Washington State House of Representatives Office of Program Research	BILL ANALYSIS
Finance Committee

HB 2466

Brief Description:  Revising the multiple‑unit dwellings property tax exemption.

Sponsors:  Representatives Morell, Kirby, Edwards, Darneille, Van Luven, Anderson, Simpson, Talcott, Hunt, Esser, Ahern, Carrell, Jarrett, Bush, Boldt, Casada and Woods.

Brief Summary of Bill

$Reduces the minimum city population cap from 50,000 to 30,000 for the multifamily housing property tax exemption program.

Counts the cost of the rehabilitation as new construction when calculating the maximum district property tax amount.

Hearing Date:  1/30/02

Staff:  Rick Peterson (786‑7150).

Background:

New, rehabilitated, or converted multifamily housing projects in targeted residential areas are eligible for a 10‑year property tax exemption program.  The program's purpose is to increase multifamily housing in urban centers.

The property tax exemption applies to the new housing construction and the increased value of the building due to rehabilitation made after the application for the tax exemption.  The exemption does not apply to the land or the non‑housing related improvements.  If the property is removed from multifamily housing use before 10 years, then back taxes are recovered based on the difference between the taxes paid and taxes that would have been paid had the property not been put to multifamily use.

The property tax exemption program is limited to cities with a population of at least 50,000 and to the largest city or town within a county planning under the Growth Management Act.  A targeted residential area must be located within an urban center, lack sufficient available, desirable, and convenient residential housing to meet public demand, and increase permanent residents in the area or achieve the planning goals of the Growth Management Act.  The city is authorized to establish standards and guidelines for approving tax exemption applications by developers.

Taxing district property tax amounts that are imposed within the constitutional 1 percent rate limit are constrained by a limit on annual increases.  Generally, these taxing districts may not increase the property tax amount by more than 1 percent without a public vote.  However, the district may also increase the property tax amount by the value of new construction in the district multiplied by the preceding year's property tax rate.

Summary of Bill:

The minimum population cap is reduced from 50,000 to 30,000 for the multifamily housing property tax exemption program.

At the end of the 10-year exemption period , the cost of the rehabilitation will be counted as new construction when calculating the maximum district property tax amount.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  Ninety days after adjournment of session in which bill is passed.