S 0750

S‑0750.1 _____________________________________________

SENATE BILL 5872

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Senators Prentice, Kohl‑Welles, Kline and Fairley

Read first time 02/06/2001. Referred to Committee on Labor, Commerce & Financial Institutions.

_1 AN ACT Relating to the property tax exemption for new or

_2 rehabilitated multiple-unit dwellings; and amending RCW 84.14.020,

_3 84.14.030, and 84.14.110.

_4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_5 Sec. 1. RCW 84.14.020 and 1999 c 132 s 1 are each amended to read

_6 as follows:

_7 (1) The value of new housing construction, conversion, and

_8 rehabilitation improvements qualifying under this chapter is

_9 exempt from ad valorem property taxation, for ten successive years

10 beginning January 1 of the year immediately following the calendar

11 year of issuance of the certificate of tax exemption eligibility.

12 However, the exemption does not include the value of land or

13 nonhousing-related improvements not qualifying under this

14 chapter. When a governing authority adopts guidelines pursuant to

15 RCW 84.14.030(2) and the qualifying dwelling units have been

16 segregated for the purpose of property taxation, the exemption

17 may, at the local governing authority's discretion, be limited to

18 those dwelling units that meet the local low-income or moderate-

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_1 income occupancy requirements.

_2 (2) In the case of rehabilitation of existing buildings, the

_3 exemption does not include the value of improvements constructed

_4 prior to the submission of the application required under this

_5 chapter. The incentive provided by this chapter is in addition to

_6 any other incentives, tax credits, grants, or other incentives

_7 provided by law.

_8 (3) This chapter does not apply to increases in assessed

_9 valuation made by the assessor on nonqualifying portions of

10 building and value of land nor to increases made by lawful order

11 of a county board of equalization, the department of revenue, or a

12 county, to a class of property throughout the county or specific

13 area of the county to achieve the uniformity of assessment or

14 appraisal required by law.

15 Sec. 2. RCW 84.14.030 and 1997 c 429 s 42 are each amended to read

16 as follows:

17 An owner of property making application under this chapter must

18 meet the following requirements:

19 (1) The new or rehabilitated multiple-unit housing must be

20 located in a residential targeted area as designated by the city;

21 (2) The multiple-unit housing must meet the guidelines as

22 adopted by the governing authority that may include height,

23 density, public benefit features, number and size of proposed

24 development, parking, low-income or moderate-income occupancy

25 requirements, and other adopted requirements indicated necessary

26 by the city. The required amenities should be relative to the size

27 of the project and tax benefit to be obtained. The governing

28 authority may also elect by guideline whether, in the case of

29 qualifying dwelling units that have been segregated for the

30 purpose of property taxation, the exemption will be limited to

31 those dwelling units that meet the local low-income or

32 moderate-income occupancy requirements;

33 (3) The new, converted, or rehabilitated multiple-unit housing

34 must provide for a minimum of fifty percent of the space for

35 permanent residential occupancy. In the case of existing occupied

36 multifamily development, the multifamily housing must also provide

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_1 for a minimum of four additional multifamily units. Existing

_2 multifamily vacant housing that has been vacant for twelve months

_3 or more does not have to provide additional multifamily units;

_4 (4) New construction multifamily housing and rehabilitation

_5 improvements must be completed within three years from the date of

_6 approval of the application;

_7 (5) Property proposed to be rehabilitated must be vacant at

_8 least twelve months before submitting an application and fail to

_9 comply with one or more standards of the applicable state or local

10 building or housing codes on or after July 23, 1995; and

11 (6) The applicant must enter into a contract with the city

12 approved by the governing body under which the applicant has

13 agreed to the implementation of the development on terms and

14 conditions satisfactory to the governing authority.

15 Sec. 3. RCW 84.14.110 and 1995 c 375 s 14 are each amended to read

16 as follows:

17 (1) If improvements have been exempted under this chapter, the

18 improvements continue to be exempted and may not be converted to

19 another use for at least ten years from date of issuance of the

20 certificate of tax exemption. If the owner intends to convert the

21 multifamily development to another use or intends or anticipates

22 that the multifamily development may no longer qualify for the

23 exemption under this chapter or guidelines adopted by the

24 governing authority pursuant to RCW 84.14.030, the owner shall

25 notify the assessor and the governing authority within sixty days

26 of the change in use or other event terminating qualification for

27 the exemption. If, after a certificate of tax exemption has been

28 filed with the county assessor the city or assessor or agent

29 discovers that a portion of the property is changed or will be

30 changed to a use that is other than residential or that housing or

31 amenities no longer meet the requirements as previously approved

32 or agreed upon by contract between the governing authority and the

33 owner and that the multifamily housing, or a portion of the

34 housing, no longer qualifies for the exemption, the tax exemption

35 must be canceled and the following must occur:

36 (a) Additional real property tax must be imposed upon the value

37 of the nonqualifying improvements in the amount that would

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_1 normally be imposed, plus a penalty must be imposed amounting to

_2 twenty percent. This additional tax is calculated based upon the

_3 difference between the property tax paid and the property tax that

_4 would have been paid if it had included the value of the

_5 nonqualifying improvements dated back to the date that the

_6 improvements were converted to a nonmultifamily use;

_7 (b) The tax must include interest upon the amounts of the

_8 additional tax at the same statutory rate charged on delinquent

_9 property taxes from the dates on which the additional tax could

10 have been paid without penalty if the improvements had been

11 assessed at a value without regard to this chapter; and

12 (c) The additional tax owed together with interest and penalty

13 must become a lien on the land and attach at the time the property

14 or portion of the property is removed from multifamily use or the

15 amenities no longer meet applicable requirements, and has priority

16 to and must be fully paid and satisfied before a recognizance,

17 mortgage, judgment, debt, obligation, or responsibility to or with

18 which the land may become charged or liable. The lien may be

19 foreclosed upon expiration of the same period after delinquency

20 and in the same manner provided by law for foreclosure of liens

21 for delinquent real property taxes. An additional tax unpaid on its

22 due date is delinquent. From the date of delinquency until paid,

23 interest must be charged at the same rate applied by law to

24 delinquent ad valorem property taxes.

25 (2) Upon a determination that a tax exemption is to be canceled

26 for a reason stated in this section, the governing authority shall

27 notify the record owner of the property as shown by the tax rolls

28 by mail, return receipt requested, of the determination to cancel

29 the exemption. The owner may appeal the determination to the

30 governing authority within thirty days by filing a notice of

31 appeal with the clerk of the governing authority, which notice

32 must specify the factual and legal basis on which the

33 determination of cancellation is alleged to be erroneous. The

34 governing authority or a hearing examiner or other official

35 authorized by the governing authority may hear the appeal. At the

36 hearing, all affected parties may be heard and all competent

37 evidence received. After the hearing, the deciding body or officer

38 shall either affirm, modify, or repeal the decision of

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_1 cancellation of exemption based on the evidence received. An

_2 aggrieved party may appeal the decision of the deciding body or

_3 officer to the superior court under RCW 34.05.510 through

_4 34.05.598.

_5 (3) Upon determination by the governing authority or authorized

_6 representative to terminate an exemption, the county officials

_7 having possession of the assessment and tax rolls shall correct

_8 the rolls in the manner provided for omitted property under RCW

_9 84.40.080. The county assessor shall make such a valuation of the

10 property and improvements as is necessary to permit the correction

11 of the rolls. The owner may appeal the valuation to the county

12 board of equalization under chapter 84.48 RCW. If there has been a

13 failure to comply with this chapter, the property must be listed

14 as an omitted assessment for assessment years beginning January 1

15 of the calendar year in which the noncompliance first occurred,

16 but the listing as an omitted assessment may not be for a period

17 more than three calendar years preceding the year in which the

18 failure to comply was discovered.

‑‑‑ END ‑‑‑

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