AN ACT Relating to taxation of multiple-unit housing; and adding a new chapter to Title 84 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that it is in the public interest to stimulate the construction of rental housing in the core areas of Washington's urban centers to improve the balance between the residential and commercial nature of those areas, and thus, to insure full-time use of these areas as places where citizens of the community have an option to live as well as work. The legislature further finds that cities of this state should be enabled to establish and design programs to attract new development of rental housing in their core areas based on the incentive of a local property tax exemption, which is authorized under this chapter. Such programs shall emphasize the development of vacant or under-utilized sites in the core areas, rather than sites where sound or rehabilitable multiple-unit rental housing exists, and shall result in the construction of units at rental rates accessible to a broad range of the general public.

NEW SECTION. Sec. 2. As used in this chapter, "multiple-unit housing" means newly constructed structures having twenty-four or more rental dwelling units not designed or used as transient accommodations and not including hotels and motels, but including such design elements benefiting the general public as specified by the city pursuant to section 7 of this act.

NEW SECTION. Sec. 3. (1) This chapter applies to multiple-unit rental housing for which construction commences after July 1, 1986, and which is completed on or before January 1, 1996, in cities which adopt, after a public hearing and determination pursuant to subsection (3) of this section, by resolution or ordinance, the provisions of this chapter. The tax exemption provided by this chapter only applies to the tax levy of a city which adopts the provisions of this chapter, except that the tax exemption shall apply to the tax levy of all taxing districts, except the state, when upon request of the city which has adopted the provisions of this chapter, the rates of taxation of taxing districts whose governing boards agree by resolution to the policy of providing tax exemptions for multiple-unit rental housing as provided in this chapter, when combined with the rate of taxation of the city which adopts the provisions of this chapter, equal fifty-one percent or more of the total combined rate of taxation levied on the property which is exempt under this chapter.

(2) The city shall designate an area within and in proximity to the central business district, within which it proposes to allow exemptions provided for under this chapter.

(3) The city shall, before passing a resolution or ordinance adopting the provisions of this chapter, hold a public hearing in order to determine whether multiple-unit housing meeting the qualifications of subsection (4) of this section would not otherwise be built in the designated area without the benefits provided for under this chapter.

(4) Prior to accepting project applications under this chapter, cities shall adopt standards and guidelines to be utilized in considering applications and making the determinations required by section 7 of this act. The standards and guidelines shall establish policy governing basic requirements for an application, including but not limited to:

(a) Existing utilization of proposed project site, including justification of the elimination of any existing sound or rehabilitable housing;

(b) Design elements;

(d) Extensions of public benefits from the project beyond the period of the exemption.

NEW SECTION. Sec. 4. In cities with a population of over three hundred thousand, the exemption provided by this chapter shall apply only to multiple-unit housing constructed on land with an assessed valuation of eight dollars per square foot or more on September 13, 1986, or on land within a designated urban renewal area formed pursuant to chapter 35.81 RCW or a designated apportionment district formed pursuant to chapter 39.88 RCW.

NEW SECTION. Sec. 5. Multiple-unit housing which qualifies for exemption under this chapter shall be exempt from ad valorem taxation as provided by section 3 of this act, for ten successive years beginning January 1 of the year immediately following the calendar year in which the improvement would have been listed on tax rolls under chapter 84.40 RCW in the absence of the exemption provided for in this chapter. However, the exemption shall not include the land or any improvements not a part of the multiple-unit housing. The exemption provided by this chapter shall be in addition to any other exemption provided by law.

NEW SECTION. Sec. 6. An owner desiring an exemption under this chapter shall first apply to the city on forms supplied by the city. The application shall describe the property for which an exemption is requested, set forth the grounds supporting the requested exemption, and include any information the city finds necessary to determine whether the property qualifies for exemption under this chapter. The application shall include a statement that the applicant is aware of the potential tax liability involved when the property ceases to be eligible for the exemption provided for under this chapter. The application shall be verified by oath or affirmation of the applicant.

Application shall be made on or before September 1 of the calendar year immediately preceding the first assessment year for which exemption is requested, and shall be accompanied by the application fee required by section 8 of this act. The city may permit the applicant to revise an application prior to final action by the city.

NEW SECTION. Sec. 7. The city may approve the application if it finds that:

(1) The owner has agreed to include in the construction as a part of the multiple-unit housing one or more design elements benefiting the general public as specified by the city, including but not limited to open spaces, parks and recreational facilities, common meeting rooms and day care facilities.

(2) The proposed construction project is or will be, at the time of completion, in conformance with all local plans and planning regulations, which are applicable at the time the application is approved.

(3) The owner has complied with all standards and guidelines adopted by the city pursuant to section 3(4) of this act.

NEW SECTION. Sec. 8. (1) The city shall approve or deny an application filed under section 7 of this act within one-hundred eighty days after receipt of the application. An application not acted upon within one-hundred eighty days shall be deemed approved.

(2) Final action upon an application by the city shall be in the form of an ordinance or resolution that shall contain the owner's name and address, a description of the subject multiple-unit housing, either the legal description of the property or the assessor's property account number, and the specific conditions upon which the approval of the application is based. On or before April 1 following approval, the city shall file with the county assessor and send to the owner at his last known address a copy of the ordinance or resolution approving or disapproving the application. In addition, the city shall file with the county assessor on or before April 1 a document listing the same information otherwise required to be in an ordinance or resolution under this subsection, as to each application deemed approved under subsection (1) of this section.

(3) If the application is denied, the city shall state in writing the reasons for denial and send notice of denial to the applicant at his or her last known address within ten days after the denial.

(4) The city, after consultation with the county assessor, shall establish an application fee in an amount sufficient to cover the cost to be incurred by the city and the assessor in administering this chapter. The application fee shall be paid to the city at the time the application for exemption is filed. If the application is approved, the city shall pay the application fee to the county assessor for deposit in the county current expense fund, after first deducting that portion of the fee attributable to its own administrative costs in processing the application. If the application is denied, the city shall retain that portion of the application fee attributable to its own administrative costs and shall refund the balance to the applicant.

NEW SECTION. Sec. 9. (1) If, after an application has been approved under this chapter, the city finds that construction of multiple-unit housing was not completed on or before January 1, 1996, unless extended under section 11 of this act, or that any provision of this chapter is not being complied with, or any provision required by the city pursuant to this chapter is not being complied with, the city shall give notice to the owner, mailed to the owner's last known address, of the proposed termination of the exemption. The notice shall state the reasons for the proposed termination and shall require the owner to appear at a specified time, not less than twenty days after mailing the notice, to show cause, if any, why the exemption should not be terminated.

(2) If the owner fails to show cause why the exemption should not be terminated, the city shall adopt an ordinance or resolution stating its findings terminating the exemption. A copy of the ordinance or resolution shall be filed with the county assessor and a copy sent to the owner at his or her last known address, within ten days after its adoption.

NEW SECTION. Sec. 10. (1) Review of a denial of an application under section 8 of this act, or of the termination of an exemption under section 9 of this act, shall be as provided by chapter 34.04 RCW.

(2) If the termination of an exemption is not reviewed as provided in subsection (1) of this section, or upon final adjudication, the county officials having possession of the assessment and tax rolls shall correct the rolls in the manner provided for omitted property under RCW 84.40.080, to provide for the assessment and taxation of any property for which exemption was terminated by the city or by a court, in accordance with the finding of the city or the court as to the assessment year in which the exemption is first to be terminated. The county assessor shall make such valuation of the property as shall be necessary to permit such correction of the rolls. The owner may appeal any such valuation to the county board of equalization under chapter 84.48 RCW. Where there has been a failure to comply with section 9 of this act, the property shall be listed as an omitted assessment for assessment years beginning January 1 of the calendar year in which the noncompliance first occurred.

NEW SECTION. Sec. 11. If the city finds that construction of the multiple-unit housing was not completed by January 1, 1996, due to circumstances beyond the control of the owner, and that the owner had been acting and could reasonably be expected to act in good faith and with due diligence, the city may extend the deadline for completion of construction for a period not to exceed twelve consecutive months.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 13. Sections 1 through 11 of this act shall constitute a new chapter in Title 84 RCW.