HOUSE BILL REPORT

                 HJR 4205

             As Reported By House Committee on:

                           Housing

Brief Description:  Amending the Constitution to allow property devoted to low‑income housing to be taxed based on its current use value.

Sponsor(s):  Representatives Winsley, Wang, Ballard, Leonard, Mitchell, Nelson, Ebersole, Franklin, Bowman, Jones, R. Johnson, Jacobsen, Betrozoff, Fraser, R. King, Phillips, Brekke, Inslee, Spanel, Rasmussen and Anderson.

Brief History:

  Reported by House Committee on:

Housing, January 24, 1991, DP.

HOUSE COMMITTEE ON

HOUSING

Majority Report: Do pass.  Signed by 8 members:  Representatives Nelson, Chair; Franklin, Vice Chair; Mitchell, Ranking Republican Member; Winsley, Assistant Ranking Republican Member; Ballard; Leonard; Ogden; and Wineberry. 

Staff:  Kenny Pittman (786-7392).

Background:  Under the state Constitution, real property must be taxed according to the valuation of its highest and best use.  Exceptions to this rule are listed in Article VII, Section 11 of the state Constitution.  The exceptions include farm and agricultural land, standing timber and timberlands, and open space lands.

Taxing residential real estate at highest and best use, particularly multifamily residential housing located in commercial areas, encourages owners to redevelop their property to secure the highest possible revenue in order to cover the tax burden.  This rule discourages owners of low-income housing located in commercial areas from maintaining their property for that use.

Any changes to the classification of property for taxation purposes will require a constitutional amendment, approved by a vote of the public.

Summary of Bill:  A constitutional amendment to Article VII, Section 11 of the Constitution of the state of Washington to allow property with dwelling units that are devoted primarily to low-income housing, containing five or more low-income dwelling units, and that comply with health and safety standards will be submitted to the voters in November 1991.  If approved, real property meeting these requirements will be valued at its current use value rather than its true and fair market value for property tax purposes.

Fiscal Note:  Requested January 21, 1991.

Effective Date:  This bill takes effect after the approval by the voters in the November 1991 general election.

Testimony For:  The bill provides another tool to local governments to preserve the supply of affordable housing.  However, the requirement that a property contain at least 5 dwelling units should be lowered to 2 units.

Testimony Against:  None.

Witnesses:  Mike Ryherd, Low-Income Housing Congress (in favor of bill); Fred Saeger, Washington Association of County Officials (in favor of bill); Rick Slunaker, Yakima Valley Rental Association (in favor of bill with changes); and Arnold Fox, Washington Apartment Association (in favor of bill with changes).