AN ACT Relating to the classification and valuation of multiple-unit buildings devoted primarily to low-income housing and of mobile home parks at current use value; adding a new chapter to Title 84 RCW; and providing a contingent effective date.

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

NEW SECTION. Sec. 1. The legislature hereby declares that:

(1) There is a shortage in the supply of decent, safe, and sanitary housing for persons of low income in this state. Far too many people live in overcrowded dwellings, in buildings that are not safe, sanitary, and protected from the elements, in temporary shelters, or even without any form of decent shelter.

(2) The shortage of safe, sanitary, decent housing for persons of low income harms the general health and safety. It deprives many persons of low income of proper shelter and protections from unreasonable risks of fire, crime, personal injury, and from overcrowded and deteriorated living conditions. It harms the general public by contributing to the use of storefronts, public parks, and sidewalks as shelter by the homeless and by contributing to slums and blight in urban areas.

(3) Public agencies acting alone do not have sufficient resources to supply housing for persons of low income. Federal cutbacks have made it even more difficult for public agencies to respond to the dwindling supply of low-income housing. The assistance of private capital and free enterprise is essential to reduce the shortage of housing for persons of low income, and organizations and individuals should be encouraged to preserve and develop low-income housing.

(4) Mobile home parks are an important source of affordable housing, especially for low-income and elderly persons. Mobile home parks also provide a unique form of community living that allows elderly persons to live independently for as long as possible.

(5) Economic pressures have resulted in a dramatic increase in the number of mobile home parks being closed due to changes in land use by the landowner. Not only does this result in lost affordable housing, but mobile homes are difficult and expensive to move. Mobile homeowners find it difficult to locate spaces for mobile homes that must be relocated, especially for older mobile homes.

(6) Valuing and taxing property primarily devoted to mobile home parks or low-income housing at its current use will provide an economic incentive for preservation and development of mobile home parks and low-income housing and a disincentive to elimination of such housing for purely economic reasons. Such an incentive may delay the deterioration and demolition of existing low-income housing, or in the closure of mobile home parks, in higher density areas where competition from higher uses threatens this less competitive use, and it may encourage the development of additional low-income housing and mobile home parks.

(7) This chapter will implement an amendment to Article VII, section 11, of the Washington state Constitution submitted to the electorate of the state of Washington at the November 1989 general election.

NEW SECTION. Sec. 2. The definitions set forth in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Assessor" means the county assessor or such agency or person who is authorized to act on behalf of the county assessor.

(2) "Dwelling unit" means a structure or that part of a structure that is used as a home, residence, or sleeping place by one person or by two or more persons maintaining a common household, including but not limited to units of multiplexes and apartment buildings.

(3) "Devoted primarily to low-income housing" means that at least fifty percent of the rentable floor area of the building is occupied for residential purposes by persons of low income at rents set below market rates.

(4) "Mobile home" means a mobile or manufactured home as defined in RCW 46.04.302.

(5) "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 production of income, except where such real property is rented or held out for rent for seasonal recreational purpose only and is not intended for year-round occupancy.

(6) "Owner" means the party or parties with the fee ownership in the land, a lessee with a lease covering the premises for the years when current use classification is in effect, and the contract vendee where land is subject to a real estate contract.

(7) "Persons of low income" means one person or two or more persons maintaining a common household whose current income does not exceed fifty percent of the median income, scaled by family size, for the area in which the building is located. Median income is measured by the most recent statistics published by the United States department of housing and urban development for counties within a standard metropolitan statistical area, and for other areas, by estimates prepared and filed by the state department of community development with the code reviser's office for publication in the Washington state register.

(8) "Rents set below market rates" means rents that are:

(a) Set in accordance with an agreement with the United States department of housing and urban development or other federal agency, or a local housing authority, to carry out a government program to provide housing for persons of low income, and that are equal to or less than the fair rental rate promulgated for such low-income housing by the United States or the housing authority; or

(b) Equal to or less than fifteen percent of the median income, scaled by using the occupancy for the unit authorized by the local building code for family size, for the area in which the building is located.

(9) "Reviewing official" means the chief executive officer of a city or town or a subordinate municipal officer designated by the chief executive officer for review of applications for classification pursuant to this chapter.

NEW SECTION. Sec. 3. (1) Any property used for a mobile home park may be valued and taxed at its current use value.

(2) Any property occupied by a building that meets the following criteria may be classified as "devoted primarily to low-income housing," and valued and taxed at its current use value unless disqualified under subsection (4) of this section:

(a) At least fifty percent of the rentable floor area of the building shall be occupied at all times for residential purposes by persons of low income. The remainder of the building may be: (i) Occupied as residences paying higher rents or by the owner or the owner's manager or agents, (ii) devoted to commercial tenants and generating commercial income, (iii) committed to other uses, or (iv) vacant for up to six months, as long as the remainder does not impair the habitability of the units rented for housing to persons of low income;

(b) At least five dwelling units in the building must be leased to or occupied by persons of low income;

(d) The building and the dwelling units rented to persons of low income must comply with local health and safety standards.

(3) A classification of the real property occupied by a building devoted primarily to low-income housing or used for a mobile home park applies to the entire parcel or a portion of the parcel, including ancillary areas used for parking, lawn, garden, or landscaping, as required by local zoning and building ordinances.

(4) The following properties are not eligible for classification as property "devoted primarily for low-income housing":

(a) Slums: (i) Property with a residential building under a municipal or judicial order for abatement; (ii) property with a building that the local jurisdiction has found to violate local health and safety standards and on which compliance has not been completed or satisfactory progress shown within sixty days after notice; or (iii) property that is repeatedly cited for a substantial violation of a local code standard.

(b) Institutional housing: (i) Residential units that serve an institution, when payments for health care, education, or other institutional services are made by or for the occupants to the owner in addition to rent for the dwelling; (ii) privately-owned student housing, including fraternities and sororities; or (iii) resorts for recreational purposes. This subsection (b) does not exclude from eligibility housing that is under contract to a governmental organization or private nonprofit health care organization and is devoted to persons of low income.

(c) Employee housing: Property used primarily for industrial, commercial, institutional, farm, or agricultural purposes or as timber land in which the dwelling units identified as devoted to use by persons of low income are occupied by employees of the owner, contract workers for the owner, or relatives of the owner.

(d) Any acreage beyond five acres: That portion of a parcel or tract that exceeds five acres, the maximum acreage eligible for classification in any particular parcel or tract.

(5) The classification established under this section shall be in effect for taxes payable for the year following the year in which the application is approved and for each subsequent year until (a) withdrawn by the owner or (b) found ineligible by the assessor.

NEW SECTION. Sec. 4. (1) An owner may apply to the assessor for classification of a parcel as a mobile home park or as "devoted primarily to low-income housing" at any time. Applications made on or before the last day of December shall be processed for classification pursuant to this chapter in the following year.

(2) When practical, applications shall be made upon forms prepared by the state department of revenue and supplied by the assessor. A document that contains the essential information requested by the state form shall be processed as an application whenever the approved forms are not available. The application shall contain a verification or statement under penalty of perjury that the information supplied is true and correct. The application shall require the applicant to inform the assessor if there is any change in circumstances that would affect the continuing eligibility of the property for classification pursuant to this chapter. The assessor shall provide reasonable assistance to applicants in completing the form.

(3) In the event that the property for which a classification under this section is applied for is used in part as other than either residential rental property or a mobile home park, only the portion of the property used as residential rental property or a mobile home park shall be eligible for classification under this chapter. For residential rental property the value of the new construction improvements or rehabilitation improvements in the portion of the property used as residential rental property shall be determined as if such portion was designated as a separate apartment under chapter 64.32 RCW.

(4) When the property lies in an incorporated area, the assessor shall send a copy of the application to the chief executive officer of the city or town or to a subordinate municipal officer designated by the chief executive officer for review. When the property lies in an unincorporated area, the assessor shall transmit a copy of the application for review to the official who administers the county building codes unless the county legislative authority designates another official. When a municipal boundary bisects property subject to an application, officials of each affected municipality shall receive a copy of the application. Before a reviewing official recommends denial of an application, the reviewer shall inform the owner of the proposed denial and allow the owner an opportunity to submit additional information.

(5) Processing of forms shall respect the right of privacy of persons of low income and shall not disclose their names or data about them unless absolutely necessary. The processing shall also preserve the confidentiality of financial information supplied by the owner.

(6) The county or city legislative authority may require a reasonable application fee, including the costs necessary to record the document. Except for recording costs, the application fee shall be nonrefundable. The fee shall accompany the application.

(7) An assessor may delegate the performance of any or all of the activities specified by this section to the municipal officials of the jurisdiction in which the property is located.

NEW SECTION. Sec. 5. (1) The reviewing municipal official shall report to the assessor whether or not the property qualifies for the classification. The reviewing official may contact the applicant, examine documents and records, interview occupants, and enter and inspect the premises or real property in the case of a mobile home park during reasonable business hours to determine compliance with the requirements of this chapter. The report shall be filed with the assessor within forty-five days after the application was received by the reviewing official from the assessor. Upon notice to the assessor, the reviewing official may take such additional time as may be needed on account of delays in securing information from an applicant.

(2) The assessor shall grant the classification if the report of the reviewing official recommends approval of the application and shall deny the application if the report recommends denial.

(3) If no timely report is received from a reviewing official, the assessor shall inform the applicant. An applicant may then apply to the county board of equalization for relief. The board may grant the classification, order the classification granted unless the reviewing official shows cause for a denial by a date contained in the order, or deny the application on the record already made.

(4) Property classified as a mobile home park or classified as "devoted primarily to low-income housing" shall be so designated on the assessment roll and notice of that classification shall be given on the notice of assessed value change sent to the taxpayer.

NEW SECTION. Sec. 6. The true and fair value of the real property classified as a mobile home park or classified as "devoted primarily for low-income housing" shall be the lesser of its value based on its current use and its value if it were assessed without regard to its classification. In computing its value based on its current use, the assessor shall disregard potential uses that might return a higher income, rents that might be charged were the owner to maximize returns, and values of the property that suppose either the land or the improvements were unencumbered by its current classification pursuant to this chapter.

NEW SECTION. Sec. 7. To be sure that the classification is intended to remain in effect each year, an assessor, or the reviewing official if that authority has been delegated, may require the owner to certify information about the building's occupancy by persons of low income and the rents paid or the continued use of a mobile home park as a mobile home park.

NEW SECTION. Sec. 8. When real property has once been classified under this chapter, it shall remain under such classification and shall not be applied to other use for at least ten years from the date of classification and shall continue under such classification until and unless withdrawn from classification after notice of request for withdrawal shall be made by the owner. During any year after eight years of the initial ten-year classification period have elapsed, notice of request for withdrawal of all or a portion of the land, which request shall be irrevocable, may be given by the owner to the assessor or assessors of the county or counties in which the real property is situated. If a portion of a parcel is removed from classification, the remaining portion must meet the same requirements as did the entire parcel when the real property was originally granted classification pursuant to this chapter. Within seven days the assessor shall transmit one copy of such notice to the reviewing official who originally approved the application. The assessor or assessors, as the case may be, shall, when two assessment years have elapsed following the date of receipt of the notice, withdraw the real property from such classification and the real property shall be subject to the additional tax due under section 12 of this act: PROVIDED, That agreement to tax according to use shall not be considered to be a contract and can be abrogated at any time by the legislature, in which event no additional tax or penalty may be imposed.

NEW SECTION. Sec. 9. When real property has been classified under this chapter, except through compliance with section 8 of this act, or except as a result solely from any one of the conditions listed in section 12(5) of this act, the owner shall within sixty days notify the assessor of the change in use, and additional real property tax shall be imposed upon the real property in an amount equal to the sum of the following:

(1) The total amount of the additional tax due under section 12 of this act; plus

(2) A penalty amounting to twenty percent of the amount determined in subsection (1) of this section.

Any person who has information that the property no longer qualifies for the classification may supply the information to the assessor. Upon receipt of the information, the assessor shall promptly refer the matter to the reviewing official for a report and recommendation on whether the property should be removed from classification.

NEW SECTION. Sec. 10. The additional tax and penalties, if any, provided by sections 8 and 9 of this act shall be extended on the tax roll and shall be, together with the interest thereon, a lien on the land to which the tax applies as of January 1st of the year for which the additional tax is imposed. The lien has priority as provided in chapter 84.60 RCW. For purposes of all periods of limitation of actions specified in Title 84 RCW, the year in which the tax became payable shall be as specified in section 11 of this act.

NEW SECTION. Sec. 11. The additional tax, penalties, and interest provided by sections 8 and 9 of this act shall be paid in full thirty days after the date that the treasurer's statement therefor is rendered. The county treasurer shall distribute the additional tax in the same manner in which current taxes applicable to the subject land are distributed.

NEW SECTION. Sec. 12. (1) When real property has once been classified under this chapter, a notation of the designation shall be made each year upon the assessment and tax rolls, and the real property shall be valued pursuant to this chapter until removal of all or a portion of the designation by the assessor upon occurrence of any of the following:

(a) Receipt of notice from the owner to remove all or a portion of the designation;

(b) Sale or transfer to an ownership making all or a portion of the real property exempt from ad valorem taxation;

(c) Sale or transfer of all or a portion of the real property to a new owner, unless the new owner has signed a notice of classification continuance. The signed notice of continuance shall be attached to the real estate excise tax affidavit provided for in RCW 82.45.120. The notice of continuance shall be on a form prepared by the department of revenue. If the notice of continuance is not signed by the new owner and attached to the real estate excise tax affidavit, all additional taxes calculated pursuant to subsection (3) of this section shall become due and payable by the seller or transferor at time of sale. The county auditor shall not accept an instrument of conveyance of classified real property for filing or recording unless the new owner has signed the notice of continuance or the additional tax has been paid. The seller, transferor, or new owner may appeal the new assessed valuation calculated under subsection (3) of this section to the county board of equalization. The county board of equalization has jurisdiction to hear these appeals;

(d) Determination by the reviewing official, after giving the owner written notice and an opportunity to be heard, that all or a portion of the real property is no longer primarily devoted to and used for the purposes under which it was granted classification.

(2) Within thirty days after the removal of all or a portion of the real property from current use classification, the assessor shall notify the owner in writing, setting forth the reasons for the removal. Within thirty days of mailing the notice of removal, the seller, transferor, or owner may appeal the removal to the county board of equalization.

(3) Unless the removal is reversed on appeal, the assessor shall revalue the affected real property with reference to full market value on the date of removal from classification. Both the assessed valuation before and after the removal of classification shall be listed and taxes shall be allocated according to that part of the year to which each assessed valuation applies. Except as provided in subsection (5) of this section, an additional tax shall be imposed that is due and payable to the county treasurer thirty days after the owner is notified of the amount of the additional tax. As soon as possible, the assessor shall compute the amount of such an additional tax and the treasurer shall mail notice to the owner of the amount thereof and the date on which payment is due. The amount of the additional tax shall be equal to:

(a) The difference between the property tax paid as property used as a mobile home park or as property "devoted to low-income housing" and the amount of property tax otherwise due and payable for the seven years last past had the real property not been so classified; plus

(b) Interest upon the amounts of the additional tax paid at the same statutory rate charged on delinquent property taxes from the dates on which the additional tax could have been paid without penalty if the real property had been assessed at a value without regard to this chapter.

(4) Additional tax, together with applicable interest thereon, becomes a lien on the real property, which lien attaches at the time the real property is removed from current use classification under this chapter. The lien has priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the land may become charged or liable. The lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050. Any additional tax unpaid on its due date is delinquent. From the date of delinquency until paid, interest shall be charged at the same rate applied by law to delinquent ad valorem property taxes.

(5) The additional tax specified in subsection (3) of this section shall not be imposed if the removal of designation pursuant to subsection (1) of this section resulted solely from:

(a) A taking under exercise of the power of eminent domain or a transfer to a condemning authority under threat of an exercise of the power of eminent domain;

(b) A transfer to a use that is exempt from property taxes;

(c) A change in the law or land use regulations that precludes use of the property for low-income housing or as a mobile home park;

(d) Destruction of the property, or such severe damage as to render the premises untenantable, through a natural disaster, such as flood, landslide, or earthquake, or a calamity beyond the owner's control, such as fire.

NEW SECTION. Sec. 13. An aggrieved owner, the local government agency approving the application, the assessor, and the department of revenue may appeal an action granting or denying a classification to the classification of "devoted primarily to low-income housing" or of a mobile home park or granting or denying a removal from such a classification to the county board of equalization. The appeal shall be filed within thirty days by serving a copy upon the reviewing officer and the county board of equalization. The appeal shall be processed in the same manner as appeals from property valuations. Any party with a right to appeal may intervene in an appeal filed by another party.

NEW SECTION. Sec. 14. The department of revenue may adopt rules to implement this chapter.

NEW SECTION. Sec. 15. The department of community development may prepare and publish data on median income to implement this chapter. The agency may make its estimates for areas outside federal standard metropolitan statistical areas on the basis of the nearest area with such data.

NEW SECTION. Sec. 16. This chapter shall be liberally construed to accomplish its purposes. This chapter shall also be interpreted as granting reviewing officials designated by a city or county the authority to carry out the functions contemplated by section 5 of this act.

NEW SECTION. Sec. 17. If any provision of this chapter or its application to any person or circumstance is held invalid, the remainder of the chapter or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 18. Sections 1 through 17 of this act shall constitute a new chapter in Title 84 RCW.

NEW SECTION. Sec. 19. This act shall take effect upon the effective date of an amendment to Article VII, section 11 of the Washington state Constitution to authorize current use valuation of property used as a mobile home park or property with buildings that meet health and safety standards and are devoted primarily to low-income housing, and contain five or more low-income dwelling units. If such amendment is not validly submitted to and approved by the voters at the November 1989 general election, this act shall be null and void in its entirety.