S-0402.3/91       _______________________________________________


                                 SENATE BILL 5246



State of Washington              52nd Legislature             1991 Regular Session


By Senators Sutherland, A. Smith and Rasmussen.


Read first time January 24, 1991.  Referred to Committee on Ways & Means.Providing a limitation of six percent per year on tax increases on residential real property.

     AN ACT Relating to limiting tax increases on residential real property; adding new sections to chapter 84.52 RCW; creating a new section; and providing a contingent effective date.




     NEW SECTION.  Sec. 1.        This act provides for a limitation on the rate of increase of the taxes assessed on residential real property in order to spread rising property taxes over a period of years.


     NEW SECTION.  Sec. 2.      For purposes of sections 3 through 6 of this act, unless the context requires otherwise:

     (1) "Change of ownership" means a transfer of a present interest in real property, including a transfer of the beneficial use of real property.

     (2) "Residential property" means a single-family dwelling unit, regardless of whether such unit shares a common wall with one or more other units, including the land upon which such dwelling stands, and that is owned in its entirety either by a natural person or persons, a housing cooperative, or a trust. 

     The term residential property also includes a mobile home that has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed upon a foundation (posts or blocks) with fixed pipe, connections with sewer, water, or other utilities.

     The term residential property does not include a dwelling unit primarily used in the conduct of a commercial enterprise or a dwelling unit located upon real property that is primarily used in the conduct of a commercial enterprise.  Property is considered primarily used in the conduct of a commercial enterprise if more than one-half of the total square footage of the property is devoted to commercial use.


     NEW SECTION.  Sec. 3.      Subject to the provisions of sections 2, 5, and 6 of this act, the aggregate tax increase on residential property for purposes of property tax assessment is limited to six percent per year.  The rate of taxation for each taxing district that is imposed upon such residences shall be reduced by the same proportion to keep the increases in aggregate taxes within this limitation.


     NEW SECTION.  Sec. 4.       All residential property that meets all the qualifications of section 2 of this act, shall be taxed as provided in section 3 of this act, unless and until the property is no longer residential property, or a change of ownership has occurred.  Upon a change of ownership a new aggregate tax level is established.


     NEW SECTION.  Sec. 5.      Upon a change of ownership involving residential property, the aggregate property tax shall be established as of January 1 of the year following the date the change of ownership occurs.  The aggregate tax shall be the tax that would have been assessed had the property not met the criteria of section 2 of this act.


     NEW SECTION.  Sec. 6.      (1) An owner of residential property may apply to the county assessor in the county where the property is located to have his or her real property taxed according to the provisions of sections 2 through 5 of this act.  Application shall be made on forms prepared by the department of revenue.  The forms shall be made available at the office of the county assessor.  The application shall be submitted to the county assessor for determination of qualification under this chapter.  The applicant shall certify that he or she is the owner of a qualifying residence.  The assessor shall, at the time a notice of change of value is mailed to a taxpayer under RCW 84.40.045, require the taxpayer to recertify that he or she is an owner of a qualifying residence in order to continue to qualify for the limitation provisions of sections 2 through 5 of this act.

     (2) If, on the basis of the application submitted by the taxpayer, the assessor determines that the taxpayer does not qualify for the limitation under this chapter, the assessor shall so notify the taxpayer in writing. The notice shall inform the taxpayer of the reasons for the failure to qualify and of his or her right to appeal the assessor's determination to the county board of equalization within thirty days of the mailing of the notice to the taxpayer.


     NEW SECTION.  Sec. 7.      This act shall take effect for taxes payable in 1992 and thereafter, if the proposed amendment to the state Constitution authorizing the limitations on taxation provided for in this act is approved and ratified by the voters at a general election held in November 1991.  If the proposed amendment is not so approved and ratified, this act is void in its entirety.


     NEW SECTION.  Sec. 8.      Sections 2 through 6 of this act are each added to chapter 84.52 RCW.