AN ACT Relating to the
multiple-unit dwellings property tax exemption; and amending RCW 84.14.010,
84.14.020, and 84.14.110.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 84.14.010 and 2000 c
242 s 1 are each amended to read as follows:
Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this chapter.
(1) "City"
means either (a) a city or town with a population of at least ((fifty)) thirty
thousand or (b) the largest city or town, if there is no city or town with a
population of at least ((fifty)) thirty thousand, located in a
county planning under the growth management act.
(2) "Governing
authority" means the local legislative authority of a city having
jurisdiction over the property for which an exemption may be applied for under
this chapter.
(3) "Growth
management act" means chapter 36.70A RCW.
(4) "Multiple-unit
housing" means a building having four or more dwelling units not designed
or used as transient accommodations and not including hotels and motels.
Multifamily units may result from new construction or rehabilitated or conversion
of vacant, underutilized, or substandard buildings to multifamily housing.
(5) "Owner"
means the property owner of record.
(6) "Permanent
residential occupancy" means multiunit housing that provides either rental
or owner occupancy on a nontransient basis. This includes owner-occupied or
rental accommodation that is leased for a period of at least one month. This
excludes hotels and motels that predominately offer rental accommodation on a
daily or weekly basis.
(7)
"Rehabilitation improvements" means modifications to existing
structures, that are vacant for twelve months or longer, that are made to
achieve a condition of substantial compliance with existing building codes or
modification to existing occupied structures which increase the number of
multifamily housing units.
(8) "Residential
targeted area" means an area within an urban center that has been
designated by the governing authority as a residential targeted area in
accordance with this chapter.
(9) "Substantial
compliance" means compliance with local building or housing code
requirements that are typically required for rehabilitation as opposed to new
construction.
(10) "Urban
center" means a compact identifiable district where urban residents may
obtain a variety of products and services. An urban center must contain:
(a) Several existing or
previous, or both, business establishments that may include but are not limited
to shops, offices, banks, restaurants, governmental agencies;
(b) Adequate public
facilities including streets, sidewalks, lighting, transit, domestic water, and
sanitary sewer systems; and
(c) A mixture of uses
and activities that may include housing, recreation, and cultural activities in
association with either commercial or office, or both, use.
Sec. 2. RCW 84.14.020 and 1999 c
132 s 1 are each amended to read as follows:
(1) The value of new
housing construction, conversion, and rehabilitation improvements qualifying
under this chapter is exempt from ad valorem property taxation, for ten
successive years beginning January 1 of the year immediately following the
calendar year of issuance of the certificate of tax exemption eligibility.
However, the exemption does not include the value of land or nonhousing-related
improvements not qualifying under this chapter. When a local government
adopts guidelines pursuant to RCW 84.14.030(2) and the qualifying dwelling units
are each on separate parcels for the purpose of property taxation, the
exemption may, at the local government's discretion, be limited to those
dwelling units that meet the local guidelines.
(2) In the case of
rehabilitation of existing buildings, the exemption does not include the value
of improvements constructed prior to the submission of the application required
under this chapter. The incentive provided by this chapter is in addition to
any other incentives, tax credits, grants, or other incentives provided by law.
(3) This chapter does
not apply to increases in assessed valuation made by the assessor on
nonqualifying portions of building and value of land nor to increases made by
lawful order of a county board of equalization, the department of revenue, or a
county, to a class of property throughout the county or specific area of the
county to achieve the uniformity of assessment or appraisal required by law.
(4) At the
conclusion of the ten-year exemption period, the new or rehabilitated housing
cost shall be considered as new construction for the purposes of chapter 84.55
RCW.
Sec. 3. RCW 84.14.110 and 2001 c
185 s 1 are each amended to read as follows:
(1) If improvements
have been exempted under this chapter, the improvements continue to be exempted
and not be converted to another use for at least ten years from date of
issuance of the certificate of tax exemption. If the owner intends to convert
the multifamily development to another use, the owner shall notify the assessor
within sixty days of the change in use. If, after a certificate of tax
exemption has been filed with the county assessor the city or assessor or agent
discovers that a portion of the property is changed or will be changed to a use
that is other than residential or that housing or amenities no longer meet the
requirements as previously approved or agreed upon by contract between the
governing authority and the owner and that the multifamily housing, or a
portion of the housing, no longer qualifies for the exemption, the tax
exemption must be canceled and the following must occur:
(a) Additional real
property tax must be imposed upon the value of the nonqualifying improvements
in the amount that would normally be imposed, plus a penalty must be imposed
amounting to twenty percent. This additional tax is calculated based upon the
difference between the property tax paid and the property tax that would have
been paid if it had included the value of the nonqualifying improvements dated
back to the date that the improvements were converted to a nonmultifamily use;
(b) The tax must
include interest upon the amounts of the additional tax 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 improvements had
been assessed at a value without regard to this chapter; and
(c) The additional tax
owed together with interest and penalty must become a lien on the land and
attach at the time the property or portion of the property is removed from
multifamily use or the amenities no longer meet applicable requirements, and
has priority to and must be fully paid and satisfied before a 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. An additional tax
unpaid on its due date is delinquent. From the date of delinquency until paid,
interest must be charged at the same rate applied by law to delinquent ad
valorem property taxes.
(2) Upon a
determination that a tax exemption is to be canceled for a reason stated in this
section, the governing authority shall notify the record owner of the property
as shown by the tax rolls by mail, return receipt requested, of the
determination to cancel the exemption. The owner may appeal the determination
to the governing authority within thirty days by filing a notice of appeal with
the clerk of the governing authority, which notice must specify the factual and
legal basis on which the determination of cancellation is alleged to be
erroneous. The governing authority or a hearing examiner or other official
authorized by the governing authority may hear the appeal. At the hearing, all
affected parties may be heard and all competent evidence received. After the
hearing, the deciding body or officer shall either affirm, modify, or repeal
the decision of cancellation of exemption based on the evidence received. An
aggrieved party may appeal the decision of the deciding body or officer to the
superior court under RCW 34.05.510 through 34.05.598.
(3) Upon
determination by the governing authority or authorized representative to
terminate an exemption, the county officials having possession of the
assessment and tax rolls shall correct the rolls in the manner provided for
omitted property under RCW 84.40.080. The county assessor shall make such a
valuation of the property and improvements as is necessary to permit the
correction of the rolls. The value of the new housing construction,
conversion, and rehabilitation improvements added to the rolls shall be
considered as new construction for the purposes of chapter 84.55 RCW. The
owner may appeal the valuation to the county board of equalization under
chapter 84.48 RCW and according to the provisions of RCW 84.40.038. If there
has been a failure to comply with this chapter, the property must be listed as
an omitted assessment for assessment years beginning January 1 of the calendar
year in which the noncompliance first occurred, but the listing as an omitted
assessment may not be for a period more than three calendar years preceding the
year in which the failure to comply was discovered.
