H-3581

AN ACT Relating to housing; amending RCW 82.45.010, 82.45.020, 82.45.030, 82.45.032, 82.45.060, 82.45.070, 82.45.080, 82.45.090, 82.45.100, 82.45.150, 82.46.010, 82.46.035, 82.46.050, 82.46.070, 30.60.010, 30.60.030, 30.04.212, 32.40.010, 32.40.030, 19.27.015, 19.27.035, 19.27.040, 19.27.074, 19.27.078, 19.27.085, 36.70A.030, 36.70A.020, 36.70A.070, 35.21.685, 36.32.415, 82.02.050, 49.60.030, 49.60.222, 49.60.223, 49.60.224, 49.60.225, 49.60.227, 49.60.230, 49.60.250, 49.60.260, 43.63A.510, 36.34.135, 47.12.063, 18.85.310, and 18.85.315; amending 1985 c 329 s 1 (uncodified); reenacting and amending RCW 82.46.040, 82.46.060, 42.17.310, 19.27.031, 19.27.060, and 49.60.040; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 84.36 RCW; adding a new section to chapter 82.45 RCW; adding new sections to chapter 30.60 RCW; adding new sections to chapter 32.40 RCW; adding a new section to chapter 30.04 RCW; adding a new section to chapter 31.12 RCW; adding a new section to chapter 32.04 RCW; adding a new section to chapter 33.04 RCW; adding new sections to chapter 19.27 RCW; adding a new section to chapter 36.70A RCW; adding a new section to chapter 8.26 RCW; adding new sections to chapter 49.60 RCW; adding a new section to chapter 28A.335 RCW; adding new sections to chapter 35.21 RCW; adding a new section to chapter 36.34 RCW; adding a new section to chapter 43.19 RCW; adding a new section to chapter 36.32 RCW; adding new chapters to Title 43 RCW; adding new chapters to Title 82 RCW; adding new chapters to Title 84 RCW; adding a new chapter to Title 33 RCW; creating new sections; repealing RCW 82.45.035, 82.45.105, and 82.45.120; prescribing penalties; and providing an effective date.

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

NEW SECTION. Sec. 1. (1) The legislature finds that:

(a) Housing is of vital state-wide importance to the health, safety, and welfare of the residents of the state;

(b) Decent housing is an essential motivating force in helping people achieve self-sufficiency;

(c) A healthy housing market is one in which residents of this state have a choice of housing opportunities and one in which the housing consumer may effectively choose within the free market;

(d) A healthy housing market is fundamentally related to a healthy state economy and can contribute significantly to the employment factor in Washington;

(e) The federal government has reduced its involvement in the provision of affordable housing;

(f) State involvement in the provision of affordable housing has increased;

(g) Public and private sector activity in the provision of affordable housing has increased;

(h) The lack of a coherent state housing policy has hindered the effective delivery of housing and supportive services to very low-income and low-income households and special needs populations;

(i) The state has a vital interest in ensuring that resources for housing exist; and

(j) It is in the public interest to adopt a statement of housing policy objectives.

(2) The legislature declares that the purposes of the Washington housing policy act are to:

(a) Provide policy direction to the public and private sector in their attempts to meet the shelter needs of Washington residents;

(b) Reevaluate housing-related activities affected by legislation in order to ensure proper coordination of those activities to meet the shelter needs of Washington residents;

(c) Expand and improve the delivery of state services and assistance to very low-income and low-income households and special needs populations;

(d) Strengthen partnerships among all levels of government, and the public and private sector, including for-profit and nonprofit organizations, in the production and operation of housing that is affordable to very low-income, low-income and moderate-income households; and

(e) Increase the supply of housing with necessary supportive services needed to enable persons with special needs to live with dignity and independence.

PART I

GOAL AND POLICY OBJECTIVES

NEW SECTION. Sec. 101. It is the goal of the state of Washington to coordinate, encourage, and direct, when necessary, the efforts of the public and private sectors of the state and to cooperate and participate, when necessary, in the attainment of a decent home in a suitable environment for every resident of the state. The legislature declares that attainment of that goal is a state priority.

NEW SECTION. Sec. 102. The objectives of the Washington housing policy act shall be to attain the state's goal of providing a decent home in a suitable environment for every resident of the state by strengthening public and private institutions that are able to:

(1) Develop an adequate and affordable supply of housing for all economic segments of the population;

(2) Encourage and maintain home ownership opportunities;

(3) Reduce life cycle housing costs while preserving public health and safety;

(4) Preserve the supply of existing affordable housing;

(5) Provide housing and necessary supportive services for special needs populations;

(6) Ensure fair and equal access to the housing market;

(7) Increase the availability of mortgage credit at affordable interest rates; and

(8) Coordinate and be consistent with the goals and objectives of the state's growth management act.

NEW SECTION. Sec. 103. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affordable housing" means residential housing that is rented or owned by a person who qualifies as a very low-income, low-income, or moderate-income household and special needs populations, and whose monthly housing costs, including utilities other than telephone, do not exceed thirty percent of the household's monthly income.

(2) "Affordable housing development" means either: (a) Residential rental housing in which (i) twenty percent or more of the dwelling units in the development are occupied by households with incomes at or below fifty percent of the median income, adjusted for household size, for the county where the housing development is located and rented at affordable rents or (ii) forty percent or more of the dwelling units in the development are occupied by households with incomes at or below sixty percent of the median income, adjusted for household size, for the county where the housing development is located and rented at affordable rents; or (b) residential housing for private individual ownership that is occupied by households with incomes at or below eighty percent of the median income, adjusted for household size, for the county where the housing development is located.

(3) "Affordable rent" means that the gross rent paid by the household does not exceed thirty percent of the applicable qualifying income, adjusted for household size, for the county where the housing development is located.

(4) "First-time homebuyer" means an individual or his or her spouse who has not owned a residence during the three-year period prior to the purchase of a home.

(5) "Gross rent" means the monthly rent agreed to or contracted for and includes all utilities, other than telephone expenses, but does not include payments made under a federal, state, or local rent subsidy program designed to make the dwelling unit in the structure affordable to very low-income or low-income households.

(6) "Residence" means a single-family dwelling unit whether such unit be separate or part of a multi-unit dwelling, including the land on which such dwelling stands not to exceed one acre. The term shall also include a share ownership in a cooperate housing association, corporation, or partnership if the share represents a specific unit. The term also includes a mobile home which has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a post or block foundation with fixed pipe connections with sewer, water, or other utilities.

(7) "Nonprofit organization" means any public or private nonprofit organization that: (a) Is organized under federal, state, or local laws; (b) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; and (c) has among its purposes significant activities related to the provision of decent housing that is affordable to very low-income, low-income, or moderate-income households and special needs populations.

(8) "Tenant-based organization" means a nonprofit organization whose governing body includes a majority of members who reside in the housing development and are considered low-income households.

(9) "Very low-income household" means a single person, family, or unrelated persons living together whose income is at or below fifty percent of the median income, adjusted for household size, for the county where the housing development is located.

(10) "Low-income household" means a single person, family, or unrelated persons living together whose income is more than fifty percent but is at or below eighty percent of the median income, adjusted for household size, for the county where the housing development is located.

(11) "Moderate-income household" means a single person, family, or unrelated persons living together whose income is more than eighty percent but is at or below one hundred fifteen percent of the median income, adjusted for household size, for the county where the housing development is located.

PART II

TAX PROVISIONS

NEW SECTION. Sec. 201. 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 developments or to the labor used to incorporate such building materials into real estate. As used in this section, affordable housing development is as defined in section 103(2)(a) of this act.

(2) In order to qualify for the exemption of retail sales tax on materials or labor under this section, the affordable housing development must meet the following requirements:

(a) The affordable housing development must be located in Washington;

(b) The affordable housing development must be owned by an organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW;

(c) The affordable housing development must contain two or more residential rental dwelling units. Rental units used on a transient basis shall not be considered under this section; and

(d) The dwelling units identified for lower-income households in subsection (1) of this section shall be available for a period of at least twenty-five years.

(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 from retail sales tax on materials or labor, the form, manner, and time in which applications shall be filed, the information to be contained therein, and criteria for the approval or denial of requests for the exemption from retail sales tax on materials or labor under this chapter. The rules shall apply to both the department of revenue and the department of community development.

(4) The department of revenue shall grant an exemption from retail sales tax on materials or labor for affordable housing developments 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 202 of this act during each fiscal biennium. The department of revenue shall not allow any exemption that would cause the tabulation for a biennium to exceed two million dollars.

(5) This section shall expire January 1, 2002.

NEW SECTION. Sec. 202. 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 developments or to the labor used to incorporate such building materials into real estate. As used in this section, affordable housing development is as defined in section 103(2)(a) of this act.

(2) In order to qualify for the exemption granted by this section, the affordable housing development must meet the following requirements:

(a) The affordable housing development must be located in Washington;

(b) The affordable housing development must be owned by an organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW;

(c) The affordable housing development must contain two or more residential rental dwelling units. Rental units used on a transient basis shall not be considered under this section; and

(d) The dwelling units identified for lower-income households in subsection (1) of this section shall be available for a period of at least twenty-five years.

(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 applications shall be filed, the information to be contained therein, and criteria for the approval or denial of requests for the tax exemption under this chapter. The rules shall apply to 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 developments 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 201 of this act during each fiscal biennium. The department of revenue shall not allow any exemption that would cause the tabulation for a biennium to exceed two million dollars.

(5) This section shall expire January 1, 2002.

NEW SECTION. Sec. 203. 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. 204. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affordable housing development" has the same meaning as in section 103 of this act.

(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 of financial assistance, labor, material, or technical assistance to aid in the construction, rehabilitation, or acquisition of affordable housing developments.

(4) "Department" means the department of revenue.

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

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

NEW SECTION. Sec. 205. The department shall establish a program to provide tax credits to business firms making contributions to affordable housing developments 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. 206. (1) Application for tax credits under this chapter must be made before the actual contribution to the affordable housing development is made. The application shall be made to the department of community development in a form and manner prescribed by the department of revenue and the department of community development.

(2) The department of community development shall transmit a copy of the completed application for tax credits to the department of revenue, 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 of revenue shall determine the amount of tax credits to be allocated to the business firm. The department of revenue shall notify the department of community development of its decision within ten days.

(3) The department of revenue, 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 rules shall apply to both the department of revenue and the department of community development.

(4) This section shall expire January 1, 2002.

NEW SECTION. Sec. 207. In order to qualify for the tax credits in section 205 of this act, the affordable housing development must meet the following requirements:

(1) The affordable housing development must be located in Washington;

(2) The affordable housing development must be owned or managed by an organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW, or a partnership the majority of which is owned by an organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW;

(3) The housing development is an affordable housing development as defined in section 103 of this act. Rental units used on a transient basis shall not be considered under this section; and

(4) The residential rental dwelling units identified for lower-income households in subsection (3) of this section shall be available for a period of at least twenty-five years.

NEW SECTION. Sec. 208. (1) No tax credit for an affordable housing development shall be issued after December 31, 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 two 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 savings 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. 209. 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. 210. 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, 1993, and every December 1 thereafter and shall include but need not be limited to results regarding the individual affordable housing developments selected, the number of dwelling units developed under the program, the amount of tax credits awarded under the program, and recommendations for improving the program.

NEW SECTION. Sec. 211. A new section is added to chapter 84.36 RCW to read as follows:

(1) Any physical improvements to affordable housing developments upon real property shall be exempt from taxation for the three assessment years subsequent to the completion of the improvements. As used in this section, affordable housing development has the same meaning as in section 103(2)(a) of this act. In order to qualify for the property tax exemption, the property must meet the following requirements:

(a) The affordable housing development must be either owned or leased by an organization eligible to receive assistance through the Washington housing trust fund under chapter 43.185 RCW or owned by a tenant-based organization as defined in section 103 of this act;

(b) The affordable housing development must contain two or more residential dwelling units;

(c) The value of the improvements to the affordable housing development must exceed twenty percent of the current assessed value of the original structure; and

(d) The rent paid by very low-income and low-income households in dwelling units identified in this subsection shall be considered affordable rent as defined in section 103 of this act.

(2) Application for the exemption granted by this section must be made prior to the improvements being made. The application shall be made on forms prescribed by the department of revenue and furnished to the taxpayer by the county assessor. This exemption may not be claimed more than once in a five-year period.

(3) The department of revenue, in consultation with the department of community development, shall adopt such rules as are necessary and convenient to properly administer the provisions of this section.

(4) The department of revenue shall grant a property tax exemption under this section for affordable housing developments that are approved by the department of community development. The department of revenue shall keep a running total of exemptions granted under this section during each fiscal biennium.

(5) Applications and any other information received by the county assessor under this section shall be confidential. However, the department of community development and the department of revenue may conduct such audits of the administration of this section, and the claims for exemptions filed under this section, as they consider necessary.

(6) Any applicant knowingly signing a false application for an exemption under this section shall have the exemption revoked under the provisions of RCW 84.36.845.

(7) This section shall expire January 1, 2002.

Sec. 212. RCW 82.45.010 and 1981 c 93 s 1 are each amended to read as follows:

(1) As used in this chapter, the term ((~~"sale" shall have its ordinary meaning and shall include any~~)) "conveyance"((,)) shall mean the grant, assignment, quitclaim, sale, or other transfer of the ownership of or title to real property((~~, including standing timber, or any estate or interest therein for a valuable consideration, and~~)). The term includes the grant, assignment, quitclaim, sale, or transfer of improvements constructed upon leased land.

(2) The term conveyance also includes any contract for ((~~such conveyance,~~)) the grant, assignment, quitclaim, sale, or transfer((~~, and any lease with an option to purchase real property, including standing timber, or any estate or interest therein or other contract~~)) of real property where, under ((~~which~~)) the terms of the contract possession of the property is given to the ((~~purchaser~~)) contract vendee, or any other person ((~~by his~~)) at the vendee's direction, ((~~which~~)) and title to the property is retained by the vendor as security for the ((~~payment of the purchase price~~)) vendee's performance of the contract terms.

((The term shall not include a transfer by gift, devise, or inheritance, a transfer of any leasehold interest other than of the type mentioned above, a cancellation or forfeiture of a vendee's interest in a contract for the sale of real property, whether or not such contract contains a forfeiture clause, or deed in lieu of foreclosure of a mortgage or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage or deed in lieu of forfeiture of the vendee's interest in a contract of sale where no consideration passes otherwise or the partition of property by tenants in common by agreement or as the result of a court decree, any transfer, conveyance, or assignment of property or interest in property from one spouse to the other in accordance with the terms of a decree of divorce or in fulfillment of a property settlement agreement incident thereto, the assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved, transfers by appropriation or decree in condemnation proceedings brought by the United States, the state or any political subdivision thereof, or a municipal corporation, a mortgage or other transfer of an interest in real property merely to secure a debt, or the assignment thereof, any transfer or conveyance made pursuant to an order of sale by the court in any mortgage or lien foreclosure proceeding or upon execution of a judgment, or deed in lieu of foreclosure to satisfy a mortgage, a conveyance to the federal housing administration or veterans administration by an authorized mortgagee made pursuant to a contract of insurance or guaranty with the federal housing administration or veterans administration, nor a transfer in compliance with the terms of any lease or contract upon which the tax as imposed by this chapter has been paid or where the lease or contract was entered into prior to the date this tax was first imposed, nor the sale of any grave or lot in an established cemetery, nor a sale by or to the United States, this state or any political subdivision thereof, or a municipal corporation of this state.

The term sale shall further not include a transfer to a corporation or partnership which is wholly owned by the transferor and/or the transferor's spouse or children: PROVIDED, That if thereafter such transferee corporation or partnership voluntarily transfers such real property, or such transferor, spouse, or children voluntarily transfer stock in the transferee corporation or interest in the transferee partnership capital, as the case may be, to other than (1) the transferor and/or the transferor's spouse or children, (2) a trust having the transferor and/or the transferor's spouse or children as the only beneficiaries at the time of the transfer to the trust, or (3) a corporation or partnership wholly owned by the original transferor and/or the transferor's spouse or children, within five years of the original transfer to which this exemption applies, excise taxes shall become due and payable on the original transfer as otherwise provided by law.))

(3) The term conveyance does not include the grant or transfer of an easement, leasehold, license, equitable servitude, or option to purchase.

Sec. 213. RCW 82.45.020 and 1980 c 154 s 1 are each amended to read as follows:

As used in this chapter the term ((~~"seller,"~~)) "transferor," unless otherwise indicated by the context, shall mean any individual, receiver, assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint venture, club, company, joint stock company, business trust, municipal corporation, quasi municipal corporation, corporation, association, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit or otherwise; but it shall not include the United States or the state of Washington.

Sec. 214. RCW 82.45.030 and 1969 ex.s. c 223 s 28A.45.030 are each amended to read as follows:

As used in this chapter, the term ((~~"selling price"~~)) "taxable value" means the ((~~consideration, including~~)) true and fair value of the property conveyed. Where property has been conveyed in an arm's length transaction between unrelated persons for a valuable consideration, the taxable value shall be equal to the total consideration paid or contracted to be paid to the transferor or another for the transferor's benefit. The total consideration paid, or contracted to be paid, includes money or anything of value, paid or delivered or contracted to be paid or delivered in return for the transfer of the real property or estate or interest in real property, and shall include the amount of any lien, mortgage, contract indebtedness, or other incumbrance, either given to secure the purchase price, or any part thereof, or remaining unpaid on such property at the time of ((~~sale~~)) conveyance.

((~~The term~~)) Total consideration shall not include the amount of any outstanding lien or incumbrance in favor of the United States, the state, or a municipal corporation for ((~~the~~)) taxes, special benefits, or improvements.

Under circumstances where the total consideration for the conveyance cannot be ascertained or the total consideration does not represent the true and fair value of the property transferred, the market value assessment maintained on the rolls of the county assessor at the time of the conveyance shall be used as the taxable value.

Sec. 215. RCW 82.45.032 and 1986 c 211 s 1 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Real estate" or "real property" means ((~~real property but includes~~)) any interest or estate in land or anything affixed to land, including standing timber, used mobile homes, and used floating homes. The term includes improvements constructed by a lessee upon leased land when the ownership of the improvements passes to the lessor, if at all, only upon the expiration or termination of the leasehold. The term does not include easements, equitable servitudes, licenses, options to purchase, leaseholds, water rights, or other similar rights transferred separate from the ownership of land.

(2) "Used mobile home" means a mobile home which has been previously sold at retail and has been subjected to tax under chapter 82.08 RCW, or which has been previously used and has been subjected to tax under chapter 82.12 RCW, and which has substantially lost its identity as a mobile unit at the time of ((~~sale~~)) conveyance by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe connections with sewer, water, and other utilities.

(3) "Mobile home" means a mobile home as defined by RCW 46.04.302, as now or hereafter amended.

(4) "Used floating home" means a floating home in respect to which tax has been paid under chapter 82.08 or 82.12 RCW.

(5) "Floating home" means a building on a float used in whole or in part for human habitation as a single-family dwelling, which is not designed for self propulsion by mechanical means or for propulsion by means of wind, and which is on the property tax rolls of the county in which it is located.

(6) "Affordable housing development" has the same meaning as in section 103(2)(a) of this act.

Sec. 216. RCW 82.45.060 and 1987 c 472 s 14 are each amended to read as follows:

(1) There is imposed an excise tax upon each ((~~sale~~)) conveyance of real property at the rate of one and twenty-eight one-hundredths percent of the ((~~selling price~~)) taxable value of the property conveyed as determined under RCW 82.45.030. An amount equal to seven and seven-tenths percent of the proceeds of this tax remitted to the state treasurer shall be deposited in the public works assistance account created in RCW 43.155.050.

(2) ((There is imposed an additional excise tax through June 30, 1989, upon each sale of real property at the rate of six one-hundredths of one percent of the selling price. The tax imposed under this subsection shall be deposited in the conservation area account under RCW 79.71.110)) An amount equal to two percent of the proceeds of this tax remitted to the state treasurer shall be used to offset the potential loss of revenue to the state general fund as a result of housing-related tax exemptions to encourage the development of affordable housing created under sections 201 through 210 of this act.

NEW SECTION. Sec. 217. A new section is added to chapter 82.45 RCW to read as follows:

The following conveyances are exempt from the tax imposed by this chapter:

(1) A transfer by gift to a family member or to an entity exempt from federal income tax under section 501(c) of the internal revenue code. For purposes of this section, "family member" means the transferor, the transferor's spouse, grandparents, parents, children, grandchildren, sisters, or brothers.

(2) A transfer of property by devise or inheritance.

(3) An assignment or transfer of property from one spouse to another to establish or separate community property in accordance with the terms of a community property agreement, or to separate community property in accordance with the terms of a decree of divorce or in fulfillment of a property settlement agreement incident to a decree of divorce.

(4) A physical partition of property by tenants in common by agreement or as a result of a court decree.

(5) A family transfer.

(a) For the purposes of this subsection, "family transfer" means any transfer:

(i) To a trust having family members of the transferor as the only beneficiaries at the time of the transfer to the trust; or

(ii) To a corporation or partnership wholly owned by one or more family members of the transferor.

(b) A family transfer also includes any subsequent transfer of property by a trust, corporation, or partnership described in (a) of this subsection to a transferee described in (a) of this subsection.

(c) The exemption provided in this subsection may not apply to any transfer, and tax will be due on such transfer, if, within five years of the date of the transfer, the transferee corporation, partnership, or trust voluntarily conveys the property, or a family member voluntarily transfers stock in the transferee corporation or an interest in the transferee partnership or trust, as the case may be, to other than a person described in (a) of this subsection.

(6) The creation of a lien by means of a mortgage or deed of trust or the assignment of such a mortgage or deed of trust.

(7) The assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved.

(8) A release or satisfaction of mortgage or full reconveyance of the beneficiary's interest under a deed of trust.

(9) A deed given to the vendee under a real estate contract upon fulfillment of the contract terms.

(10) A transfer or conveyance made under an order of sale by a court in any mortgage or lien foreclosure proceeding or upon execution of a judgment.

(11) A transfer by a trustee under a power of sale contained in a deed of trust.

(12) A deed in lieu of foreclosure of a mortgage or deed of trust given to the mortgagee or trust deed beneficiary.

(13) A declaration of contract forfeiture or deed given by the vendee to the vendor upon forfeiture of a real estate contract.

(14) A transfer of a grave or cemetery lot in an established cemetery.

(15) A transfer by a trustee in bankruptcy or under a court-approved plan of reorganization under chapters 11 or 12 of the bankruptcy code, Title 11 U.S.C.

(16) A transfer by appropriation or decree in condemnation proceedings brought by the United States, the state of Washington or any of its political subdivisions, or a municipal corporation of this state.

(17) A transfer to the federal housing administration or the veterans' administration by an authorized mortgagee under a contract of insurance or guaranty with the federal housing administration or the veterans' administration.

(18) A transfer by a nominee to a third-party principal, if:

(a) The proper tax was paid on the transfer to the nominee;

(b) The third-party principal was in legal existence at the time of initial transfer;

(d) The subsequent transfer from the nominee to the third-party principal is not for a greater consideration than that of the initial acquisition.

(19) A transfer by the United States, the state of Washington or any of its political subdivisions, or a municipal corporation of this state.

(20) The conveyance of an affordable housing development by or to an organization eligible to receive assistance through the Washington housing trust fund created in chapter 43.185 RCW.

Sec. 218. RCW 82.45.070 and 1969 ex.s. c 223 s 28A.45.070 are each amended to read as follows:

The tax ((~~herein provided for and any~~)) imposed by this chapter, along with interest ((~~or penalties thereon~~)) accruing as provided for in RCW 82.45.100 shall be a specific lien upon each ((~~piece~~)) parcel of real property ((~~sold~~)) conveyed from the time of ((~~sale~~)) conveyance until the tax ((~~shall have~~)) has been paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages. The lien provided under this section is perfected without further act and has priority over any lien arising after the conveyance.

Sec. 219. RCW 82.45.080 and 1980 c 154 s 3 are each amended to read as follows:

The tax levied under this chapter shall be the obligation of the ((~~seller~~)) transferor and the department of revenue may, at the department's option, enforce the obligation through an action of debt against the ((~~seller~~)) transferor or the department may proceed in the manner prescribed for the foreclosure of mortgages ((~~and~~)). Resort to one course of enforcement shall not ((~~be an election not to pursue~~)) preclude the department from pursuing the other.

Sec. 220. RCW 82.45.090 and 1991 c 327 s 6 are each amended to read as follows:

The tax imposed by this chapter shall be paid to and collected by the treasurer of the county ((~~within~~)) in which the property conveyed is located ((~~the real property which was sold, said~~)). In collecting the tax the treasurer ((~~acting~~)) shall act as agent for the state. The county treasurer shall cause a stamp evidencing satisfaction of the lien to be affixed to the instrument of ((~~sale or~~)) conveyance prior to its recording or to the real estate excise tax affidavit in the case of sales of used mobile homes ((~~sales~~)) and used floating homes ((~~sales~~)). A receipt issued by the county treasurer for the payment of the tax imposed under this chapter shall be evidence of the satisfaction of the lien imposed hereunder and may be recorded in the manner prescribed for recording satisfactions of mortgages. No instrument ((~~of sale or conveyance~~)) evidencing a ((~~sale~~)) conveyance subject to the tax shall be accepted by the county auditor for filing or recording until the tax ((~~shall have~~)) has been paid and the ((~~stamp affixed thereto~~)) instrument has been stamped; in case the tax is not due on the ((~~transfer~~)) conveyance, the instrument shall not be so accepted until suitable notation of such fact has been made on the instrument by the treasurer.

Sec. 221. RCW 82.45.100 and 1988 c 286 s 5 are each amended to read as follows:

(1) The tax imposed under this chapter is due and payable immediately at the time of ((~~sale~~)) conveyance, and if not paid within thirty days thereafter shall bear interest at the rate of one percent per month from the time of ((~~sale~~)) conveyance until the date of payment.

(2) In addition to the interest described in subsection (1) of this section, if the payment of any tax is not received by the county treasurer within thirty days of the date due, there shall be assessed a penalty of five percent of the amount of the tax; if the tax is not received within sixty days of the date due, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within ninety days of the date due, there shall be assessed a total penalty of twenty percent of the amount of the tax. The payment of the penalty described in this subsection shall be collectible from the ((~~seller~~)) transferor only, and RCW 82.45.070 does not apply to the penalties described in this subsection.

(3) If upon examination of any affidavits or from other information obtained by the department or its agents it appears that all or a portion of the tax is unpaid, the department shall assess against the ((~~taxpayer~~)) transferor the additional amount found to be due plus interest and penalties as provided in subsections (1) and (2) of this section. If the department finds that all or any part of the deficiency resulted from an intent to evade the tax payable under this chapter, an additional penalty of fifty percent of the additional tax found to be due shall be added.

(4) No assessment or refund may be made by the department more than four years after the date of ((~~sale~~)) conveyance except upon a showing of fraud or of misrepresentation of a material fact by the ((~~taxpayer~~)) transferor or a failure by the taxpayer to record documentation of a ((~~sale~~)) conveyance or otherwise report the ((~~sale~~)) conveyance to the county treasurer.

(5) Penalties collected pursuant to subsection (2) of this section shall be deposited in the housing trust fund as described in chapter 43.185 RCW.

Sec. 222. RCW 82.45.150 and 1981 c 167 s 1 are each amended to read as follows:

All of chapter 82.32 RCW, except RCW 82.32.030, 82.32.040, 82.32.050, 82.32.140, and 82.32.270 and except for the penalties and the limitations thereon imposed by RCW 82.32.090, applies to the tax imposed by this chapter, in addition to any other provisions of law for the payment and enforcement of the tax imposed by this chapter. The department of revenue shall by rule provide for the effective administration of this chapter. The rules shall ((~~also include a manual which defines transactions which are taxable under~~)) prescribe and furnish a real estate excise tax affidavit form to be used by each county in the collection and reporting of the tax imposed by this chapter. The department of revenue shall annually conduct audits of transactions and affidavits filed under this chapter.

Sec. 223. RCW 82.46.010 and 1990 1st ex.s. c 17 s 36 are each amended to read as follows:

(1) The governing body of any county or any city may impose an excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. The revenues from this tax shall be used by the respective jurisdictions for local capital improvements, including those listed in RCW 35.43.040.

After July 1, 1990, revenues generated from the tax imposed under this subsection in counties and cities that are required or choose to plan under RCW 36.70A.040 shall be used primarily for financing capital projects specified in a capital facilities plan element of a comprehensive plan and housing relocation assistance under RCW 59.18.440 and 59.18.450. However, revenues (a) pledged by such counties and cities to debt retirement prior to July 1, 1990, may continue to be used for that purpose until all outstanding debt is retired, or (b) committed prior to July 1, 1990, by such counties or cities to a capital project may continue to be used for that purpose until the project is completed.

(2) In lieu of imposing the tax authorized in RCW 82.14.030(2), the governing body of any county or any city may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-half of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030.

(3) Taxes imposed under this section shall be collected from persons who are taxable by the state under chapter 82.45 RCW upon the occurrence of any taxable event within the unincorporated areas of the county or within the corporate limits of the city, as the case may be.

(4) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding real estate excise taxes as imposed by the state under chapter 82.45 RCW.

(5) As used in this section, "city" means any city or town.

Sec. 224. RCW 82.46.035 and 1991 sp.s. c 32 s 33 are each amended to read as follows:

(1) The governing body of any county or any city that plans under RCW 36.70A.040(1) may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. Any county choosing to plan under RCW 36.70A.040(2) and any city within such a county may only adopt an ordinance imposing the excise tax authorized by this section if the ordinance is first authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters.

(2) Revenues generated from the tax imposed under subsection (1) of this section shall be used by such counties and cities solely for financing capital projects specified in a capital facilities plan element of a comprehensive plan.

(3) Revenues generated by the tax imposed by this section shall be deposited in a separate account.

(4) As used in this section, "city" means any city or town.

(5) When the governor files a notice of noncompliance under RCW 36.70A.340 with the secretary of state and the appropriate county or city, the county or city's authority to impose the additional excise tax under this section shall be temporarily rescinded until the governor files a subsequent notice rescinding the notice of noncompliance.

Sec. 225. RCW 82.46.040 and 1990 1st ex.s. c 17 s 39 and 1990 1st ex.s. c 5 s 4 are each reenacted and amended to read as follows:

Any tax imposed under this chapter ((~~or RCW 82.46.070~~)) and any interest or penalties thereon is a specific lien upon each piece of real property ((~~sold~~)) conveyed from the time of ((~~sale~~)) conveyance until the tax is paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages.

Sec. 226. RCW 82.46.050 and 1990 1st ex.s. c 17 s 40 are each amended to read as follows:

The taxes levied under this chapter are the obligation of the ((~~seller~~)) transferor and may be enforced through an action of debt against the ((~~seller~~)) transferor or in the manner prescribed for the foreclosure of mortgages. Resort to one course of enforcement is not an election not to pursue the other.

Sec. 227. RCW 82.46.060 and 1990 1st ex.s. c 17 s 41 and 1990 1st ex.s. c 5 s 5 are each reenacted and amended to read as follows:

Any taxes imposed under this chapter ((~~or RCW 82.46.070)) shall be paid to and collected by the treasurer of the county within which is located the real property which was ((sold~~)) conveyed. The treasurer shall act as agent for any city within the county imposing the tax. The county treasurer shall cause a stamp evidencing satisfaction of the lien to be affixed to the instrument of sale or conveyance prior to its recording or to the real estate excise tax affidavit in the case of used mobile home ((~~sales~~)) conveyances. A receipt issued by the county treasurer for the payment of the tax imposed under this chapter ((~~or RCW 82.46.070~~)) shall be evidence of the satisfaction of the lien imposed in RCW 82.46.040 and may be recorded in the manner prescribed for recording satisfactions of mortgages. No instrument of sale or conveyance evidencing a ((~~sale~~)) conveyance subject to the tax may be accepted by the county auditor for filing or recording until the tax is paid and the stamp affixed thereto; in case the tax is not due on the transfer, the instrument shall not be accepted until suitable notation of this fact is made on the instrument by the treasurer.

Sec. 228. RCW 82.46.070 and 1990 1st ex.s. c 5 s 3 are each amended to read as follows:

(1) Subject to subsection (2) of this section, the legislative authority of any county may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the county at a rate not to exceed one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. The proceeds of the tax shall be used exclusively for the acquisition and maintenance of conservation areas.

The taxes imposed under this subsection shall be imposed in the same manner and on the same occurrences, and are subject to the same conditions, as the taxes under chapter 82.45 RCW, except:

(a) The tax shall be the obligation of the ((~~purchaser~~)) transferee; and

(b) The tax does not apply to the acquisition of conservation areas by the county.

The county may enforce the obligation through an action of debt against the ((~~purchaser~~)) transferee or may foreclose the lien on the property in the same manner prescribed for the foreclosure of mortgages.

The tax shall take effect thirty days after the election at which the taxes are authorized.

(2) No tax may be imposed under subsection (1) of this section unless approved by a majority of the voters of the county voting thereon for a specified period and maximum rate after:

(a) The adoption of a resolution by the county legislative authority of the county proposing this action; or

(b) The filing of a petition proposing this action with the county auditor, which petition is signed by county voters at least equal in number to ten percent of the total number of voters in the county who voted at the last preceding general election.

The ballot proposition shall be submitted to the voters of the county at the next general election occurring at least sixty days after a petition is filed, or at any special election prior to this general election that has been called for such purpose by the county legislative authority.

(3) A plan for the expenditure of the excise tax proceeds shall be prepared by the county legislative authority at least sixty days before the election if the proposal is initiated by resolution of the county legislative authority, or within six months after the tax has been authorized by the voters if the proposal is initiated by petition. Prior to the adoption of this plan, the elected officials of cities located within the county shall be consulted and a public hearing shall be held to obtain public input. The proceeds of this excise tax must be expended in conformance with this plan.

(4) As used in this section, "conservation area" has the meaning given under RCW 36.32.570.

NEW SECTION. Sec. 229. The following acts or parts of acts are each repealed:

(1) RCW 82.45.035 and 1969 ex.s. c 223 s 28A.45.035;

(2) RCW 82.45.105 and 1969 ex.s. c 223 s 28A.45.105; and

(3) RCW 82.45.120 and 1981 c 167 s 5, 1980 c 134 s 1, & 1969 ex.s. c 223 s 28A.45.120.

NEW SECTION. Sec. 230. The legislature finds that the property tax exemption authorized in Article VII, section ... of the state Constitution (HJR ...) shall be made available on the basis of a low-income person's ability to pay property taxes. The legislature further finds that the best measure of a low-income person's ability to pay taxes is that person's income. The definition of "income" shall be the same as for low-income households as defined in section 103 of this act.

NEW SECTION. Sec. 231. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Residence" has the same meaning as in RCW 84.36.383.

(2) "Real property" has the same meaning as in RCW 84.36.383.

(3) "Low-income household" has the same meaning as in section 103 of this act.

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

(5) "Preceding calendar year" has the same meaning as in RCW 84.36.383.

(6) "Cotenant" has the same meaning as in RCW 84.36.383.

NEW SECTION. Sec. 232. A person is exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and for an additional one-year period thereafter, in accordance with the following:

(1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of January 1st of the year for which the exemption is claimed;

(2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed. For purposes of this subsection, a residence owned by a marital community or owned by cotenants is deemed to be owned by each spouse or cotenant, and any lease for life is deemed a life estate;

(3) The person claiming the exemption must be considered a low-income household; and

(4) The person claiming the exemption must be sixty years of age or younger on January 1st of the year in which the exemption claim is filed and not eligible for property tax relief under RCW 84.36.379 through 84.36.389.

NEW SECTION. Sec. 233. (1) A claim for exemption under section 232 of this act shall be made every two years and filed at any time during the year for exemption from taxes payable the following two-year period. The claim must be made upon forms as prescribed and furnished by the department.

(2) A person granted an exemption under section 232 of this act shall inform the county assessor of any change in status affecting the person's entitlement to the exemption on forms prescribed and furnished by the department.

(3) If the assessor finds that the applicant does not meet the qualifications as set forth in section 232 of this act, the claim or exemption shall be denied but such denial shall be subject to review under the fifth rule in RCW 84.48.010. If the applicant has received exemption in prior years based on erroneous information, the taxes shall be collected subject to penalties as provided in RCW 84.40.130 for a period not to exceed three years.

(4) The department and each local assessor shall publicize the qualifications and manner of making claims under this chapter, through communications media, including such paid advertisements or notices as it deems appropriate. Notice of the qualifications, method of making applications, the penalties for not reporting a change in status, and availability of further information shall be included on or with property tax statements and revaluation notices for all residential property including mobile homes, except rental properties.

NEW SECTION. Sec. 234. (1) All claims for exemption shall be made and signed by the person entitled to the exemption, by his or her attorney in fact or in the event the residence of such person 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, by such holder or by the owner, either before two witnesses or the county assessor or his or her deputy in the county where the real property is located.

(2) If a claim for an exemption is made by a person living in a cooperative housing association, corporation, or partnership, such claim shall be made and signed by the person entitled to the exemption and by the authorized agent of such cooperative.

(3) Any person signing a false claim with the intent to defraud or evade the payment of any tax is guilty of the offense of perjury.

(4) The tax liability of a cooperative housing association, corporation, or partnership shall be reduced by the amount of tax exemption to which a claimant residing therein is entitled and such cooperative shall reduce any amount owed by the claimant to the cooperative by such exact amount of the tax exemption or, if no amount be owed, the cooperative shall make payment to the claimant of such exact amount of exemption.

NEW SECTION. Sec. 235. (1) The department shall adopt rules to implement this chapter.

(2) The department may conduct such audits of the administration of this chapter and the claims for exemption filed under this chapter as it considers necessary. The powers of the department under chapter 84.08 RCW apply to these audits.

(3) Any information or facts concerning confidential income data obtained by the assessor or the department, or their agents or employees, under subsection (2) of this section shall be used only to administer this chapter.

NEW SECTION. Sec. 236. Sections 230 through 235 of this act shall take effect upon the effective date of the proposed amendment to Article VII of the Washington state Constitution to authorize a property tax exemption for low-income households if the amendment is validly submitted to and is approved and ratified by the voters at the November 1992 general election. If the proposed amendment is not so approved and ratified, sections 230 through 235 of this act shall be null and void in its entirety.

NEW SECTION. Sec. 237. The legislature hereby declares that:

(1) There is a shortage in the supply of decent, safe, and sanitary housing for very low-income households in this state. Far too many people live in overcrowded dwellings, in buildings that are not safe, sanitary, and protected from the elements, in temporary shelters, or even without a form of decent shelter.

(2) The shortage of safe, sanitary, decent housing for very low-income households harms the general health and safety. It deprives many very low-income households of proper shelter and protections from unreasonable risks of fire, crime, personal injury, and from overcrowded and deteriorated living conditions. It harms the general public by contributing to the use of storefronts, public parks, and sidewalks as shelter by the homeless and by contributing to slums and blight in urban areas.

(3) Public agencies acting alone do not have sufficient resources to supply housing for very low-income households. Federal cutbacks have made it even more difficult for public agencies to respond to the dwindling supply of very low-income housing. The assistance of private capital and free enterprise is essential to reduce the shortage of housing for very low-income households, and organizations and individuals should be encouraged to preserve and develop very low-income housing.

(4) Mobile home parks are an important source of affordable housing, especially for very low-income and elderly persons. Mobile home parks also provide a unique form of community living that allows elderly persons to live independently for as long as possible.

(5) Economic pressures have resulted in a dramatic increase in the number of mobile home parks being closed due to changes in land use by the landowner. Not only does this result in lost affordable housing, but mobile homes are difficult and expensive to move. Mobile homeowners find it difficult to locate spaces for mobile homes that must be relocated, especially for older mobile homes.

(6) Valuing and taxing property primarily devoted to mobile home parks or very low-income housing at its current use will provide an economic incentive for preservation and development of mobile home parks and very low-income housing and a disincentive to elimination of such housing for purely economic reasons. Such an incentive may delay the deterioration and demolition of existing affordable housing, or in the closure of mobile home parks, in higher density areas where competition from higher uses threatens this less competitive use, and it may encourage the development of additional affordable housing and mobile home parks.

(7) This chapter will implement an amendment to Article VII, section 11, of the Washington state Constitution submitted to the electorate of the state of Washington at the November 1992 general election.

NEW SECTION. Sec. 238. The definitions set forth in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Assessor" means the county assessor or such agency or person who is authorized to act on behalf of the assessor.

(2) "County financial authority" and "financial authority" means the county treasurer or an agency or person charged with the responsibility for billing and collecting property taxes.

(3) "County recording authority" means the county auditor or an agency or person charged with the recording of documents.

(4) "Dwelling unit" means a structure other than a single-family home, or that part of a structure that is used as a home, residence, or sleeping place by one person or by two or more persons maintaining a common household, including but not limited to multiplexes and apartment buildings.

(5) "Devoted to very low-income housing" means that the property is dedicated to housing for very low-income households at rents set below market rates.

(6) "Mobile home" means a mobile or manufactured home as defined in RCW 46.04.302.

(7) "Mobile home park" means real property that is rented or held out for rent to others for the placement of two or more mobile homes for the primary purpose of production of income, except where such real property is rented or held out for rent for seasonal recreational purposes only and is not intended for year-round occupancy.

(8) "Owner" means the party or parties with the fee ownership in the land, and the contract vendee where land is subject to a real estate contract.

(9) "Very low-income households" shall have the same meaning as in section 103 of this act.

(10) "Rents set below market rates" means rents that are equal to or less than the greater of either:

(a) Set in accordance with an agreement with the United States department of housing and urban development or other federal agency, or a local housing authority, to carry out a government program to provide housing for very low-income households, and that do not exceed the fair rental rate promulgated for such very low-income housing by the United States or the housing authority; or

(b) Do not exceed fifteen percent of the median income, scaled by using the occupancy for the unit authorized by the local building code for family size, for the area in which the building is located.

(11) "Reviewing official" means the chief executive officer of a county, city, or town or a subordinate municipal officer designated by the chief executive officer for review of applications for classification pursuant to this chapter.

NEW SECTION. Sec. 239. Current use valuation as authorized by this chapter shall be available within each county only if the county legislative authority adopts an implementing ordinance or resolution.

NEW SECTION. Sec. 240. (1) Property occupied by a building that meets the following criteria may be classified in whole or in part as "devoted to very low-income housing," and valued and taxed at its current use value unless disqualified under subsection (7) of this section:

(a) At least fifty percent of the rentable floor area of the building shall be dedicated to housing for very low-income households. The remainder of the building may be: (i) Committed to other uses, or (ii) vacant for up to six months, as long as the remainder does not impair the habitability of the units rented for housing to very low-income households;

(b) At least three dwelling units in the building must be dedicated to housing for very low-income households;

(d) The building and the dwelling units dedicated to housing for very low-income households must comply with local health and safety standards.

(2) A classification of the real property occupied by a building devoted to very low-income housing applies to the portion of the parcel dedicated to housing for very low-income households, including ancillary areas used for parking, lawn, garden, or landscaping, as required by local zoning and building ordinances.

(3) Property used for a mobile home park that meets the following criteria may be classified in whole or in part as "devoted to very low-income housing" and valued and taxed at its current use value unless disqualified under subsection (7) of this section:

(a) At least fifty percent of the mobile home park spaces shall be dedicated to very low-income households at all times for residential purposes by very low-income households. The remainder of the mobile home park may be: (i) Committed to other uses, or (ii) vacant for up to six months, as long as the remainder does not impair the habitability of the mobile home park spaces rented to very low-income households;

(b) At least three mobile home spaces in the mobile home park must be dedicated to housing for very low-income households;

(d) The mobile home park must comply with local health and safety standards.

(4) A classification of real property used for a mobile home park applies to the portion of the property dedicated to housing for very low-income households, including ancillary areas used for parking, lawn, garden, or landscaping, as required by local zoning and building ordinances.

(5) In the event that the property for which a classification under this section is applied for is used in part as other than either residential rental property or a mobile home park, only the portion of the property dedicated to housing for very low-income households or a mobile home park shall be eligible for classification under this chapter.

(6) An assessor may, for property tax purposes, segregate those portions of a property dedicated to housing for very low-income households.

(7) The following properties are not eligible for classification as property "devoted to very low-income housing":

(a) Slums: (i) Property under a municipal or judicial order for abatement; (ii) property with a building that the local jurisdiction has found to violate applicable building, health, and safety standards and on which compliance has not been completed or satisfactory progress shown within sixty days after notice; or (iii) property that is repeatedly cited for a substantial violation of such local standards.

(b) Institutional housing: (i) Residential units that serve an institution, where payments for health care, education, or other institutional services are made by or for the occupants to the owner in addition to rent for the dwelling; (ii) privately owned student housing, including fraternities and sororities; or (iii) resorts for recreational purposes. This subsection (7)(b) does not exclude from eligibility housing that is under contract to a governmental organization or private nonprofit health care organization and is devoted to persons of very low-income.

(c) Employee housing: Property used primarily for industrial, commercial, institutional, farm, or agricultural purposes, or as timber land in which the dwelling units identified as devoted to use by persons of very low-income are occupied by employees of the owner, contract workers for the owner, or relatives of the owner.

(d) A portion of the property that exceeds five acres; except that this requirement does not apply to mobile home parks.

NEW SECTION. Sec. 241. (1) Applications made on or before the last day of December shall be processed for classification in the year following application.

(2) Where practical, applications shall be made upon forms prepared by the state department of revenue and supplied by the assessor. A document that contains the essential information requested by the state form shall be processed as an application if the approved forms are not available. The application shall contain a verification or statement under penalty of perjury that the information supplied is true and correct. The application shall require the applicant to inform the assessor if there is a change in circumstances that would affect the continuing eligibility of the property for classification under this chapter. The assessor shall provide reasonable assistance to applicants in completing the form.

(3) If the property lies in an incorporated area, the assessor shall send a copy of the application to the chief executive officer of the city or town or to a subordinate municipal officer designated by the chief executive officer for review. If the property lies in an unincorporated area, the assessor shall transmit a copy of the application for review to the official who administers the county building codes unless the county legislative authority designates another official. If a municipal boundary bisects property that is the subject of an application, officials of each affected municipality shall receive a copy of the application. Before a reviewing official recommends denial of an application, the reviewer shall inform the owner of the proposed denial and allow the owner an opportunity to submit additional information.

(4) The classification established under this chapter shall be in effect for taxes payable for the year following the year in which a classification is made by and for each subsequent year until (a) withdrawn by the owner or (b) found ineligible by the assessor.

(5) The city, town, or county may require a reasonable application fee, including the costs necessary to record the document. Except for recording costs, the application fee shall be nonrefundable. The fee shall accompany the application.

(6) An assessor may delegate the performance of any or all of the activities specified by this chapter to a reviewing official of the jurisdiction in which the property is located.

NEW SECTION. Sec. 242. (1) Upon receipt of an application from the assessor, a reviewing official may contact the applicant, examine documents and records, interview occupants, and enter and inspect the real property during reasonable business hours to determine compliance with the requirements of this chapter. However, nothing in this section shall be construed to authorize an entry by a reviewing official into a mobile home site in a mobile home park classified under this chapter unless the owner of such home grants permission. The reviewing official shall, within forty-five days of receipt of the application from the assessor, file with the assessor a report that states whether the property qualifies for classification under this chapter. Upon notice to the assessor, the reviewing official may take such additional time as may be needed on account of delays in securing information from an applicant. An application that is returned to the assessor by the reviewing official later than December 31 of the year in which it is submitted, and that is subsequently approved, shall be treated as approved in the calendar year in which it is returned, except that an application submitted to the assessor fewer than forty-five days prior to December 31, and that is subsequently approved within the forty-five day period, shall be treated as approved in the calendar year in which it is submitted for classification the year following approval.

(2) The assessor shall grant the classification if the report of the reviewing official recommends approval of the application and shall deny the application if the report recommends denial.

(3) If no timely report is submitted by a reviewing official, the reviewing official shall inform the applicant. An applicant may then apply to the county board of equalization for relief. The board may order: The classification granted; the classification granted unless the reviewing official shows cause for a denial by a date contained in the order; or denial of the application on the record already made.

(4) Property classified as a mobile home park or classified as "devoted to very low-income housing" shall be so designated on the assessment roll and notice of that classification shall be given on the notice of assessed value change sent to the taxpayer. The assessor shall also maintain on the assessment rolls the true and fair value of the property.

NEW SECTION. Sec. 243. For the purposes of property tax the value of the real property classified as a mobile home park or classified as "devoted to very low-income housing" shall be the lesser of its value based on its current use and its true and fair value. In computing its value based on its current use, the assessor shall disregard potential uses that might return a higher income, rents that might be charged were the owner to maximize returns, and values of the property that suppose either the land or the improvements were unencumbered by classification under this chapter.

NEW SECTION. Sec. 244. To be sure the property continues to be eligible for classification, an assessor may require the owner to certify information about the building's occupancy by very low-income households, and the rents paid, the continued use of a mobile home park as a mobile home park, or other information pertinent to the continuation of this classification.

NEW SECTION. Sec. 245. Once real property has been classified under this chapter, it shall remain under such classification and shall not be applied to other use for at least ten years from the date of classification and shall continue under such classification until and unless withdrawn from classification after notice of request for withdrawal is made by the owner. During any year after eight years of the initial ten-year classification period have elapsed, notice of request for withdrawal of all or a portion of the land, which request shall be irrevocable, may be given by the owner to the assessor. If a portion of a parcel is removed from classification, the remaining portion must meet the same requirements as did the entire parcel when the real property was originally granted classification pursuant to this chapter. Within seven days the assessor shall transmit one copy of such notice to the reviewing official who originally approved the application. The assessor or assessors, as the case may be, shall, when two assessment years have elapsed following the date of receipt of the notice, withdraw the real property from such classification and the real property shall be subject to the additional tax due under section 249 of this act. Classification according to this chapter shall not be considered to be a contract and can be abrogated at any time by the legislature, in which event no additional tax or penalty may be imposed.

NEW SECTION. Sec. 246. If real property has been classified under this chapter, except through compliance with section 245 of this act, or except as a result solely from any one of the conditions listed in section 249(5) of this act, the owner shall within sixty days notify the assessor of a change in use, and additional property tax shall be imposed upon the property in an amount equal to the sum of the following:

(1) The total amount of the additional tax due under section 249 of this act; plus

(2) A penalty amounting to twenty percent of the amount determined under subsection (1) of this section.

A person who has information that the property no longer qualifies for the classification may supply the information to the assessor. Upon receipt of the information, the assessor shall promptly refer the matter to the reviewing official for a report and recommendation on whether the property should be removed from classification.

NEW SECTION. Sec. 247. The additional tax and penalties, if any, provided by section 246 of this act shall be extended on the tax roll and shall be, together with the interest thereon, a lien on the property to which the tax applies as of January 1st of the year for which the additional tax is imposed. The lien has priority as provided in chapter 84.60 RCW. For purposes of all periods of limitation of actions specified in this title, the year in which the tax became payable shall be as specified in section 248 of this act.

NEW SECTION. Sec. 248. The additional tax, penalties, and interest provided by section 247 of this act shall be paid in full thirty days after the date that the county financial authority's statement therefor is rendered. The county financial authority shall distribute the additional taxes, interest, and penalties in the same manner in which current taxes applicable to the subject land are distributed.

NEW SECTION. Sec. 249. (1) If real property has once been classified under this chapter, a notation of the classification shall be made each year upon the assessment and tax rolls, and the real property shall be valued under this chapter until removal of all or a portion of the classification by the assessor upon occurrence of any of the following:

(a) Receipt of notice from the owner to remove all or a portion of the designation;

(b) Conveyance or transfer to an ownership making all or a portion of the real property exempt from ad valorem taxation;

(c) Conveyance or transfer of all or a portion of the real property to a new owner, unless the new owner has signed a notice of classification continuance. If the notice of continuance is not signed by the new owner, all additional taxes calculated under subsection (3) of this section shall become due and payable by the conveyor or transferor at time of sale. The county recording authority shall not accept an instrument of conveyance of classified real property for filing or recording unless the new owner has signed the notice of continuance or the additional tax has been paid;

(d) Determination by the reviewing official, after giving the owner written notice and an opportunity to be heard, that all or a portion of the real property is no longer primarily devoted to and used for the purposes under which it was granted classification.

(2) Within thirty days after the removal of all or a portion of the real property from classification, the assessor shall notify the owner in writing, setting forth the reasons for the removal. Within thirty days of mailing the notice of removal, the seller, transferor, or owner may appeal the removal to the county board of equalization.

(3) Both the assessed valuation before and after the removal of classification shall be listed and taxes shall be allocated according to that part of the year to which each assessed valuation applies. Except as provided in subsection (5) of this section, an additional tax shall be imposed that is due and payable to the county financial authority thirty days after the owner is notified of the amount of the additional tax. As soon as possible, the assessor shall compute the amount of such an additional tax and the county financial authority shall mail notice to the owner of the amount thereof and the date on which payment is due. The amount of the additional tax shall be equal to:

(a) The difference between the property tax paid as property classified under this chapter and the amount of property tax otherwise due and payable for the seven years last past had the real property not been so classified; plus

(b) Interest upon the amounts of the additional tax paid at the same statutory rate charged on delinquent property taxes from the dates on which the additional tax could have been paid without penalty if the real property had been assessed at a value without regard to this chapter.

(4) Additional tax, together with applicable interest thereon, becomes a lien on the real property, which lien attaches at the time the real property is removed from current use classification under this chapter. The lien has priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the land may become charged or liable. The lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050. Any additional tax unpaid on its due date is delinquent. From the date of delinquency until paid, interest shall be charged at the same rate applied by law to delinquent ad valorem property taxes.

(5) The additional tax specified in subsection (3) of this section shall not be imposed if the removal of designation pursuant to subsection (1) of this section resulted solely from:

(a) A taking under exercise of the power of eminent domain or a transfer to a condemning authority under threat of an exercise of the power of eminent domain;

(b) A transfer to a use that is exempt from property taxes;

(c) A change in the law or land use regulations that precludes use of the property for very low-income housing or as a mobile home park;

(d) Destruction of the property, or such severe damage as to render the premises untenantable, through a natural disaster, such as flood, landslide, or earthquake, or a calamity beyond the owner's control, such as fire.

NEW SECTION. Sec. 250. An aggrieved owner, the local government agency approving the application, the assessor, and the department of revenue may appeal an action granting or denying a classification pursuant to this chapter to the county board of equalization. The appeal shall be filed within thirty days of the granting or denial of the classification by serving a copy upon the reviewing officer and the county board of equalization. The appeal shall be processed in the same manner as appeals from property valuations.

NEW SECTION. Sec. 251. The department of revenue shall adopt rules to implement this chapter.

NEW SECTION. Sec. 252. The department of community development shall prepare and publish, within sixty days of the date the department of housing and urban development publishes or no later than December 31st of each year, the data on median incomes necessary to implement this chapter. The department may make its estimates for areas outside federal standard metropolitan statistical areas on the basis of the nearest area with such data.

NEW SECTION. Sec. 253. This chapter shall be liberally construed to accomplish its purposes. This chapter shall also be interpreted as granting reviewing officials designated by a city or county the authority to carry out the functions contemplated by this chapter.

NEW SECTION. Sec. 254. Sections 237 through 253 of this act shall take effect upon the effective date of the proposed amendment to Article VII, section 11 of the Washington state Constitution to authorize current use valuation of property used for qualified very low-income housing containing three or more units, if the amendment is validly submitted to and is approved and ratified by the voters at the November 1992 general election. If the proposed amendment is not so approved and ratified, sections 237 through 253 of this act shall be null and void in its entirety.

Sec. 255. RCW 42.17.310 and 1991 c 301 s 13, 1991 c 87 s 13, and 1991 c 23 s 10 are each reenacted and amended to read as follows:

(1) The following are exempt from public inspection and copying:

(a) Personal information in any files maintained for students in public schools, patients or clients of public institutions or public health agencies, or welfare recipients.

(b) Personal information in files maintained for employees, appointees, or elected officials of any public agency to the extent that disclosure would violate their right to privacy.

(c) Information required of any taxpayer in connection with the assessment or collection of any tax if the disclosure of the information to other persons would (i) be prohibited to such persons by RCW 82.32.330 or (ii) violate the taxpayer's right to privacy or result in unfair competitive disadvantage to the taxpayer.

(d) Specific intelligence information and specific investigative records compiled by investigative, law enforcement, and penology agencies, and state agencies vested with the responsibility to discipline members of any profession, the nondisclosure of which is essential to effective law enforcement or for the protection of any person's right to privacy.

(e) Information revealing the identity of persons who file complaints with investigative, law enforcement, or penology agencies, other than the public disclosure commission, if disclosure would endanger any person's life, physical safety, or property. If at the time the complaint is filed the complainant indicates a desire for disclosure or nondisclosure, such desire shall govern. However, all complaints filed with the public disclosure commission about any elected official or candidate for public office must be made in writing and signed by the complainant under oath.

(f) Test questions, scoring keys, and other examination data used to administer a license, employment, or academic examination.

(g) Except as provided by chapter 8.26 RCW, the contents of real estate appraisals, made for or by any agency relative to the acquisition or sale of property, until the project or prospective sale is abandoned or until such time as all of the property has been acquired or the property to which the sale appraisal relates is sold, but in no event shall disclosure be denied for more than three years after the appraisal.

(h) Valuable formulae, designs, drawings, and research data obtained by any agency within five years of the request for disclosure when disclosure would produce private gain and public loss.

(i) Preliminary drafts, notes, recommendations, and intra-agency memorandums in which opinions are expressed or policies formulated or recommended except that a specific record shall not be exempt when publicly cited by an agency in connection with any agency action.

(j) Records which are relevant to a controversy to which an agency is a party but which records would not be available to another party under the rules of pretrial discovery for causes pending in the superior courts.

(k) Records, maps, or other information identifying the location of archaeological sites in order to avoid the looting or depredation of such sites.

(l) Any library record, the primary purpose of which is to maintain control of library materials, or to gain access to information, which discloses or could be used to disclose the identity of a library user.

(m) Financial information supplied by or on behalf of a person, firm, or corporation for the purpose of qualifying to submit a bid or proposal for ((~~(a)~~)) (i) a ferry system construction or repair contract as required by RCW 47.60.680 through 47.60.750 or ((~~(b)~~)) (ii) highway construction or improvement as required by RCW 47.28.070.

(n) Railroad company contracts filed with the utilities and transportation commission under RCW 81.34.070, except that the summaries of the contracts are open to public inspection and copying as otherwise provided by this chapter.

(o) Financial and commercial information and records supplied by private persons pertaining to export services provided pursuant to chapters 43.163 ((~~RCW~~)) and ((~~chapter~~)) 53.31 RCW.

(p) Financial disclosures filed by private vocational schools under chapter 28C.10 RCW.

(q) Records filed with the utilities and transportation commission or attorney general under RCW 80.04.095 that a court has determined are confidential under RCW 80.04.095.

(r) Financial and commercial information and records supplied by businesses during application for loans or program services provided by chapters 43.163 ((~~RCW and chapters~~)), 43.31, 43.63A, and 43.168 RCW.

(s) Membership lists or lists of members or owners of interests of units in timeshare projects, subdivisions, camping resorts, condominiums, land developments, or common-interest communities affiliated with such projects, regulated by the department of licensing, in the files or possession of the department.

(t) All applications for public employment, including the names of applicants, resumes, and other related materials submitted with respect to an applicant.

(u) The residential addresses and residential telephone numbers of employees or volunteers of a public agency which are held by the agency in personnel records, employment or volunteer rosters, or mailing lists of employees or volunteers.

(v) The residential addresses and residential telephone numbers of the customers of a public utility contained in the records or lists held by the public utility of which they are customers.

(w) Information obtained by the board of pharmacy as provided in RCW 69.45.090.

(x) Information obtained by the board of pharmacy or the department of health and its representatives as provided in RCW 69.41.044, 69.41.280, and 18.64.420.

(y) Financial information, business plans, examination reports, and any information produced or obtained in evaluating or examining a business and industrial development corporation organized or seeking certification under chapter 31.24 RCW.

(z) Financial and commercial information supplied to the state investment board by any person when the information relates to the investment of public trust or retirement funds and when disclosure would result in loss to such funds or in private loss to the providers of this information.

(aa) Financial and valuable trade information under RCW 51.36.120.

(bb) Client records maintained by an agency that is a domestic violence program as defined in RCW 70.123.020 or a rape crisis center as defined in RCW 70.125.030.

(cc) Financial information contained in applications and tenant information for the current use valuation granted by chapter 84.-- RCW (sections 237 through 253 of this act).

(2) Except for information described in subsection (1)(c)(i) of this section and confidential income data exempted from public inspection pursuant to RCW 84.40.020, the exemptions of this section are inapplicable to the extent that information, the disclosure of which would violate personal privacy or vital governmental interests, can be deleted from the specific records sought. No exemption may be construed to permit the nondisclosure of statistical information not descriptive of any readily identifiable person or persons.

(3) Inspection or copying of any specific records exempt under the provisions of this section may be permitted if the superior court in the county in which the record is maintained finds, after a hearing with notice thereof to every person in interest and the agency, that the exemption of such records is clearly unnecessary to protect any individual's right of privacy or any vital governmental function.

(4) Agency responses refusing, in whole or in part, inspection of any public record shall include a statement of the specific exemption authorizing the withholding of the record (or part) and a brief explanation of how the exemption applies to the record withheld.

PART III

FINANCIAL INSTITUTION PROVISIONS

Sec. 301. 1985 c 329 s 1 (uncodified) is amended to read as follows:

The legislature believes that commercial banks ((~~and~~)), savings banks, and savings and loan associations doing business in Washington state have a responsibility to meet the credit needs of the businesses and communities of Washington state, consistent with safe and sound business practices and the free exercise of management discretion.

This act is intended to provide the supervisor of banking and the supervisor of savings and loan associations with the information necessary to enable the supervisors to better determine whether commercial banks, savings banks, and savings and loan associations are meeting the convenience and needs of the public.

This act is further intended to condition the approval of any application by a commercial bank, savings bank, or savings and loan association for a new branch or satellite facility, for an acquisition, merger, conversion, or purchase of assets of another institution not required for solvency reasons, or for the exercise of any new power upon proof that the applicant is satisfactorily meeting the convenience and needs of its community or communities.

Sec. 302. RCW 30.60.010 and 1985 c 329 s 2 are each amended to read as follows:

(1) In conducting an examination of a bank chartered under Title 30 RCW, the supervisor of banking, deputy supervisor, or examiner shall investigate and assess the record of performance of the bank in meeting the credit needs of the bank's entire community, including low and moderate-income neighborhoods. The supervisor shall accept, in lieu of an investigation or part of an investigation required by this section, any report or document that the bank is required to prepare or file with one or more federal agencies by the act of Congress ((~~entitled~~)) under the (("))Community Reinvestment Act ((~~of 1977"~~)) (12 U.S.C. Sec. 2901 et seq.) as amended and ((~~the~~)) any regulations promulgated in accordance with that act, to the extent such reports or documents assist the supervisor in making an assessment based upon the factors outlined in subsection (2) of this section.

(2) In making an investigation required under subsection (1) of this section, the supervisor shall consider, independent of any federal determination, the following factors in assessing the bank's record of performance:

(a) Activities conducted by the institution to ascertain credit needs of its community, including the extent of the institution's efforts to communicate with members of its community regarding the credit services being provided by the institution;

(b) The extent of the institution's marketing and special credit related programs to make members of the community aware of the credit services offered by the institution;

(c) The extent of participation by the institution's board of directors in formulating the institution's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act ((~~of 1977~~));

(d) Any practices intended to discourage applications for types of credit set forth in the institution's community reinvestment act statement(s);

(e) The geographic distribution of the institution's credit extensions, credit applications, and credit denials;

(f) Evidence of prohibited discriminatory or other illegal credit practices;

(g) The institution's record of opening and closing offices and providing services at offices;

(h) The institution's participation, including investments, in local community development projects;

(i) The institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans, and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;

(k) The institution's ability to meet various community credit needs based on its financial condition, size, legal impediments, local economic condition, and other factors;

(l) Other factors that, in the judgment of the supervisor, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.

(3) The supervisor shall include as part of the examination report, a summary of the results of the assessment required under subsection (1) of this section and shall assign annually to each bank a numerical community reinvestment rating based on a one through five scoring system. Such numerical scores shall represent performance assessments as follows:

(a) ((~~Excellent performance~~)) Outstanding

record of meeting community credit needs: 1

(b) ((~~Good performance~~)) Good record of

meeting community credit needs: 2

Satisfactory record of meeting community

credit needs: 3

(d) ((~~Inadequate performance~~)) Needs to

improve record of meeting community credit needs: 4

(e) ((~~Poor performance~~)) Substantial

noncompliance in meeting community credit needs: 5

NEW SECTION. Sec. 303. (1) The supervisor of banking shall annually prepare and submit to the state treasurer a list of banks that have satisfied their continuing and affirmative obligations to help meet the credit needs of the applicant's entire community, including low and moderate-income neighborhoods. Only banks in such list shall be eligible to receive deposits of state funds under the provisions of chapter 43.86A RCW.

(2) The supervisor of banking shall also prepare and submit annually to the state treasurer a list, based on information received from the appropriate federal agency, that indicates those federal savings and loan associations and national banking associations that have been determined by the office of thrift supervision, the federal deposit insurance corporation, the federal reserve bank, or the office of the comptroller of the currency to have complied with the requirements of the federal community reinvestment act (12 U.S.C. Sec. 2901 et seq.), and any regulations promulgated in accordance with that act. Only those banks so listed shall be eligible to receive deposits of state funds under the provisions of chapter 43.86A RCW.

NEW SECTION. Sec. 304. The supervisor of banking shall compile community reinvestment evaluations required under RCW 30.60.010 and the federal community reinvestment act (12 U.S.C. Sec. 2901 et seq.). The supervisor shall summarize the results of the evaluations and make this information available to the public.

Sec. 305. RCW 30.60.030 and 1985 c 329 s 7 are each amended to read as follows:

(1) The supervisor of banking shall adopt all rules necessary to implement sections 2 through 6 of ((~~this act~~)) chapter 329, Laws of 1985 by January 1, 1986.

(2) The supervisor of banking shall adopt all rules necessary to implement sections 303 and 304 of this act by January 1, 1993.

Sec. 306. RCW 30.04.212 and 1985 c 329 s 5 are each amended to read as follows:

(1) In addition to the powers granted under RCW 30.04.210 and subject to the limitations and restrictions contained in this section and in RCW 30.60.010 and 30.60.020, a bank:

(a) May acquire any interest in unimproved or improved real property;

(b) May construct, alter, and manage improvements of any description on real estate in which it holds a substantial equity interest.

(2) The powers granted under subsection (1) of this section do not include, and a bank may not:

(a) Manage any real property in which the bank does not own a substantial equity interest;

(b) Engage in activities of selling, leasing, or otherwise dealing in real property as an agent or broker; or

(c) Acquire any equity interest in any one to four-family dwelling that is used as a principal residence by the owner of the dwelling; however, this shall not prohibit a bank from making loans secured by such dwelling where all or part of the bank's anticipated compensation results from the appreciation and sale of such dwelling.

(3) The aggregate amount of funds invested under this section shall not exceed two percent of a bank's capital, surplus, and undivided profits. Such percentage amount shall be increased based upon the most recent community reinvestment rating assigned to a bank by the supervisor in accordance with RCW 30.60.010, as follows:

(a) ((~~Excellent performance~~))

Outstanding record of meeting community

credit needs: Increase to 10%

(b) ((~~Good performance~~)) Good

record of meeting community credit needs: Increase to 8%

Satisfactory record of meeting community

credit needs: Increase to 6%

(d) ((~~Inadequate performance~~)) Needs

to improve record of meeting community

credit needs: Increase to 3%

(e) ((~~Poor performance~~)) Substantial

noncompliance in meeting community

credit needs: No increase

(4) For purposes of this section only, each bank will be deemed to have been assigned a community reinvestment rating of "1" for the period beginning with January 1, 1986, and ending December 31, 1986. Thereafter, each bank will be assigned an annual rating in accordance with RCW 30.60.010, which rating shall remain in effect for the next succeeding year and until the supervisor has conducted a new investigation and assigned a new rating for the next succeeding year, the process repeating on an annual basis.

(5) No bank may at any time be required to dispose of any investment made in accordance with this section due to the fact that the bank is not then authorized to acquire such investment, if such investment was lawfully acquired by the bank at the time of acquisition.

(6) The supervisor shall limit the amount that may be invested in a single project or investment and may adopt any rule necessary to the safe and sound exercise of powers granted by this section.

Sec. 307. RCW 32.40.010 and 1985 c 329 s 8 are each amended to read as follows:

(1) In conducting an examination of a savings bank chartered under Title 32 RCW, the supervisor of banking, deputy supervisor, or examiner shall investigate and assess the record of performance of the savings bank in meeting the credit needs of the savings bank's entire community, including low and moderate-income neighborhoods. The supervisor shall accept, in lieu of an investigation or part of an investigation required by this section, any report or document that the savings bank is required to prepare or file with one or more federal agencies by the act of Congress ((~~entitled~~)) under the (("))Community Reinvestment Act ((~~of 1977"~~)) (12 U.S.C. Sec. 2901 et seq.), and ((~~the~~)) any regulations promulgated in accordance with that act, to the extent such reports or documents assist the supervisor in making an assessment based upon the factors outlined in subsection (2) of this section.

(b) The extent of the institution's marketing and special credit related programs to make members of the community aware of the credit services offered by the institution;

(c) The extent of participation by the institution's board of directors or board of trustees in formulating the institution's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act ((~~of 1977~~));

(d) Any practices intended to discourage applications for types of credit set forth in the institution's community reinvestment act statement(s);

(e) The geographic distribution of the institution's credit extensions, credit applications, and credit denials;

(f) Evidence of prohibited discriminatory or other illegal credit practices;

(g) The institution's record of opening and closing offices and providing services at offices;

(h) The institution's participation, including investments, in local community development projects;

(i) The institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;

(k) The institution's ability to meet various community credit needs based on its financial condition, size, legal impediments, local economic condition, and other factors;

(l) Other factors that, in the judgment of the supervisor, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.

(3) The supervisor shall include as part of the examination report, a summary of the results of the assessment required under subsection (1) of this section and shall assign annually to each savings bank a numerical community reinvestment rating based on a one through five scoring system. Such numerical scores shall represent performance assessments as follows:

(a) ((~~Excellent performance~~)) Outstanding

record of meeting community credit needs: 1

(b) ((~~Good performance~~)) Good record of

meeting community credit needs: 2

record of meeting community credit needs: 3

(d) ((~~Inadequate performance~~)) Needs to

improve record of meeting community credit needs: 4

(e) ((~~Poor performance~~)) Substantial

noncompliance in meeting community credit needs: 5

NEW SECTION. Sec. 308. (1) The supervisor of banking shall annually prepare and submit to the state treasurer a list of savings banks that have satisfied their continuing and affirmative obligations to help meet the credit needs of the applicant's entire community, including low and moderate-income neighborhoods. Only savings banks in such list shall be eligible to receive deposits of state funds under the provisions of chapter 43.86A RCW.

(2) The supervisor of banking shall also prepare and submit annually to the state treasurer a list, based on information received from the appropriate federal agency, that indicates those federal savings and loan associations and national banking associations that have been determined by the office of thrift supervision, the federal deposit insurance corporation, the federal reserve bank, or the office of the comptroller of the currency to have complied with the requirements of the federal community reinvestment act (12 U.S.C. Sec. 2901 et seq.), and any regulations promulgated in accordance with that act. Only those savings banks so listed shall be eligible to receive deposits of state funds under the provisions of chapter 43.86A RCW.

NEW SECTION. Sec. 309. The supervisor of banking shall compile community reinvestment evaluations required under RCW 32.40.010 and the federal community reinvestment act (12 U.S.C. Sec. 2901 et seq.). The supervisor shall summarize the results of the evaluations and make this information available to the public.

Sec. 310. RCW 32.40.030 and 1985 c 329 s 10 are each amended to read as follows:

(1) The supervisor of banking shall adopt all rules necessary to implement RCW 32.40.010 and 32.40.020 by January 1, 1986.

(2) The supervisor of banking shall adopt all rules necessary to implement sections 308 and 309 of this act by January 1, 1993.

NEW SECTION. Sec. 311. (1) In conducting an examination of a savings and loan association chartered under Title 33 RCW, the supervisor of savings and loans, deputy supervisor, or examiner shall investigate and assess the record of performance of the savings and loan association in meeting the credit needs of the savings and loan associations' entire community, including low and moderate-income neighborhoods. The supervisor shall accept, in lieu of an investigation or part of an investigation required by this section, any report or document that the savings and loan association is required to prepare or file with one or more federal agencies by the act of Congress under the community reinvestment act (12 U.S.C. Sec. 2901 et seq.) and any regulations promulgated in accordance with that act, to the extent such reports or documents assist the supervisor in making an assessment based upon the factors outlined in subsection (2) of this section.