What The Market Won’t Bear
Wednesday, October 24, 2018
WHAT THE MARKET WON’T BEAR: Bellingham City Council passed resolutions this week in support of two initiatives on the November ballot, a recommendation that body considers from time to time in support of state measures of benefit to municipal goals.
As provided under state law, if the city provides proper notice and an equal opportunity for statements for and against a ballot measure, a legislative body can pass resolutions expressing an opinion on the proposal. City Council over the years has been judicious with this liberty, and confines commentary to measures that directly impact established city policy goals.
Council members passed a resolution in support of Initiative 1631, a unique carbon pricing strategy that would impose a fee on large-scale emitters of greenhouse gases in Washington. In their action, Council joined their counterparts in the large metro areas of Seattle, Tacoma, and Spokane in support of the measure. Large numbers of citizens arrived to comment on the merits of I-1631 and its limitations and imperfections.
In their recitals, Council noted phased-in carbon fees on greenhouse gas emissions are the most efficient, transparent and enforceable mechanism to drive an effective and fair transition to a less carbon-intensive economy, by unleashing the power of the market to identify the most effective solutions. The goal dovetails with the City of Bellingham’s climate action plan goals to reduce municipal greenhouse gas emissions to 85 percent below 2000 levels by 2030 and 100 percent below 2000 levels by 2050.
“Let’s start where there are areas of agreement,” Council member Michael Lilliquist suggested in support of the resolution. “Even those who are skeptical of I-1631 said we need to address climate change, we need to address fossil fuel pollution. They’re asking for a different carbon-pricing scheme instead.
“Well, any carbon-pricing fee will result in higher fossil fuel prices,” Lilliquist observed. “That’s how it works, how it is supposed to work. Part of the cost will be passed on to us.
“It sends a price signal and informs businesses and consumers about what it costs, and allows us to make proper decisions in response to those price signals,” he said. “It informs us in our pocketbooks, where it matters to us” and provides incentives to reduce carbon pollution to save money.
Council also passed a resolution in support of Proposition 2018-5, a city measure that would extend the horizon of the successful Bellingham Home Fund. If approved by voters, the measure would replace and enhance existing housing levies by authorizing property taxes for 10 years to fund programs for low-income housing and related services. The proposed levy would authorize $0.36 per $1,000 assessed value, raising up to $4 million annually to improve housing supply for lower incomes. According to the U.S. Census Bureau data, 58 percent of renter households in Bellingham are “cost burdened” because they spend 30 percent or more of their income per month on housing costs.
“I think this is one of the more important issues on the ballot,” said Council member Gene Knutson, who recommended the resolution in favor of the Home Fund. “We’ve exceeded every expectation from when it was originally passed in 2012, and I know we will do it again.”
When he initially proposed Council take a position in support of the levy, Knutson had noted that he really had no idea how Bellingham would address the issue of affordable housing and housing security without the levy.
Few programs outside of Greenways have produced the tangible, measurable benefits of property tax revenues than the Home Fund. With a goal to produce 400 units of affordable housing, the original 2012 Housing Levy exceeded all goals by supporting the construction or preservation of more than 700 homes. Rental assistance programs funded by the 2012 levy have served more than 5,000 people since its inception. Each dollar of public funds in the 2012 levy was anticipated to be matched by $5 of other private and public funding sources. Instead, the Home Fund has leveraged an average of over $8 from other private and public funding sources, turning $3 million every year into $27 million spent in the local economy to help fill gaps in the housing system.
Notably, when the call went out in August for statements in favor of and opposed to the renewal of the affordable housing levy, no statement was offered in opposition to it.
“All of that $27 million of activity has been spent locally, in the local economy, building and preserving homes, providing housing assistance, either in rent assistance or supportive services,” affordable housing consultant Paul Schissler noted in comments to Council.
The new levy has a lower millage rate than the 2012 Home Fund, but will generate more revenue annually—the result of an enlarged tax base from population growth and rising property values.
“If approved by voters,” Schissler commented, “next year we’ll have $4 million, and for the next ten years. And if we—as we expect—exceed the 8-to-1 leveraging, that amounts to $36 million per year or more spent locally on housing development, preservation, rent assistance and services.
“Remember, half of us can still continue to afford market-rate housing in this town,” Schissler noted. “But about half of us can no longer afford market-rate housing—the market just doesn’t work for about half of us in Bellingham. And it is that half of the housing system that we have to figure out how to fix.”
What the markets alone won’t bear, public policy must.