HOUSE BILL REPORT

                 2SHB 1557

                    As Passed Legislature

Title:  An act relating to taxation of property improvements used for fish and wildlife habitat restoration and protection and water quantity and quality improvement programs.

Brief Description:  Exempting from taxation and valuation of property improvements used for fish and habitat restoration and protection and water quantity and quality improvement programs.

Sponsors:  By House Committee on Finance (originally sponsored by  Representatives Buck, Linville, Crouse, Kastama, Hankins, Grant, Lisk, Doumit, Hatfield, Johnson and Regala).

Brief History:

Committee Activity:

Natural Resources:  2/11/97, 2/18/97 [DPS];

Finance:  3/3/97, 3/7/97 [DP2S w/o sub NR].

Floor Activity:

Passed House:  3/13/97, 96‑0.

Senate Amended.

House Concurred.

Passed Legislature.

HOUSE COMMITTEE ON NATURAL RESOURCES

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 11 members:  Representatives Buck, Chairman; Sump, Vice Chairman; Thompson, Vice Chairman; Regala, Ranking Minority Member; Butler, Assistant Ranking Minority Member; Alexander; Anderson; Chandler; Hatfield; Pennington and Sheldon.

Staff:  Rick Anderson (786-7114).

HOUSE COMMITTEE ON FINANCE

Majority Report:  The second substitute bill be substituted therefor and the second substitute bill do pass and do not pass the substitute bill by Committee on Natural Resources.  Signed by 14 members:  Representatives B. Thomas, Chairman; Carrell, Vice Chairman; Mulliken, Vice Chairman; Dunshee, Ranking Minority Member; Dickerson, Assistant Ranking Minority Member; Boldt; Butler; Conway; Kastama; Mason; Morris; Pennington; Schoesler and Van Luven.

Staff:  Rick Peterson (786-7150).

Background:  The Puget Sound water quality management plan requires local conservation districts to work cooperatively with commercial and non-commercial farms to implement plans and management practices to reduce water quality impacts caused by non-point pollution.  To meet this requirement, local conservation districts develop farm plans that incorporate various actions commonly referred to as best management practices.  These practices include activities such as fencing cattle from streams, planting trees alongside water bodies to reduce water temperature, and restoring and enhancing wetlands.

Real and personal property in this state is generally subject to a property tax.  Property is assessed at its true and fair market value, unless the property qualifies under a special valuation program. The tax is determined by multiplying the assessed value by the tax rate for each taxing district in which the property is located.

The federal Endangered Species Act (ESA) makes it unlawful to "take" any endangered species of fish or wildlife.  Habitat conservation plans are provided to the Secretary of the Interior (Secretary of Commerce, for salmon species) by an applicant who seeks a permit for incidental taking of endangered species of fish or wildlife.  Compensatory mitigation projects are actions required by an agency to compensate for the environmental impacts of a permitted development project.

Summary of Bill:  Improvements to real and personal property are excluded from property tax assessment if the improvement is a part of a written conservation plan that provides benefits to wildlife habitat, water quality, or water quantity.  The conservation plan must be approved by a local conservation district.  Conservation districts must work with the state and federal natural resource agencies, and nonprofit organizations to include practices, arranged by these entities and landowners, in conservation plans.   Habitat conservation plans under the terms of the federal Endangered Species Act and compensatory mitigation projects are not eligible for property tax exemption.

Conservation districts are directed to keep a current list of property owners that have entered into a conservation plan that provides specific natural resource benefits.  The districts must provide the list to the appropriate county tax assessor.  A landowner may file a claim with a county assessor to receive the tax exemption.  The claim must include the district=s certification of the conservation plan and the landowner must verify that the improvements have been maintained as provided in the plan.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  (Natural Resources)  Local conservation districts work with farmers on a voluntary basis.  There is a perception that the improvements a farmer may make as a result of entering into a best management practice agreement will increase that person=s property taxes.  People should not have to pay higher taxes when they make voluntary improvements to benefit the environment.  Improvements should be maintained to continue qualifying for a tax exemption. 

(Finance)  Washington needs tools to begin salmon restoration and other projects. This bill provides incentives to encourage private participation in projects that will mitigate impacts on wildlife habitat.  Landowners will be reluctant to participate in mitigation or restoration projects when their property taxes might rise.  This bill provides a quick simple solution:  the assessor does not increase your property value when an improvement that is part of a best management practices agreement is added to the property.

Testimony Against:  (Natural Resources)  None.

(Finance)  None.

Testified:  (Natural Resources)  Ted Bottiger, Washington State Association of Conservation Districts; John D. Kelly, King County Outdoor Sports Council; Ed Owens, Coalition of Coastal Fisheries; Bruce Wishart, People for Puget Sound (all pro); and Cyreis Schmitt, Washington Department of Fish and Wildlife (with concerns).

(Finance)  (Pro)  Steve Keller, Department of Fish and Wildlife; Larry Oathout, South Puget Sound Salmon Enhancement Group; and Ted Bottiger, Washington Association of Conservation Districts.