HOUSE BILL REPORT
HB 1604
BYRepresentatives H. Sommers, Locke, Wineberry, Armstrong, Barnes, Ebersole, Anderson, Hine, Ferguson and Nutley
Lowering property tax on low-income housing.
House Committe on Housing
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (9)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Barnes, Padden, Sanders, Todd,J. Williams and Wineberry.
House Staff:Kenny Pittman (786-7392)
Rereferred House Committee on Ways & Means/Revenue
Majority Report: The substitute bill by Committee on Housing be substituted therefor and the substitute bill do pass. (7)
Signed by Representatives Appelwick, Chair; Basich, Dellwo, Rust, Schoon, Taylor and Valle.
Minority Report: Do not pass. (1)
Signed by Representative Holland.
House Staff: Rick Wickman (786-7136)
AS REPORTED BY COMMITTEE ON WAYS & MEANS/REVENUE
FEBRUARY 6, 1988
BACKGROUND:
A proposed constitutional amendment, HJR 4226, would allow property with buildings that are devoted primarily to low income housing and contain at least five low-income dwelling units to be valued at its current use value rather than true and fair market value for property tax purposes.
SUMMARY:
SUBSTITUTE BILL: Any property with buildings that are devoted primarily to low-income housing and contain at least five low-income housing dwelling units will be valued at its current use value rather than true and fair market value for property tax purposes.
A low-income person is defined as a family or household whose annual income does not exceed fifty percent of the median income in the area in which the qualifying property is located.
A dwelling unit is defined as a structure that is used as a home, residence, or sleeping area by one person or by two or more persons maintaining a common household, including but not limited to units of multiplexes and apartment buildings.
The current use valuation, for property tax purposes, would apply to any building, including ancillary areas used for parking, space, and landscaping as required by local building and zoning ordinances, that meets all of the following criteria: (a) at least fifty percent of the rentable floor area is occupied at all times for residential purposes by persons of low income; (b) at least five dwelling units are occupied by persons of low income; (c) the rents charged to low-income persons are below market rates; and (d) the building and the dwelling units rented to low-income persons comply with local health and safety standards.
The current use valuation would not apply to: (a) substandard buildings; (b) institutional housing, except housing under contract to a governmental organization or private health care organization; (c) employee housing, including contract workers, employees, or relatives of the owner; and (d) any acreage beyond five acres.
In computing the current use value, the county assessor is to disregard: (a) potential uses that might return a higher income; (b) rents that might be charged were the owner to maximize returns; and (c) values of the property that either the land or the improvements were unencumbered by their current commitment to low-income housing. The assessed value is to be the lesser of the property's value based on current use or its value if it were assessed without regard to this classification.
Property classified as "devoted primarily to low income housing" must remain in that use for at least ten years. After eight years, the owner of the property may choose to change its use. Two years' notice of a change in classification must be given to the assessor of the county in which the property is located. In the event of such a change in use, the bill provides for the same collection of foregone back taxes, interest and penalties as apply to agricultural lands, timber lands, and other property under Chapter 84.34 RCW, the Open Space Act.
The Department of Revenue shall adopt rules to implement this chapter.
The Department of Community Development shall may publish and prepare data on median income figures.
SUBSTITUTE BILL COMPARED TO ORIGINAL: A dwelling unit is defined as a structure or part of a structure that is used as a home, residence, or sleeping area by one person or by two or more persons maintaining a common household, including but not limited to units of multiplexes and apartment buildings.
The current use valuation would apply to the land and building as opposed to the land only.
References to "land" have been replaced with "real property" to reflect the intent of the legislation that the current use valuation be applied to the building and required ancillary areas to support the building as required by local building and zoning ordinances.
CHANGES PROPOSED BY COMMITTEE ON WAYS & MEANS/REVENUE: None.
Revenue: The bill has a revenue impact.
Fiscal Note: Requested January 20, 1988.
Effective Date:This bill does not take effect unless the constitutional amendment, HJR 4226, is approved by the voters in the November 1988 general election.
House Committee ‑ Testified For: (Housing) David Moseley, City of Seattle; and Sylvia McGee, Washington State Coalition for the Homeless.
(Ways & Means/Revenue) None Presented.
House Committee - Testified Against: (Housing) None Presented.
(Ways & Means/Revenue) None Presented.
House Committee - Testimony For: (Housing) The loss in the downtown area due to development pressures is a critical issue. This loss of housing is part of the problem for the homeless. It is more costly to produce new housing than to save the existing units. There are currently exemptions in the state constitution that allow certain property to be valued at current use instead of the highest best use, this could save that low-income housing in those downtown areas.
(Ways & Means/Revenue) It is necessary to develop and preserve low income housing through the granting of a current use assessment for property tax purposes on land and buildings that are used primarily for low income housing.
House Committee - Testimony Against: (Housing) None Presented.
(Ways & Means/Revenue) None Presented.