Select Budget Committee 10/22/18

Good morning, everybody.

This is October 22, 2018. This is our budget committee for the first one, Monday.

The time is 10.32 a.m.

I'm Councilmember Sally Bagshaw.

Thanks to all of my colleagues for being here.

I appreciate the fact that Councilmember Gonzalez, Councilmember Johnson, Councilmember Juarez are all here.

And thank you to our council central staff and again to Allison McClain for helping get us all organized.

This morning, the committee is gonna continue with our budget issue ID deliberations.

And today we're gonna take a closer look at two things.

One is the sweetened beverage tax and the other is the short term rental tax and the proposed use of those revenues.

Of course, council colleagues we will do what we did last uh for the the previous meetings.

Let me know if you've got questions down on this end.

I really appreciate everybody uh helping me keep an eye on who's who's asking and what the order is.

There will be um clear opportunity Council Member Juarez to um to bring up Your point.

But the sweetened beverage taxes are first.

The presentation will be with Council Central staff.

So I'm going to ask you just to get going, then we'll do the short-term rental tax, and then we'll have public comment.

So please, will you introduce yourselves?

Hello, I'm Eric Sund of your Council Central staff.

Yolanda Ho, Council Central staff.

Brian Goodnight, Council Central staff.

Jeff Sims, Council Central staff.

Thank you all for being here.

Eric, are you the kickoff this morning?

a lot of introduction to make.

I'm going to turn it over to the experts here really soon.

But yeah, today's topics are not departments, as we've tended to be covering in these sessions so far, but rather new or newish sources of revenue to the general fund that are subject, in one case, The rental tax, due to state law, and in the other case, the sweetened beverage tax, because of our own municipal code, are dedicated to specific purposes.

And so, in that sense, distinct from most of the general fund revenues, which, as the name would suggest, are allocable to virtually any legitimate public purpose.

The reason that these are being called out and addressed separately is both because the revenue sources are relatively new and because the allocation, the permitted uses of those funds and the mayor's proposal to program those funds spread across multiple departments.

And so we're treating them as standalone program areas in a sense.

So that's all I would say on that.

I'll turn it over to Yolanda.

Very good.

All right.

Thank you.

So our presentation today will begin with a background of the SVT, and we're going to highlight a couple of issues that central staff identified in regards to the proposed spending plan, describe legislation submitted to amend the ordinance, as well as council member proposals.

So as quick background, at the SBT, which is a tax on sugar sweetened beverages, was established by ordinance in 2017. The city began collecting revenues from the SBT on January 1st, 2018. So the initial estimates were relatively conservative and were about 14.8 million, but this has been since revised to 20.7 million, which is about 40% higher based on actual revenues received.

The net proceeds may be used for two types of expenditures.

There are one time or limited duration expenditures that are about 20% of net proceeds may be used for for the first five years.

And so these can be used for the initial tax administration setup, Seattle College's 13th year Promise Scholarship Program.

up to $5 million, job retraining for workers who are adversely impacted by the tax, up to $1.5 million, and projects for the Seattle Preschool Program capital projects.

The other category of expenditures are ongoing programs.

And so 80% of the net proceeds may be dedicated towards these, which include expand, they may expand access to healthy and affordable food, support evidence-based programs for child development, tax administration, resources for the office of sustainability environment and the SBT community advisory board which advises and provides recommendations to the mayor and council regarding SBT related programs and funding and tax evaluation.

So in the second quarter of 2018, the city distributed $2.8 million, which were held in reserve.

And these were distributed to city departments according to the CAB recommendations.

And these were identified by priority areas created by the CAB.

The table one shows how these funds were distributed by department.

and the share of the funds.

And so these were, these are included in the budget 2018. And so moving on to 2019, the proposed budget appropriates about 2.7 million to one-time expenditures and 18.4 million to ongoing expenditures for a total of 21.1 million.

And you can see the bottom line there, anticipated net surplus of about $460,000 in 2019 and $1.4 million in 2020. Yolanda, I'm just struggling to find that first number, the $21 million you were talking about.

Can you just point that out?

The ongoing expenditures?

So I've got 12, I'm coming up to 18. I thought I understood you just to say 21 million.

Did I miss something?

The 21.1 million is the ongoing plus the one time.

So that 21 million, which is the second to last number moving down in the 2019 proposed column, is the sum of the number directly above it.

And the subtotal, which is the third number down that column, the third non-zero number, that is the 2.668 million, which are those time-limited categories of expenditure.

Okay.

And so the net surplus we think in 2019 is that $460,000?

Correct.

Has that been identified yet for any particular purpose?

No.

Is that cab generated?

No, so that is just what is estimated is the net surplus at this point.

So it has not been, there's been no identified use for that.

Okay.

So that is something for council to discuss.

I think Councilmember Juarez may want to.

Did you want to bring that up now or do you want to say?

Please, go ahead.

I'll just, and I, there's some more here that I'll add to it, but I shared some with some central staff, and I just was looking at the ordinance.

So, just so I was clear, and I just want you to keep this in mind as we go through it.

One of the main reasons we passed the ordinance, Ordinance 125-324-2017, was not just for deal.

It was, if you're going to make sugar, and the bad guy here, and obesity, and you're worried about children's health, and nutrition, and we have all these needs, we voted that we needed an increase in a line item for food banks.

So what I've learned from reading this is that food banks will not see an increase.

Food banks will not see an expansion of funds from this sweetened beverage tax.

In fact, it'll just remain flatlined like it was before.

And that's a problem with these numbers.

Is there something?

Brindell, you have the ordinance for me?

Never mind, I was making a comment about the net surplus, but the spirit and the intent of the law was to free up these funds so food banks who do more than just provide food, they provide other services as well, Medicaid, Medicare, eviction services, homeless, rapid rehousing.

They do everything else so that if we had a guaranteed increased revenue fund, that would free up some of their resources so these community-based organizations can do other things with their money.

So that was the point.

So I'm really disappointed that there is no increase, even though it's in the ordinance, for food banks.

And how many do we have across the city?

17?

Excuse me.

Mr. Zimmerman, do you have a problem?

Well, will you please be quiet?

I really do not appreciate you laughing when one of my colleagues is speaking.

Got it?

I am asking you to be quiet and respectful.

Okay.

Thank you.

Thank you, Chairwoman.

So that, and the, where I was being laser focused was on page six.

And so I was going to, and if you can just explain for me and the viewing public and the food banks that have contacted me on, right now, whether or why there is no expansion.

It's just the supplementing of 5.7, right?

5.7.

Yes, that's correct.

If you're looking at the table on page six, you'll see that the line item for the food banks program, the second column shows about $1.2 million.

And those funds are proposed in the third quarter to supplant general fund revenue.

And then the proposed budget also would continue that.

So that would not be an expansion of the program.

That would be replacing general fund with sweetened beverage tax funds.

Do you want to continue or do you want to do that offline?

I want to say my colleagues had anything to add to this.

Councilmember Johnson.

Yeah, I mean, I think to support that position, Councilmember Juarez, I wanted to ask just a couple of follow up questions.

You know, the table you're about to get to, which is table two, I think would really help us frame some of the discussion that we're having today.

Because I think obviously we all adopted a set of revenues that we assumed were going to be part of the tax that we passed last year.

And then when those revenues came in in excess, we had held aside a particular set amount to allow for the advisory board to make recommendations.

Those recommendations came in and we authorized those funds to be spent in the way that the advisory board had suggested.

And what I'm seeing here as part of Table 2 is expenditures as part of the third quarter supplemental budget that I have some questions about and then also expenditures in 2019 and 2020 that look as though they're the for the most part consistent with our base recommendations and then they use any excess revenue that was going to be generated to supplant existing general fund revenue.

And so I think it gets to Council Member Juarez's point that I think there was some presumption by some of us on council that growth of a conservative estimate in Sweden beverage tax would result in additional dollars to be spent in the program areas that we had anticipated.

And so I'm looking forward to getting a little bit more detail here because it seems to me like we might be reprioritizing in some way, shape or form And I'm not saying that I'm for or against that reprioritization, but I think that that's a policy choice that the council has in front of us.

Councilmember Gonzalez.

Thank you.

And then it's sort of just to add a layer to this.

I know that there is a Form A that was submitted by I believe Councilmember O'Brien really talking about the need to align some of the investment choices and decisions to what the SBT advisory board recommended us to do.

Can you just highlight for me what their recommendations were as it relates to some of the food bank funding issues that Councilmember Juarez has highlighted.

In other words, is it their position and their recommendation as an advisory committee that we not just the plant but more robustly fund food access and health programs?

Well, so in terms of the recommendations from the CAB, what they had provided to the mayor was kind of a recommended share of whatever the expenditures were, so they didn't have specific numbers.

And they also provided a generally prioritized list of items that might fall within their larger categories of healthy food and beverage access, birth to three services, and kindergarten readiness.

It was the same.

like kind of program areas that were in their original when they released the reserve funds.

And so, so they did, so they didn't have specific recommendations in terms of how much should go to food banks or how much for this program.

It's page eight.

But so what we had done in our analysis was take what is in the 2019 proposed budget, and these are the program areas, these six program areas, and looked at what the share was that was the actual share in the 2019 proposed budget and looked at the CAB recommendation and what those shares would have been had they, you know, applied to this, the total, the $17.4 million in ongoing expenditures.

So that column to the right, the difference, shows that, you know, on paper they have overfunded healthy food and beverage access potentially, or funded more than recommended.

I would not say overfunded.

But in other categories, there was not as, you know, they are not meeting the recommendations by the CAB.

I would add that, so the line that Yolanda is looking at, the first line in that table, the recommendation is saying healthy food and beverage access.

It's not pointing specifically to the food banks program.

There are other programs in the human services department that are related to food and nutrition that are receiving increases, but they're not the particular food banks program.

I'd have to get back to council on the differences between how those programs operate to give you more detail there.

I think that would be helpful, just having a better, clearer sense of how the issues that Councilmember Juarez and Johnson have flagged align with or don't align with not just the 2019 proposed budget, but also through the lens of layering the Community Advisory Board's recommendations for allocations.

I recognize that the allocations that are recommending are not in dollar amounts, but are in percentages, but I think that would just be a helpful way to evaluate the policy decisions that are before us in terms of whether or not we want to deviate from either the mayor's proposed budget or the CAB's recommended proportional spending in these particular areas.

So it would be helpful to me to just get a better sense of those nuances.

Are you also, Councilmember Gonzales, asking for what numbers, what other revenue potentials are coming in from other departments or, I mean, are we looking at this holistically?

Is that also, Councilmember Juarez, what you're asking for?

Yes, I am.

And I want to thank Councilmember Gonzales for pointing that out.

And if I could just add one.

I'm sorry, did Councilmember O'Brien have something to say?

He did.

Go ahead, Councilmember O'Brien.

I was.

Well, you can respond if you want.

I'll come in later.

Whatever order, I don't care.

Okay.

Councilmember Juarez, I think you're following up here with this and then I'll shift.

I'm just going to make one more comment and we'll go back to the green sheets again.

But again, this is what the law said.

This is what we agreed upon on food banks.

So, and I find this more glaring and more emergent in light of the fact that we found out that, we have an increase of more than $14.8 million than we had originally thought we were going to get from the sugar and beverage tax.

So we thought we were going to get $5.8.

We ended up with $20.6 around there.

And so I think that it's unconscionable that not only do we have this major increase of this tax that we got, but that there was no increase to the food banks that are actually in the ordinance.

That's my big concern here.

So I'll leave it at that.

Thank you I think your points well taken and we can ask either by green sheet or further conversation From council central staff how we can address that.

So in the next couple of days if you get back, did you?

Brindell did you bring something?

Okay.

Good council member O'Brien.

Thank you for waiting

I have a couple technical questions and then a comment.

And so maybe these technical questions are answered in this document and you can point me to it or perhaps there's some more analysis.

So the legislation that established the sugary beverage tax talked about 20% of the revenue we receive in the first five years going to one time investments.

And I'm curious, when we look at 2018, 19, and 20, so that's three of the first five years, how we're doing on that 20% to one time investments.

I can tell by just adding up the funding for the 13th year promise.

Endowment that we will have hit the maximum of five million dollars in three years So that will not be happening in year four and five But when we look at all those things that are delineated including like capital infrastructure for preschools Does this stick to that 20%?

So there's actually legislation that's kind of with the budget in terms of changing those allocations because the revenues came in higher than anticipated.

So the 20% was based upon that kind of more conservative estimate.

But given the increased amount of revenue there that we're looking at, They're looking at changing that 20% to 10% because they are seeing that they are going to be able to fund those limited term one-time investments sufficiently at 10%.

So they'll, 90% of ongoing expenditures for, you know, beginning next year will be dedicated to ongoing programs.

Great.

I appreciate that, and I think that's consistent with the intent.

What's inconsistent with the intent is some of the things that my colleagues have highlighted, and I just want to repeat this for the public.

You know, the sugary beverage tax was something that was a complex policy that we were working on, largely driven by community members from both public health perspective and also community-based organizations working at the intersection of public health and access to healthy food and how that relates to low-income communities and communities of color.

And my understanding of the data is that, you know, Diseases like obesity and diabetes disproportionately impact low-income communities and communities of color.

And so the idea is, for the sugar beverage tax, was how do we help correct that disproportionality?

And these communities also disproportionately consume sugary beverages, in part because of marketing schemes, in part because of where they live and what's available.

And so that meant that if we were going to put a tax on sugary beverages, we know that these communities would disproportionately be paying that tax.

Now that is in part by design, because we do want to change behavior.

But if the only behavior we change is making low income communities even poorer without fixing it, we've actually gone backwards.

And so where we got to in the collaboration with community was an agreement that this is a smart policy move if the revenues are invested and directed back into those communities that are most impacted by the disease and most impacted by the tax.

And so the part that, and it was complex.

We set aside 20% for long-term things.

We seem to be meeting that.

I appreciate the executive proposing that, hey, even a smaller amount can go to that because of the size of it is higher.

But that 80% or what will be 90% going forward, It's really important that we're not using a tax on these low-income communities to fund broader societal needs that are good things to do.

If we need to do that, we should be coming up with a more equitable tax.

But instead, the specific revenue that we're dedicating from here should be going back into those communities as directed.

And I think the place where If not deviating from the letter of the law, certainly the intent of the law this budget does is when it says we're going to dedicate some of this to food access programs, including food banks and other programs, but not actually increase the investment in those.

And instead say, now that we've added this investment, we're going to take away baseline investment from previous years and redirect it otherwise.

It feels, well it is essentially a swap of revenue.

to technically meet the letter and redistribute the money elsewhere.

And I think we need to look at, you know, if there are opportunities to undo that this budget year, but certainly prevent this from happening going forward.

And we'll talk about that, I imagine, when we get to some of the form A's.

I appreciate what Councilmember Johnson said, and he said it much more eloquently.

I'm not Johnson.

Councilmember O'Brien.

Yeah, right.

But I'm just going to say it.

It's like a switch and bait.

You said, please pass this tax for poor people so we can worry about obesity and actually have a place where people could have food because we have food banks and other programs like Fresh Bucks.

Oh, but by the way, we had an increase of over $14 million, but we're not going to raise money in the programs that we originally intended this money for.

That is inconsistent, and that is not who we are, and that is not reflected in the law.

So I'll leave it at that.

And we're staring at you sitting at the table as we say this.

We know that you aren't the ones that dictated the policy.

You're here to help us answer the questions.

So I want to apologize if it feels like to the public that we're upset with you all, because you are just messengers of helping us understand what's in there.

It's a complex budget, but what the executive proposed, I think, is inconsistent at a minimum in spirit with what we want, and we want to figure out how to move that forward.

Councilmember Johnson.

Just briefly, I want to correct just one small thing, Councilmember Juarez.

We only saw a $5 million increase, not a $14 million.

We had expected to raise $14 million.

We've raised a little more than $20 million.

I'm sorry, you're right.

Thank you for correcting that little small thing.

But I'm not apologizing.

I'm not mad at you guys, but I am angry.

Over 18, 19, and 20, it adds up to about $15 million.

So my question is, we're going to move on to, I think, how we plan to spend the money, but I wondered if Central staff could give just a little brief history about the one-time expenditure of $960,000 that we're planning to spend on setting up the systems to collect the revenue as part of the supplemental budget.

I was under the impression that we had already adopted the resources necessary to set up the Sweden beverage tax when we adopted it, but I'm seeing a Almost a million dollars reflected as part of the third quarter supplemental for additional setup costs.

And I'm wondering, did we not allocate enough?

Did we allocate enough and it didn't get spent?

And this is just the budget authorization for it.

So a million dollars is a healthy amount of money for one-time setup costs.

And I thought we had done that already.

So it would just be helpful for us to know a little bit more.

If you don't have the answer today, that's fine.

But just want to know going forward.

We can get back to you with further detail, but some of it is, as with a lot of other investments, would be maintaining your systems that you established, things like that.

But to arrive at the full investment and detail on that, we'll have to get back to you.

We'll get back to you, but I believe there, if recollection serves me correctly, there was an inter-fund loan that was used to set up the administration and then needs to be repaid effectively.

Any other questions down here?

All right, let's move on to the next item.

Clearly, this is going to be an issue where we're going to need more revenue and take a look at the food bank expenses.

Well, we've already highlighted in some instances where the supplantation has occurred, but we wanted to give you kind of a full picture of the amount of supplanting that was done in three different departments, the Department education and early learning, human services department, and in offices of sustainability and environment.

So all told, the proposed budgets include about 5.8 million of SBT revenues that supplant the general fund, which thus freed up general fund for other uses.

And while those, the supplantation does align with SBT spending priorities, but as you note, did not increase the level.

And so you want to talk about deal?

Sure.

So I think if it's okay with the council, we'll just walk through the three different departments and to kind of describe what's in the mayor's proposed budget for those departments.

So I'd like to draw your attention to table three, which is on page four of the memo.

This deals with the Department of Education and Early Learning or DEEL.

All told, Deal has a little less than $10 million of SBT proceeds in each year, and about $3.4 million of that is used to supplant this unrestricted general fund.

And there's, it might just be easiest to walk down the table.

There's a whole bunch of things happening in DEEL.

Some programs are no longer funded by SBT, some are new funding by SBT.

So I'll just walk through.

So the first four items on the table, items A through D, were funded with SBT proceeds in the 2018 adopted budget, but have been included in the proposed families education preschool and promise levy.

So those don't receive funding in the proposed budgets from SBT.

Item E, the Parent-Child Home Program, goes the opposite direction.

In 2018, it's funded both with SBT and with some funding from the 2011 Families and Education Levy.

And in the proposed budgets, the entire funding for that program comes from the Sweetened Beverage Tax proceeds.

As correctly noted by Council Member O'Brien, earlier item F is the 13th year or Seattle Promise Scholarship Endowment, and the proposed funding levels in 2019 and 2020 do bring it to that max $5 million contribution from SPT proceeds.

So that would be the, these would be the last two years for that.

The next two items, items G and H, are actually the simplest to explain on this table, and those are just pure continuations of funding that was provided for these programs in 2018 adopted budget and in the second quarter supplemental.

That $555,000 that you see was part of the CAB reserve that was released during the second quarter supplemental.

So those are just continued at the same levels in the proposed budgets.

And then the next three items, I, J, and K, they're all marked with asterisks.

And that's going to be consistent in the tables in the paper.

And those are the ones that are receiving or where SBT is supplanting general funds.

So that's what that indicator means.

So in the 2018 third quarter supplemental budget, SPT funding is proposed to support the entire cost of the child care assistance program.

So that's the $2.311 million.

And about 27% of the comprehensive child care program.

And so that's the $176,000 that you see in the second column.

And then beginning in 2019, SBT funds are proposed to support about 41% of the Nurse Family Partnership Program at the $921,000 level that you see, and with the balance continuing to come from the general fund.

And then that final item there on the table, the preschool capital projects, item L, that proposes to use $612,000 in 2020 to support capital projects for the Seattle Preschool Program.

And this is consistent with the kind of eligible one-time uses of SPT proceeds, but it's the first time that that will have been done with this funding, so.

Brian, can you tell me on the preschool capital projects, have the projects been identified yet, or is this a placeholder?

I think this is just a placeholder.

Okay.

Yeah, thanks.

manager yeah please mr. Johnson Brian I think it's easy to understand how this transfer works as part of the 2019 and 2021 proposals because they're just sort of part of the base assumption that the mayor's office sends down to us but I'm a little less clear about how the three million dollars of proposed funding five hundred thousand or so of which we authorize as part of the second quarter supplemental but the other two and a half million dollars is supplants existing budget authority that we've already given to the department.

Does that result in another two and a half million dollars worth of deal funding to be spent, or does the third quarter supplemental presume to spend that two and a half million dollars in another way, and if so, does it outline that expenditure?

It simply changes the flavor or the color of the money that's being spent.

So DEEL is going to continue to do the exact same amount of work in 2018. The programs don't change at all.

All that changes would basically be the bottom line of where the money is coming out of in 2018. So the kind of effect is it's a positive to the unrestricted general fund, right?

They freed up essentially $2.5 million, which helps kind of the ending fund balance in 2018, which then sets the stage for 2019. So the body of work doesn't change.

It nets to zero in DEEL's budget.

It just changes the color of money.

And is that the expectation moving forward on each of these items as we go through the third quarter supplemental?

The net effect here is that we have raised a little more revenue than we expected in 2018 that we can carry over in general fund balance into 2019, and that's how we are building a balanced budget in 2019.

I believe that is the case.

I'll let Jeff and Yolanda speak to their departments, but that's my understanding for the third quarter supplemental swaps, yeah.

Mr. Sund, anything that you wanted to add?

That sounds about right.

In effect, since the sweetened beverage tax revenue does flow to the general fund along with many other sources of revenue, it's sort of like we've started using the 20s instead of the 10s in the wallet and the 10s count, or rather the 20s count against the dedication and the 10s don't.

It's the same level of funding.

That analogy was more confusing somehow, I think, than when we started.

I assure you, I've got probably still more confusing ways to think about this, and I'll leave them untouched.

But one bottom line is that the same amount of funding is coming from the general fund, but it's carrying a tag saying that it's come from the sweetened beverage taxes as opposed to

The range of other but what my original assumption was that we were spending an additional two and a half million dollars in ways that we hadn't allocated in 2018 and that that was going to be consistent going forward and it sounds like the answer is no.

There's not a line item associated with this revenue for the expenditures in 2018 and instead it's just benefiting the net bottom line for us as we contemplate rolling over any general fund dollars that wouldn't have been spent in 2018 into the 2019 for a positive higher cash flow amount.

Okay.

Thanks.

And that was a big yes.

And I know cash flow is the wrong term, but, you know, just in terms of the way that we think about the positive balance of expenditures into the following year, that's helpful to understand.

Okay, so that wraps up deal if there aren't any other questions and then we can turn Jeff can cover the Human Services Department.

Okay, any other questions on deal colleagues?

Okay, please go ahead Brian.

So with with the Human Services Department we've actually covered a lot of the the detail here in general already as Council Member Johnson just noted in the third quarter supplemental you would see a supplementation of the general fund with approximately $2 million of sweetened beverage tax funds.

And the 2019 to 2020 proposed budget continues that $2 million roughly in supplanting.

The proposed budget also continues at about $1 million worth of expansion of other food access and nutrition related programs.

from 2018 and further expands those by a million dollars.

So on whole what you're looking at in the proposed budget is about $2 million in supplanting and about $2 million in expansion.

Anything else?

Mr. Johnson, please.

May I ask, I don't remember hearing what the definition of the Food Access Opportunity Fund is.

May I ask, Jeff, that you explain what the Food Access Opportunity Fund is?

So it's not fully fleshed out.

That actually stems from the Community Advisory Board's recommendations so that local agencies could propose approaches to address food access in their service areas.

But the actual specific activities would be a little bit more flexible.

There's not a certain thing that's being prescribed.

Understood.

And I'm just looking at another line item here, which is the senior meal delivery, and the next one, so there's two senior congregate meals.

There's no increase.

It's a supplantation, once again.

On the senior meal deliveries?

I'm looking at table four, about six lines down, and I note the asterisk that the programs where the SBT funds will be used, they're just going to be supplanting general funds, but there's no addition to the senior programs there.

That's correct for both of those.

And the table that we have up there, the third column where it says 2018 supplemental, kind of combines some various actions.

But I can provide a more detailed table that'll break this out, and I think that that would be useful given the council's questions.

I think so.

Madam Chair?

Please.

I know we talked a little bit about this, Jeff.

So, just so we're clear, and I'm just going to pull out a few.

When I'm looking at your table four, so, farm to table, okay.

So, food banks, out of school nutrition time, senior meal delivery, senior congregate meals, and community-based meal providers and programs will not see an increase in this budget.

Food banks, that is correct.

Out-of-school nutrition time, also correct.

Then you skipped two senior meal programs, I believe.

That is correct for both of those.

And then, I'm sorry, the last one was?

Base meal providers.

Community-based meal providers.

Oh, actually, that one is an expansion.

That's actually expanding.

Yeah, there's not an asterisk next to that.

So that program actually would be expanding.

Farm-to-table, though.

So from the table, that's correct also that it's not an expansion, it's a supplantation.

Okay.

So in the Food Access Opportunity Fund is, like you said, you're not sure what that is?

It would be an opportunity for organizations in the city to apply for funds to do an approach that they have identified as a way to increase food access for the populations that they serve.

And HSD at this time is not prescribing specifically how that would have to occur.

It's almost, you can almost think of it as an innovation fund to some degree.

Okay.

Council Member O'Brien.

One thing that would be helpful for me is another column or marker on here on which of these have been identified by the CAB as priorities and which are not.

Because one of the things that I wanna just highlight about, as I mentioned earlier, this is a complex policy and the interactions between where people live, their income levels, who's marketing to them, access to foods, all those things are integral in us getting the correct policy outcome.

The amazing thing is there's a great group of community members who have come together to really put their mind together and think through thoughtfully how we can actually address this crisis and resolve it.

We had a great presentation in our committee a little over a month ago on the work they've been doing, and I want to make sure that we're elevating this group of experts from the communities, their work, and highlighting it.

And so it would be really helpful, I think, just knowing where they believe the best use of our investments are going forward as we think through this budget.

Paula, maybe you can correct me if I'm wrong, but did they, the most recent recommendation didn't break it down to the level of detail that we are?

They had some level of detail.

They did highlight in the recommendations some programs that were already existing with the city, and I think there's some other areas that the city would have to develop new programs and other, so that, but they did list within their areas of interest specific things that the city's already doing.

And so Council Member Ryan, if they come back with another column, it's probably going to have to be landscape now with it, but to identify what the CAB had recommended, is that what you're looking for?

Yeah, exactly, and I think, you know, I want to be clear on a couple things.

One, it's clear that the mayor's proposal did supplant general fund with this new source, and that was clearly not the intent of what we were asking for.

I also want to respect that the mayor was not doing this willy-nilly.

I imagine she's trying to balance a complex budget with a lot of other needs, and so it wasn't something that I...

I'm assuming she didn't take lightly.

But going back to the focus of this particular tax and how we really want to commit to it, investing in the community, and that was really intended not just for the nine of us to decide what a good investment in the community looks like, although we will ultimately be the decision makers.

but to really make sure that we're hearing from community experts who are on the ground doing this work where they see the greatest need is or where they see the greatest return on investment can be.

And so that's what I think would be really useful to see where they're aligned and misaligned.

We may choose to say, we disagree, we want to go a different direction, but having that delineated to the extent it can be, I recognize there's some spaces where there may be some gray areas, flagging that too would be great.

Council Member Herbold or Johnson, did you?

You're good, okay.

Great.

Thank you.

Do you want to continue?

Yes.

So just the last department is Office of Sustainability and Environment.

The sub-plantation here was relatively small compared to the other two departments, only $365,000.

But just to give you an overview of how SBT revenue is allocated in OSC, so the Office of Sustainability and Environment will be receiving about $3.86 million in SBT revenue, which represents about 50% of OSC's total budget.

And $2.8 million for the general fund budget, I should clarify, $2.8 million for FreshBooks.

So that's about 74% of SBT revenue within the department.

And so other programs that are funded are the Food Action Plan, Food Policy Programming, And so some of these programs that were recommended by the CAB, so they will be developing those.

And also, OSC supports the CAB, so they have staffing for the CAB, as well as the CAB has requested, and it is included in the budget, some outreach funding and kind of internal capacity building for the CAB.

So those are two items they will be receiving.

In terms of the supplantation, it's $200,000 for fresh books and $165,000 for food policy development.

Any questions?

Go ahead.

So unlike the previous two tables where there's an asterisk by FreshBucks here, this is a partial supplement, barely, and most of this is an expansion of the FreshBucks program.

Absolutely, yes, that's correct.

And in terms of the food policy program, that is a full supplantation, but it is in alignment with SBT priorities.

So we will continue on.

So let's see.

So we have, so we've talked about the, we have talked about the issues in terms of the supplantation.

I just wanted to, should we run through the options?

So as we, so some of the options in regards to the, you know, in some cases where programs were not expanded, an option could be to reduce the SBT appropriations for those programs.

where SBT revenue was supplanting general fund and reallocate those revenues to create new or expand existing programs that align with SBT spending priorities.

This would require the identification of other revenue sources or funding sources to sustain the programs receiving SBT reductions.

Another possibility is to direct a portion of future SBT revenues to create new or expand existing programs that align with SBD spending priorities, so kind of leaving the sub-plantation as is, but taking any, if there are, you know, additional unanticipated revenues in future years, this could be an option or obviously no action.

Do you have revenue sources in mind?

All of you have been diving into this.

We have definitely begun the process of looking for both revenue sources but also other ways to free current resources within the city budget to make available to fund council priorities.

But it hasn't specifically been directed at this one area because essentially we'll identify as many opportunities as we can and then it's up to you as chair and the other members of the committee to decide where the highest priorities for making those tradeoffs are.

Great, and so we definitely will be talking more about that this week.

Thank you for flagging it.

Council Member O'Brien, did you have anything else you wanted to add on this?

Just when we get to the, we can go to Budget Actions next.

Yes, well, we we will touch on the cab recommendations quick.

I think we've already kind of talked about that I don't know if we necessarily need to there were some options associated with that Similarly kind of changing the allocation of SBT appropriations for 2019 to more closely align with the CAB recommendations and again that comes with the caveat of finding other revenue sources and funding sources or potentially directing additional funding, such as the net surplus, to underfunded CAB priority program areas in 2019, and looking at requiring future spending to follow CAB recommendations or no action.

But the net surplus, as we pointed out on page three, is $460,000.

Correct.

And what I'm seeing here is moving close to $5 million in the difference.

I think if the council were not identifying additional resources from outside this allocation, then what that would effectively mean would be to move between categories, yes.

So that would mean reducing support to healthy food and beverage access and or birth to three services in kindergarten readiness and then allocating that to some of these other categories.

questions council member johnson uh less a question more of a comment i just want to echo something that council member o'brien had said earlier the um cab made a really impressive presentation to his committee um that included their review of all the available revenues about how they as a coalition would recommend spending it and it was in rank order priority which for um a group of very diverse stakeholders coming from a lot of different places, both geographically as well as from different backgrounds, nonprofit, private sector, public sector, I was very impressed by.

And so it's my understanding that they are reviewing the proposal that has come down and may have some additional thoughts for council to consider.

as we continue our deliberations.

So I'm hopeful that we can take into account those recommendations before we would take any final action to move things around, because I think there may be some changes that were proposed in the mayor's proposal that they would support, and there may be some that they would oppose.

And so I'd love the chance to hear from that panel of experts about their recommendations based on this new proposal from the mayor's office before we take further action.

So are they in this panel in touch with either of you, Council Member O'Brien as chair?

They're actively meeting and discussing and I think working on documents to share with us.

So we will make sure that as we hear from them, we will disseminate that information to all the colleagues.

And I think it's important for them to know that we need this by Thursday if we're going to be putting in some green sheets.

I believe they met on Thursday or Friday last week, so hopefully we'll see some of them soon.

Good.

Okay, and we already touched on the budget legislation.

So again, this will amend the allocation of net proceeds to decreasing from 20% to 10% for the one-time expenditures, allowing for more investment in ongoing programs.

So on to budget actions proposed by council members.

The first was to allocate SBT expenditures to follow CAB recommendations and create a separate fund for SBT revenue from Councilmember O'Brien.

So the proposed budgets were like some of the CAB's funding priorities but do not fully follow the recommendations.

This proposal would create a separate fund for SBT revenue and require that future spending align with the CAB's recommendations.

I have an email here from Councilmember Muscata's office, and maybe you have received this as well.

And after she shared her idea about bonding and using this resources as a bonding mechanism, She received some correspondence back from the community advisory board who recommended against that bonding.

And my understanding is that she is going to pull back on it.

So, just for those of you who are going to be working on this this week, just know that based upon what I've received from her office that she's not going to proceed with that recommendation.

Madam Chair?

Yeah, please.

And I just want to, maybe it's a little bit of a preview.

I concur with your message from Council Member Mosqueda.

There is another proposal as it relates to the short-term rental funding that we'll hear about a little later.

Good.

Great.

Council Member Bryan.

If I could speak to just the first budget action proposed about the separate fund for revenue.

This proposal follows on what we've been discussing this morning and some of the frustration about how things have played out.

And I want to be clear, I don't know that we can fully legislate our way out of this.

The mayor probably has flexibility to oppose whatever she wants.

But I want to be clear that the revenue from this fund goes into a dedicated BCL that can only be spent on certain things to hopefully make crystal clear and hopefully that this is not a fund that can be rated for swaps, you know, in the event of downtimes and those things need to happen elsewhere.

This legislation or this proposal would not necessarily undo what is proposed for 2019, but for 2020 and going forward would create that kind of on a prospective basis.

The challenge we have around 2019 is, as you all have mentioned very clearly, that to really fix this thing will require us defunding other programs that are funded by general fund money because the mayor has already put out and made public what she wants to fund.

And so now we're in a position where we would have to say, no, we're going to undo that to fix this.

And that's something that we'll continue to work on or look for opportunities in the next couple weeks.

But it's particularly challenged.

But my hope is that we're not in this position in future years.

And that hopefully a step by creating a separate budget account for this would limit that.

Thank you.

Any other comments on this?

All right, that's the end of our sugary beverage tax, so let's move on to short-term rental.

And thank you, colleagues, for your engagement on this, as always.

And welcome, Allie and Lish and Alan, and if you would start introductions.

Good morning, Ali Panucci, Council of Central Staff.

the Schwitzing Council Central staff.

Ellen Lee, Council Central staff.

Great.

Thank you all for being here.

Who's kicking this one off?

Great.

I will kick us off.

So today, we will brief you quickly on the background on the short-term rental tax, the proposed allocation of funds across departments, any issues identified by staff for council's consideration, and then the specific council member proposals.

And relatively speaking, this will be a somewhat simpler but similar conversation as you just had on the sugary beverage tax.

So just as a reminder, in November of 2017, the council adopted Ordinance 125-422.

That imposed a per-night tax on each short-term rental operator in the City of Seattle at a rate of $8 per night for a private or shared room and $14 per night for an entire unit.

That ordinance outlined the council's intent to direct the proceeds from the short-term rental tax as follows.

The first $5 million was directed to investments in community-initiated equitable development projects.

Excuse me.

The next $2 million would be directed to investments in affordable housing, and then any remaining proceeds after that would be used to support the equitable development initiative projects that include affordable housing component.

Following adoption of the local tax, the state adopted House Bill 2015 that extended the authority for the existing convention and trade center tax to include short-term rentals.

and directed any revenues generated from that activity within the city of Seattle to the city to be used for affordable housing and equitable development projects, provided that the city repeals their local tax.

In June of last year, the city repealed that tax so the city will benefit from the revenues generated by the state and doesn't have to pay the startup costs for the local tax.

The proposed budget assumes that the short-term rental tax will generate about $10.5 million in revenues for the city to use for equitable development projects as well as affordable housing projects.

Lish and Alan will provide more detail on the proposals for spending in the Office of Planning and Community Development, HSD.

However, broadly speaking, The proposed spending plan in general aligns with those categories, generally or broadly speaking.

However, it's unclear if it is consistent with the council's original intent to provide $5 million for equitable development projects, as well as money for new affordable housing.

So that will be a question that is before you today.

And similar to the previous conversation, council can consider modifications to the proposed spending plan.

However, any modification could result in a funding shortfall for some of the areas that are proposed in the mayor's budget.

With that, I'll pass it over to Lish.

All right.

The Equitable Development Initiative is a program of the Office of Planning and Community Development.

It's an innovative program that provides funding for community-based projects that increase access to opportunity and decrease displacement.

EDI provides both funding and technical assistance to help these projects succeed.

Examples of projects that were added to the EDI program in 2018 include funding to the Chief Seattle Club for capacity building and project development to support the construction of affordable housing, health care, and art gallery space serving the American Indian, Alaska Native community.

Funding for the Filipino community of Seattle for capacity building, pre-development and construction of senior housing, a technical learning center, and community gathering space.

Funding for the Refugee and Immigrant Family Center to prevent the displacement of an existing child care facility in the Delridge neighborhood.

neighborhood serving primarily immigrant and refugee families, and funding and capacity building support for the African Women Business Alliance to explore a permanent home for the alliance and to support economic development of women-owned businesses.

Can I ask you a quick question, Lish?

Sure.

You just pointed out four or five programs, but you also note here that there's 15 community-based projects with resources.

Can you just describe the difference?

Why did you highlight those first ones?

I just wanted to give you a flavor of the types of projects the program is funding.

Great.

And if I can ask one other question here.

On the end of page two of your good report, you say that directing the revenue to support staff and consultant resources for the EDI rather than grants to the community and support existing supportive housing programs, may not align with the original intent.

Ali, you just brought that up.

Could you just talk about that a little bit more?

Sure.

So when council was considering the local tax initially, the conversation really was about a stable funding source for the grants to the community for the equitable development initiative.

And so the idea was to provide an ongoing $5 million per year allocation for grants.

And what the mayor's proposed budget does is proposes about $3.9 million of the projected revenues to grants to the community and the remaining would be used for staff and consultant services that have been previously funded through unrestricted general fund.

So have you done analysis on whether or not that million dollars for staff and outside consultants is bringing us back the benefits that we want as contrasted to just awarding it to the community?

So the mayor's proposal is, as with the sweetened beverage tax, is supplanting general funds for, with the short-term rental tax.

Both are necessary for the program to succeed.

I think the council's intent originally was that $5 million would be provided for grants plus having the staff necessary to, and consultant expertise necessary to run the program.

And the proposed budget reduces that $5 million by applying essentially $1 million plus to staff and outside consultants.

So we're 20% down of what the expectations were.

And I would just note, similarly with the HSD investments, the discussion was about providing additional investments in affordable housing, and those programs certainly are housing programs.

I guess the question before the council is, was the intent to invest in those types of ongoing service provisions, or was it to invest in new dollars for new affordable housing units?

Good.

Thank you.

Please continue.

Included in the staff are is one position that is The mayor's budget proposes to abrogate one position and replace it with a different level position In the equitable development initiative team So there are currently five staff that will continue into 2019 one position is being abrogated and a new position is being added in addition That position and the $3.9 million for grants are the only funds being funded through the short-term rental tax that will not be needed to be spent on January 1st of 2019. The rest of the funding will be committed for support of ongoing programs and staff.

Because that's the only sort of fungible funding from this funding source, and we do not know yet how much exactly the short-term rental tax will be bringing in, council may want to proviso those funds until we have a better sense of exactly how much money the short-term rental tax is providing, so provisoing either the position or the grant funding or both until we have a couple of quarters of revenue from the short-term rental tax.

So we will assume that starting in January, we'll have more information on that first quarter, obviously.

But by July, you think that we will then have two quarters and more information and more revenue from our budget office?

Hopefully, yes.

And will this be accounted for through the state?

through the city or both?

The state collects the funds and will pass them forward to the city.

Yeah, and I'll just note, so the way the bill is set up, it would be quarterly payments to the city.

Because of the type of activity, short-term rentals, the business activity fluctuates, and so until we have really a full year of collection, frankly, we won't know with great certainty, but I think, you know, mid-year we will have some sense of what we are bringing in, frankly, in some of the slower seasons, and so it will give you more information to understand how to spend those dollars?

No, I think that's a really good point that at least from January through March it isn't necessarily, Seattle doesn't necessarily call people because of its weather.

So I would at least consider that maybe we would like to see it, what the amount of money is all the way through September next just to get a sense of how much we can count on.

Yeah, and I would also just be remiss in not noting that January 1st, also the city's local regulations that would restrict the number of short-term rentals operators can operate in the city of Seattle goes into effect.

And we don't yet know what effect that will have on the market overall.

So that's yet another reason to be somewhat cautious in spending these dollars.

Thanks.

Any questions down to my right?

No?

Please, go ahead.

So Human Services Department, the proposed budget includes two budget neutral funding swaps involving this revenue for two items.

Those would be permanent supportive housing at $3.7 million, as well as the Mayor's Seattle Rental Housing Assistance Pilot at $1 million.

So I'm going to talk about each of those things.

The Permanent Supportive Housing Intervention Model, I know that the Council is very aware of this model and has shown great interest in supporting this.

It is a specific homelessness intervention that involves a high level of service for people with significant medical, health, and or substance use disorders, typically at either scattered sites or project-based supportive housing units.

These clients need permanent ongoing support and it is extremely likely that they would become homeless without this intervention.

It's generally a very successful intervention with over 90% of clients retaining their housing for each reporting period each quarter.

So about $2.75 million of the $3.7 million for permanent supportive housing funding that's being swapped.

So $2.75 million was a council ad in 2018 funded through an inner fund loan backed by a real estate sale.

That was the 800 Mercer Street sale.

The council's original intention was to fill the ongoing expense with the progressive revenue source So the proposed budget provides the ongoing revenue source through this funding swap Sure councilmember Johnson, thanks of the total island of 3.7 million dollars in permanent supportive housing.

Is that the entirety of the line item for?

No, absolutely not.

The line item, and this is for services only, is about $15 million, and that includes the majority funding from HSD with about a million dollars from the Office of Housing.

So would it be a fair characterization then to say that when the council added additional permanent supportive housing dollars to that bucket, we did it in one-time funds, and this swap allows for a more permanent fund source to be identified to allow it to stay at a higher level?

Yes, that is correct, Council Member.

And is it, and just following on here too, so the permanent supportive housing at 3.7, we anticipate there's going to be significantly more than that even in the first quarter of our good weather January to March.

So it would not be a questionable revenue source next year because we've got 3.7 plus 1 million and we anticipate significantly more than that.

Yeah, so what Lish was noting was that of all of this, the planned expenditures, these funds are already committed.

And so sort of putting some holds on the money that is not yet already sort of promised.

out the door would be conservative in the event that the revenue, we are projecting 10.5 million.

It is based on the sales tax revenue that the state has been collecting already for at least some of the short-term rental operators, but it's again unclear what our local regulations will do.

And so I would say that the entire revenue source is a little bit unstable, but I think that we have some certainty that we will collect a certain amount of money and because this money is already committed, it would be better to spend on this first and wait on some of the other pieces.

Thank you.

Yeah, to underline that, so these programs that I'm describing, permanent supportive housing and next the prevention pilot, these are existing ongoing programs.

Council Member O'Brien.

I have a question about how these proposed investments are consistent or inconsistent with our legislation, a number of questions.

But specifically, after the first 5 million, the 2 million of net proceeds applied to investments in affordable housing.

Permanent supportive housing is affordable housing.

This is services related to it, not capital.

Did we clarify between capital or operational expenses for affordable housing?

So there was not that level of specificity in the local ordinance.

I will note that at the time when the deliberations were happening, the questions were really looking for an ongoing revenue source for the equitable development initiative and then a stable revenue source to pay the debt service on the $29 million in bonds that were issued were authorized for issuance in 2017. And so that's really how that $5 million, $2 million breakdown was sort of playing out.

But I will say that neither the local tax ordinance nor the state's bill specified capital investments.

That was just, I'm raising the issue more that that was the tone of the conversation, but you have the flexibility to choose otherwise.

And so along those lines, unless I'm missing it, I don't see the bonding payment coming out of this.

That's coming up next.

So actually, I'm not quite done there, Eric.

So the second item for HSD.

Alan, before you dive in, I think Council Member Johnson has.

I just wanted to concur as the person who still has scars from that conversation around short-term rentals that yes, Ms. Panucci's memory is correct.

Thank you.

Please, Alan.

Great.

So the second item involves the Seattle Housing Authority Prevention Pilot.

And this was began earlier this year and was funded through the sale of the comm shop in February.

So the Seattle Housing Authority Prevention Pilot, this targets people who are on the SHA voucher wait list who are currently housed but are at risk of becoming homeless.

So in this program, they're targeting people who are 0% to 50% AMI.

The spending for this program is approximately, they estimate it to be about 750,000.

So my memo is already a little bit out of date.

So there's currently 2 million appropriated for this pilot in 2018. The expenditures are expected to be about 750,000.

So that remaining 1.25 million or so is expected to carry forward in 19. And so the proposed $1 million in the short-term rental tax revenue, it would be appropriate for this purpose.

And that would leave the $1 million in general funds for next year.

So they do anticipate that.

Go ahead and finish your sentence.

I was just going to say that they anticipate a revised annual cost of $1.2 million.

So this would mean that the executive would have to appropriate the additional $200,000 or so gap for next year.

Thank you.

You guys did a great job of explaining why this wasn't additional money for this pilot.

If you could explain again, the council appropriated funds for the pilot earlier this year, and I understand there are some dollars carrying over from unexpended expenditures, but since this is a specific revenue source that is allocating $1 million, can you explain why it is that that's not an additional $1 million?

So actually, technically, I think it is an additional $1 million, and the $2 million that has been appropriated for 2018, so the balance of what is not spent by the prevention pilot is not reflected in the 19 proposed budget.

So the anticipated 1.25 million that is anticipated to be carried forward is not in the proposed budget.

So it's a net of 250,000.

So at the end of the day, is it still a $2 million pilot or is it a $3 million pilot?

It is at the end of the day a $2 million pilot.

Thank you.

You're welcome.

Okay, good.

I think we've got that cleared up.

Anything else?

Allie, are you next on general fund?

Yeah, so the final light items in the proposed spending plan relates to the $29 million in LTGO bonds to be used for affordable housing that were authorized in 2017 were issued in part in 2018, and the remainder will be issued in 2019. So in the mayor's proposed budget in 2019, approximately $763,000 of the short-term rental tax revenue will be used to cover a portion of the debt service.

And then moving forward, The debt service will be fully covered by the short-term rental revenue, so that will be a $2.2 million investment.

Council Member Herbold, did you want to address this?

I think I'm just going to wait until Ms. Panucci deals with the budget proposal.

Okay.

Great, so I'll now move into the budget actions proposed by council members.

The first one is a proposal from Council Member O'Brien to ensure that if the full five million dollars in funding from the short-term rental tax revenue is provided for EDI grants and that other resources are used to continue to support the staffing and consultant services has as has been the case in previous years.

I think this is a bit of similarity between what we discussed and the sugary beverage tax.

Actually, in the case of the Equitable Development Initiative, I think there's even more clear deviation from not just the intent, but the specifics of what we passed and asked the executive to do.

And so I think trying to strengthen our language to make it really clear what should be happening in future years.

And I'm also interested in the next one talking about how we try to undo some of the damage with community that may be done if moving forward with the mayor's proposal.

So the second proposal is also Council Member O'Brien that he just referred to, that similar to the discussion on the sweetened beverage tax, it would create a short-term rental fund, which would allow another layer of setting policy and scrutiny on how those funds are being allocated.

And similarly, as Council Member O'Brien described previously, it could be a question of, a different question of what happens in 2019 versus what's happening in future years, if that's the council's choice.

Okay.

Do you want anything else you want to say to the council member?

I just, in the sugary beverage tax I was pretty clear that the intent was not followed, but I can see how by spending money on food programs, even though it was a total supplantation, that might technically have met what we intended to do.

Here, I mean, when I look at our language, the $5 million towards community-initiated equitable development projects is, I mean, there's just no read of mine where that covers a million dollars worth of staff time.

Now that million dollars of staff time is certainly necessary to do the work, but I feel like we're letting down some community members if we can't figure out a way to undo that for this year.

Thank you.

Do you want to go with number three?

And the final item is a proposal from Council Member Mosqueda and Council Member Herbold.

This would, in its current form, is a request for a statement of legislative intent requesting that the executive explores the feasibility of issuing additional bonds for affordable housing and EDI projects using short-term rental revenue.

And part of this question is, will we receive more revenues than projected.

So that is one question.

Will there be additional dollars to pay future debt service as well as the feasibility of rethinking sort of how the current spending under the current allocations are applied?

Do you want to address this?

Yes, thank you.

In Council Member Mosqueda's absence, I will do my best, but I think the interest is in recognizing that there are no additional dollars proposed in the Office of Housing funding of affordable housing over and above last year's not including the bond funds that were that were issued and the council's interest in trying to find ways of really infusing the investments that we make in affordable housing.

According to the EDI implementation plan, as our city grows, communities of color are not equally benefiting from that growth.

Our median income is the third highest of any city.

And 23% of people of color in Seattle live in poverty as compared to 9% of white people.

The EDI plan is one tool to help address this inequality by implementing equitable development projects in specific areas where the city has recently conducted development work with the neighborhood to identify displacement risk.

And we know that over 45,000 people in this city pay more than half of their income for housing.

And so the idea here is to identify the equitable development projects that actually have a housing component.

And I want to just share with folks the 2018 intents to apply to Office of Housing as it relates specifically to projects that we're planning to apply is on one side, and then projects that actually did apply on the other side.

And you can see that the total applications represent about $246 million.

And as we know, the likely investment is more like, I believe it's $70,000.

More or less, is that about right?

Million.

So I'm sorry, million, yes.

More or less $70 million.

And so just sharing with folks, you can see both on the intents to apply as well as the actual applications.

There is a project on intents to apply.

There are two projects on the actual applications.

There's one project.

And these are, again, projects that are identified as EDI projects.

that have specifically have a housing component.

That's all.

Thank you.

Thank you for bringing that up.

Council Member Johnson.

So, Ali, this is one where I think I would like to continue to work with you a little bit on some of the options that you put forward for us.

You know, again, wearing the scars from the last conversation.

I think it's pretty clear to me that the council anticipated we thought we could generate about $7 million worth of funding for short-term rental.

So I feel pretty confident in that number based on the long amount of math that we did to get to that place.

Anticipating $3.5 million coming in and above and beyond that, I think it's good for us to find some way to proviso.

But the option that you've given us where we would proviso that money on the OPCD side seems a little incongruent with the objectives that we set forward for the expenditures for the revenue.

At the same time, I recognize that of the $270 million worth of projects that Council Member Herbold just handed out, I would guess that the overwhelming majority of them would want us to put some money into permanent supportive housing to support the clients that are living in those buildings.

So I'm a little bit torn here between how to proviso something that we know is necessary in terms of expansion of permanent supportive housing versus the projects that we had committed to constructing in the EDI projects.

So I'd like to spend a little more time working with you on what another option here could look like, but I will say, I am uncomfortable with the idea of um, I I understand that we've got a statement of legislative intent coming Um, but I think we should be really cautious about the revenue until we've got a better sense of the money coming in and and how um, and then just generally I think we um, you know having um a million dollars of carryover funds that have already been allocated be swapped out for a new million dollars worth of short-term rental tax revenue seems like a right place for us to look to start.

And I'll just be curious about other rocks that we might be able to turn over that could help us come up with something that I think puts us in a little bit of an unfortunately forced choice.

Yeah, and I would just, one thing I would just know on, in terms of the EDI projects that have already been identified, those have funding commitments already from revenue that was generated from the sale of the property across the street.

And so the funding, not that this makes your choice easier, but it is a slight twist on it, which is they are projects that have not yet been identified, but it would be the money that would allow the city to invest in additional projects.

And I totally get that, and as I understand the way that Director Aceva and Director Walker have kind of worked this out is such that projects would still kind of apply through the OH buckets, but we'd have money set aside that would fund those projects that come from the EDI process themselves.

Yeah, and one of the, I think, distinguishing things here is that most of OH's existing funding streams can only fund the housing portion.

So what's unique about the EDI fund is it supports the non-housing components of those projects.

And some of the EDI projects do not have a housing component.

So it is perhaps the or one of the only sources of city funding that supports the non-housing portion of those projects.

which only reinforces my interest in trying to keep us from provisoing that section of this $10.5 million and wanting to work with you more creatively about other ways that we could find ourselves in a fiscally responsible $7 million or so without having to sacrifice what is, as you correctly pointed out, likely the only revenue tool for some of these projects that are coming in.

Council President Harrell.

Just a clarification on the proposal.

If I'm reading it correctly, if we were to bond against the revenue stream, there are still non-housing EDI projects that would be admissible under the bonding piece, because it says housing and EDI projects, correct?

I believe the intent was for specifically EDI projects that have a housing component, like the two on the intents to apply that I distributed.

The Ethiopian and African town.

My understanding is the intent would be that the the goal would be to determine if the city can use bond financing for the whole project both the housing and the non-housing portion, but that is part of the I guess, I don't know what the right word is, that is part of the opportunity of providing the space over the course of the year to determine what the feasibility is of all of those components to ensure that we can use bond financing for those projects.

So help me understand, what's the practical benefit of bonding against it?

Is it just that we could do more projects over the course of time or more cash up front?

If we have a revenue stream, What do we gain by bonding?

Well, for instance, last year it was the difference between spending $70 million on affordable housing projects and $100 million on affordable housing projects.

So it's more sooner.

more sooner?

Yeah, so bonding is a form of financing.

It incurs costs.

The advantage is that you get to have a larger amount of money sooner.

But generally speaking, you're going to end up with a smaller amount of money over the long haul.

And so it's a trade-off over time.

You're paying to be able to make those investments sooner and have them in place sooner.

And the trade-off is having some reduced level overall, presumably.

I think that's very clear.

Thank you.

Yeah, and I'm certainly supportive of trying to understand it better and makes a good sense to have that discussion during the budget process.

I guess one of my concerns, just one of my knee-jerk reactions would be As I continue to think about physical displacement and need for housing, I think of cultural displacement and types of organization structures that aren't so much housing related as they are cultural related and sort of don't want to lose that ability to still preserve those gems even five or ten years from now.

So I just think we need to think about that.

That's why some of these current projects are not housing related.

They're more cultural related, which I think is very important.

but Councilmember Hurrell, did you have anything else?

All right, anybody else have any other questions for Council Central staff?

Anything else that all of you would like to opine on at this point?

All right, well, then this brings today's session to a close, and I want to thank everybody for your time and attention and deep engagement.

We are going to meet tomorrow morning at 9.30, and we're going to continue with the Human Services Department and Navigation Team.

We have our public hearing tomorrow night at starting at 5.30 here in council chambers.

Sign-ups will start at 4.30 for those who would like to participate.

And we will stay as long as we need to tomorrow night to hear from people.

So it's not one of those times where you have to hurry in and get on the front of the line because we will stay here for you to be able to make your comments.

So if there is no further business in front of this committee, I am going to move into public comment.

We've got three people who are here signed up to comment.

Alex Zimmerman, Marguerite Richard, and Hilary Coleman.

Mr. Zimmerman, you're first.

I don't know whether Marguerite Richard is still with us or not, but if not, Hilary.

Pass right now for six months.

So this is not legally absolutely criminal.

It's up to you.

When you don't like Jews...

Would you like to start?

Would you please start his time?

Okay, no problem.

Sieg Heil, my dirty Nazi Gestapo pig, anti-Semite, tax sucker, and killer.

My name is Alex Zimmerman.

I want to speak about sugar.

I want to speak about sugar because I think you're absolutely cretino what you did with sugar tax.

First, 20 million shows of people will be buy sugar.

From Soda, taxes don't stop this.

So this means everything what is he talking about health care is a pure BS.

Number two.

Color people will buy right now sugar, right now soda tax without sugar because it costs much cheaper.

But soda tax without sugar hundred times more dangerous because provocate a cancer.

So you care about color and poor people, so you want to kill this color and poor people.

It's very simple.

Yes.

And about another minute what is I want to speak.

I see this comment what is come from council worries who district five about food bank.

I think council worries not exactly know what is she doing and maybe she have a mental problem too about this.

So she don't know nothing about for example Bike line cost, you know what it means?

She know nothing, do know about food bank because she's going to transfer almost $2 million to food bank.

Situation right now with food bank, very simple.

This idiot who work for you, he work for food bank, will buy up food, but this have more sugar than soda.

sugar.

So this don't have sense, this is absolutely idiotic, this is exactly what I told you.

You're not only a cretino, you're a killer.

Ricky Turing in Kirov.

Stand up 700,000 emerald degenerate idiot and clean this dirty chamber from this idiot.

Hillary, we're looking forward to hearing from you.

Council members, I'm good to see you for the record.

My name is Hillary Coleman and I work with the Seattle King County Coalition on homelessness I'm here today just to speak to the importance of finding more funding in the biennial budget for affordable housing as councilmember Herbold mentioned one of the coalition's priorities is finding more affordable housing because the mayor put no new money for affordable housing into her budget and in this biennial budget we want to make sure that we are finding more funds to get more projects online now.

Tomorrow we'll be bringing a bunch of our advocacy postcards to all of you.

We have over 400 that our intern is busily sorting into your districts.

And I just wanted to share a couple of the sentiments that folks have shared so far.

But I also wanted to mention that we're glad to see the $2.75 million as a more permanent stream for the permanent supportive housing supports that was put into the budget last year.

And note that that is very important that that continues, but also that's not new capital funding for housing.

So I just wanted to share a couple of these postcard messages.

And these are from folks that work directly with people experiencing homelessness every day.

I went to one of their staff meetings last week, and there's lots of people excited to share these thoughts.

Many will come tomorrow night's hearing, but also many folks aren't able to make that time to wait in line, so we're happy to share their messages.

But Jordan in District 6 writes, I work with clients who are homeless who are ready for housing but have nowhere to go.

Cheryl in District 7 writes, I work directly with individuals experiencing homelessness and strongly believe that housing is a basic need that we all should have access to.

Brenda writes, homelessness is a growing issue in Seattle and not having enough appropriate shelter or housing options for people to go into is a challenge when people are wanting to move forward.

And Claire in District 4 writes, the stability of housing is needed in order to help someone with their substance use or mental health.

We cannot keep outreaching without having places for people to stay.

So thank you for your continued support of more affordable housing and we'll see you tomorrow.

Thank you, Hillary, and thank you very much for reading those cards.

We look forward to getting them.

Okay.

We have nobody else who has signed up for public comment this afternoon, so thank you all for coming.

Colleagues, an excellent conversation and discussion this morning.

Thank you for your deep engagement.

And this meeting's adjourned.

We'll pick up at 2 o'clock, of course, for our regular council meeting, and then we'll see you all tomorrow morning at 930.