Property Tax. All property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The county assessor determines assessed value for each property and calculates property taxes. The property tax bill for an individual property is determined by multiplying the assessed value of the property by the tax rate for each taxing district in which the property is located. The aggregate of all regular tax levies upon real and personal property by the state and all taxing districts may not exceed 1 percent of the true and fair value of the property. The aggregate regular levies of junior taxing districts and senior taxing districts, other than the state, may not exceed $5.90 per $1,000 of assessed valuation.
Targeted Urban Area Property Tax Exemption. Cities and towns are authorized to grant a ten-year local property tax exemption for new industrial or manufacturing facilities in designated areas. The property tax exemption is provided on the value of eligible improvements, applies only to the city portion of the property tax, and becomes effective upon completion of the project. A county may, by resolution, allow any property receiving an exemption from city property taxes to also receive an exemption from county property taxes. No application for the exemption may be submitted after December 31, 2030.
The industrial or manufacturing facilities must be at least 10,000 square feet with an improvement value of at least $800,000 and meet certain building use standards defined by the United States Department of Labor. New construction of industrial or manufacturing facilities must:
Upon completion of the new construction, the owner of the facility must file certain document with the city, including:
Within one year of building occupancy, the facility must create at least 25 family living wage jobs. If a project fails to maintain 25 family living wage jobs, the exemption must be canceled and an additional tax must be imposed on the property equal to the amount that was exempted but for which program requirements were not met.
If the city finds that the work was not completed within the required time limit of three years, due to circumstances beyond the control of the owner, and that the owner is acting in good faith, cities may extend the deadline for completion of the work for a period not to exceed two years.
Tax Preference Performance Statement. State law provides a range of tax preferences that confer reduced tax liability upon a designated class of taxpayer. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Legislation that establishes or expands a tax preference must include a tax preference performance statement (TPPS) that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax preferences automatically expire after ten years unless an alternative expiration date is provided or the tax preference is exempted from expiration.
If the project is a clean energy transformation business facility requiring certification by a federal regulatory commission, cities may extend the deadline for completion of the work for an additional period not to exceed four years.
Upon completion, for clean energy transformation business facilities requiring federal certification , the owner must file additional documents with the city, including:
For such projects, the city must also determine whether the labor standard requirements are consistent with the application and the contract approved by the city and consult with the Department of Labor and Industries (L&I) to confirm the portion of the following information available to L&I that:
The automatic ten-year expiration date, TPPS requirement, and the JLARC review do not apply to the bill.
PRO: Tri-cities and City of Richland have been making good use of the tax preference. There are currently four projects in the pipeline totaling about $6 billion of investment and 1500 jobs. Two of them are nuclear projects, which are complicated to regulate and need additional time to get through the regulatory pipeline. The labor language in the bill makes sure that workers have their voice and safety moving forward.
The program is already implemented under current law and it is not an incentive. The bill only affects local taxes and it's free to the state.
CON: Nuclear fuel production should not be given special tax treatment. Any tax preference for the inclusion of new nuclear, small modular reactors (SMR), and associated fuel production technologies is unfavorable. A study shows that the costs of SMR increased from $10,000 per kilowatt in 2015 to $23,000 per kilowatt in 2023. The cost rose three-fold from initial estimates. The state cannot afford to extend tax preferences to increasingly expensive, unproven, and incomplete nuclear designs and supporting technologies.
Although local governments would shoulder financial risks of the tax break, this is not a local issue. These nuclear projects pose serious risks extending to residents throughout Washington and beyond. Fission reactors, even small modular reactors, generate radioactive waste, and there is no safe place to store it.
PRO: Richland is the only city that has adopted this manufacturing tax exemption so far and used it very effectively on three projects. The bill gives the local authority to rule on should they grant these extra extensions for clean energy transformation businesses. The bill has zero fiscal impact on the state.
The targeted urban area preference is a good program. Implementing this program will bring dozens of new family living wage jobs and millions of dollars in new investments. As a new program, however good and effective, it often needs some tweaks and modifications along the way. The bill makes one such tweak, which is accommodation for the extra time needed for permitting large clean energy transformation facilities that require complex certification.
CON: The purpose of the bill is to enable millions of dollars in local property tax breaks to nuclear fuel facilities. Relief for these projects means everyone else has to absorb higher property taxes. Although local governments would shoulder the cost of the tax break, the actual financial impact would extend much further. Expensive nuclear power will result in significantly higher electricity costs to utility customers.
Nuclear fuels can be used to produce nuclear weapons with little or no further enrichment.
The bill is not a job bill. The federal administration is putting nuclear workers at greater risk by severely weakening health and safety protections at nuclear facilities, pushed by the nuclear industry in the interest of speeding up reactor deployment and ultimately the nuclear industry profit. Please exclude nuclear facilities from the definition of clean energy transformation businesses.
OTHER: The inclusion of project labor agreement raises concerns. Local labor workers in the community should also have the chance to participate in the constriction and benefit from the investment.
PRO: Seth Worley, Government Affairs Director, UA Plumbers & Steamfitters Local 598; Jason Hudson, IBEW Local 77; KARL DYE, TRIDEC; Adam J. Fyall, Benton County; Austin Hicks, Atlas Agro; Joe Schiessl, City of Richland.