AN ORDINANCE proposing an amendment to the King County Charter removing restrictions related to the disposition of real property for less than full value when the property would be used for affordable housing; amending Section 230.10.10 of the King County Charter; and submitting the same to the voters of the county for their ratification or rejection at the next general election to be held in this county occurring more than forty-five days after the enactment of this ordinance.
By your vote we have moved advanced motion 2020 202 for Council without recommendation we will expedite. So it is on the agenda for next Tuesday's council meeting. Thank you, everyone. That brings us to item seven proposed ordinance 2020 203, which would place on the November ballot a charter amendment to allow the county to sell some properties for less than fair market value, provide for affordable housing. Mary Brennan from the council's policy staff will present a staff report and then we'll hear from Charter Review Commissioner Michael Harrison. Some colleagues please note that each of the charter after each charter amendment staff and there are presentation slides from the Charter Review Commission members in the meeting packet without Mary. Thank you, Mr. Chair. For the record, this is Mary Burge, and I'm from the council staff. And the materials for this item begin on page 23 of the committee packet. As you noted, Mr. Chair, proposed ordinance 2020 0203 would propose an amendment to the Charter to allow the transfer, sale or lease of county metropolitan functions surplus property at less than fair market value for affordable housing. As you noted, this is one of the 11 charter amendments recommended by the King County Charter Review Commission. And just for timing. If you wish to place this charter amendment on the November 3rd ballot, the last regular council meeting date for adoption is July 21st. So moving on, just to provide some context on this issue, if you'll jump ahead to page 25 of the staff report, because of the importance and need for affordable housing in the county, the King County Code has a process for dedicating county owned surplus property for housing. In fact, it requires that if a county agency declares property surplus, the agency must first determine whether that property is needed for a different county agency, for essential government services, and if not, whether it is suitable for affordable housing. If that property is suitable for affordable housing, then the code allows that it can be leased or sold for less than fair market value. That said, as a number of restrictions on properties that cannot be used in this way either because they're not suitable for affordable housing, because they're outside the urban growth area or not zoned residential or have other issues, or because of the funding source that was used to purchase the property, or specifically for properties that are called out in section 2310 ten of the King County May Charter. And if you'll turn to page 26 of the staff report, that section of the charter deals with functions. Properties that are owned by what are called metropolitan functions of the county. Those functions are defined in state law. And you'll see a list on the top of page 26 of the packet as being a number of services that can provide for populous areas of the state a way of obtaining essential services. Those include any of the following of water pollution abatement, water supply, public transportation, garbage disposal, parks and parkways and metropolitan comprehensive planning. Now, the two we typically think of in King County as being metropolitan functions are those that were once part of the independent municipality of Metropolitan Seattle, which was created by King County voters in 1958. Voters created that entity to manage wastewater treatment. And then in 1972, added public transit. The independent municipality of Metropolitan Seattle functioned until 1994, when its functions were assumed into King County under a state law that allows for metropolitan functions to be operated by county governments. In anticipation of King County, Samsung's assumption of these functions. In 1992, King County voters approved a charter amendment that did a number of things. First, it expanded what was then a nine member, King County Council, into a 13 member Metropolitan King County Council. It created the three regional committees, regional policy, transit and Water Quality, and it added a section to the charter. The section 2230, 1010 that I mentioned earlier and that you can see cited on page 26 of the staff report that specifically notes that metropolitan functions that are performed by the county must be operated as distinct functional units , and specifically that any revenues or property received for those functions cannot be used for any other purpose. But for that function. What that means specifically is that properties owned for the use of metropolitan functions operated by the county cannot follow the code provisions for being transferred or sold or leased for less than fair market value for affordable housing. That then takes us to 2018, an action by the state led by the state legislature, which will see described on page 27 of the packet. During the 2018 state legislative session, the Legislature passed a bill to promote the use of surplus public property for affordable housing. And while it had a number of exclusions of types of properties that could not be used in this way, it did specifically allow for the transfer or sale at less than fair market value for properties held by enterprise funds regardless of the primary purpose or function of the agency holding the property. Following the passage of this law last year, the Charter Review Commission proposed that that relevant section of the charter be amended to add in the ability to transfer, sell or lease these enterprise fund metropolitan function properties if surplus to be used for affordable housing. You can see at the bottom of page 27 the relevant charter section again and then at the top of page 28. In underlined the sentence that the Charter Review Commission has recommended be added, which would state to the extent not otherwise prohibited by law. This section shall not preclude the county from leasing, selling or conveying the properties at less than fair market value for affordable housing purposes. So if the Council were to adopt this ordinance and place this charter amendment before the voters, what it would do is not require, but rather allow that properties owned by agencies operating metropolitan functions could make that property available for less than fair market value for affordable housing. Now, what would that mean? You'll see starting on page 28 of the staff report, a number of potential implications, many of which were discussed by the Charter Review Commission during the course of their work last year. First, the notion that some of these properties may have been designed for or purchased for capital projects or to, if not actually be used for capital projects to have the proceeds fund capital projects, which could have implications next that there would obviously need to be careful inter-governmental accounting to account for any transfer or sale of a metropolitan function piece of property. Third, the notion of best use of funds. The committee asked whether it is always the best use of funds to sell a piece of county property at less than the fair market value, rather than to simply sell the property for fair market value and use the funds to develop affordable housing elsewhere. Presumably a question that could be resolved on a case by case basis. Next, restrictions on use and resale, with the committee noting that if you were to sell any of these properties, you would want to make sure of the long term affordability of the property. Some things that King County's Housing and Homelessness Community Development Division has developed for their other property transfers and affordable housing programs. Next issue, noted, is the cyclical nature of the housing market, with the Charter Review Commission noting that in some cases when the housing market is not roaring ahead as it has been these last several years, it may be that there are other tools or even just the market itself that would be sufficient to provide affordable housing. And so this tool may not always be necessary. Next, the Commission pointed out that there are other housing investment options that the county has in its capacity as a regional government, including zoning, other developer incentives and other forms of funding that would be in addition to making surplus property available. And then finally, the Charter Review Commission just raised the caveat that they did not see it as being appropriate, that the county would ever be in a situation of purchasing property simply to then sell it for less than fair market value for housing. So again, these were all issues raised by the commission during their deliberations. All issues that were this charter amendment to be adopted by voters the Council would want to consider in some way, potentially by amendments to the section of code that deals with the surplus of county owned property. I'll conclude by noting that it is impossible at this point to estimate what the potential fiscal impact from this could be, as this is something you'd have to consider on a property by property basis. Looking at. First, if a property is available and suitable for affordable housing, then if it has any other restrictions on its use or surplus. For instance, if it was purchased through the use of a levy by ratepayer funds or with federal grant funds, that would preclude its transfer for a less than fair market value. And then finally, what would be the difference between what would be fair market value at that point and what the property would be transferred for? So this is something that would really have to be done in the future on a case by case basis, typically in the way that the council makes property surplus decisions. Now finally, I'll note that there is a technical amendment on page three of the First Amendment packet that you were sent out this morning simply makes a couple of wording changes to make sure that the title and the body of the ordinance have the same words in them, but nothing substantive. And then again, just a reminder that if you wish to move forward in November, the last regular council meeting date for adoption would be July 21st. That concludes my report. As the Chair noted, there is a member of the Charter Review Commission here to make a presentation which begins on page 35 of your packet. Thank you, Mr. Burton. See, no urgent questions will go to the member of the Charter Review Commission. Mr.. Help me. I'm sorry, Mr. Holsten. Some. Michael Hirsh. Hansen Michael Hirsh. Jonathan, welcome. Thank you. Well, thank you very much for inviting me, Mr. Chairman, and thank you, Mrs. Bourguignon, for your presentation. I think you should include clarifying all the details that the Commission considered over its term and why the Commission believes that this is an important change to make in the King County Charter. I have very little to add that you have all the details before you. I'm happy to take any questions, if you have any, but I would encourage you to place this matter on the ballot this coming November. It is very. Appropriate. Even more appropriate now in our present time than when the commission considered this last year. So I don't want to take any more of your valuable time and any questions that you might have for new women's bourguignon would be appreciated. Thank you very much for joining us today, and thank you, more importantly, for your work on the Charter Review Commission for over a year. We appreciate the work you and your colleagues did in bringing all of the recommendations to us. And you're joining us to speak to this one today. Welcome. Questions of staff for our commissioner. Member Council member LAMBERT Thank you. So. You know, because I've been used to they have to keep each enterprise whole. How will an enterprise who had on their books an asset was worth, say, $10 Million and now it's going to be given away. How will that enterprise be made whole? Because a lot of our enterprises are doing better than the general fund, but that may not always be true. And then one of the things that concerns me is that I think we should, if we do go forward with this, that we should look at tracking whether the property was acquired by eminent domain or as a staging area. Because I am concerned that some of our projects, if we say we need a staging area of five acres, that maybe we only needed three, we would say five, and then we would have that as surplus property. And it's a concern I'm already concerned about. So this would only make that a bigger concern. So if we do go forward, those are. Two things I think we would need to put in the enabling legislation so that we don't end up with that. So my question is, how do we keep the enterprise accounts as much as they possibly can be without it being moved at less than market value? Thank you, council members. So as as I noted, these were issues that the Charter Review Commission considered last year and are issues that would not necessarily need to be in this charter amendment legislation, but rather through a future amendment to the King County Code. In terms of the processes that are used to surplus property, clearly you would have to ensure that there are very careful accounting measures taken so that if enterprise fund properties are surplus for less than fair market values, that is clearly accounted for. And as you noted, council member clearly there would need to be oversight of good business practices so that the county is not in the situation of purchasing properties it does not need for another purpose. That said, we do have a fairly extensive section in the King County Code right now for all non enterprise function agencies that surplus property. And so it may be that if this were to be approved by voters, you could address those issues through the code as part of that section. Okay. Thank you for that. How does the enterprise made whole? Would that be the general fund? How would that happen? Council Member It would essentially take the loss of that delta and I see that Patrick Hamacher is available, who staff the Charter Review Commission. If he wanted to add anything but essentially the Enterprise Fund would have to eat that difference between what they could get and what they are getting. That's exactly that's all I was going to add as well. Mary, Mary, hit it right on the head. The price. You're you're right council member Lambert that you've always learned that. And that has always been true. Prior to that 2018 state law changed. So what what is now allowable is that the Enterprise Fund could take a loss on the difference between the value of the land and what and transferring it to whatever they got out of it for if it's being used for the affordable housing purposes. So you're not you're not wrong to remember it that way. It's that the state law has changed. So. It the enterprise zone enterprise, the opportunity to tell the council, you know, I realize this is surface property, but we can't. Afford to eat. X number of millions of dollars. You know, all of these transactions would have to come before the council for approval. Well, I guess there are some very tiny ones that don't have to come to the council for approval, but those aren't going to be the ones you're talking about. Anything with any meaningful dollars would. Still, as Mary is noted for the Title four, provisions have to come to the Council for approval. Councilmember Dombroski. Thank you, Mr. Chair. Are you ready for a motion? I would be, yes. All right. Thank you, Mr. Chair. I move. Adoption of proposed ordinance 2020 203. Councilmember Dombroski did we give a do pass recommendation to ordinance 2020 203? Councilmember Dombrowski. Well, thank you, Mr. Chair. I don't have a whole lot to add beyond Mary, Vernon's Comprehensive and Excellent Staff Report and the remarks of Commissioner Hirsh Johnson from the Charter Review Commission. My recollection is that this was one of the early action items that they brought last year before us. Maybe not. But in any event, is a high priority. The Regional Affordable Housing Task Force, as you all know, identified a number of strategies to respond to the affordable housing crisis facing residents of our region. And one of the strategies or maybe it's a tactic, but whatever it is, is to look at available public lands to see whether or not they can be put to use. And a number of inventories have been done on those lands, like many solutions that maybe sound easy. I think those inventories have shown that a lot of public property simply just isn't suitable because it's too small or it's incorrectly zoned or in the wrong locations. But there are a number of parcels that often are owned by the county government that could be put to use to support the response to the affordable housing crisis facing the region. Some of those are, in fact owned by the kinds of funds that Mary identified, what we might traditionally call their funds. This charter amendment would be the next step in an initiative started by then Speaker Chopp in the Legislature, which I think followed some meetings with many of us at the council he had IS as he began to work more closely with the county in identifying actual sites to build projects. Some of those that became clear really couldn't be freed up in at a below market rate. He helped pass that law, led the effort to pass the law in Olympia to bring us to this point today. The Charter Review Commission, I think correctly has phrased the language. It's is not a mandate as simply as the releasing of the fines, the chains that prevent us from making the decision to sell a piece of property in the wastewater treatment division or the solid waste division, for example, at less than fair market value. I agree with the Commission and Mary and Councilmember Lammers point that some additional policy work will probably need to be done in an implementing ordinance later or motion that says, you know, in what cases and under what terms and conditions we would want to pursue this. And it may be a case by case basis. It may be, Councilmember Lambert, that a division could afford to turn over a piece of property with no compensation. Or maybe they want half the fair market value. The way this is written is it doesn't preclude any any of those options. So I think it's a good step and allows us some flexibility if the voters approve it, to be able to put some property that we have to use for this important public function. We're doing some of that on a short term basis. Just by way of example, Councilmember Cole Wells knows this well and she may want to speak to it in her district down on Elliott. The wastewater treatment division owns a a parcel where we have placed on a temporary basis modular housing. And the reason it's temporary and the reason we haven't been able to. One reason we have to move forward on a permanent basis is this very issue of of the Enterprise Fund and the Accountancy Act and the requirement that properties acquired for use by a utility be be used for the utility. So I think, for example, this would allow us to on that parcel and other similarly situated to have more flexibility to bring them on line for housing. So I encourage members support and I'll offer the technical amendment when you're ready, Mr. Chair. That's not my double duty. I just a question and so. I. Thinking similarly there we worked on a been working on a project here on the east side to create not affordable housing. But while some affordable housing and a shelter on a piece of property that's owned by the Solid Waste Division, and I have been told repeatedly that that property can't be reduced in price. It has to go for fair market value because it's owned by the utility. Does this change remove that impediment? I didn't think it did. I thought it had to do with state law. So, Councilmember, I think we'd have to look at the the way the property was purchased. This the change in state law allows enterprise funds to take a loss on these properties for affordable housing, and changing the charter would remove our prohibition. But if there are other impediments such as that the property was purchased using funding that cannot be dedicated in that way, for instance, you know, ratepayer funds or a federal grant for parkland with conservation futures tax dollars, there may be other impediments that would prevent it. So it would really be on a property by property basis. But this charter change amendment would remove the Enterprise Fund impediment. Okay. I believe in this situation. It would have to do with repair funds being involved. So it does not change the legal requirements with regard to. And that, by the way, I'm totally in favor of this proposal. And you can only do what you can do with the county charter. And I would be in favor of us trying to find ways for a government to be able to surplus properties even if they had been purchased with ratepayer funds. But I'm just trying to confirm what this actually does. This does not change the rules with regard to purchase properties purchased with ratepayer funds. This would not this would simply say that if the property is held in an enterprise fund and there are no other impediments, while it could not be used in this way today, it would be able to be in the future. But if there are other impediments or legal issues, then it would not be able to be so today because of the language immediately preceding this charter amendment. Enterprise funds wouldn't be able to discount properties, but with this change they would. That is correct. Without other amendment the correct answer. Councilmember Dombrowski. I thank you, Mr. Chair. A move adoption of Amendment One, which is the technical amendment previously described. Councilmember Damascus approved adoption of Amendment One, saying no discussion. All those in favor, please say i. I. I oppose nay. The ayes have it. The amendment is adopted for the discussion. Of no further discussion, Councilmember Wells. Just be ready to vote, Mr. Chair. Okay, fair enough. And then I ask you to please call the roll. Thank you, Mr. Chair. Council Member Value Chain. I Council Member Blue Chip Outside Council. American Masking. I remember DEMBOSKY about to become. A. Council member done or to iron council member Caldwell's high member Caldwell spoke. Council Member Lambert High Ranking Member Lambert Goldstein Council Member of the Grove High Council Member of the Girl Scouts I Council Member Von Richthofen. I. Council member of one night bar votes i council members all my. High. Council members all I. Votes I. Mr. Chair. Hi. Mr. Chair. Votes I. The vote is 980. Knows by your vote we have given a do pass recommendation to ordinance 2020 203 will expedite that to full council next Tuesday. Takes us to item nine proposed ordinance 2020 204, which would place on the November ballot amendments to carry charter the would change the term citizen to public or resident.