Local real estate excise tax

AN ACT Relating to increasing the flexibility of existing funding 1
sources to fund public safety and other facilities by modifying the 2
local real estate excise tax; amending RCW 82.45.010, 82.45.010, 3
82.46.010, 82.46.015, 82.46.035, and 82.46.037; creating a new 4
section; providing an effective date; and providing an expiration 5
date. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
Sec. 1. RCW 82.45.010 and 2022 c 199 s 3 are each amended to 8
read as follows: 9
(1) As used in this chapter, the term "sale" has its ordinary 10
meaning and includes any conveyance, grant, assignment, quitclaim, or 11
transfer of the ownership of or title to real property, including 12
standing timber, or any estate or interest therein for a valuable 13
consideration, and any contract for such conveyance, grant, 14
assignment, quitclaim, or transfer, and any lease with an option to 15
purchase real property, including standing timber, or any estate or 16
interest therein or other contract under which possession of the 17
property is given to the purchaser, or any other person at the 18
purchaser's direction, and title to the property is retained by the 19
vendor as security for the payment of the purchase price. The term 20
H-0539.1
HOUSE BILL 1791
State of Washington 69th Legislature 2025 Regular Session
By Representatives Paul, Low, Ramel, Peterson, Nance, Springer, and
Leavitt
Read first time 02/03/25. Referred to Committee on Finance.
p. 1 HB 1791
also includes the grant, assignment, quitclaim, sale, or transfer of 1
improvements constructed upon leased land. 2
(2)(a) The term "sale" also includes the transfer or acquisition 3
within any ((thirty-six)) 36 month period of a controlling interest 4
in any entity with an interest in real property located in this state 5
for a valuable consideration. 6
(b) For the sole purpose of determining whether, pursuant to the 7
exercise of an option, a controlling interest was transferred or 8
acquired within a ((thirty-six)) 36 month period, the date that the 9
option agreement was executed is the date on which the transfer or 10
acquisition of the controlling interest is deemed to occur. For all 11
other purposes under this chapter, the date upon which the option is 12
exercised is the date of the transfer or acquisition of the 13
controlling interest. 14
(c) For purposes of this subsection, all acquisitions of persons 15
acting in concert must be aggregated for purposes of determining 16
whether a transfer or acquisition of a controlling interest has taken 17
place. The department must adopt standards by rule to determine when 18
persons are acting in concert. In adopting a rule for this purpose, 19
the department must consider the following: 20
(i) Persons must be treated as acting in concert when they have a 21
relationship with each other such that one person influences or 22
controls the actions of another through common ownership; and23
(ii) When persons are not commonly owned or controlled, they must 24
be treated as acting in concert only when the unity with which the 25
purchasers have negotiated and will consummate the transfer of 26
ownership interests supports a finding that they are acting as a 27
single entity. If the acquisitions are completely independent, with 28
each purchaser buying without regard to the identity of the other 29
purchasers, then the acquisitions are considered separate 30
acquisitions. 31
(3) The term "sale" does not include: 32
(a) A transfer by gift, devise, or inheritance.33
(b) A transfer by transfer on death deed, to the extent that it 34
is not in satisfaction of a contractual obligation of the decedent 35
owed to the recipient of the property. 36
(c) A transfer of any leasehold interest other than of the type 37
mentioned above. 38
(d) A cancellation or forfeiture of a vendee's interest in a 39
contract for the sale of real property, whether or not such contract 40
p. 2 HB 1791
contains a forfeiture clause, or deed in lieu of foreclosure of a 1
mortgage. 2
(e) The partition of property by tenants in common by agreement 3
or as the result of a court decree. 4
(f) The assignment of property or interest in property from one 5
spouse or one domestic partner to the other spouse or other domestic 6
partner in accordance with the terms of a decree of dissolution of 7
marriage or state registered domestic partnership or in fulfillment 8
of a property settlement agreement. 9
(g) The assignment or other transfer of a vendor's interest in a 10
contract for the sale of real property, even though accompanied by a 11
conveyance of the vendor's interest in the real property involved.12
(h) Transfers by appropriation or decree in condemnation 13
proceedings brought by the United States, the state or any political 14
subdivision thereof, or a municipal corporation. 15
(i) A mortgage or other transfer of an interest in real property 16
merely to secure a debt, or the assignment thereof.17
(j) Any transfer or conveyance made pursuant to a deed of trust 18
or an order of sale by the court in any mortgage, deed of trust, or 19
lien foreclosure proceeding or upon execution of a judgment, or deed 20
in lieu of foreclosure to satisfy a mortgage or deed of trust.21
(k) A conveyance to the federal housing administration or 22
veterans administration by an authorized mortgagee made pursuant to a 23
contract of insurance or guaranty with the federal housing 24
administration or veterans administration. 25
(l) A transfer in compliance with the terms of any lease or 26
contract upon which the tax as imposed by this chapter has been paid 27
or where the lease or contract was entered into prior to the date 28
this tax was first imposed. 29
(m) The sale of any grave or lot in an established cemetery.30
(n) A sale by the United States, this state or any political 31
subdivision thereof, or a municipal corporation of this state.32
(o) A sale to a regional transit authority or public corporation 33
under RCW 81.112.320 under a sale/leaseback agreement under RCW 34
81.112.300. 35
(p) A transfer of real property, however effected, if it consists 36
of a mere change in identity or form of ownership of an entity where 37
there is no change in the beneficial ownership. These include 38
transfers to a corporation or partnership which is wholly owned by 39
the transferor and/or the transferor's spouse or domestic partner or 40
p. 3 HB 1791
children of the transferor or the transferor's spouse or domestic 1
partner. However, if thereafter such transferee corporation or 2
partnership voluntarily transfers such real property, or such 3
transferor, spouse or domestic partner, or children of the transferor 4
or the transferor's spouse or domestic partner voluntarily transfer 5
stock in the transferee corporation or interest in the transferee 6
partnership capital, as the case may be, to other than (i) the 7
transferor and/or the transferor's spouse or domestic partner or 8
children of the transferor or the transferor's spouse or domestic 9
partner, (ii) a trust having the transferor and/or the transferor's 10
spouse or domestic partner or children of the transferor or the 11
transferor's spouse or domestic partner as the only beneficiaries at 12
the time of the transfer to the trust, or (iii) a corporation or 13
partnership wholly owned by the original transferor and/or the 14
transferor's spouse or domestic partner or children of the transferor 15
or the transferor's spouse or domestic partner, within three years of 16
the original transfer to which this exemption applies, and the tax on 17
the subsequent transfer has not been paid within ((sixty)) 60 days of 18
becoming due, excise taxes become due and payable on the original 19
transfer as otherwise provided by law. 20
(q)(i) A transfer that for federal income tax purposes does not 21
involve the recognition of gain or loss for entity formation, 22
liquidation or dissolution, and reorganization, including but not 23
limited to nonrecognition of gain or loss because of application of 24
26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 of the internal 25
revenue code of 1986, as amended. 26
(ii) However, the transfer described in (q)(i) of this subsection 27
cannot be preceded or followed within a ((thirty-six)) 36 month 28
period by another transfer or series of transfers, that, when 29
combined with the otherwise exempt transfer or transfers described in 30
(q)(i) of this subsection, results in the transfer of a controlling 31
interest in the entity for valuable consideration, and in which one 32
or more persons previously holding a controlling interest in the 33
entity receive cash or property in exchange for any interest the 34
person or persons acting in concert hold in the entity. This 35
subsection (3)(q)(ii) does not apply to that part of the transfer 36
involving property received that is the real property interest that 37
the person or persons originally contributed to the entity or when 38
one or more persons who did not contribute real property or belong to 39
the entity at a time when real property was purchased receive cash or 40
p. 4 HB 1791
personal property in exchange for that person or persons' interest in 1
the entity. The real estate excise tax under this subsection 2
(3)(q)(ii) is imposed upon the person or persons who previously held 3
a controlling interest in the entity. 4
(r) A qualified sale of a manufactured/mobile home community, as 5
defined in RCW 59.20.030. 6
(s)(i) A transfer of a qualified low-income housing development 7
or controlling interest in a qualified low-income housing 8
development, unless, due to noncompliance with federal statutory 9
requirements, the seller is subject to recapture, in whole or in 10
part, of its allocated federal low-income housing tax credits within 11
the four years prior to the date of transfer. 12
(ii) For purposes of this subsection (3)(s), "qualified low-13
income housing development" means real property and improvements in 14
respect to which the seller or, in the case of a transfer of a 15
controlling interest, the owner or beneficial owner, was allocated 16
federal low-income housing tax credits authorized under 26 U.S.C. 17
Sec. 42 or successor statute, by the Washington state housing finance 18
commission or successor state-authorized tax credit allocating 19
agency. 20
(iii) This subsection (3)(s) does not apply to transfers of a 21
qualified low-income housing development or controlling interest in a 22
qualified low-income housing development occurring on or after July 23
1, 2035. 24
(iv) The Washington state housing finance commission, in 25
consultation with the department, must gather data on: (A) The fiscal 26
savings, if any, accruing to transferees as a result of the exemption 27
provided in this subsection (3)(s); (B) the extent to which 28
transferors of qualified low-income housing developments receive 29
consideration, including any assumption of debt, as part of a 30
transfer subject to the exemption provided in this subsection (3)(s); 31
and (C) the continued use of the property for low-income housing. The 32
Washington state housing finance commission must provide this 33
information to the joint legislative audit and review committee. The 34
committee must conduct a review of the tax preference created under 35
this subsection (3)(s) in calendar year 2033, as required under 36
chapter 43.136 RCW. 37
(t)(i) A qualified transfer of residential property by a legal 38
representative of a person with developmental disabilities to a 39
qualified entity subject to the following conditions:40
p. 5 HB 1791
(A) The adult child with developmental disabilities of the 1
transferor of the residential property must be allowed to reside in 2
the residence or successor property so long as the placement is safe 3
and appropriate as determined by the department of social and health 4
services; 5
(B) The title to the residential property is conveyed without the 6
receipt of consideration by the legal representative of a person with 7
developmental disabilities to a qualified entity; 8
(C) The residential property must have no more than four living 9
units located on it; and 10
(D) The residential property transferred must remain in continued 11
use for ((fifty)) 50 years by the qualified entity as supported 12
living for persons with developmental disabilities by the qualified 13
entity or successor entity. If the qualified entity sells or 14
otherwise conveys ownership of the residential property the proceeds 15
of the sale or conveyance must be used to acquire similar residential 16
property and such similar residential property must be considered the 17
successor for continued use. The property will not be considered in 18
continued use if the department of social and health services finds 19
that the property has failed, after a reasonable time to remedy, to 20
meet any health and safety statutory or regulatory requirements. If 21
the department of social and health services determines that the 22
property fails to meet the requirements for continued use, the 23
department of social and health services must notify the department 24
and the real estate excise tax based on the value of the property at 25
the time of the transfer into use as residential property for persons 26
with developmental disabilities becomes immediately due and payable 27
by the qualified entity. The tax due is not subject to penalties, 28
fees, or interest under this title. 29
(ii) For the purposes of this subsection (3)(t) the definitions 30
in RCW 71A.10.020 apply. 31
(iii) A "qualified entity" is: 32
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 33
of the federal internal revenue code of 1986, as amended, as of June 34
7, 2018, or a subsidiary under the same taxpayer identification 35
number that provides residential supported living for persons with 36
developmental disabilities; or 37
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 38
that exclusively serves persons with developmental disabilities.39
p. 6 HB 1791
(iv) In order to receive an exemption under this subsection 1
(3)(t) an affidavit must be submitted by the transferor of the 2
residential property and must include a copy of the transfer 3
agreement and any other documentation as required by the department.4
(u)(i) The sale by an affordable homeownership facilitator of 5
self-help housing to a low-income household. 6
(ii) The definitions in this subsection (3)(u) apply to this 7
subsection (3)(u) unless the context clearly requires otherwise.8
(A) "Affordable homeownership facilitator" means a nonprofit 9
community or neighborhood-based organization that is exempt from 10
income tax under Title 26 U.S.C. Sec. 501 (c) of the internal revenue 11
code of 1986, as amended, as of October 1, 2019, and that is the 12
developer of self-help housing. 13
(B) "Low-income" means household income as defined by the 14
department, provided that the definition may not exceed ((eighty)) 80 15
percent of median household income, adjusted for household size, for 16
the county in which the dwelling is located. 17
(C) "Self-help housing" means dwelling residences provided for 18
ownership by low-income individuals and families whose ownership 19
requirement includes labor participation. "Self-help housing" does 20
not include residential rental housing provided on a commercial basis 21
to the general public. 22
(v)(i) A sale or transfer of real property to a qualifying 23
grantee that uses the property for housing for low-income persons and 24
receives or otherwise qualifies the property for an exemption from 25
real and personal property taxes under RCW 84.36.560, 84.36.049, 26
35.82.210, 35.21.755, or 84.36.010. For purposes of this subsection 27
(3)(v), "qualifying grantee" means a nonprofit entity as defined in 28
RCW 84.36.560, a nonprofit entity or qualified cooperative 29
association as defined in RCW 84.36.049, a housing authority created 30
under RCW 35.82.030 or 35.82.300, a public corporation established 31
under RCW 35.21.660 or 35.21.730, or a county or municipal 32
corporation. A qualifying grantee that is a county or municipal 33
corporation must record a covenant at the time of transfer that 34
prohibits using the property for any purpose other than for low-35
income housing for a period of at least 10 years. At a minimum, the 36
covenant must address price restrictions and household income limits 37
for the low-income housing. A qualifying grantee must comply with the 38
requirements described in (v)(i)(A), (B), or (C) of this subsection 39
p. 7 HB 1791
and must also certify, by affidavit at the time of sale or transfer, 1
that it intends to comply with those requirements. 2
(A) If the qualifying grantee intends to operate existing housing 3
on the property, within one year of the sale or transfer:4
(I) The qualifying grantee must receive or qualify the property 5
for a tax exemption under RCW 84.36.560, 84.36.049, 6
35.82.210, 35.21.755, or 84.36.010; and 7
(II) The property must be used as housing for low-income persons.8
(B) If the qualifying grantee intends to develop new housing on 9
the site, within five years of the sale or transfer:10
(I) The qualifying grantee must receive or qualify the property 11
for a tax exemption under RCW 84.36.560, 84.36.049, 12
35.82.210, 35.21.755, or 84.36.010; and 13
(II) The property must be used as housing for low-income persons.14
(C) If the qualifying grantee intends to substantially 15
rehabilitate the premises as defined in RCW 59.18.200, within three 16
years: 17
(I) The qualifying grantee must receive or qualify the property 18
for a tax exemption under RCW 84.36.560, 84.36.049, 19
35.82.210, 35.21.755, or 84.36.010; and 20
(II) The property must be used as housing for low-income persons.21
(ii) If the qualifying grantee fails to satisfy the requirements 22
described in (v)(i)(A), (B), or (C) of this subsection, within the 23
timelines described in (v)(i)(A), (B), or (C) of this subsection, the 24
qualifying grantee must pay the tax that would have otherwise been 25
due at the time of initial transfer, plus interest calculated from 26
the date of initial transfer pursuant to RCW 82.32.050.27
(iii) If a qualifying grantee transfers the property to a 28
different qualifying grantee within the original timelines described 29
in (v)(i)(A), (B), or (C) of this subsection, neither the original 30
qualifying grantee nor the new qualifying grantee is required to pay 31
the tax, so long as the new qualifying grantee satisfies the 32
requirements as described in (v)(i)(A), (B), or (C) of this 33
subsection within the exemption period of the initial transfer. If 34
the new qualifying grantee fails to satisfy the requirements 35
described in (v)(i)(A), (B), or (C) of this subsection, only the new 36
qualifying grantee is liable for the payment of taxes required by 37
(v)(ii) of this subsection. There is no limit on the number of 38
transfers between qualifying grantees within the original timelines.39
p. 8 HB 1791
(iv) Each affidavit must be filed with the department upon 1
completion of the sale or transfer of property, including transfers 2
from a qualifying grantee to a different qualifying grantee. The 3
qualifying grantee must provide proof to the department as required 4
by the department once the requirements as described in (v)(i)(A), 5
(B), or (C) of this subsection have been satisfied.6
(v) For the purposes of this subsection (3)(v), "low-income" has 7
the same meaning as in (u) of this subsection. 8
(w)(i) The sale of qualified space in a development that 9
qualifies for a property tax exemption under RCW 84.36.560, 10
84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a nonprofit 11
organization, a housing authority, or public corporation for use for 12
an exempt community purpose.13
(ii) For the purposes of this subsection (3)(w), the following 14
definitions apply:15
(A) "Affordable housing development" means a development with 16
housing provided to households with a household income that does not 17
exceed 80 percent of median household income at initial occupancy, 18
adjusted for household size, for the county in which the dwelling is 19
located.20
(B) "Exempt community purpose" means any use to provide a service 21
that benefits affordable housing development tenants or the public 22
including, but not limited to, health clinics, senior day care, food 23
banks, community centers, and early learning facilities.24
(C) "Nonprofit organization" means an organization exempt from 25
taxation under section 501 (c)(3) of the internal revenue code of 1986 26
(26 U.S.C. Sec. 501(c)(3)), as amended.27
(D) "Qualified space" means any portion of an affordable housing 28
development that is accessible to tenants or the public that 29
constitutes a separate legal parcel of property under chapter 64.32, 30
64.34, or 64.90 RCW.31
Sec. 2. RCW 82.45.010 and 2022 c 199 s 4 are each amended to 32
read as follows: 33
(1) As used in this chapter, the term "sale" has its ordinary 34
meaning and includes any conveyance, grant, assignment, quitclaim, or 35
transfer of the ownership of or title to real property, including 36
standing timber, or any estate or interest therein for a valuable 37
consideration, and any contract for such conveyance, grant, 38
assignment, quitclaim, or transfer, and any lease with an option to 39
p. 9 HB 1791
purchase real property, including standing timber, or any estate or 1
interest therein or other contract under which possession of the 2
property is given to the purchaser, or any other person at the 3
purchaser's direction, and title to the property is retained by the 4
vendor as security for the payment of the purchase price. The term 5
also includes the grant, assignment, quitclaim, sale, or transfer of 6
improvements constructed upon leased land. 7
(2)(a) The term "sale" also includes the transfer or acquisition 8
within any ((thirty-six)) 36 month period of a controlling interest 9
in any entity with an interest in real property located in this state 10
for a valuable consideration. 11
(b) For the sole purpose of determining whether, pursuant to the 12
exercise of an option, a controlling interest was transferred or 13
acquired within a ((thirty-six)) 36 month period, the date that the 14
option agreement was executed is the date on which the transfer or 15
acquisition of the controlling interest is deemed to occur. For all 16
other purposes under this chapter, the date upon which the option is 17
exercised is the date of the transfer or acquisition of the 18
controlling interest. 19
(c) For purposes of this subsection, all acquisitions of persons 20
acting in concert must be aggregated for purposes of determining 21
whether a transfer or acquisition of a controlling interest has taken 22
place. The department must adopt standards by rule to determine when 23
persons are acting in concert. In adopting a rule for this purpose, 24
the department must consider the following: 25
(i) Persons must be treated as acting in concert when they have a 26
relationship with each other such that one person influences or 27
controls the actions of another through common ownership; and28
(ii) When persons are not commonly owned or controlled, they must 29
be treated as acting in concert only when the unity with which the 30
purchasers have negotiated and will consummate the transfer of 31
ownership interests supports a finding that they are acting as a 32
single entity. If the acquisitions are completely independent, with 33
each purchaser buying without regard to the identity of the other 34
purchasers, then the acquisitions are considered separate 35
acquisitions. 36
(3) The term "sale" does not include: 37
(a) A transfer by gift, devise, or inheritance.38
p. 10 HB 1791
(b) A transfer by transfer on death deed, to the extent that it 1
is not in satisfaction of a contractual obligation of the decedent 2
owed to the recipient of the property. 3
(c) A transfer of any leasehold interest other than of the type 4
mentioned above. 5
(d) A cancellation or forfeiture of a vendee's interest in a 6
contract for the sale of real property, whether or not such contract 7
contains a forfeiture clause, or deed in lieu of foreclosure of a 8
mortgage. 9
(e) The partition of property by tenants in common by agreement 10
or as the result of a court decree. 11
(f) The assignment of property or interest in property from one 12
spouse or one domestic partner to the other spouse or other domestic 13
partner in accordance with the terms of a decree of dissolution of 14
marriage or state registered domestic partnership or in fulfillment 15
of a property settlement agreement. 16
(g) The assignment or other transfer of a vendor's interest in a 17
contract for the sale of real property, even though accompanied by a 18
conveyance of the vendor's interest in the real property involved.19
(h) Transfers by appropriation or decree in condemnation 20
proceedings brought by the United States, the state or any political 21
subdivision thereof, or a municipal corporation. 22
(i) A mortgage or other transfer of an interest in real property 23
merely to secure a debt, or the assignment thereof.24
(j) Any transfer or conveyance made pursuant to a deed of trust 25
or an order of sale by the court in any mortgage, deed of trust, or 26
lien foreclosure proceeding or upon execution of a judgment, or deed 27
in lieu of foreclosure to satisfy a mortgage or deed of trust.28
(k) A conveyance to the federal housing administration or 29
veterans administration by an authorized mortgagee made pursuant to a 30
contract of insurance or guaranty with the federal housing 31
administration or veterans administration. 32
(l) A transfer in compliance with the terms of any lease or 33
contract upon which the tax as imposed by this chapter has been paid 34
or where the lease or contract was entered into prior to the date 35
this tax was first imposed. 36
(m) The sale of any grave or lot in an established cemetery.37
(n) A sale by the United States, this state or any political 38
subdivision thereof, or a municipal corporation of this state.39
p. 11 HB 1791
(o) A sale to a regional transit authority or public corporation 1
under RCW 81.112.320 under a sale/leaseback agreement under RCW 2
81.112.300. 3
(p) A transfer of real property, however effected, if it consists 4
of a mere change in identity or form of ownership of an entity where 5
there is no change in the beneficial ownership. These include 6
transfers to a corporation or partnership which is wholly owned by 7
the transferor and/or the transferor's spouse or domestic partner or 8
children of the transferor or the transferor's spouse or domestic 9
partner. However, if thereafter such transferee corporation or 10
partnership voluntarily transfers such real property, or such 11
transferor, spouse or domestic partner, or children of the transferor 12
or the transferor's spouse or domestic partner voluntarily transfer 13
stock in the transferee corporation or interest in the transferee 14
partnership capital, as the case may be, to other than (i) the 15
transferor and/or the transferor's spouse or domestic partner or 16
children of the transferor or the transferor's spouse or domestic 17
partner, (ii) a trust having the transferor and/or the transferor's 18
spouse or domestic partner or children of the transferor or the 19
transferor's spouse or domestic partner as the only beneficiaries at 20
the time of the transfer to the trust, or (iii) a corporation or 21
partnership wholly owned by the original transferor and/or the 22
transferor's spouse or domestic partner or children of the transferor 23
or the transferor's spouse or domestic partner, within three years of 24
the original transfer to which this exemption applies, and the tax on 25
the subsequent transfer has not been paid within sixty days of 26
becoming due, excise taxes become due and payable on the original 27
transfer as otherwise provided by law. 28
(q)(i) A transfer that for federal income tax purposes does not 29
involve the recognition of gain or loss for entity formation, 30
liquidation or dissolution, and reorganization, including but not 31
limited to nonrecognition of gain or loss because of application of 32
26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 of the internal 33
revenue code of 1986, as amended. 34
(ii) However, the transfer described in (q)(i) of this subsection 35
cannot be preceded or followed within a ((thirty-six)) 36 month 36
period by another transfer or series of transfers, that, when 37
combined with the otherwise exempt transfer or transfers described in 38
(q)(i) of this subsection, results in the transfer of a controlling 39
interest in the entity for valuable consideration, and in which one 40
p. 12 HB 1791
or more persons previously holding a controlling interest in the 1
entity receive cash or property in exchange for any interest the 2
person or persons acting in concert hold in the entity. This 3
subsection (3)(q)(ii) does not apply to that part of the transfer 4
involving property received that is the real property interest that 5
the person or persons originally contributed to the entity or when 6
one or more persons who did not contribute real property or belong to 7
the entity at a time when real property was purchased receive cash or 8
personal property in exchange for that person or persons' interest in 9
the entity. The real estate excise tax under this subsection 10
(3)(q)(ii) is imposed upon the person or persons who previously held 11
a controlling interest in the entity. 12
(r) A qualified sale of a manufactured/mobile home community, as 13
defined in RCW 59.20.030, that takes place on or after June 12, 2008, 14
but before December 31, 2018. 15
(s)(i) A transfer of a qualified low-income housing development 16
or controlling interest in a qualified low-income housing 17
development, unless, due to noncompliance with federal statutory 18
requirements, the seller is subject to recapture, in whole or in 19
part, of its allocated federal low-income housing tax credits within 20
the four years prior to the date of transfer. 21
(ii) For purposes of this subsection (3)(s), "qualified low-22
income housing development" means real property and improvements in 23
respect to which the seller or, in the case of a transfer of a 24
controlling interest, the owner or beneficial owner, was allocated 25
federal low-income housing tax credits authorized under 26 U.S.C. 26
Sec. 42 or successor statute, by the Washington state housing finance 27
commission or successor state-authorized tax credit allocating 28
agency. 29
(iii) This subsection (3)(s) does not apply to transfers of a 30
qualified low-income housing development or controlling interest in a 31
qualified low-income housing development occurring on or after July 32
1, 2035. 33
(iv) The Washington state housing finance commission, in 34
consultation with the department, must gather data on: (A) The fiscal 35
savings, if any, accruing to transferees as a result of the exemption 36
provided in this subsection (3)(s); (B) the extent to which 37
transferors of qualified low-income housing developments receive 38
consideration, including any assumption of debt, as part of a 39
transfer subject to the exemption provided in this subsection (3)(s); 40
p. 13 HB 1791
and (C) the continued use of the property for low-income housing. The 1
Washington state housing finance commission must provide this 2
information to the joint legislative audit and review committee. The 3
committee must conduct a review of the tax preference created under 4
this subsection (3)(s) in calendar year 2033, as required under 5
chapter 43.136 RCW. 6
(t)(i) A qualified transfer of residential property by a legal 7
representative of a person with developmental disabilities to a 8
qualified entity subject to the following conditions:9
(A) The adult child with developmental disabilities of the 10
transferor of the residential property must be allowed to reside in 11
the residence or successor property so long as the placement is safe 12
and appropriate as determined by the department of social and health 13
services; 14
(B) The title to the residential property is conveyed without the 15
receipt of consideration by the legal representative of a person with 16
developmental disabilities to a qualified entity; 17
(C) The residential property must have no more than four living 18
units located on it; and 19
(D) The residential property transferred must remain in continued 20
use for ((fifty)) 50 years by the qualified entity as supported 21
living for persons with developmental disabilities by the qualified 22
entity or successor entity. If the qualified entity sells or 23
otherwise conveys ownership of the residential property the proceeds 24
of the sale or conveyance must be used to acquire similar residential 25
property and such similar residential property must be considered the 26
successor for continued use. The property will not be considered in 27
continued use if the department of social and health services finds 28
that the property has failed, after a reasonable time to remedy, to 29
meet any health and safety statutory or regulatory requirements. If 30
the department of social and health services determines that the 31
property fails to meet the requirements for continued use, the 32
department of social and health services must notify the department 33
and the real estate excise tax based on the value of the property at 34
the time of the transfer into use as residential property for persons 35
with developmental disabilities becomes immediately due and payable 36
by the qualified entity. The tax due is not subject to penalties, 37
fees, or interest under this title. 38
(ii) For the purposes of this subsection (3)(t) the definitions 39
in RCW 71A.10.020 apply. 40
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(iii) A "qualified entity" is: 1
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 2
of the federal internal revenue code of 1986, as amended, as of June 3
7, 2018, or a subsidiary under the same taxpayer identification 4
number that provides residential supported living for persons with 5
developmental disabilities; or 6
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 7
that exclusively serves persons with developmental disabilities.8
(iv) In order to receive an exemption under this subsection 9
(3)(t) an affidavit must be submitted by the transferor of the 10
residential property and must include a copy of the transfer 11
agreement and any other documentation as required by the department.12
(u)(i) A sale or transfer of real property to a qualifying 13
grantee that uses the property for housing for low-income persons and 14
receives or otherwise qualifies the property for an exemption from 15
real and personal property taxes under RCW 84.36.560, 84.36.049, 16
35.82.210, 35.21.755, or 84.36.010. For purposes of this subsection 17
(3)(u), "qualifying grantee" means a nonprofit entity as defined in 18
RCW 84.36.560, a nonprofit entity or qualified cooperative 19
association as defined in RCW 84.36.049, a housing authority created 20
under RCW 35.82.030 or 35.82.300, a public corporation established 21
under RCW 35.21.660 or 35.21.730, or a county or municipal 22
corporation. A qualifying grantee that is a county or municipal 23
corporation must record a covenant at the time of transfer that 24
prohibits using the property for any purpose other than for low-25
income housing for a period of at least 10 years. At a minimum, the 26
covenant must address price restrictions and household income limits 27
for the low-income housing. A qualifying grantee must comply with the 28
requirements described in (u)(i)(A), (B), or (C) of this subsection 29
and must also certify, by affidavit at the time of sale or transfer, 30
that it intends to comply with those requirements.31
(A) If the qualifying grantee intends to operate existing housing 32
on the property, within one year of the sale or transfer:33
(I) The qualifying grantee must receive or qualify the property 34
for a tax exemption under RCW 84.36.560, 84.36.049, 35
35.82.210, 35.21.755, or 84.36.010; and 36
(II) The property must be used as housing for low-income persons.37
(B) If the qualifying grantee intends to develop new housing on 38
the site, within five years of the sale or transfer:39
p. 15 HB 1791
(I) The qualifying grantee must receive or qualify the property 1
for a tax exemption under RCW 84.36.560, 84.36.049, 2
35.82.210, 35.21.755, or 84.36.010; and 3
(II) The property must be used as housing for low-income persons.4
(C) If the qualifying grantee intends to substantially 5
rehabilitate the premises as defined in RCW 59.18.200, within three 6
years: 7
(I) The qualifying grantee must receive or qualify the property 8
for a tax exemption under RCW 84.36.560, 84.36.049, 9
35.82.210, 35.21.755, or 84.36.010; and 10
(II) The property must be used as housing for low-income persons.11
(ii) If the qualifying grantee fails to satisfy the requirements 12
described in (u)(i)(A), (B), or (C) of this subsection, within the 13
timelines described in (u)(i)(A), (B), or (C) of this subsection, the 14
qualifying grantee must pay the tax that would have otherwise been 15
due at the time of initial transfer, plus interest calculated from 16
the date of initial transfer pursuant to RCW 82.32.050.17
(iii) If a qualifying grantee transfers the property to a 18
different qualifying grantee within the original timelines described 19
in (u)(i)(A), (B), or (C) of this subsection, neither the original 20
qualifying grantee nor the new qualifying grantee is required to pay 21
the tax, so long as the new qualifying grantee satisfies the 22
requirements as described in (u)(i)(A), (B), or (C) of this 23
subsection within the exemption period of the initial transfer. If 24
the new qualifying grantee fails to satisfy the requirements 25
described in (u)(i)(A), (B), or (C) of this subsection, only the new 26
qualifying grantee is liable for the payment of taxes required by 27
(u)(ii) of this subsection. There is no limit on the number of 28
transfers between qualifying grantees within the original timelines.29
(iv) Each affidavit must be filed with the department upon 30
completion of the sale or transfer of property, including transfers 31
from a qualifying grantee to a different qualifying grantee. The 32
qualifying grantee must provide proof to the department as required 33
by the department once the requirements as described in (u)(i)(A), 34
(B), or (C) of this subsection have been satisfied.35
(v) For the purposes of this subsection (3)(u), "low-income" 36
means household income as defined by the department, provided that 37
the definition may not exceed 80 percent of median household income, 38
adjusted for household size, for the county in which the dwelling is 39
located. 40
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(v)(i) The sale of qualified space in a development that 1
qualifies for a property tax exemption under RCW 84.36.560, 2
84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a nonprofit 3
organization, a housing authority, or public corporation for use for 4
an exempt community purpose.5
(ii) For the purposes of this subsection (3)(v), the following 6
definitions apply:7
(A) "Affordable housing development" means a development with 8
housing provided to households with a household income that does not 9
exceed 80 percent of median household income at initial occupancy, 10
adjusted for household size, for the county in which the dwelling is 11
located.12
(B) "Exempt community purpose" means any use to provide a service 13
that benefits affordable housing development tenants or the public 14
including, but not limited to, health clinics, senior day care, food 15
banks, community centers, and early learning facilities.16
(C) "Nonprofit organization" means an organization exempt from 17
taxation under section 501 (c)(3) of the internal revenue code of 1986 18
(26 U.S.C. Sec. 501(c)(3)), as amended.19
(D) "Qualified space" means any portion of an affordable housing 20
development that is accessible to tenants or the public that 21
constitutes a separate legal parcel of property under chapter 64.32, 22
64.34, or 64.90 RCW.23
Sec. 3. RCW 82.46.010 and 2021 c 296 s 10 are each amended to 24
read as follows: 25
(1) The legislative authority of any county or city must identify 26
in the adopted budget the capital projects funded in whole or in part 27
from the proceeds of the tax authorized in this section, and must 28
indicate that such tax is intended to be in addition to other funds 29
that may be reasonably available for such capital projects.30
(2)(((a))) The legislative authority of any county or any city 31
may impose an excise tax on each sale of real property in the 32
unincorporated areas of the county for the county tax and in the 33
corporate limits of the city for the city tax at a rate not exceeding 34
((one-quarter of one)) 0.25 percent of the selling price. ((Except as 35
provided in subsection (8) of this section, the )) The revenues from 36
this tax must be used by any city or county ((with a population of 37
5,000 or less and any city or county that does not plan under RCW 38
36.70A.040)) for any capital purpose identified in a capital 39
p. 17 HB 1791
improvements plan and local capital improvements, including those 1
listed in RCW 35.43.040((.2
(b) Except as provided in subsection (8) of this section, after 3
April 30, 1992, revenues generated from the tax imposed under this 4
subsection (2) in counties over 5,000 population and cities over 5
5,000 population that are required or choose to plan under RCW 6
36.70A.040 must be used solely )) and for ((financing)) capital 7
projects specified in a capital facilities plan element of a 8
comprehensive plan and housing relocation assistance under RCW 9
59.18.440 and 59.18.450. However, revenues (((i))) (a) pledged by 10
such counties and cities to debt retirement prior to April 30, 1992, 11
may continue to be used for that purpose until the original debt for 12
which the revenues were pledged is retired, or (((ii))) (b) committed 13
prior to April 30, 1992, by such counties or cities to a project may 14
continue to be used for that purpose until the project is completed.15
(3) In lieu of imposing the tax authorized in RCW 82.14.030(2), 16
the legislative authority of any county or any city may impose an 17
additional excise tax on each sale of real property in the 18
unincorporated areas of the county for the county tax and in the 19
corporate limits of the city for the city tax at a rate not exceeding 20
one-half of one percent of the selling price. 21
(4) Taxes imposed under this section must be collected from 22
persons who are taxable by the state under chapter 82.45 RCW upon the 23
occurrence of any taxable event within the unincorporated areas of 24
the county or within the corporate limits of the city, as the case 25
may be. 26
(5) Taxes imposed under this section must comply with all 27
applicable rules, regulations, laws, and court decisions regarding 28
real estate excise taxes as imposed by the state under chapter 82.45 29
RCW. 30
(6) The definitions in this subsection (6) apply throughout this 31
section unless the context clearly requires otherwise.32
(a) "City" means any city or town. 33
(b) "Capital project" means those public works projects of a 34
local government for planning, acquisition, construction, 35
reconstruction, repair, replacement, rehabilitation, or improvement 36
of streets; roads; highways; sidewalks; street and road lighting 37
systems; traffic signals; bridges; domestic water systems; storm and 38
sanitary sewer systems; parks; recreational facilities; law 39
enforcement facilities; fire protection facilities; trails; 40
p. 18 HB 1791
libraries; administrative facilities; judicial facilities; river 1
flood control projects; waterway flood control projects by those 2
jurisdictions that, prior to June 11, 1992, have expended funds 3
derived from the tax authorized by this section for such purposes; 4
until December 31, 1995, housing projects for those jurisdictions 5
that, prior to June 11, 1992, have expended or committed to expend 6
funds derived from the tax authorized by this section or the tax 7
authorized by RCW 82.46.035 for such purposes; and technology 8
infrastructure that is integral to the capital project.9
(7) ((From July 22, 2011, until December 31, 2016, a city or 10
county may use the greater of $100,000 or 35 percent of available 11
funds under this section, but not to exceed $1,000,000 per year, for 12
the operations and maintenance of existing capital projects as 13
defined in subsection (6) of this section.14
(8) After May 13, 2021, through December 31, 2023, a city or 15
county may use the greater of $100,000 or 35 percent of available 16
funds under this section for the operation of, maintenance of, and 17
service support for, existing capital projects, including the 18
provision of services to residents of affordable housing or shelter 19
units.)) A county or city may use available funds under this section 20
for any eligible use in RCW 82.46.035.21
Sec. 4. RCW 82.46.015 and 2021 c 296 s 11 are each amended to 22
read as follows: 23
(1) ((After May 13, 2021, through December 31, 2023, a )) A city 24
or county may use the greater of $100,000 or 35 percent of available 25
funds from revenues collected under RCW 82.46.010 for the maintenance 26
of, operation of, and service support for, existing capital projects, 27
as defined in RCW 82.46.010 and 82.46.035, and including the 28
provision of services to residents of affordable housing or shelter 29
units. 30
(2) ((After December 31, 2023, a city or county that meets the 31
requirements of subsection (3) of this section may use the greater of 32
$100,000 or 25 percent of available funds, but not to exceed 33
$1,000,000 per year, from revenues collected under RCW 82.46.010 for 34
the maintenance of capital projects, as defined in RCW 82.46.010.35
(3))) A city or county may use revenues pursuant to subsection 36
(((2))) (1) of this section if: 37
(a) ((The city or county prepares a written report demonstrating 38
that it has or will have adequate funding from all sources of public 39
p. 19 HB 1791
funding to pay for all capital projects, as defined in RCW 82.46.010, 1
identified in its capital facilities plan for the succeeding two-year 2
period. Cities or counties not required to prepare a capital 3
facilities plan may satisfy this provision by using a document that, 4
at a minimum, identifies capital project needs and available public 5
funding sources for the succeeding two-year period; and6
(b)(i))) The city or county has not enacted, after June 9, 2016: 7
Any requirement on the listing or sale of real property; or any 8
requirement on landlords, at the time of executing a lease, to 9
perform or provide physical improvements or modifications to real 10
property or fixtures, except if necessary to address an immediate 11
threat to health or safety; or 12
(((ii))) (b) Any local requirement adopted by the city or county 13
under (((b)(i))) (a) of this subsection is: Specifically authorized 14
by RCW 35.80.030, 35A.11.020, chapter 7.48 RCW, or chapter 19.27 RCW; 15
specifically authorized by other state or federal law; or a seller or 16
landlord disclosure requirement pursuant to RCW 64.06.080.17
(((4) The report prepared under subsection (3)(a) of this section 18
must: (a) Include information necessary to determine compliance with 19
the requirements of subsection (3)(a) of this section; (b) identify 20
how revenues collected under RCW 82.46.010 were used by the city or 21
county during the prior two-year period; (c) identify how funds 22
authorized under subsection (2) of this section will be used during 23
the succeeding two-year period; and (d) identify what percentage of 24
funding for capital projects within the city or county is 25
attributable to revenues under RCW 82.46.010 compared to all other 26
sources of capital project funding. The city or county must prepare 27
and adopt the report as part of its regular, public budget process.28
(5) The authority to use funds as authorized in this section is 29
in addition to the authority to use funds pursuant to RCW 30
82.46.010(7), which remains in effect through December 31, 2016.31
(6) For purposes of this section, "maintenance" means the use of 32
funds for labor and materials that will preserve, prevent the decline 33
of, or extend the useful life of a capital project. "Maintenance" 34
does not include labor or material costs for routine operations of a 35
capital project.))36
Sec. 5. RCW 82.46.035 and 2021 c 296 s 12 are each amended to 37
read as follows: 38
p. 20 HB 1791
(1) ((Except for revenues used after May 13, 2021, through 1
December 31, 2023, as provided in subsection (3) of this section, 2
the)) The legislative authority of any county or city must identify 3
in the adopted budget the capital projects funded in whole or in part 4
from the proceeds of the tax authorized in this section, and must 5
indicate that such tax is intended to be in addition to other funds 6
that may be reasonably available for such capital projects.7
(2) The legislative authority of any county or any city that 8
plans under RCW 36.70A.040(1) may impose an additional excise tax on 9
each sale of real property in the unincorporated areas of the county 10
for the county tax and in the corporate limits of the city for the 11
city tax at a rate not exceeding one-quarter of one percent of the 12
selling price. Any county choosing to plan under RCW 36.70A.040(2) 13
and any city within such a county may only adopt an ordinance 14
imposing the excise tax authorized by this section if the ordinance 15
is first authorized by a proposition approved by a majority of the 16
voters of the taxing district voting on the proposition at a general 17
election held within the district or at a special election within the 18
taxing district called by the district for the purpose of submitting 19
such proposition to the voters. 20
(3) Revenues generated from the tax imposed under subsection (2) 21
of this section must be used by such counties and cities solely for 22
((financing)) capital projects specified in a capital facilities plan 23
element of a comprehensive plan ((, except that the greater of 24
$100,000 or 35 percent of revenues may additionally be used for the 25
operation of, maintenance of, and service support for, existing 26
capital projects after May 13, 2021, through December 31, 2023 )). 27
However, revenues (a) pledged by such counties and cities to debt 28
retirement prior to March 1, 1992, may continue to be used for that 29
purpose until the original debt for which the revenues were pledged 30
is retired, or (b) committed prior to March 1, 1992, by such counties 31
or cities to a project may continue to be used for that purpose until 32
the project is completed. 33
(4) ((Revenues generated by the tax imposed by this section must 34
be deposited in a separate account after December 31, 2023.35
(5))) As used in this section, "city" means any city or town and 36
"capital project" means those public works projects of a local 37
government for: 38
(a) Planning, acquisition, construction, reconstruction, repair, 39
replacement, rehabilitation, or improvement of streets, roads, 40
p. 21 HB 1791
highways, sidewalks, street and road lighting systems, traffic 1
signals, bridges, domestic water systems, storm and sanitary sewer 2
systems; 3
(b) Planning, construction, reconstruction, repair, 4
rehabilitation, or improvement of parks; ((and))5
(c) ((Until January 1, 2026, planning )) Planning, acquisition, 6
construction, reconstruction, repair, replacement, rehabilitation, or 7
improvement of facilities for those experiencing homelessness and 8
affordable housing projects; and9
(d) Any use allowed under RCW 82.46.010. 10
(((6))) (5) A county or city may use the greater of $100,000 or 11
25 percent of available funds ((, but not to exceed $1,000,000, )) for 12
capital projects as defined in subsection (((5))) (4)(c) of this 13
section. The limits in this subsection do not apply to any county or 14
city that used revenue under this section for the acquisition, 15
construction, improvement, or rehabilitation of facilities to provide 16
housing for the homeless prior to June 30, 2019. 17
(((7))) (6) A county or city using funds for uses in subsection 18
(((5))) (4)(c) of this section must document in its plan under RCW 19
36.70A.070(3) that it has funds during the next two years for capital 20
projects in subsection (((5))) (4)(a) of this section.21
(((8))) (7) When the governor files a notice of noncompliance 22
under RCW 36.70A.340 with the secretary of state and the appropriate 23
county or city, the county or city's authority to impose the 24
additional excise tax under this section is temporarily rescinded 25
until the governor files a subsequent notice rescinding the notice of 26
noncompliance. 27
Sec. 6. RCW 82.46.037 and 2021 c 296 s 13 are each amended to 28
read as follows: 29
(1) A city or county that meets the requirements of subsection 30
(2) of this section may use the greater of $100,000 or ((25)) 35 31
percent of available funds ((, but not to exceed $1,000,000 per year, 32
except for the period from May 13, 2021, through December 31, 2023, 33
when the greater of $100,000 or 35 percent may be used )) from 34
revenues collected under RCW 82.46.035 for((:35
(a) The maintenance of capital projects, as defined in RCW 36
82.46.035(5);37
(b) The planning, acquisition, construction, reconstruction, 38
repair, replacement, rehabilitation, improvement, or maintenance of 39
p. 22 HB 1791
capital projects as defined in RCW 82.46.010(6)(b) that are not also 1
included within the definition of capital projects in RCW 2
82.46.035(5); and 3
(c) The)) the operation of, the maintenance of, and service 4
support for, existing capital projects as included in the definition 5
of capital project in RCW 82.46.035(((5))) (4) and 82.46.010(6)(b)((, 6
from May 13, 2021, through December 31, 2023)). 7
(2) A ((city or county may use revenues pursuant to subsection 8
(1) of this section after May 13, 2021, through December 31, 2023. 9
Thereafter, a )) city or county may use revenues pursuant to 10
subsection (1) of this section if: 11
(a) ((The city or county prepares a written report demonstrating 12
that it has or will have adequate funding from all sources of public 13
funding to pay for all capital projects, as defined in RCW 14
82.46.035(5), identified in its capital facilities plan for the 15
succeeding two-year period; and16
(b)(i))) The city or county has not enacted, after June 9, 2016, 17
any requirement on the listing or sale of real property; or any 18
requirement on landlords, at the time of executing a lease, to 19
perform or provide physical improvements or modifications to real 20
property or fixtures, except if necessary to address an immediate 21
threat to health or safety; 22
(((ii))) (b) Any local requirement adopted by the city or county 23
under (((b)(i))) (a) of this subsection is: Specifically authorized 24
by RCW 35.80.030, 35A.11.020, chapter 7.48 RCW, or chapter 19.27 RCW; 25
specifically authorized by other state or federal law; or a seller or 26
landlord disclosure requirement pursuant to RCW 64.06.080((; or27
(iii) For a city or county using funds under subsection (1)(b) of 28
this section, the requirements of this subsection apply, except that 29
the date for such enactment under (b)(i) of this subsection is ninety 30
days after October 19, 2017.31
(3) The report prepared under subsection (2)(a) of this section 32
must: (a) Include information necessary to determine compliance with 33
the requirements of subsection (2)(a) of this section; (b) identify 34
how revenues collected under RCW 82.46.035 were used by the city or 35
county during the prior two-year period; (c) identify how funds 36
authorized under subsection (1) of this section will be used during 37
the succeeding two-year period; and (d) identify what percentage of 38
funding for capital projects within the city or county is 39
attributable to revenues under RCW 82.46.035 compared to all other 40
p. 23 HB 1791
sources of capital project funding. The city or county must prepare 1
and adopt the report as part of its regular, public budget process.2
(4) For purposes of this section, "maintenance" means the use of 3
funds for labor and materials that will preserve, prevent the decline 4
of, or extend the useful life of a capital project. "Maintenance" 5
does not include labor or material costs for routine operations of a 6
capital project)). 7
NEW SECTION. Sec. 7. RCW 82.32.805 and 82.32.808 do not apply 8
to this act.9
NEW SECTION. Sec. 8. Section 1 of this act expires January 1, 10
2030.11
NEW SECTION. Sec. 9. Section 2 of this act takes effect January 12
1, 2030.13
--- END ---
p. 24 HB 1791