SENATE BILL REPORT

SB 6231

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by Senate Committee On:

Housing Stability & Affordability, January 27, 2020

Brief Description: Providing a limited property tax exemption for the construction of accessory dwelling units. [Revised for 1st Substitute: Limiting the property tax exemption for improvements to single-family dwellings to the construction of accessory dwelling units.]

Brief Summary of First Substitute Bill

Limits the property tax exemption for improvements to single-family dwellings to only include the construction of accessory dwelling units.

Majority Report: That Substitute Senate Bill No. 6231 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.

Signed by Senators Kuderer, Chair; Das, Vice Chair; Zeiger, Ranking Member; Fortunato, Assistant Ranking Member; Darneille, Saldaña and Warnick.

Background: All real and personal property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. Examples of property tax exemptions established either by statute or constitutionally include exemptions for churches, nonprofit hospitals, affordable housing, and certain improvements to single family residences. If a single family residence is improved by remodeling, adding new rooms, decks, patios, or other improvements, a person may apply for a three-year exemption from property taxes on the value of the physical improvement. Physical improvements do not include normal maintenance items, and the value of the improvements must be 30 percent or less of the value of the original structure. The exemption may not be claimed more than once in a five-year period.

Summary of Bill (First Substitute): The existing property tax exemption for any improvements to a single-family dwelling is narrowed to only include the construction of accessory dwelling units (ADUs). The ADU may be either attached to or within the single-family dwelling or a detached unit on the same real property to qualify for the exemption.

EFFECT OF CHANGES MADE BY HOUSING STABILITY & AFFORDABILITY COMMITTEE (First Substitute):

Limits the property tax exemption for improvements to single-family dwellings to only include the construction of accessory dwelling units.

Staff Summary of Public Testimony on Original Bill: The committee recommended a different version of the bill than what was heard. PRO: Homeowners currently may exempt the value of improvements to their residences from property tax for three years, and this bill adds the construction of accessory dwelling units, or ADUs, as an incentive for property owners. ADUs provide flexibility for homeowners to provide additional living space for multi-generational families, seniors to age in place, to increase urban density, or to generate additional income. The state needs to create more affordable housing, and this incentive can help develop the missing middle in the housing market.