AN ACT Relating to property taxation; amending RCW 84.40.030; creating a new section; and providing a contingent effective date.

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

NEW SECTION. Sec. 1. It is the intent of the legislature to value and tax owner-occupied single family residences and duplexes located in single family residential-zoned areas at the current use of the property. RCW 84.40.030 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.

Sec. 2. Section 2, chapter 155, Laws of 1980 as amended by section 14, chapter 222, Laws of 1988 and RCW 84.40.030 are each amended to read as follows:

All property, other than owner-occupied single family residences and duplexes located in residential-zoned areas, 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. As used in this section, "owner-occupied" means residences or duplexes occupied by the owner. Each owner-occupied single family residence or duplex located in residential-zoned areas shall be assessed at its current use value. As used in this section "single family residence" or "duplex" means a single family or duplex dwelling unit and the land on which the dwelling unit stands.

Taxable leasehold estates shall be valued at such price as they would bring at a fair, voluntary sale for cash without any deductions for any indebtedness owed including rentals to be paid. Notwithstanding any other provisions of this section or of any other statute, when the value of any taxable leasehold estate created prior to January 1, 1971 is being determined for assessment years prior to the assessment year 1973, there shall be deducted from what would otherwise be the value thereof the present worth of the rentals and other consideration which may be required of the lessee by the lessor for the unexpired term thereof: PROVIDED, That the foregoing provisions of this sentence shall not apply to any extension or renewal, made after December 31, 1970 of the term of any such estate, or to any such estate after the date, if any, provided for in the agreement for rental renegotiation.

The true and fair value of real property for taxation purposes (including property upon which there is a coal or other mine, or stone or other quarry) shall be based upon the following criteria:

(1) Any sales of the property being appraised or similar properties with respect to sales made within the past five years. The appraisal shall take into consideration political restrictions such as zoning as well as physical and environmental influences. The appraisal shall also take into account, (a) in the use of sales by real estate contract as similar sales, the extent, if any, to which the stated selling price has been increased by reason of the down payment, interest rate, or other financing terms; and (b) the extent to which the sale of a similar property actually represents the general effective market demand for property of such type, in the geographical area in which such property is located. Sales involving deed releases or similar seller-developer financing arrangements shall not be used as sales of similar property.

(2) In addition to sales as defined in subsection (1), consideration may be given to cost, cost less depreciation, reconstruction cost less depreciation, or capitalization of income that would be derived from prudent use of the property. In the case of property of a complex nature, or being used under terms of a franchise from a public agency, or operating as a public utility, or property not having a record of sale within five years and not having a significant number of sales of similar property in the general area, the provisions of this subsection (2) shall be the dominant factors in valuation. When provisions of this subsection (2) are relied upon for establishing values the property owner shall be advised upon request of the factors used in arriving at such value.

(3) In valuing any tract or parcel of real property, the value of the land, exclusive of structures thereon shall be determined; also the value of structures thereon, but the valuation shall not exceed the value of the total property as it exists. In valuing agricultural land, growing crops shall be excluded.

NEW SECTION. Sec. 3. 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 owner-occupied single family residences or duplexes located in residential-zoned areas. If such amendment is not validly submitted to and approved by the voters at the November 1989 general election, this act shall be void in its entirety.