Alexan­dria raises meal tax to 5% for hous­ing fund

Ex­tra $4.75 mil­lion ear­marked to help with af­ford­able units

The Washington Post Sunday - - COMMUTER - BY PA­TRI­CIA SUL­LI­VAN pa­tri­cia.sul­li­van@wash­post.com

The Alexan­dria City Coun­cil fi­nal­ized plans Satur­day to boost the lo­cal meals tax to raise money for af­ford­able hous­ing, over the ob­jec­tions of small-busi­ness own­ers.

Start­ing July 1, din­ers will see their meals tax rise from 4 per­cent to 5 per­cent, with the ex­tra per­cent­age point rais­ing an ad­di­tional $4.75 mil­lion that would be ded­i­cated to the city’s af­ford­able hous­ing fund. The rest of the meals tax would con­tinue to go into Alexan­dria’s gen­eral fund.

Res­tau­rant op­er­a­tors told the coun­cil that they want to see more fund­ing for af­ford­able hous­ing in an in­creas­ingly ex­pen­sive city where more than 16,000 sub­si­dized units have been lost since 2000.

But the restau­ra­teurs also said they don’t want to be the only ones to bear the bur­den.

“We ab­so­lutely feel it’s dis­crim­i­na­tory and un­fair,” said Sue Ko­val­sky of the Del Ray Busi­ness As­so­ci­a­tion. “This tax needs to be spread among the en­tire com­mu­nity . . . . Restau­rants are clos­ing their doors ev­ery day, and restau­rants want­ing to open a se­cond lo­ca­tion are go­ing to Na­tional Har­bor, D.C., and Arlington.”

An in­crease of the meals tax to 5 per­cent would boost the cost of the av­er­age $16 din­ing bill by 16 cents. That will make the tax the largest in the metropoli­tan re­gion, but not in Vir­ginia, where higher meals taxes are levied in Rich­mond, Char­lottesville and else­where, city of­fi­cials said.

Mayor Al­li­son Sil­ber­berg (D), who voted with the 4-3 ma­jor­ity on the all-Demo­cratic coun­cil, said she sup­ported the pro­posal if the city man­ager finds in the next bud­get year a re­place­ment $4.75 mil­lion from cuts within the ex­ist­ing bud­get. That would al­low next year’s coun­cil, which is up for re­elec­tion this fall, to elim­i­nate the tax in­crease.

Three coun­cil mem­bers quickly ob­jected.

“It’s not proper to make staff do the work to find the fund­ing,” said John Tay­lor Chap­man.

“I think it’s in­con­sis­tent to say you’re for ded­i­cated fund­ing, then talk about re­vis­it­ing it next year,” Ti­mothy Lo­vain added. “To talk about find­ing $4.7 mil­lion with­out find­ing off­sets is just wrong.”

Justin Wil­son, who is run­ning for mayor against Sil­ber­berg in the June 12 Demo­cratic pri­mary, said it’s “lip ser­vice” to make al­ter­na­tive pro­pos­als from the coun­cil dais.

“If you want to make a pro­posal, you put it on pa­per and shop it around to the com­mu­nity and the coun­cil,” Wil­son said. “That’s the way things get done.”

Wil­son, Lo­vain and Paul Smed­berg voted against the tax be­cause they said they do not think tax rev­enue should be ded­i­cated by law to spe­cific needs, but should go into the gen­eral fund to com­pete with other pri­or­i­ties each year.

The af­ford­able hous­ing fund has no money at the mo­ment, a re­sult of the city’s de­ci­sion in Jan­uary to spend $9 mil­lion to help the Church of the Res­ur­rec­tion be­gin its ef­fort to build 113 units of hous­ing on its prop­erty. Hous­ing Di­rec­tor He­len McIl­vaine later said that de­vel­oper con­tri­bu­tions, which un­der state law the city must ne­go­ti­ate with each pro­posal, usu­ally bring in about $4 mil­lion an­nu­ally.

Six-tenths of one cent of the city’s prop­erty taxes is also set aside for the hous­ing trust fund, but that money is mostly com­mit­ted to cover­ing the debt on hous­ing loans made to the non­profit de­vel­op­ers who build the af­ford­able and work­force hous­ing in the city.

While some busi­ness own­ers ob­jected to the tax hike and sev­eral af­ford­able hous­ing sup­port­ers spoke in fa­vor Satur­day, coun­cil mem­bers said this was a rare op­por­tu­nity to act on the long-known cri­sis in af­ford­able hous­ing.

“This is the first time in I don’t know how many years that we got a ma­jor­ity on this coun­cil to ap­prove fund­ing for af­ford­able hous­ing,” Chap­man said.

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