(1) The real property owned by a limited equity cooperative that provides owned housing for low-income households is exempt from property taxation if:
(a) The benefit of the exemption inures to the limited equity cooperative and its members;
(b) At least 85 percent of the occupied dwelling units in the limited equity cooperative is occupied by members of the limited equity cooperative determined as of January 1st of each assessment year for which the exemption is claimed;
(c) At least 95 percent of the property for which the exemption is sought is used for dwelling units or other noncommercial uses available for use by the members of the limited equity cooperative; and
(d) The housing was insured, financed, or assisted, in whole or in part, through one or more of the following sources:
(i) A federal or state housing program administered by the department of commerce;
(ii) A federal or state housing program administered by the federal department of housing and urban development;
(iii) A federal housing program administered by a city or county government;
(iv) An affordable housing levy authorized under RCW
84.52.105;
(v) The surcharges authorized by RCW
36.22.250 and any of the surcharges authorized in chapter
43.185C RCW; or
(vi) The Washington state housing finance commission.
(2) If less than 100 percent of the dwelling units within the limited equity cooperative is occupied by low-income households, the limited equity cooperative is eligible for a partial exemption on the real property. The amount of exemption must be calculated by multiplying the assessed value of the property owned by the limited equity cooperative by a fraction. The numerator of the fraction is the number of dwelling units occupied by low-income households as of January 1st of each assessment year for which the exemption is claimed, and the denominator of the fraction is the total number of dwelling units as of such date.
(3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
(a) "Cooperative" has the meaning provided in RCW
64.90.010.
(b)(i) "Limited equity cooperative" means a cooperative subject to the Washington uniform common interest ownership act under chapter
64.90 RCW that owns the real property for which an exemption is sought under this section and for which, following the completion of the development or redevelopment of such real property:
(A) Members are prevented from selling their ownership interests other than to a median-income household; and
(B) Members are prevented from selling their ownership interests for a sales price that exceeds the sum of:
(I) The sales price they paid for their ownership interest;
(II) The cost of permanent improvements they made to the dwelling unit during their ownership;
(III) Any special assessments they paid to the limited equity cooperative during their ownership to the extent utilized to make permanent improvements to the building or buildings in which the dwelling units are located; and
(IV) A three percent annual noncompounded return on the above amounts.
(ii) For the purposes of this subsection (3)(b), "sales price" is the total consideration paid or contracted to be paid to the seller or to another for the seller's benefit.
(c) "Low-income household" means a single person, family, or unrelated persons living together whose income is at or below 80 percent of the median income adjusted for family size as most recently determined by the federal department of housing and urban development for the county in which the housing is located and in effect as of January 1st of the year in which the determination is to be made as to whether the single person, family, or unrelated persons living together qualify as a low-income household.
(d) "Median-income household" means a single person, family, or unrelated persons living together whose income is at or below 100 percent of the median income adjusted for family size as most recently determined by the federal department of housing and urban development for the county in which the housing is located and in effect as of January 1st of the year in which the determination is to be made as to whether the single person, family, or unrelated persons living together qualify as a median-income household.
(e) "Members" of a limited equity cooperative means individuals or entities that have an ownership interest in the limited equity cooperative that entitles them to occupy and sell a dwelling unit in the limited equity cooperative.
Tax preference performance statement—2022 c 93 s 2: "(1) This section is the tax preference performance statement for the tax preference contained in section 2, chapter 93, Laws of 2022. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.
(2) The legislature categorizes this tax preference as one intended to provide tax relief for certain businesses or individuals, as indicated in RCW
82.32.808(2)(e).
(3) It is the legislature's specific public policy objective to financially incentivize the formation and utilization of limited equity cooperatives, and to increase the availability of housing available to low-income households. It is the legislature's intent to exempt from taxation any real property owned by a limited equity cooperative when a majority of the property is used and occupied by low-income households.
(4)(a) To measure the effectiveness of the tax preference provided in section 2 of this act in achieving the specific public policy objectives described in subsection (3) of this section, the joint legislative audit and review committee must evaluate, two years prior to the expiration of the tax preference: (i) Growth in the formation and utilization of limited equity cooperatives; (ii) growth in available units of affordable housing within limited equity cooperatives; and (iii) any other metric the joint legislative audit and review committee determines is relevant to measuring success of this exemption.
(b) If the review by the joint legislative audit and review committee finds that growth in the formation and utilization of limited equity cooperatives or growth in available units of affordable housing within limited equity cooperatives has occurred, then the legislature intends to extend the expiration date of the tax preference.
(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to:
(a) Initial applications for the preference as approved by the department of revenue under RCW
84.36.815;
(b) Annual financial statements for a limited equity cooperative claiming this tax preference; and
(c) Any other data necessary for the evaluation under subsection (4) of this section." [
2022 c 93 s 1.]