H-2211

AN ACT Relating to tax credits for affordable housing; and adding a new chapter to Title 82 RCW.

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

NEW SECTION. Sec. 1. The state of Washington has an acute shortage of affordable housing. The reductions in federal funding have hampered the ability of state and local governments to meet this need. The provision of housing assistance through the state's tax system can be used to provide an incentive for the development, preservation, or acquisition of affordable housing. It is the purpose and intent of the legislature to promote private financial assistance in meeting the state's need for affordable housing by creating a tax incentive for contributions.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affordable housing projects" means residential rental housing in which either: (a) Twenty percent or more of the dwelling units in the structure are occupied by households with incomes at or below fifty percent of the median income, adjusted for household size, for the county where the project is located; or (b) forty percent or more of the dwelling units in the structure are occupied by households with incomes at or below sixty percent of the median income, adjusted for household size, for the county where the project is located.

(2) "Business firm" means any incorporated or unincorporated business entity authorized to do business in the state and subject to the state's business and occupation taxes levied in chapter 82.04 RCW.

(3) "Contributions" means furnishing financial assistance, labor, material, or technical assistance to aid in the construction, rehabilitation, or acquisition of affordable housing projects.

(4) "Recipient" means the person or business firm receiving tax credits under this chapter.

(5) "Tax year" or "taxable year" means either the calendar year, or the taxpayer's fiscal year when permission is obtained from the department to use a fiscal year in lieu of the calendar year.

NEW SECTION. Sec. 3. The department shall establish a program to provide tax credits to business firms making contributions to affordable housing projects developed, sponsored, or managed by organizations that are eligible to receive housing trust fund assistance as eligible organizations under RCW 43.185.060. The tax credits may be used as a credit against any of the taxes imposed on the business firm under chapter 82.04 RCW.

NEW SECTION. Sec. 4. (1) Application for tax credits under this chapter must be made before the actual contribution to the affordable housing project is made. The application shall be made to the department of community development in a form and manner prescribed by the department and department of community development.

(2) The department of community development shall transmit a copy of the completed application for tax credits to the department, with its recommendations, within ten working days after receipt thereof. Within thirty days after receipt of the completed application from the department of community development, the department shall determine the amount of tax credits to be allocated to the business firm. The department shall notify the department of community development of its decision within ten days.

(3) The department, with approval of the department of community development, shall adopt rules specifying the administrative procedures applicable to applicants for tax credits, the form and manner in which the applications shall be filed, the information to be contained therein, and criteria for the approval or denial of requests for tax credits under this chapter. The rule shall apply to administrative procedure before both the department and the department of community development.

(4) This section shall expire January 1, 2001, unless extended by law for an additional period of time.

NEW SECTION. Sec. 5. In order to qualify for the tax credits in section 3 of this act, the affordable housing project must meet the following requirements:

(1) The housing project must be located in Washington.

(2) The housing project must be owned or managed by a nonprofit corporation, a government entity, or a partnership the majority of which is owned by a nonprofit corporation or government entity.

(3) The housing project is an affordable housing project as defined in section 2 of this act. Rental units used on a transient basis shall not be considered under this section.

(4) The gross rent paid by tenants in dwelling units identified in subsection (3) of this section shall not exceed thirty percent of the applicable qualifying income, adjusted for household size, for the county where the project is located. As used in this subsection, gross rent is considered to include all utilities, other than telephone expenses, but does not include payments under a federal, state, or local rent subsidy program designed to make the dwelling unit in the structure affordable to low-income households.

(5) The dwelling units described in subsection (3) of this section must be occupied by lower-income persons for a period of at least fifteen years.

NEW SECTION. Sec. 6. (1) No tax credit for an affordable housing project can be issued after January 1, 2001.

(2) The department shall grant a credit against the tax due under chapter 82.04 RCW of an amount equal to twenty percent of the approved amount contributed by the business firm for eligible housing activities during the taxable year.

(3) The department shall keep a running total of all tax credits granted under this chapter during each fiscal biennium. The department shall not allow any credits which would cause the tabulation for a biennium to exceed three million dollars. If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over for approval the next biennium.

(4) Any tax credit not used during the taxable year in which the contribution was made may be carried forward for the five immediately succeeding calendar or fiscal years until the full credit has been used.

(5) No tax credit shall be granted to any bank, bank and trust company, insurance company, trust company, national bank, savings association, or building and loan association for activities that are a part of its normal course of business.

(6) No recipient is eligible for tax credits in excess of five hundred thousand dollars during the taxable year.

NEW SECTION. Sec. 7. Applications and any other information received by the department under this chapter shall not be confidential and shall be subject to disclosure.

NEW SECTION. Sec. 8. The department, in consultation with the department of community development, shall report to the appropriate committees of the legislature on the progress and status of the tax credit program. The report shall be due on December 1, 1992, and every December 1 thereafter and shall include but need not be limited to the results of the individual affordable housing projects selected, the number of dwelling units developed under the program, the amount of tax credit awarded under the program, and recommendations for improving the program.

NEW SECTION. Sec. 9. Sections 1 through 8 of this act shall constitute a new chapter in Title 82 RCW.