SENATE BILL REPORT

ESB 5321

BYSenators Fleming, Warnke, Zimmerman, Lee, Saling, McDermott, Stratton, Owen, Rinehart, Kiskaddon and Moore

Providing for lower property tax on buildings used for low-income housing.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 10, 1987

Majority Report:  Do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Fleming, Kreidler, Moore, Owen, Rinehart, Warnke, Williams, Wojahn, Zimmerman.

Senate Staff:William Bafus (786-7437)

                  March 17, 1987

AS PASSED SENATE, MARCH 16, 1987

BACKGROUND:

A proposed constitutional amendment, SJR 8210, would 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.

SUMMARY:

Any property with a building that meets all of the following criteria may be valued for property tax purposes at its current use value:  (a) at least 50 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.

"Persons of low income" means a person or family whose current income does not exceed 50 percent of the median income in the area in which the qualifying property is located.

The following property is not eligible:  (a) slums; (b) institutional housing; (c) employee housing; and (d) properties in excess of five acres.

In computing the current use value, the county assessor is to disregard:  (a) potential uses that might return a higher income; (b) rents that might be charged were the owner to maximize returns; and (c) values of the property that either the land or the improvements were unencumbered by their current commitment to low-income housing.  The assessed value is to be the lesser of the property's value based on current use or its value if it were assessed without regard to this classification.

Property classified as "devoted primarily to low income housing" must remain in that use for at least 10 years.  After eight years, the owner of the property may choose to change its use.  Two years' notice of a change in classification must be given to the assessor of the county in which the property is located.  In the event of such a change in use, the bill provides for the same collection of foregone back taxes, interest and penalties as apply to agricultural lands, timber lands, and other property under RCW 84.34, the Open Space Act.

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill is to take effect on the effective date of an amendment to Article VII, Section 11 of the State Constitution authorizing current use valuation of property devoted primarily to low-income housing (SJR 8210).

Senate Committee - Testified: David Moseley, City of Seattle