by providing support to owners of Levy-funded housing for 20 years. This program is aimed at residents whose incomes are at or below 30 percent of area median income.
  • Rental Assistance. The City anticipates spending about $4.2 million over seven years to provide rental assistance to an estimated 605 households each year. The program is intended to prevent eviction and homelessness, and help families earning no more than 50 percent of area median income. In 2009, 50 percent of area median income for a family of two is approximately $33,700.
  • Homebuyer Assistance. The City anticipates spending up to $9.09 million to assist an estimated 180 first-time low-income homebuyers. Among other things, this program is intended to promote long-term housing affordability. This assistance would go to homebuyers earning less than 80 percent of area median income, which, for a family of two, is approximately $51,200.
  • Acquisition and Opportunity Loans. The City anticipates spending $6.5 million for short-term loans to buy buildings or land for housing developments for an estimated 175 low-income households. Levy funds not yet needed for other levy programs will be used. Because this is a loan, the City expects that the $6.5 million will be repaid and that the money will be available for other levy programs.
  • Administration. About $13.3 million in levy funds will be spent on the administration of all programs except the Operation and Maintenance Program. The Operation and Maintenance Program administrative costs will be paid with interest earnings on the levy funds and other revenues.

The City Council described these anticipated programs in Ordinance number 123013. The City Council could change the programs, consistent with the basic purposes of the proposition. The Council could add or delete programs, or change the amount of money for any program.

Administrative and Financial Plans covering all levy programs would be periodically submitted to the City Council for its review. Each plan would include amounts allocated to programs, criteria for funding projects, guidelines for loans or grants, requirements for project sponsors, progress and performance reports, program reviews to ensure that levy funds are used for their stated purposes, and guidelines for use of program income and investment earnings. The City Council could also request that the Plans include other information. Upon review, the Council could approve or modify the Plans.

The proposition also would create an oversight committee to monitor and report on the progress of the levy programs. The committee would report on levy program accomplishments and problems. It would also make recommendations on the Administrative and Financial Plans and on actions to be taken, including additions or deletions of programs or amounts of money allocated to programs. Committee members would serve without compensation.

Proposition 1 would authorize the collection of more property taxes than would otherwise be allowed by the limits imposed under RCW 84.55. That state law generally limits the increase in property tax revenue to one percent over the highest amount that the City could have received in the prior year.

The taxes authorized by Proposition 1 would be in addition to the maximum regular property taxes to which the City would have been limited under state law without the proposition, plus any other authorized levy lid lifts. In the first year of collection (2010), the additional tax rate associated with the tax increase authorized by Proposition 1 for any property owner would be approximately 17 cents per thousand dollars of assessed value. The City’s total regular property-tax rate would not exceed the state law limit of $3.60 per $1,000 of assessed value. Taxes levied in 2017 for collection in 2018, and later tax levies, would be calculated as if Proposition 1 had not been passed.

Ordinance Number 123013, which placed Proposition 1 on the ballot, is reprinted in full in this voters’ pamphlet.

 

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