HOUSE BILL REPORT

HJR 4226

BYRepresentatives H. Sommers,  Locke, Wineberry, Armstrong, Barnes, Ferguson, Anderson, Hine, Ebersole and Nutley

Amending the Constitution to allow current use property tax valuation on low-income housing.

House Committe on Housing

Majority Report:  Do pass.  (9)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Barnes, Padden, Sanders, Todd, J. Williams and Wineberry.

House Staff:Kenny Pittman (786-7392)

Rereferred House Committee on Ways & Means/Revenue

Majority Report:  Do pass.  (7)

      Signed by Representatives Appelwick, Chair; Basich, Dellwo, Rust, Schoon, Taylor and Valle.

Minority Report:  Do not pass.  (1)

      Signed by Representative Holland.

House Staff:      Rick Wickman (786-7136)

AS REPORTED BY COMMITTEE ON WAYS & MEANS/REVENUE

FEBRUARY 6, 1988

BACKGROUND:

The taxation of real estate is guided by Article VII, Section 1 of the Washington Constitution, which provides as follows: "All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and...."

Chapter 84.40 RCW, prescribes the basis of valuation of all property for purposes of taxation.  This chapter states that: "All property shall be valued at one hundred percent of its true and fair value in money and assessed on the same basis unless specifically provided otherwise by law."

The development of affordable housing for low-income persons has not kept pace with demand.  The public and private sector have explored a variety of techniques to lower the development and operational cost of housing for low-income persons.

The current requirement that all property be valued on the basis of highest and best use, instead of current use, has been cited as a potential hindrance to the development of affordable housing for low-income persons.

Any changes to the classification of property for taxation purposes will require a constitutional amendment, approved by a vote of the public.

SUMMARY:

A constitutional amendment will be submitted to the voters in November 1988, to allow property with buildings that are devoted primarily to low-income housing and contain at least five low-income dwelling units to be valued at its current use value rather than true and fair market value for property tax purposes.

A low-income person is defined as a family or household whose annual income does not exceed fifty percent of the median income in the area in which the qualifying property is located.

The current use valuation, for property tax purposes, would apply to any property with a building that meets all of the following criteria:  (a) at least fifty percent of the rentable floor area is occupied at all times for residential purposes by persons of low income;  (b) at least five dwelling units are occupied by persons of low income;  (c) the rents charged to low-income persons are below market rates; and (d) the building and the dwelling units rented to low-income persons comply with local health and safety standards.

CHANGES PROPOSED BY COMMITTEE ON WAYS & MEANS/REVENUE:  None.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Requested January 20, 1988.

Effective Date:This bill takes effect after the approval by the voters in the November 1988 general election.

House Committee ‑ Testified For:    (Housing)  David Moseley, City of Seattle; and Sylvie McGee, Washington Coalition for the Homeless.

(Ways & Means/Revenue)  None Presented.

House Committee - Testified Against:      (Housing)  None Presented.

(Ways & Means/Revenue)  None Presented.

House Committee - Testimony For:    (Housing)  The loss of housing in the downtown area due to development pressures is a critical issue.  This loss of housing is part of the problem for the homeless.  It is more costly to produce new housing than to save the existing units.  There are currently exemptions in the state constitution that allow certain property to be valued at current use instead of the highest best use, this could save that low-income housing in those downtown areas.

(Ways & Means/Revenue)  None Presented.

House Committee - Testimony Against:      (Housing)  None Presented.

(Ways & Means/Revenue)  None Presented.