Multifamily tax exemption

AN ACT Relating to expanding eligibility to utilize the 1
multifamily tax exemption program to all counties required or 2
choosing to plan under RCW 36.70A.040; and amending RCW 84.14.010 and 3
84.14.040. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 84.14.010 and 2024 c 332 s 17 are each amended to 6
read as follows: 7
The definitions in this section apply throughout this chapter 8
unless the context clearly requires otherwise. 9
(1) "Affordable housing" means residential housing that is rented 10
by a person or household whose monthly housing costs, including 11
utilities other than telephone, do not exceed thirty percent of the 12
household's monthly income. For the purposes of housing intended for 13
owner occupancy, "affordable housing" means residential housing that 14
is within the means of low or moderate-income households.15
(2) "Campus facilities master plan" means the area that is 16
defined by the University of Washington as necessary for the future 17
growth and development of its campus facilities for campuses 18
authorized under RCW 28B.45.020. 19
(3) "City" means either (a) a city or town with a population of 20
at least fifteen thousand, (b) the largest city or town, if there is 21
H-0434.1
HOUSE BILL 1206
State of Washington 69th Legislature 2025 Regular Session
By Representatives Low, Leavitt, and Jacobsen
Prefiled 01/09/25. Read first time 01/13/25. Referred to Committee
on Finance.
p. 1 HB 1206
no city or town with a population of at least fifteen thousand, 1
located in a county planning under the growth management act, (c) a 2
city or town with a population of at least five thousand located in a 3
county subject to the provisions of RCW 36.70A.215, or (d) any city 4
that otherwise does not meet the qualifications under (a) through (c) 5
of this subsection, until December 31, 2031, that complies with RCW 6
84.14.020(1)(a)(iii) or 84.14.021(1)(b). 7
(4) "Conversion" means the conversion of a nonresidential 8
building, in whole or in part, to multiple-unit housing under this 9
chapter. 10
(5) "County" means a county ((with an unincorporated population 11
of at least 170,000 )) required or choosing to plan according to RCW 12
36.70A.040. 13
(6) "Governing authority" means the local legislative authority 14
of a city or a county having jurisdiction over the property for which 15
an exemption may be applied for under this chapter.16
(7) "Growth management act" means chapter 36.70A RCW.17
(8) "Household" means a single person, family, or unrelated 18
persons living together. 19
(9) "Low-income household" means a single person, family, or 20
unrelated persons living together whose adjusted income is at or 21
below eighty percent of the median family income adjusted for family 22
size, for the county, city, or metropolitan statistical area, where 23
the project is located, as reported by the United States department 24
of housing and urban development. 25
(10) "Moderate-income household" means a single person, family, 26
or unrelated persons living together whose adjusted income is more 27
than eighty percent but is at or below one hundred fifteen percent of 28
the median family income adjusted for family size, for the county, 29
city, or metropolitan statistical area, where the project is located, 30
as reported by the United States department of housing and urban 31
development. 32
(11) "Multiple-unit housing" means a building or a group of 33
buildings having four or more dwelling units not designed or used as 34
transient accommodations and not including hotels and motels. 35
Multifamily units may result from new construction or rehabilitated 36
or conversion of vacant, underutilized, or substandard buildings to 37
multifamily housing. 38
(12) "Owner" means the property owner of record.39
p. 2 HB 1206
(13) "Permanent residential occupancy" means multiunit housing 1
that provides either rental or owner occupancy on a nontransient 2
basis. This includes owner-occupied or rental accommodation that is 3
leased for a period of at least one month. This excludes hotels and 4
motels that predominately offer rental accommodation on a daily or 5
weekly basis. 6
(14) "Rehabilitation improvements" means modifications to 7
existing structures, that are vacant for twelve months or longer, 8
that are made to achieve a condition of substantial compliance with 9
existing building codes or modification to existing occupied 10
structures which increase the number of multifamily housing units.11
(15) "Residential targeted area" means an area within an urban 12
center or urban growth area that has been designated by the governing 13
authority as a residential targeted area in accordance with this 14
chapter. With respect to designations after July 1, 2007, 15
"residential targeted area" may not include a campus facilities 16
master plan. 17
(16) "Rural county" means a county with a population between 18
fifty thousand and seventy-one thousand and bordering Puget Sound.19
(17) "Substantial compliance" means compliance with local 20
building or housing code requirements that are typically required for 21
rehabilitation as opposed to new construction. 22
(18) "Urban center" means a compact identifiable district where 23
urban residents may obtain a variety of products and services. An 24
urban center must contain: 25
(a) Several existing or previous, or both, business 26
establishments that may include but are not limited to shops, 27
offices, banks, restaurants, governmental agencies;28
(b) Adequate public facilities including streets, sidewalks, 29
lighting, transit, domestic water, and sanitary sewer systems; and30
(c) A mixture of uses and activities that may include housing, 31
recreation, and cultural activities in association with either 32
commercial or office, or both, use. 33
Sec. 2. RCW 84.14.040 and 2021 c 187 s 4 are each amended to 34
read as follows: 35
(1) The following criteria must be met before an area may be 36
designated as a residential targeted area: 37
(a) The area must be within an urban center, as determined by the 38
governing authority; 39
p. 3 HB 1206
(b) The area must lack, as determined by the governing authority, 1
sufficient available, desirable, and convenient residential housing, 2
including affordable housing, to meet the needs of the public who 3
would be likely to live in the urban center, if the affordable, 4
desirable, attractive, and livable places to live were available;5
(c) The providing of additional housing opportunity, including 6
affordable housing, in the area, as determined by the governing 7
authority, will assist in achieving one or more of the stated 8
purposes of this chapter; 9
(d) If the residential targeted area is designated by a county, 10
the area must be located in an unincorporated area of the county that 11
is within an urban growth area under RCW 36.70A.110 ((and the area 12
must be: (i) In a rural county, served by a sewer system and 13
designated by a county prior to January 1, 2013; or (ii) in a county 14
that includes a campus of an institution of higher education, as 15
defined in RCW 28B.92.030, where at least one thousand two hundred 16
students live on campus during the academic year; and (iii) until 17
July 15, 2024, in a county seeking to promote transit supportive 18
densities and efficient land use in an area that is located within a 19
designated urban growth area and within .25 miles of a corridor where 20
bus service is scheduled at least every thirty minutes for no less 21
than 10 hours per weekday and is in service or is planned for service 22
to begin within five years of designation)); and 23
(e) For a residential targeted area designated by a county after 24
July 25, 2021, the county governing authority must conduct an 25
evaluation of the risk of potential displacement of residents 26
currently living in the area if the tax incentives authorized in this 27
chapter were to be used in the area. The county may use an existing 28
analysis if one exists. An area may not be designated as a 29
residential targeted area unless: (i) The evaluation finds that the 30
risk of displacement is minimal; or (ii) the governing authority 31
mitigates the risk of displacement with locally adopted mitigation 32
measures such as, but not limited to, ensuring that those directly or 33
indirectly displaced have a first right of refusal to occupy the 34
newly created dwelling units receiving an exemption under this 35
chapter, including the affordable units if they otherwise meet the 36
qualifications. 37
(2) For the purpose of designating a residential targeted area or 38
areas, the governing authority may adopt a resolution of intention to 39
so designate an area as generally described in the resolution. The 40
p. 4 HB 1206
resolution must state the time and place of a hearing to be held by 1
the governing authority to consider the designation of the area and 2
may include such other information pertaining to the designation of 3
the area as the governing authority determines to be appropriate to 4
apprise the public of the action intended. 5
(3) The governing authority must give notice of a hearing held 6
under this chapter by publication of the notice once each week for 7
two consecutive weeks, not less than seven days, nor more than thirty 8
days before the date of the hearing in a paper having a general 9
circulation in the city or county where the proposed residential 10
targeted area is located. The notice must state the time, date, 11
place, and purpose of the hearing and generally identify the area 12
proposed to be designated as a residential targeted area.13
(4) Following the hearing, or a continuance of the hearing, the 14
governing authority may designate all or a portion of the area 15
described in the resolution of intent as a residential targeted area 16
if it finds, in its sole discretion, that the criteria in subsections 17
(1) through (3) of this section have been met. 18
(5) After designation of a residential targeted area, the 19
governing authority must adopt and implement standards and guidelines 20
to be utilized in considering applications and making the 21
determinations required under RCW 84.14.060. The standards and 22
guidelines must establish basic requirements for both new 23
construction and rehabilitation, which must include:24
(a) Application process and procedures; 25
(b) Income and rent standards for affordable units;26
(c) Requirements that address demolition of existing structures 27
and site utilization; and 28
(d) Building requirements that may include elements addressing 29
parking, height, density, environmental impact, and compatibility 30
with the existing surrounding property and such other amenities as 31
will attract and keep permanent residents and that will properly 32
enhance the livability of the residential targeted area in which they 33
are to be located. 34
(6)(a) The governing authority may adopt and implement, either as 35
conditions to eight -year exemptions or as conditions to an extended 36
exemption period under RCW 84.14.020(1)(a)(ii) (B) or (C), or as 37
conditions to any combination of exemptions authorized under this 38
chapter, more stringent income eligibility, rent, or sale price 39
limits, including limits that apply to a higher percentage of units, 40
p. 5 HB 1206
than the minimum conditions for an extended exemption period under 1
RCW 84.14.020(1)(a)(ii) (B) or (C). 2
(b) Additionally, a governing authority may adopt and implement 3
as a contractual prerequisite to any exemption granted pursuant to 4
RCW 84.14.020: 5
(i) A requirement that applicants pay at least the prevailing 6
rate of hourly wage established under chapter 39.12 RCW for journey 7
level and apprentice workers on residential and commercial 8
construction; 9
(ii) Payroll record requirements consistent with RCW 10
39.12.120(1); 11
(iii) Apprenticeship utilization requirements consistent with RCW 12
39.04.310; and 13
(iv) A contracting inclusion plan developed in consultation with 14
the office of minority and women's business enterprises.15
(7) For any multiunit housing located in an unincorporated area 16
of a county, a property owner seeking tax incentives under this 17
chapter must commit to renting or selling at least twenty percent of 18
the multifamily housing units as affordable housing units to low and 19
moderate-income households. In the case of multiunit housing intended 20
exclusively for owner occupancy, the minimum requirement of this 21
subsection (7) may be satisfied solely through housing affordable to 22
moderate-income households. 23
(8) Nothing in this section prevents a governing authority from 24
adopting and implementing additional requirements to any exemption 25
granted under RCW 84.14.020. 26
--- END ---
p. 6 HB 1206