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AN ACT Relating to exemption of state regular property taxes for low-income multifamily housing; adding a new chapter to Title 84 RCW; and prescribing penalties.

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

NEW SECTION. Sec. 1. The legislature finds that rental housing provides the overwhelming source of housing for very low-income households throughout the state of Washington. The legislature further finds that as the assessed value of multifamily residential property continues to rise that the amount paid in property taxes increases. The legislature further finds that increases in property taxes are being passed on to those households in the form of higher rents. The legislature further finds that these increases cause many households to be displaced or reduce the amount of affordable housing that is available to them. It is the intent of the legislature to reduce the impact of increases in property values by providing a state property tax exemption to those property owners that pass on the savings to qualified households.

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

(1) "Applicant" means a nonprofit organization, nonprofit association, nonprofit corporation, or landlord that makes application for the state property tax exemption under this chapter.

(2) "Landlord" has the same meaning as in RCW 59.18.030.

(3) "Multi-unit housing" means a building having four or more dwelling units.

(4) "Occupied dwelling unit" means a living unit that is occupied on January 1st of the year in which the claim for exemption is submitted.

(5) "Qualified household" means a single person, family, or unrelated persons living together whose income is at or below forty percent of the median income adjusted for family size as most recently determined by the federal department of housing and urban development for the county in which the rental housing is located and in effect as of January 1st of the year the application for exemption is submitted.

(6) "Rental housing" means residential housing that is subject to the provisions of chapter 59.18 RCW and occupied by a qualified household.

NEW SECTION. Sec. 3. (1) The real property owned or used by a nonprofit organization, nonprofit association, nonprofit corporation, or landlord to provide rental housing to qualified households is exempt from state regular property taxes levied under RCW 84.52.043(1)(a) that are due and payable in the year following the year in which a claim is filed, and thereafter, if:

(a) Except as provided in subsection (2) of this section, at least fifty percent of the occupied dwelling units in the multi-unit rental housing are occupied by qualified households; and

(b) The monthly rent, including utilities, for the individual dwelling unit occupied by a qualified household within the multi-unit rental housing does not exceed forty percent of the qualified household=s income.

(2) If less than fifty percent of the dwelling units are occupied by qualified households, the rental housing used to provide housing for qualified households is eligible for a partial exemption on state real property taxes as follows:

(a) The partial exemption shall be allowed for each dwelling unit in the multi-unit rental housing occupied by qualified households.

(b) The amount of exemption shall be calculated by multiplying the assessed value of the property reasonably necessary to provide the rental housing by a fraction. The numerator of the fraction is the number of dwelling units occupied by qualified households as of January 1st of the year for which the exemption is claimed. The denominator of the fraction is the total number of occupied dwelling units as of January 1st of the year for which exemption is claimed.

NEW SECTION. Sec. 4. (1) An applicant may file a claim for exemption under section 3 of this act at any time during the year for exemption from taxes payable the following year and thereafter with the county assessor and solely upon forms as prescribed and furnished by the department. However, an exemption from tax under section 3 of this act may continue for no more than two years unless a renewal application is filed as provided in subsection (3) of this section. Renewal applications shall be on forms prescribed and furnished by the department.

(2) An applicant granted an exemption under section 3 of this act shall inform the county assessor of any change in the number of dwelling units that are occupied by qualified households on forms prescribed and furnished by the department.

(3) Each applicant exempt from taxes under section 3 of this act shall file with the county assessor a renewal application by December 31st of the year the county assessor notifies the applicant of the requirement to file a renewal application.

(4) If the county assessor finds that an applicant does not meet the requirements of section 3 of this act, the claim for an exemption under this chapter shall be denied but the denial shall be subject to appeal under chapter 84.48 RCW. If the applicant has received an 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 of not to exceed ten years.

(5) The department and each county assessor is required to publicize the qualifications and manner of making application for the tax exemption under this chapter through communications media, including such paid advertisements or notices as it deems appropriate. Notice of the qualifications, methods of making applications, and the penalties for not reporting a change in the status of occupied dwelling units shall be included on or with property tax statements and revaluations notices for all residential property, except single-family residential property.

NEW SECTION. Sec. 5. (1) All claims for the tax exemption shall be made and signed by an authorized representative or agent of the nonprofit organization, nonprofit association, nonprofit corporation, or landlord that is entitled to the tax exemption.

(2) All claims for exemption and renewal applications shall be accompanied by such documented verification of the rent and income of the qualified households as are prescribed by the department by rule.

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

NEW SECTION. Sec. 6. (1) The director of revenue shall adopt such rules and prescribe such forms as may be necessary and appropriate for implementation and administration of this chapter, subject to chapter 34.05 RCW.

(2) The department may conduct such audits of the administration of this chapter and the claims for exemption filed 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 of the qualified households obtained by the county assessor or the department, or its agents or employees, under subsection (2) of this section shall be used only to administer this chapter. The confidential income date on qualified households shall not be disclosed by the county assessor or the county assessor's agents or employees to anyone other than the department or the department's agents or employees nor by the department or the department's agents or employees to anyone other than the county assessor or the county assessor's agents or employees except in a judicial proceeding pertaining to the applicant's entitlement to the tax exemption under this chapter. A violation of this subsection is a misdemeanor.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act constitute a new chapter in Title 84 RCW.