BILL REQ. #:  H-0474.3 

Read first time 02/05/2007.   Referred to Committee on Finance.

     AN ACT Relating to property tax relief for senior citizens and persons retired by reason of disability; amending RCW 84.36.381, 84.36.383, 84.38.030, and 84.64.050; adding a new section to chapter 84.36 RCW; adding a new section to chapter 84.55 RCW; and creating a new section.

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

Sec. 1   RCW 84.36.381 and 2005 c 248 s 2 are each amended to read as follows:
     A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:
     (1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of the time of filing: PROVIDED, That any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year: PROVIDED FURTHER, That confinement of the person to a hospital, nursing home, boarding home, or adult family home shall not disqualify the claim of exemption if:
     (a) The residence is temporarily unoccupied;
     (b) The residence is occupied by a spouse and/or a person financially dependent on the claimant for support; or
     (c) The residence is rented for the purpose of paying nursing home, hospital, boarding home, or adult family home costs;
     (2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, such person must own a share therein representing the unit or portion of the structure in which he or she resides. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant, and any lease for life shall be deemed a life estate;
     (3) The person claiming the exemption must be (a) sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of disability, or (b) a veteran of the armed forces of the United States with one hundred percent service-connected disability as provided in 42 U.S.C. Sec. 423 (d)(1)(A) as amended prior to January 1, 2005. However, any surviving spouse of a person who was receiving an exemption at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section;
     (4) The amount that the person shall be exempt from an obligation to pay shall be calculated on the basis of combined disposable income, as defined in RCW 84.36.383. If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person during the months such person was retired by twelve. If the income of the person claiming exemption is reduced for two or more months of the assessment year by reason of the death of the person's spouse, or when other substantial changes occur in disposable income that are likely to continue for an indefinite period of time, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person after such occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of such income prior to May 31 of the year following application;
     (5)(a) A person who otherwise qualifies under this section and has a combined disposable income ((of thirty-five thousand dollars or)) equal to or less than income threshold 3 shall be exempt from all excess property taxes; and
     (b)(i) A person who otherwise qualifies under this section and has a combined disposable income ((of thirty thousand dollars)) equal to or less than income threshold 2, but greater than ((twenty-five thousand dollars)) income threshold 1 shall be exempt from all regular property taxes on the greater of fifty thousand dollars or thirty-five percent of the valuation of his or her residence, but not to exceed seventy thousand dollars of the valuation of his or her residence; or
     (ii) A person who otherwise qualifies under this section and has a combined disposable income ((of twenty-five thousand dollars)) equal to or less than income threshold 1 shall be exempt from all regular property taxes on the greater of sixty thousand dollars or sixty percent of the valuation of his or her residence;
     (6) For a person who otherwise qualifies under this section and has a combined disposable income ((of thirty-five thousand dollars)) equal to or less than income threshold 3, the valuation of the residence shall be the assessed value of the residence on the later of January 1, 1995, or January 1st of the assessment year the person first qualifies under this section. If the person subsequently fails to qualify under this section only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies((.));
     (7) For a person who otherwise qualifies under this section and has a combined disposable income of fifty thousand dollars or less but greater than income threshold 3, the valuation of the residence shall be the assessed value of the residence for the previous year, plus two percent. For counties that do not revalue property annually, the valuation of the residence shall be the previous assessed value plus two percent for each year since the previous revaluation of the residence. If the person subsequently fails to qualify under this subsection only for one year because of high income, the valuation of the residence upon requalification shall be calculated as if the person had been qualified the previous year. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies;
     (8) If the person transfers the exemption under this section to a different residence, the valuation of the different residence, for the purposes of subsection (6) or (7) of this section, shall be the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption((.)); and
     (9)(a) In no event may the valuation under ((this)) subsection (6) or (7) of this section be greater than the true and fair value of the residence on January 1st of the assessment year.
     ((This subsection does)) (b) Subsections (6) and (7) of this section do not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under ((this subsection)) subsections (6) and (7) of this section at their true and fair value in the year in which they are made.

Sec. 2   RCW 84.36.383 and 2006 c 62 s 1 are each amended to read as follows:
     As used in RCW 84.36.381 through 84.36.389, except where the context clearly indicates a different meaning:
     (1) The term "residence" means a single family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre, except that a residence includes any additional property up to a total of five acres that comprises the residential parcel if this larger parcel size is required under land use regulations. The term shall also include a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides. The term shall also include a single family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.
     (2) The term "real property" shall also include a mobile home which has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe, connections with sewer, water, or other utilities. A mobile home located on land leased by the owner of the mobile home is subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.
     (3) "Department" means the state department of revenue.
     (4) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse, and the disposable income of each cotenant occupying the residence for the assessment year, less amounts paid by the person claiming the exemption or his or her spouse during the assessment year for:
     (a) Drugs supplied by prescription of a medical practitioner authorized by the laws of this state or another jurisdiction to issue prescriptions;
     (b) The treatment or care of either person received in the home or in a nursing home, boarding home, or adult family home; and
     (c) Health care insurance premiums for medicare under Title XVIII of the social security act.
     (5) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 1989, or such subsequent date as the director may provide by rule consistent with the purpose of this section, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:
     (a) Capital gains, other than gain excluded from income under section 121 of the federal internal revenue code to the extent it is reinvested in a new principal residence;
     (b) Amounts deducted for loss;
     (c) Amounts deducted for depreciation;
     (d) Pension and annuity receipts;
     (e) Military pay and benefits other than attendant-care and medical-aid payments;
     (f) Veterans benefits other than attendant-care and medical-aid payments;
     (g) Federal social security act and railroad retirement benefits;
     (h) Dividend receipts; and
     (i) Interest received on state and municipal bonds.
     (6) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.
     (7) "Disability" has the same meaning as provided in 42 U.S.C. Sec. 423(d)(1)(A) as amended prior to January 1, 2004, or such subsequent date as the director may provide by rule consistent with the purpose of this section.
     (8) If a person received property tax relief under RCW 84.36.381 for property taxes levied for collection in 2007 or 2008 then:
     (a) "Income threshold 1" means the greater of eighteen thousand dollars or thirty-three percent of county median family income;
     (b) "Income threshold 2" means the greater of twenty-four thousand dollars or forty-four percent of county median family income;
     (c) "Income threshold 3" means the greater of thirty thousand dollars or fifty-five percent of county median family income.
     (9) If a person did not receive property tax relief under RCW 84.36.381 for property taxes levied for collection in 2007 or 2008 then:
     (a) "Income threshold 1" means thirty-three percent of county median family income;
     (b) "Income threshold 2" means forty-four percent of county median family income;
     (c) "Income threshold 3" means fifty-five percent of county median family income;
     (10) "County median family income" means the county median family income that is used for determination of eligibility for housing assistance payment programs under section 8 of the United States housing act of 1937, as in effect on January 1st of the year in which tax relief is received.

Sec. 3   RCW 84.38.030 and 2006 c 62 s 3 are each amended to read as follows:
     A claimant may defer payment of special assessments and/or real property taxes on up to eighty percent of the amount of the claimant's equity value in the claimant's residence if the following conditions are met:
     (1) The claimant must meet all requirements for an exemption for the residence under RCW 84.36.381, other than the age and income limits under RCW 84.36.381.
     (2) The claimant must be sixty years of age or older on December 31st of the year in which the deferral claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability: PROVIDED, That any surviving spouse of a person who was receiving a deferral at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section.
     (3) The claimant must have a combined disposable income, as defined in RCW 84.36.383, of forty thousand dollars or less.
     (4) The claimant must have owned, at the time of filing, the residence on which the special assessment and/or real property taxes have been imposed. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant. A claimant who has only a share ownership in cooperative housing, a life estate, a lease for life, or a revocable trust does not satisfy the ownership requirement.
     (5) The claimant must have and keep in force fire and casualty insurance in sufficient amount to protect the interest of the state in the claimant's equity value: PROVIDED, That if the claimant fails to keep fire and casualty insurance in force to the extent of the state's interest in the claimant's equity value, the amount deferred shall not exceed one hundred percent of the claimant's equity value in the land or lot only.
     (6) In the case of special assessment deferral, the claimant must have opted for payment of such special assessments on the installment method if such method was available.
     (7) A deferral under this chapter must have been granted for the claimant's residence for taxes levied for collection in 2008. Eligible deferrals may be renewed as provided in this chapter, but new deferrals may not be granted for taxes levied for collection after 2008.

Sec. 4   RCW 84.64.050 and 1999 c 18 s 7 are each amended to read as follows:
     After the expiration of three years from the date of delinquency, when any property remains on the tax rolls for which no certificate of delinquency has been issued, the county treasurer shall proceed to issue certificates of delinquency on the property to the county for all years' taxes, interest, and costs: PROVIDED, That the county treasurer, with the consent of the county legislative authority, may elect to issue a certificate for fewer than all years' taxes, interest, and costs to a minimum of the taxes, interest, and costs for the earliest year.
     Certificates of delinquency shall be prima facie evidence that:
     (1) The property described was subject to taxation at the time the same was assessed;
     (2) The property was assessed as required by law;
     (3) The taxes or assessments were not paid at any time before the issuance of the certificate;
     (4) Such certificate shall have the same force and effect as a lis pendens required under chapter 4.28 RCW.
     The county treasurer may include in the certificate of delinquency any assessments which are due on the property and are the responsibility of the county treasurer to collect. For purposes of this chapter, "taxes, interest, and costs" include any assessments which are so included by the county treasurer, and "interest" means interest and penalties unless the context requires otherwise.
     The treasurer shall file the certificates when completed with the clerk of the court at no cost to the treasurer, and the treasurer shall thereupon, with legal assistance from the county prosecuting attorney, proceed to foreclose in the name of the county, the tax liens embraced in such certificates. Notice and summons must be served or notice given in a manner reasonably calculated to inform the owner or owners, and any person having a recorded interest in or lien of record upon the property, of the foreclosure action to appear within thirty days after service of such notice and defend such action or pay the amount due. Either (a) personal service upon the owner or owners and any person having a recorded interest in or lien of record upon the property, or (b) publication once in a newspaper of general circulation, which is circulated in the area of the property and mailing of notice by certified mail to the owner or owners and any person having a recorded interest in or lien of record upon the property, or, if a mailing address is unavailable, personal service upon the occupant of the property, if any, is sufficient. If such notice is returned as unclaimed, the treasurer shall send notice by regular first class mail. The notice shall include the legal description on the tax rolls, the year or years for which assessed, the amount of tax and interest due, and the name of owner, or reputed owner, if known, and the notice must include the local street address, if any, for informational purposes only. The certificates of delinquency issued to the county may be issued in one general certificate in book form including all property, and the proceedings to foreclose the liens against the property may be brought in one action and all persons interested in any of the property involved in the proceedings may be made codefendants in the action, and if unknown may be therein named as unknown owners, and the publication of such notice shall be sufficient service thereof on all persons interested in the property described therein, except as provided above. The person or persons whose name or names appear on the treasurer's rolls as the owner or owners of the property shall be considered and treated as the owner or owners of the property for the purpose of this section, and if upon the treasurer's rolls it appears that the owner or owners of the property are unknown, then the property shall be proceeded against, as belonging to an unknown owner or owners, as the case may be, and all persons owning or claiming to own, or having or claiming to have an interest therein, are hereby required to take notice of the proceedings and of any and all steps thereunder: PROVIDED, That prior to the sale of the property, the treasurer shall order or conduct a title search of the property to be sold to determine the legal description of the property to be sold and the record title holder, and if the record title holder or holders differ from the person or persons whose name or names appear on the treasurer's rolls as the owner or owners, the record title holder or holders shall be considered and treated as the owner or owners of the property for the purpose of this section, and shall be entitled to the notice provided for in this section. Such title search shall be included in the costs of foreclosure.
     ((The county treasurer shall not sell property which is eligible for deferral of taxes under chapter 84.38 RCW but shall require the owner of the property to file a declaration to defer taxes under chapter 84.38 RCW.))

NEW SECTION.  Sec. 5   A new section is added to chapter 84.36 RCW to read as follows:
     The valuation of a residence determined under RCW 84.36.381(7) shall apply for the levies of all taxing districts, unless the legislative authority of a county adopts an ordinance or resolution providing that valuations under RCW 84.36.381(7) do not apply within the county. If such an ordinance or resolution is adopted, valuations under RCW 84.36.381(7) do not apply to the levy of any taxing district upon property within the county, except the levy by the state. If the ordinance or resolution is repealed, valuation of a residence determined under RCW 84.36.381(7) applies to the levies of all taxing districts upon property within the county.

NEW SECTION.  Sec. 6   A new section is added to chapter 84.55 RCW to read as follows:
     The levy for a taxing district in any year must be reduced as necessary to prevent exemptions under RCW 84.36.381(7) from resulting in a higher tax rate than would have occurred in the absence of the exemptions under RCW 84.36.381(7).

NEW SECTION.  Sec. 7   This act applies to taxes levied for collection in 2009 and thereafter.