SENATE BILL REPORT

SB 5550

BYSenators Lee, Williams and Fleming

Providing a procedure for the classification and valuation of property devoted primarily to low-income housing.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 6, 1989; February 28, 1989; January 17, 1990; January 24, 1990

Majority Report:  That Second Substitute Senate Bill No. 5550 be substituted therefor, and the second substitute bill do pass and be referred to Committee on Ways & Means.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, McMullen, Matson, Murray, Williams.

Senate Staff:Traci Anderson (786-7452)

                  January 25, 1990

Senate Committee on Ways & Means

Senate Hearing Date(s):February 5, 1990; February 6, 1990

Majority Report:  That Third Substitute Senate Bill No. 5550 be substituted therefor, and the third substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Gaspard, Hayner, Johnson, Lee, Moore, Niemi, Saling, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Terry Wilson (786-7715)

                  February 7, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 6, 1990

BACKGROUND:

A proposed constitutional amendment, SJR 8212, would allow property with buildings that are devoted primarily to low-income housing and containing at least five low-income dwelling units to be valued at current use value rather than true and fair market value for property tax purposes.  Current use taxation reduces redevelopment pressure.

SUMMARY:

Valuation of property with buildings that are devoted primarily to low-income housing and contain at least five low-income dwelling units may be based on current use value rather than true and fair market value for property tax purposes.

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

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

For property tax purposes, the current use valuation designation applies to any property with a building, including areas used for parking and landscaping required by local building and zoning ordinances, that meets all of the following criteria:  (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 at or below market rates established by the federal government or a local housing authority, or at or below 15 percent of the area median income; and (d) the building and the dwelling units rented to low-income persons comply with local health and safety standards.

The current use valuation designation does 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; and (d) any property beyond 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) the value of the property if 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 ten 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.  Upon removal from classification, the property is subject to the same taxes, interest and penalties that apply to agricultural lands, timber lands, and other property under Chapter 84.34 RCW, the Open Space Act.

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

EFFECT OF PROPOSED SECOND SUBSTITUTE:

Mobile home parks are included.  Current use valuation is made applicable to that portion of a parcel of real property which is used for low-income housing.

EFFECT OF PROPOSED THIRD SUBSTITUTE:

The property must be totally devoted to low-income housing.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: ECONOMIC DEVELOPMENT & LABOR:  Mike Ryherd, Low Income Housing Congress; John Woodring, Washington Mobile Park Owners Association; Teresa Bosler, Washington Mobile Park Owners Association; Fred McWherten, Washington Mobile Park Owners Association; Ken Katihara, Seattle Housing Development Consortium; Josephine Tamayo-Murray, Archdiocesan Housing Authority; Fred Saeger, Washington Association of County Officials; Paul Sikora, Downtown Seattle Association

Senate Committee - Testified: WAYS & MEANS:  Mike Ryherd, Low Income Housing Congress (pro)