HOUSE BILL REPORT

HB 968

BYRepresentatives Ebersole, Schoon, Nutley and Moyer

Authorizing cities to grant a 10-year property tax exemption for new multiple-unit housing in downtown areas.

House Committe on Housing

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (8)

     Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Barnes, Ebersole, Sanders, Todd and J. Williams.

House Staff:Kenny Pittman (786-7392)

AS REPORTED BY COMMITTEE ON HOUSING MARCH 3, 1987

BACKGROUND:

Local governments have explored a variety of techniques to promote the development of housing within their downtown areas.  The limited availability of land and competing uses for commercial, office and retail development often prohibit the construction of new housing.

Department of Revenue has the responsibility of administering the property tax exemption provisions for the state.  Property tax exemptions provided by the state are based upon criteria such as public property, property used for religious purposes, property owned by non-profit organizations or residences occupied by qualified elderly residents.

SUMMARY:

SUBSTITUTE BILL:  This measure grants cities the option of exempting property tax payments for a ten year period on building improvements which are used for multiple-unit housing.  The tax exemption can apply to all taxing districts, except the state, if taxing districts with 51 percent or more of the combined rate of taxation on the improvements agree to the policy of property tax exemption.

Multiple unit housing must be newly constructed structures having 24 or more dwelling units and shall apply to units where construction begins after July 1, 1987 and completed before January 1, 1997.  Multiple unit housing does not include units designed or used as transient accommodations or hotel and motels.

The Department of Revenue is responsible for the development of the necessary roles and procedures for the ten year property tax exemption.  The city must designate areas around a central business district within which owners may qualify for property tax exemption on the improvements.  Application for property tax exemptions are to be made on or before September 1, before the first exempt assessment will be made.  The city may approve the application if it meets specified criteria required by the state and city within 180 days.  The cities have the option of adding criteria they deem in their best interest in reviewing applications for property tax exemptions.  The cities are also provided provisions for termination of the property tax exemption for non-compliance by the owner.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The Department of Revenue is responsible for the development of the necessary rules and procedures for the implementation of the ten year property tax exemption on building improvements for multiple unit housing.

Fiscal Note:    Requested February 20, 1987.

House Committee ‑ Testified For:     Doug Sutherland, Mayor, City of Tacoma; Lonnie Wheeler, Chair, Tacoma Planning Commission; Sterns Wood, Tacoma Planning Department; Carroll Duval, Apartment Operators Association of Seattle and King County; Glenwood Buxton, Apartment Operators Association of Seattle and King County; Dick Barrett, Spokane Apartment Owners Association; and Randy Lewis.

House Committee - Testified Against: Joan Paulson, Planner, Denny Regrade Community Council; Joe Read, Denny Regrade Community Council; and Fred Saeger, Washington Association of County Officials.

House Committee - Testimony For:     There are currently few incentives that a city can offer a developer to encourage the development of housing in the downtown areas.  The provision of housing is vital in turning the downtown areas of our major cities into 24 hour areas and not just places to work.  The ability to provide an adequate return on the developer's investment through a property tax exemption will encourage the development of housing in the downtown areas.

House Committee - Testimony Against: The incentives may encourage the development of high income housing at the expense of existing low income housing in downtown areas.  There should be provisions that require housing for all income levels for projects that receive the property tax exemptions.  The tax exemption provisions of the bill have possible state constitutional problems.