Land Bank.

A public corporation, public housing authority, or nonprofit organization may operate as a land bank.  A land bank is authorized to:

• acquire, hold, improve, fund, lease, sell, or dispose of property to be used as affordable housing;
• enter into contracts necessary to prepare property for productive use, including clearing title, addressing outstanding liens or taxes, and undertaking predevelopment activities; and
• lease or sell land to a housing developer at less than market rate in exchange for compliance with affordability requirements—such transfers are not required to be to the highest bidder.

Land acquisitions and dispositions must be consistent with existing local, regional, or state housing plans, including antidisplacement policies in the comprehensive plans of the county and cities and towns within the county.  Land acquisitions must also demonstrate alignment with adopted local housing targets.  A nonprofit entity operating as a land bank may not build or construct housing.

At least 50 percent of the land or property leased or sold by a land bank must include a covenant or deed restriction that the housing units maintain affordability requirements for at least 30 years.  Rental units must be affordable to households with an income at or below 80 percent of the area median income.  Owner-occupied housing units must be affordable to households with an income at or below 120 percent of the area median income.

Each land bank must prepare an annual report that must include:

• parcels acquired, held, and transferred during the year;
• the manner of disposition and alignment with local housing and land use plans;
• how each action advanced a community benefit;
• the purchase price and assessed value of each parcel acquired;
• the sales price and assessed value of each parcel transferred;
• the number of housing units developed on each parcel transferred;
• the affordability covenants recorded for each parcel sold;
• the current board roster; and
• progress toward advancing equity, preventing displacement, and meeting locally identified housing needs.

The land bank must make annual reports publicly available and submit each report to any city or county in which it has acquired or transferred land in the last 12 months.  Cities and counties receiving an annual report are encouraged to provide feedback on the land bank's activities and alignment with local housing and land use plans to help guide compliance with local and regional housing plans. 

Tax Foreclosures.

A county legislative authority must give the land bank priority for acquiring tax foreclosed properties.  The property may be sold to the land bank for an amount not less than the principal amount of the unpaid taxes and may be made without a call for bids.  A city may transfer any property obtained from a county tax foreclosure to a land bank if the land bank reimburses the city for the amount the city paid to purchase the property and any direct costs the city incurred.

Property Tax Exemption.

A land bank that is a public corporation is exempt from the excise tax in lieu of property tax.  A land bank that is a nonprofit entity is exempt from property taxation if the entity is organized to provide low-cost land for affordable housing development.  This tax exemption is exempt from the automatic 10-year expiration for new tax preferences.

Real Estate Excise Tax Exemption.

Sales or transfers of land to, or by, a land bank are exempt from the real estate excise tax.  This tax exemption is exempt from the automatic 10-year expiration for new tax preferences.

As part of a pilot project, testimony in this section of the bill report was summarized by generative artificial intelligence and reviewed for accuracy by non-partisan legislative staff.  Generative artificial intelligence was used only in this section of the bill report; all other sections were prepared by non-partisan legislative staff without the use of any generative artificial intelligence.

(In support) The testimony expressed strong support for legislation establishing a coordinated land banking framework as a necessary tool to address Washington’s ongoing housing affordability crisis. Testimony emphasized that land costs and acquisition barriers are major contributors to high housing prices and that coordinated land banks would help assemble, prepare, and transfer underutilized, surplus, or tax-foreclosed properties for affordable housing development. The bill was described as expanding eligibility to nonprofits and public entities, creating priority access to land, enabling title clearing and lien resolution, and providing tax and fee exemptions that lower overall development costs. Supporters highlighted that these tools would create a reliable pipeline of development-ready land, reduce predevelopment risk, and allow housing to be built based on community needs rather than market speculation. The testimony further underscored that the proposal aligns with local housing plans, state housing targets, and existing affordability standards, while promoting mixed-income communities and long-term affordability. Equity and anti-displacement provisions were described as essential, particularly for communities disproportionately impacted by homelessness and housing instability, including youth, people of color, and other historically excluded groups. Overall, the testimony characterized the bill as a comprehensive, accountable, and flexible approach that complements other housing policies, supports a wider range of developers, and equips communities with a proactive mechanism to increase affordable housing supply statewide.

(Opposed) None.

Representative Natasha Hill, prime sponsor; Patience Malaba, HDC Seattle-King County; Matt Hoffman, Maul Foster and Alongi, Inc.; Ami Manning, Spokane Regional Land Bank and Spokane Low Income Housing Consortium; Chris Collier, Housing Authority of Snohomish County; Reggie Brown, 1DROP; Erin Chapman-Smith, Roots Young Adult Shelter; Reggie Brown, 1DROP; and Kelsey Hulse, Washington State Association of Counties.

The second substitute bill:

• allows a city or county legislative authority to authorize a public corporation, housing authority, or nonprofit organization as a land bank authority and establish a land bank;
• requires the city or county authorizing a land bank authority to pass an ordinance or resolution specifying:
  • the public purpose of the land bank authority, including acquiring, holding, managing, and transferring property for affordable housing consistent with adopted local housing plans and the Growth Management Act;
  • the governance or oversight structure of the land bank authority; and
  • the land bank authority's authorization to acquire, hold, lease, and transfer real property, including transfers at less than fair market value in exchange for affordability requirements;
• allows the legislative authorities of two or more contiguous counties to authorize a land bank authority to be administered under an interlocal agreement;
• establishes definitions for "land bank" and "land bank authority";
• requires real property held in the inventory of a land bank to be legally owned by the land bank authority;
• removes the requirement that each land bank authority include its annual board roster in its annual report;
• prohibits a land bank authority operated by a housing authority from paying an excise tax equal to the amount of property taxes that would have been due if the property was privately held;
• removes the requirement that a nonprofit entity operating as a land bank must have been organized to provide low-cost land for affordable housing to qualify for a property tax exemption; and
• requires a land bank authority and a grantee, if applicable, to submit certain documentation to claim a real estate excise tax exemption when property is being sold or transferred to, or by, a land bank authority.

(In support) Land banks primarily work with land that most people do not want.  It is land that takes time to get ready before it can be used for affordable housing development.  This bill incentivizes and gives benefits to some of our nonprofits and entities like our housing authorities that are already doing land banking work.  It will allow land banks to leverage property tax and real estate excise tax exemptions, clear titles, address outstanding liens, undertake predevelopment activities, and gain priority access to tax-foreclosed properties.  The goal is to increase the amount of land developed as housing.  Allowing land banks to hold and prepare land for development gives developers more certainty at purchase and a clear path to construction.  This means projects will move forward more quickly.  Once homes are built, the properties will be taxed like any other development.  The affordability requirements in the bill provide flexibility for mixed-income developments to deliver more affordable homes overall.

(Opposed) None.

Representative Natasha Hill, prime sponsor; Ami Manning, Spokane Regional Land Bank and Spokane Low Income Housing Consortium; Krosbie Carter, 1DROP; and Matt Hoffman, Starter Home Production Plan Team, BHI Land Strategy Team, and Maul Foster and Alongi, Inc.