BILL REQ. #:  S-2198.2 

READ FIRST TIME 03/02/05.   

     AN ACT Relating to the property taxation of qualified historic property; amending RCW 84.26.010, 84.26.020, 84.26.040, 84.26.110, and 84.26.130; adding new sections to chapter 84.26 RCW; and creating a new section.

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

Sec. 1   RCW 84.26.010 and 1985 c 449 s 1 are each amended to read as follows:
     The legislature finds and declares that it is in the public interest of the people of the state of Washington to encourage maintenance, improvement, and preservation of privately owned historic landmarks ((as the state approaches its Centennial year of 1989)). The legislature further recognizes it is a public good to keep historic private property on the tax rolls at its maximum value, rather than having such property fall into disrepair, and that well-maintained and preserved historic property enhances a community's sense of culture and pride. To achieve this purpose, this chapter provides special valuation for improvements to historic property and property tax exemptions for maintenance and repair activities.

Sec. 2   RCW 84.26.020 and 1986 c 221 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) "Historic property" means real property together with improvements thereon, except property listed in a register primarily for objects buried below ground, which is:
     (a) Listed in a local register of historic places created by comprehensive ordinance, certified by the secretary of the interior as provided in P.L. 96-515; or
     (b) Listed in the national register of historic places.
     (2) "Cost" means the actual cost of rehabilitation, which cost shall be at least twenty-five percent of the assessed valuation of the historic property, exclusive of the assessed value attributable to the land, prior to rehabilitation.
     (3) "Special valuation" means the determination of the assessed value of the historic property subtracting, for up to ten years, such cost as is approved by the local review board.
     (4) "State review board" means the advisory council on historic preservation established under chapter 27.34 RCW, or any successor agency designated by the state to act as the state historic preservation review board under federal law.
     (5) "Local review board" means a local body designated by the local legislative authority.
     (6) "Owner" means the owner of record.
     (7) "Rehabilitation" is the process of returning a property to a state of utility through repair or alteration, which makes possible an efficient contemporary use while preserving those portions and features of the property which are significant to its architectural and cultural values.
     (8) "Maintenance and repair activity" means the act or process of applying measures to sustain the existing form, integrity, and materials of an historic property. Maintenance and repair activities include, but are not limited to, exterior cladding repair; repainting and in-kind replacement; masonry cleaning and repointing; window, door, porch, and chimney repair and in-kind replacement; reroofing in-kind; and minor structural repairs. Activities also include, but are not limited to, interior repainting; replastering; flooring repair, refinishing and in-kind replacement; repair and replacement of plumbing fixtures, fittings, and equipment; and repair and replacement of lighting fixtures, electrical equipment, and heating equipment.
     (9) "Maintenance and repair expenditures" means out-of-pocket expenses incurred for maintenance and repair activity by the property owner after January 1, 2004.
     (10) "Qualified historic property" means historic property that (a) is listed on the Washington heritage register or the national register of historic places, and if within a historical district, is a contributing building as defined by regulations of the United States department of the interior; (b) is residential property occupied by the owner; and (c) has incurred expenditures within the last five years for maintenance and repair activities that exceed ten percent of the assessed value of the residential structure.

NEW SECTION.  Sec. 3   Historic property that is designated as qualified historic property under section 4 of this act is exempt from property taxes levied for any state purpose for the year of designation. This exemption cannot be claimed more than once in a five-year period. This exemption cannot be claimed if the owner of historic property is participating in the special valuation program, as defined in RCW 84.26.020.

NEW SECTION.  Sec. 4   (1) Within ten days after the filing of the application for a property tax exemption for maintenance and repair activity in the county assessor's office, the county assessor shall refer each application to the local review board.
     (2) The review board shall approve the application if the property:
     (a) Is listed on the Washington heritage register or the national register of historic places;
     (b) Is residential property occupied by the owner;
     (c) Incurs expenditures for maintenance and repair activity that exceed ten percent of the assessed value of the residential structure; and
     (d) Complies with minimum standards of maintenance that protect those elements which qualify the property as historically significant.
     (3) The assessed value of the residential structure in the year of application shall be used for purposes of comparing maintenance and repair expenditures to assessed value.
     (4) Maintenance and repair expenditures made after January 1, 2005, may be used to satisfy the ten percent threshold. Expenditures which exceed ten percent may be carried forward and used together with any additional maintenance and repair expenditures in application for exemption in future years. Expenditures that are used to satisfy the ten percent requirement in one year may not be carried forward and used in the application for exemption in future years.
     (5) An application for designation as qualified historic property shall be approved or denied by the local review board before December 31st of the calendar year in which the application is made.
     (6) The local review board is authorized to examine the maintenance and repair records of applicants.
     (7) The review board shall notify the county assessor and the applicant of the approval or denial of the application.

Sec. 5   RCW 84.26.040 and 1986 c 221 s 3 are each amended to read as follows:
     An owner of property desiring special valuation, or an exemption for maintenance and repair activities under this chapter, shall apply to the assessor of the county in which the property is located upon forms prescribed by the department of revenue and supplied by the county assessor. For application under the special valuation program, the application form shall include a statement that the applicant is aware of the potential tax liability involved when the property ceases to be eligible for special valuation. For the special valuation program, applications shall be made no later than October 1 of the calendar year preceding the first assessment year for which classification is requested. For the maintenance and repair activities exemptions, applications shall be made no later than October 1st for exemption from taxes payable the following year. The assessor may charge only such fees as are necessary to process and record documents pursuant to this chapter.

Sec. 6   RCW 84.26.110 and 1985 c 449 s 11 are each amended to read as follows:
     The local legislative authority and the local review board may request the assistance of the state historic preservation officer in conducting special valuation and property tax exemption activities.

Sec. 7   RCW 84.26.130 and 2001 c 185 s 2 are each amended to read as follows:
     Any decision by a local review board on an application for classification as historic property eligible for special valuation or property tax exemption for maintenance and repair activity may be appealed to superior court under RCW 34.05.510 through 34.05.598 in addition to any other remedy at law. Any decision on the disqualification of historic property eligible for special valuation, property tax exemption for maintenance and repair activity, or any other dispute, may be appealed to the county board of equalization in accordance with RCW 84.40.038.

NEW SECTION.  Sec. 8   This act applies to taxes levied for collection in 2006 and thereafter.

NEW SECTION.  Sec. 9   Sections 3 and 4 of this act are each added to chapter 84.26 RCW.