HOUSE BILL REPORT

HB 1536

BYRepresentatives Winsley, Nutley, Ballard, Leonard, Ferguson, Locke, Anderson, Todd, Ebersole, Brekke, Nelson, Walk, Haugen, Patrick, Brough, May, Cantwell and P. King 

Providing for current-use valuation for low-income housing and mobile home parks.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (8)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Winsley, Ranking Republican Member; Anderson, Ballard, Inslee, Rector and Todd.

House Staff:Kenny Pittman (786-7392)

AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 16, 1989

BACKGROUND:

A proposed constitutional amendment, HJR-4209, would allow property with buildings that are devoted primarily to low-income housing and containing at least five low-income dwelling units or property used for mobile home parks to be valued at its current-use value rather than true and fair market value for property tax purposes.

SUMMARY:

SUBSTITUTE BILL:  Counties are authorized to base valuation of property with buildings that are devoted to low-income housing and contain at least five low-income dwelling units or mobile home parks at its current use value rather than true and fair market value for property tax purposes.  The current use valuation process must be approved by resolution or ordinance of the county.

A low-income person is defined as a family or household whose annual income does not exceed 50 percent of the median income in the area in which the qualifying property is located.

Property with Buildings

The current-use valuation designation for low-income dwelling units, for property tax purposes, would apply to any property with a building, including ancillary areas used for parking, space and landscaping as required by local building and zoning ordinances, that meets the following criteria:  (a) at least 50 percent of the rentable floor area is dedicated to housing for persons of low income;  (b) at least five dwelling units are dedicated to housing for persons of low income;  (c) the rents charged to low-income persons are below market rates; and (d) the building and the dwelling units dedicated to persons of low income comply with local health and safety standards.

A dwelling unit is defined as a structure that is used as a home, residence, or sleeping area by one person or by two or more persons maintaining a common household, including but not limited to units of multiplexes and apartment buildings.

Property with Mobile Home Park

The current-use valuation designation for mobile home parks, for property tax purposes, would apply to any property used for a mobile home park, including ancillary areas used for parking, space and landscaping as required by local building and zoning ordinances, that meets the following criteria:  (a) at least 50 percent of the mobile home park space is dedicated to persons of low income at all times for residential purposes for persons of low income;  (b) at least five mobile home park spaces in the mobile home park must be dedicated to housing for persons of low income;  (c) the rents charged to persons of low-income are below market rates for mobile home park spaces; and (d) the mobile home park must meet with local health and safety standards.

A mobile home park means any real property which is rented or held out for rent to others for the placement of two or more mobile homes for the primary purpose of producing income.  This definition does not include a mobile home rented for seasonal recreational purposes only and is not intended for year-round occupancy.

General Provisions

The current-use valuation could be applied only to those portions of the property that is dedicated to housing for persons of low income or mobile home park spaces dedicated to persons of low income.

The current-use valuation designation would not apply to: (a) substandard buildings; (b) institutional housing, except housing under contract to a governmental organization or private health care organization;  (c) employee housing, including contract workers, employees, or relatives of the owner; (d) any acreage beyond five acres; except for mobile home parks; and (e) any portion of the property used in part as other than either residential rental property or a mobile home park.

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 or use as a mobile home park.  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 to low-income housing or as a mobile home park" 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 repayment of seven years of foregone taxes, plus a 20 percent penalty, and interest.  This provision is consistent with existing current- use law.

The Department of Revenue shall adopt rules to implement this chapter.

The Department of Community Development shall publish and prepare data on median income figures.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The current-use valuation program must be enacted by a county by ordinance or resolution.

Eligibility criteria for mobile home parks are established, including the ability to apply current-use valuation to mobile home parks in excess of five acres.

The current-use valuation could be applied only to those portions of the property that is dedicated to housing for persons of low income or mobile home park spaces dedicated to persons of low income.

Technical corrections are made for the administration of the current use valuation program.

Revenue:    This bill has a revenue impact.

Fiscal Note:      Requested January 30, 1989.

Effective Date:This bill takes effect after the approval by the voters in the November 1989 general election.

House Committee ‑ Testified For:    David Moseley, City of Seattle; and Maureen Kostyack, King County (with concern).

House Committee - Testified Against:      Fred Saeger, Washington Association of County Officials; and Bernie Ryan, King County Assessor's Office.

House Committee - Testimony For:    This is a very important tax incentive that can be used to save existing housing in downtown areas.  The use of current-use valuation assessments is the least expensive way to save this supply of affordable housing.  Current-use valuation is only part of an overall approach to preserve and develop housing that is affordable to lower income persons.  The use of current-use valuation for mobile home parks without criteria for low-income households is the only concern in the bill.

House Committee - Testimony Against:      The state's support for common schools will be impacted by this bill.  There are taxing districts already at their maximum levels.  The benefit should be targeted to low-income households.  There is need for technical corrections to this bill in its present form.