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10-06-2020 HB 1590House Bill 1590 Federal Way City Council October 6, 2020 1 2 What is House Bill 1590? Passed in 2020, HB 1590 provides that King County may impose a sales tax of up to one‐tenth of one percent countywide to fund affordable housing and other special needs projects. The authority to implement the tax is extended to cities if cities implement the tax before King County. At one-tenth of one percent, tax revenue in Federal Way would be about $160,000 annually. 3 What can be funded by House Bill 1590? •A minimum of 60% of the money collected from the tax must be used for: o Construction of affordable housing o Construction of mental and behavioral health facilities o Funding the operations and maintenance costs of new affordable housing and facilities where housing‐related programs are provided o Newly constructed evaluation and treatment centers •The remainder of the funds collected, up to 40%, may be used for the operation, delivery, or evaluation of mental and behavioral health treatment programs and services or housing-related services. 4 Who is served by House Bill 1590? Facilities and programs funded through the levy must serve individuals whose income is below 60% area median income (AMI). The funds will target specific populations including people with disabilities, domestic violence survivors, homeless individuals or families, or unaccompanied homeless youth or young adults. 5 Next steps for implementing House Bill 1590 locally To impose the tax, counties or cities may: •Submit an authorizing proposition to city voters at a special or general election. If the proposition is approved by the majority of voters, the City may impose the whole or remainder of the sales and use tax rate. •Impose by councilmanic action, without a proposition approved by a majority of voters, the whole or remainder of the sales and use tax rate. 6 Next steps for implementing House Bill 1590 locally The King County Council is considering the tax on the October 6 Committee of the Whole agenda. If it moves out of committee, King County Council could take action as early as October 13 for a countywide tax. 7 Next steps for implementing House Bill 1590 locally If King County does impose the full tax rate, but does so after a city has imposed the tax, then the county must provide a credit against its tax for the full amount of tax imposed by a city. Any city that enacts the tax would then have control over the tax revenue and its use within the city. However, King County could still fund projects sited within such cities. 8 Next steps for implementing House Bill 1590 locally The cities of Covington, Kent, Renton, and Issaquah are considering a city enacted tax, preempting King County from receiving the tax revenue generated in those cities with the cities retaining control of the funds. 9 Options •Direct Staff to schedule a Special Meeting of Council to present an ordinance implementing the local sales tax before October 13, 2020 •Take no action Mayor’s Recommendation •Take no action 10 Q&A