AN ACT Relating to supporting affordable housing by permitting a local government fee on demolitions that reduce potential housing stock; amending RCW 82.02.020; adding a new chapter to Title 35 RCW; and providing an effective date.

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

(1) "Affordable housing development" means the acquisition, construction, or rehabilitation of residential housing for purposes of providing affordable housing, as defined in RCW 43.63A.510.

(2) "City" means any city or town.

(3) "Demolition" has the same meaning as in a city's building or zoning code or other administrative code, unless a city does not define "demolition" in code, in which case it means an act or process within a person's control that results in the removal or destruction of not less than ninety percent of the structure or building, including a combination of interior and exterior elements of a structure or building.

(4) "Multifamily residential dwelling" means a structure housing two or more residential units.

(5) "Permit" means the building, construction, demolition, or other authorization that is required for the demolition of a principal structure as provided in the city's building or zoning code or other administrative or municipal code.

(6) "Residential dwelling" means a single-family residential dwelling or a multifamily residential dwelling.

(2) The demolition fee may be applied at a rate of:

(a) Not more than five thousand dollars per single-family residential dwelling; or

(b) For any multifamily residential dwelling, up to two thousand five hundred dollars multiplied by the number of units in the structure, but not more than a total of twenty-five thousand dollars.

(3) The moneys collected under this section must be deposited in an affordable housing fund established by the city and used for affordable housing development.

(4) In addition to the fee imposed in subsection (1) of this section, any city that imposes a demolition fee authorized under this section must apply the fee to the demolition of any residential dwelling owned by the city, unless the city has adopted an affordable housing development plan on the same property, or at a suitable alternative location, to replace the demolished residential dwelling.

(5) No demolition fee may apply to permits issued under the following circumstances:

(a) For the demolition of a residential dwelling that will be replaced by one or more residential dwellings that are affordable to households with an adjusted gross income of up to one hundred twenty percent of the area median income, adjusted for household size, for the county where the dwelling is located;

(b) For the demolition of a residential dwelling whose owner has owned and occupied the residential dwelling for a minimum of five years preceding the date of issuance of the permit and will be replaced by a residential dwelling that will be owned and occupied by the same owner for a minimum of five years after the date of issuance of the permit;

(c) For demolition of a residential dwelling whose owner meets the following criteria:

(i) Provides documentation that the demolition is necessary due to medical reasons;

(ii) Has an adjusted gross income of up to one hundred twenty percent of the area median income, adjusted for household size, for the county where the dwelling is located; and

(iii) Will occupy the replacement residential dwelling;

(d) For demolition of a residential dwelling that is deemed necessary due to an act of God or other factors beyond the owner's control and reasonable ability to remedy; and

(e) Permits issued to a local housing authority, nonprofit community or neighborhood-based organization, or regional or statewide nonprofit housing assistance organization, engaged in affordable housing development.

(6) Moneys collected under this section may not be used to supplant existing federal, state, or local funds.

Sec. 4.  RCW 82.02.020 and 2013 c 243 s 4 are each amended to read as follows:

(1) Except only as expressly provided in chapters 67.28, 81.104, and 82.14 RCW, the state preempts the field of imposing retail sales and use taxes and taxes upon parimutuel wagering authorized pursuant to RCW 67.16.060, conveyances, and cigarettes, and no county, town, or other municipal subdivision ((shall have)) has the right to impose taxes of that nature. Except as provided in RCW 64.34.440, section 3 of this act, and 82.02.050 through 82.02.090, no county, city, town, or other municipal corporation ((shall)) may impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any other building or building space or appurtenance thereto, or on the development, subdivision, classification, or reclassification of land. However, this section does not preclude dedications of land or easements within the proposed development or plat which the county, city, town, or other municipal corporation can demonstrate are reasonably necessary as a direct result of the proposed development or plat to which the dedication of land or easement is to apply.

(2) This section does not prohibit voluntary agreements with counties, cities, towns, or other municipal corporations that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, subdivision, or plat. A local government ((shall)) may not use such voluntary agreements for local off-site transportation improvements within the geographic boundaries of the area or areas covered by an adopted transportation program authorized by chapter 39.92 RCW. Any such voluntary agreement is subject to the following provisions:

(((1))) (a) The payment ((shall)) must be held in a reserve account and may only be expended to fund a capital improvement agreed upon by the parties to mitigate the identified, direct impact;

(((2))) (b) The payment ((shall)) must be expended in all cases within five years of collection; and

(((3))) (c) Any payment not so expended ((shall)) must be refunded with interest to be calculated from the original date the deposit was received by the county and at the same rate applied to tax refunds pursuant to RCW 84.69.100; however, if the payment is not expended within five years due to delay attributable to the developer, the payment ((shall)) must be refunded without interest.

(3) No county, city, town, or other municipal corporation ((shall)) may require any payment as part of such a voluntary agreement which the county, city, town, or other municipal corporation cannot establish is reasonably necessary as a direct result of the proposed development or plat.

(4) Nothing in this section prohibits cities, towns, counties, or other municipal corporations from collecting reasonable fees from an applicant for a permit or other governmental approval to cover the cost to the city, town, county, or other municipal corporation of processing applications, inspecting and reviewing plans, or preparing detailed statements required by chapter 43.21C RCW, including reasonable fees that are consistent with RCW 43.21C.420(6), 43.21C.428, and beginning July 1, 2014, RCW 35.91.020.

(5) This section does not limit the existing authority of any county, city, town, or other municipal corporation to impose special assessments on property specifically benefited thereby in the manner prescribed by law.

(6) Nothing in this section prohibits counties, cities, or towns from imposing or permits counties, cities, or towns to impose water, sewer, natural gas, drainage utility, and drainage system charges. However, no such charge ((shall)) may exceed the proportionate share of such utility or system's capital costs which the county, city, or town can demonstrate are attributable to the property being charged. Furthermore, these provisions may not be interpreted to expand or contract any existing authority of counties, cities, or towns to impose such charges.

(7) Nothing in this section prohibits a transportation benefit district from imposing fees or charges authorized in RCW 36.73.120 nor prohibits the legislative authority of a county, city, or town from approving the imposition of such fees within a transportation benefit district.

(8) Nothing in this section prohibits counties, cities, or towns from imposing transportation impact fees authorized pursuant to chapter 39.92 RCW.

(9) Nothing in this section prohibits counties, cities, or towns from requiring property owners to provide relocation assistance to tenants under RCW 59.18.440 and 59.18.450.

(10) Nothing in this section limits the authority of counties, cities, or towns to implement programs consistent with RCW 36.70A.540, nor to enforce agreements made pursuant to such programs.

(11) This section does not apply to special purpose districts formed and acting pursuant to Title 54, 57, or 87 RCW, nor is the authority conferred by these titles affected.

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