AN ACT Relating to agricultural property tax deferrals; amending RCW 84.38.020, 84.38.040, 84.38.050, 84.38.070, 84.38.080, 84.38.090, 84.38.130, and 84.38.150; and adding new sections to chapter 84.38 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 84.38 RCW to read as follows:

The legislature finds that as a result of public agricultural policies, agricultural market conditions, and other causes, the condition of the farm economy of the state of Washington jeopardizes the continued existence and successful operation of family-owned and operated farms in this state. It is therefore necessary that the legislature allow farmers and ranchers eligible under this chapter to defer payment of their real property tax obligations and special assessments on their agricultural property for a period not to exceed five years. This deferral program is intended to assist farmers and ranchers in maintaining their dignity and a reasonable standard of living while keeping their farms and ranches during the farm credit crisis.

Sec. 2. Section 27, chapter 291, Laws of 1975 1st ex. sess. as last amended by section 20, chapter 220, Laws of 1984 and RCW 84.38.020 are each amended to read as follows:

Unless a different meaning is plainly required by the context, the following words and phrases as hereinafter used in this chapter shall have the following meanings:

(1) "Claimant" means a person who:

(a) Is receiving a property tax exemption under RCW 84.36.381 through 84.36.389 and who either elects or is required under RCW 84.64.030 or 84.64.050 to defer payment of the special assessments and/or real property taxes accrued on his or her residence by filing a declaration to defer as provided by this chapter; or

(b) Elects to defer payment of the special assessments and/or real property taxes accrued on his or her agricultural property.

When two or more individuals of a household or family farm corporation file or seek to file a declaration to defer, they may determine between them as to who the claimant shall be.

(2) "Department" means the state department of revenue.

(3) "Equity value" means the amount by which the fair market value of a residence or agricultural property as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the property.

(4) "Agricultural property" means farm and agricultural land, as defined in RCW 84.34.020, that qualifies for current use classification under chapter 84.34 RCW, and any buildings on such land. "Agricultural property" also includes the claimant's principal residence and the land upon which it sits if such land is less than two acres and is contiguous or related to other land of the claimant which qualifies for current use classification.

(5) "Special assessment" means the charge or obligation imposed by a city, town, county, or other municipal corporation upon property specially benefited by a local improvement, including assessments under chapters 35.44, 36.88, 36.94, 53.08, 54.16, 56.20, 57.16, 86.09, and 87.03 RCW and any other relevant chapter.

((~~(5)~~)) (6) "Real property taxes" means ad valorem property taxes levied on a residence or agricultural property in this state in the preceding calendar year.

(7) "Family farm corporation" means a corporation consisting of a farm of not more than two thousand acres, whether or not contiguous, the controlling interest in which is owned by persons related by blood, marriage, or adoption. "Controlling interest" has the same meaning as provided in RCW 90.66.040.

NEW SECTION. Sec. 3. A new section is added to chapter 84.38 RCW to read as follows:

A claimant may defer payment of special assessments and/or real property taxes on his or her property that qualifies as agricultural property on up to eighty percent of his or her equity value in the property if the following conditions are met:

(1) The claimant meets the requirements of RCW 84.38.030 (1) through (3) with respect to the agricultural property for which he or she seeks a deferral;

(2) The claimant has been a farmer, or a family shareholder of a family farm corporation within the twenty-four months preceding the filing of the declaration to defer and continues to be through the deferral period;

(3) The claimant or family farm corporation has a debt-to-asset ratio greater than fifty percent; and

(4) The claimant has reportable federal adjusted gross income of fifteen thousand dollars or less in the tax year preceding the filing of the declaration to defer, and received fifty percent or more of his or her reportable federal adjusted gross income from farming in that tax year.

Sec. 4. Section 29, chapter 291, Laws of 1975 1st ex. sess. as last amended by section 22, chapter 220, Laws of 1984 and RCW 84.38.040 are each amended to read as follows:

(1) Each claimant electing to defer payment of special assessments and/or real property tax obligations under this chapter shall file with the county assessor, on forms prescribed by the department and supplied by the assessor, a written declaration thereof. The declaration to defer special assessments and/or real property taxes for any year shall be filed no later than thirty days before the tax or assessment is due or thirty days after receiving notice under RCW 84.64.030 or 84.64.050, whichever is later: PROVIDED, That for good cause shown, the department may waive this requirement.

(2) The declaration shall designate the property to which the deferral applies, and shall include a statement setting forth (a) a list of all members of the claimant's household, (b) the claimant's equity value in his or her residence or agricultural property, (c) facts establishing the eligibility for the deferral under the provisions of this chapter, and (d) any other relevant information required by the rules of the department. Each copy shall be signed by the claimant subject to the penalties as provided in chapter 9.72 RCW for the false swearing. Except for declarations to defer filed for agricultural property, the first declaration to defer filed in a county shall include proof of the claimant's age acceptable to the assessor.

(3) The county assessor shall determine if each claimant shall be granted a deferral for each year but the claimant shall have the right to appeal this determination to the county board of equalization whose decision shall be final as to the deferral of that year.

Sec. 5. Section 30, chapter 291, Laws of 1975 1st ex. sess. as amended by section 8, chapter 214, Laws of 1979 ex. sess. and RCW 84.38.050 are each amended to read as follows:

(1) (a) Declarations to defer property taxes for all years following the first year may be made by filing with the county assessor no later than thirty days before the tax is due a renewal form in duplicate, prescribed by the department of revenue and supplied by the county assessor, which affirms the continued eligibility of the claimant.

(b) In January of each year, the county assessor shall send to each claimant who has been granted deferral of ad valorem taxes for the previous year renewal forms and notice to renew.

(2) Declarations to defer special assessments shall be made by filing with the assessor no later than thirty days before the special assessment is due on a form to be prescribed by the department of revenue and supplied by the county assessor. Upon approval, the full amount of special assessments upon such claimant's residence or agricultural property shall be deferred but not to exceed an amount equal to eighty percent of the claimant's equity value in said property.

Sec. 6. Section 32, chapter 291, Laws of 1975 1st ex. sess. and RCW 84.38.070 are each amended to read as follows:

If the claimant declaring his intention to defer special assessments or real property tax obligations under ((~~this chapter~~)) RCW 84.38.030 ceases to reside permanently on the property for which the declaration to defer is made between the date of filing the declaration and December 15th of that year, the deferral otherwise allowable under this chapter shall not be allowed on such tax roll. However, this section shall not apply where the claimant dies, leaving a spouse surviving, who is also eligible for deferral of special assessment and/or property taxes.

Sec. 7. Section 33, chapter 291, Laws of 1975 1st ex. sess. and RCW 84.38.080 are each amended to read as follows:

A person's right to defer special assessments and/or property tax obligations on his or her residence or agricultural property shall not be reduced by contract or agreement((~~, from January 1, 1976 onward~~)).

Sec. 8. Section 34, chapter 291, Laws of 1975 1st ex. sess. and RCW 84.38.090 are each amended to read as follows:

If any residence or agricultural property is under mortgage or purchase contract requiring accumulation of reserves out of which the holder of the mortgage or contract is required to pay real estate taxes, said holder shall cosign the declaration of deferral either before a notary public or the county assessor or his or her deputy in the county where the real property is located.

Sec. 9. Section 38, chapter 291, Laws of 1975 1st ex. sess. as amended by section 26, chapter 220, Laws of 1984 and RCW 84.38.130 are each amended to read as follows:

Special assessments and/or real property tax obligations deferred under this chapter shall become payable together with interest as provided in RCW 84.38.100 as follows, whichever occurs first:

(1) Upon the sale of property which has a deferred special assessment and/or real property tax lien upon it.

(2) Upon the death of the claimant with an outstanding deferred special assessment and/or real property tax lien except a surviving spouse who is qualified under this chapter may elect to incur the special assessment and/or real property tax lien which shall then be payable by that spouse as provided in this section.

(3) Upon the condemnation of property with a deferred special assessment and/or real property tax lien upon it by a public or private body exercising eminent domain power, except as otherwise provided in RCW 84.60.070.

(4) At such time as the claimant ceases to reside permanently in the residence upon which the deferral has been granted. This requirement shall not apply in the case of deferrals granted on agricultural property to claimants meeting the requirements of section 3 of this 1987 act.

(5) Upon the failure of any condition set forth in RCW 84.38.030 or section 3 of this 1987 act.

(6) For deferrals granted on property meeting the qualifications in section 3 of this 1987 act, upon the expiration of the period for which the deferral was granted, or five years from the date the deferral was granted, if a shorter period was not specified. A claimant may receive a deferral under section 3 of this 1987 act for a maximum of five years.

Sec. 10. Section 40, chapter 291, Laws of 1975 1st ex. sess. and RCW 84.38.150 are each amended to read as follows:

(1) A surviving spouse of the claimant may elect to continue the property in its deferred tax status if the property is the residence of the spouse of the claimant, or the property is agricultural property in which the surviving spouse had an ownership interest, and the spouse meets the requirements of this chapter. In the case of agricultural property, the continuation of the deferral shall be for the maximum period the claimant could have continued the deferral.

(2) The election under this section to continue the property in its deferred status by the spouse of the claimant shall be filed in the same manner as an original claim for deferral is filed under this chapter, not later than ninety days from the date of the claimant's death. Thereupon, the property with respect to which the deferral of special assessments and/or real property taxes is claimed shall continue to be treated as deferred property. When the property is the surviving spouse's residence and has been continued in its deferred status by the filing of the spouse of the claimant of an election under this section, the spouse of the claimant may continue the property in its deferred status in subsequent years by filing a claim under this chapter so long as the spouse meets the qualifications set out in this section.

NEW SECTION. Sec. 11. 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.