H-2212

AN ACT Relating to sales and use tax exemptions on the construction of multifamily rental housing; adding a new section to chapter 82.08 RCW; and adding a new section to chapter 82.12 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 82.08 RCW to read as follows:

(1) The tax levied by RCW 82.08.020 shall not apply to the retail sale of building materials used in the remodeling, rehabilitation, or new construction of affordable housing projects or to the labor used to incorporate such building materials into real estate. As used in this section, affordable housing project 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) In order to qualify for the exemption of retail sales tax on materials or labor under this section, the affordable housing project must meet the following requirements:

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

(b) The housing project must be owned by a nonprofit organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW.

(d) The housing project is an affordable housing project as defined in subsection (1) of this section. Rental units used on a transient basis shall not be considered under this section.

(e) The gross rent paid by tenants in dwelling units identified in subsection (1) 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 (2)(e), 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 lower-income households.

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

(4) The department of revenue shall grant an exemption of retail sales tax on materials or labor for affordable housing projects that are approved by the department of community development. The department of revenue shall keep a running total of exemptions granted under this section and section 2 of this act during each fiscal biennium. The department of revenue shall not allow any exemption which would cause the tabulation for a biennium to exceed three million dollars.

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

NEW SECTION. Sec. 2. A new section is added to chapter 82.12 RCW to read as follows:

(1) The provisions of this chapter shall not apply in respect to the use of building materials used in the remodeling, rehabilitation, or new construction of affordable housing projects or to the labor used to incorporate such building materials into real estate. As used in this section, affordable housing project 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) In order to qualify for the exemption granted by this section, the affordable housing project must meet the following requirements:

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

(b) The housing project must be owned by a nonprofit organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW.

(d) The housing project is an affordable housing project as defined in subsection (1) of this section. Rental units used on a transient basis shall not be considered under this section.

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

(4) The department of revenue shall grant a tax exemption under this section for affordable housing projects that are approved by the department of community development. The department of revenue shall keep a running total of exemptions granted under this section and section 1 of this act during each fiscal biennium. The department of revenue shall not allow any exemption which would cause the tabulation for a biennium to exceed three million dollars.

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