Affordable housing funding

AN ACT Relating to modifying requirements and allowed uses for 1
certain funding related to providing and maintaining affordable 2
housing and related services; amending RCW 82.14.530, 82.14.540, 3
82.45.010, and 82.45.010; reenacting and amending RCW 36.22.250; 4
providing an effective date; and providing an expiration date.5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
Sec. 1. RCW 82.14.530 and 2021 c 27 s 1 are each amended to read 7
as follows: 8
(1)(a)(i) A county legislative authority may submit an 9
authorizing proposition to the county voters at a special or general 10
election and, if the proposition is approved by a majority of persons 11
voting, impose a sales and use tax in accordance with the terms of 12
this chapter. The title of each ballot measure must clearly state the 13
purposes for which the proposed sales and use tax will be used. The 14
rate of tax under this section may not exceed ((one-tenth of one )) 15
0.1 percent of the selling price in the case of a sales tax, or value 16
of the article used, in the case of a use tax. 17
(ii) As an alternative to the authority provided in (a)(i) of 18
this subsection, a county legislative authority may impose, without a 19
proposition approved by a majority of persons voting, a sales and use 20
tax in accordance with the terms of this chapter. The rate of tax 21
H-2800.1
HOUSE BILL 2359
State of Washington 69th Legislature 2026 Regular Session
By Representatives Peterson, Ramel, Reed, Zahn, and Doglio
Prefiled 01/09/26. Read first time 01/12/26. Referred to Committee
on Finance.
p. 1 HB 2359
under this section may not exceed ((one-tenth of one)) 0.1 percent of 1
the selling price in the case of a sales tax, or value of the article 2
used, in the case of a use tax. 3
(b)(i) If a county does not impose the full tax rate authorized 4
under (a) of this subsection by September 30, 2020, any city 5
legislative authority located in that county may: 6
(A) Submit an authorizing proposition to the city voters at a 7
special or general election and, if the proposition is approved by a 8
majority of persons voting, impose the whole or remainder of the 9
sales and use tax rate in accordance with the terms of this chapter. 10
The title of each ballot measure must clearly state the purposes for 11
which the proposed sales and use tax will be used; or12
(B) Impose, without a proposition approved by a majority of 13
persons voting, the whole or remainder of the sales and use tax rate 14
in accordance with the terms of this chapter. 15
(ii) The rate of tax under this section may not exceed ((one-16
tenth of one )) 0.1 percent of the selling price in the case of a 17
sales tax, or value of the article used, in the case of a use tax.18
(iii) A county with a population of greater than ((one million 19
five hundred thousand)) 1,500,000 may impose the tax authorized under 20
(a)(ii) of this subsection only if the county plans to spend at least 21
((thirty)) 30 percent of the moneys collected under this section that 22
are attributable to taxable activities or events within any city with 23
a population greater than ((sixty thousand )) 60,000 located in that 24
county within that city's boundaries. 25
(c) If a county imposes a tax authorized under (a) of this 26
subsection after a city located in that county has imposed the tax 27
authorized under (b) of this subsection, the county must provide a 28
credit against its tax for the full amount of tax imposed by a city.29
(d) The taxes authorized in this subsection are in addition to 30
any other taxes authorized by law and must be collected from persons 31
who are taxable by the state under chapters 82.08 and 82.12 RCW upon 32
the occurrence of any taxable event within the county for a county's 33
tax and within a city for a city's tax.34
(2)(a) Notwithstanding subsection (4) of this section, a minimum 35
of ((sixty)) 60 percent of the moneys collected under this section 36
must be used for the following purposes: 37
(i) Constructing or acquiring affordable housing, which may 38
include emergency, transitional, and supportive housing and new units 39
of affordable housing within an existing structure, and facilities 40
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providing housing-related services, or acquiring land for these 1
purposes; or 2
(ii) Constructing or acquiring behavioral health-related 3
facilities, or acquiring land for these purposes; or4
(iii) Funding the operations and maintenance costs of new and 5
existing units of affordable housing and facilities where housing-6
related programs are provided, or newly constructed evaluation and 7
treatment centers; or8
(iv) Rehabilitating existing affordable housing, which may 9
include emergency, transitional, and supportive housing.10
(b) The affordable housing and facilities providing housing-11
related programs in (a)(i) of this subsection may only be provided to 12
persons within any of the following population groups whose income is 13
at or below ((sixty)) 60 percent of the median income of the county 14
imposing the tax: 15
(i) Persons with behavioral health disabilities;16
(ii) Veterans; 17
(iii) Senior citizens; 18
(iv) Persons who are homeless or at-risk of being homeless, 19
including families with children; 20
(v) Unaccompanied homeless youth or young adults;21
(vi) Persons with disabilities; or 22
(vii) Domestic violence survivors. 23
(c) The remainder of the moneys collected under this section must 24
be used for the operation, delivery, or evaluation of behavioral 25
health treatment programs and services , affordable and supportive 26
housing operation and maintenance, or housing-related services.27
(3)(a) A county that imposes the tax under this section must 28
consult with a city before the county may construct or acquire any of 29
the facilities authorized under subsection (2)(a) of this section 30
within the city limits. 31
(b) Among other priorities, a county that acquires a facility 32
under subsection (2)(a) of this section must provide an opportunity 33
for 15 percent of the units provided at that facility to be provided 34
to individuals who are living in or near the city in which the 35
facility is located, or have ties to that community. The provisions 36
of this subsection (3)(b) do not apply if the county is unable to 37
identify sufficient individuals within the city in need of services 38
that meet the criteria provided in subsection (2)(b) of this section. 39
This prioritization must not jeopardize United States department of 40
p. 3 HB 2359
housing and urban development funding for the continuum of care 1
program. 2
(4) A county that has not imposed the tax authorized under RCW 3
82.14.460 prior to October 9, 2015, but imposes the tax authorized 4
under this section after a city in that county has imposed the tax 5
authorized under RCW 82.14.460 prior to October 9, 2015, must enter 6
into an interlocal agreement with that city to determine how the 7
services and provisions described in subsection (2) of this section 8
will be allocated and funded in the city. 9
(5) To carry out the purposes of subsection (2)(a) and (b) of 10
this section, the legislative authority of the county or city 11
imposing the tax has the authority to issue general obligation or 12
revenue bonds within the limitations now or hereafter prescribed by 13
the laws of this state, and may use, and is authorized to pledge, up 14
to ((fifty)) 50 percent of the moneys collected under this section 15
for repayment of such bonds, in order to finance the provision or 16
construction of affordable housing, facilities where housing-related 17
programs are provided, or evaluation and treatment centers described 18
in subsection (2)(a)(iii) of this section. 19
(6)(a) Moneys collected under this section may be used to offset 20
reductions in state or federal funds for the purposes described in 21
subsection (2) of this section. 22
(b) No more than ((ten)) 10 percent of the moneys collected under 23
this section may be used to supplant existing local funds.24
(7) A county or city may enter into an interlocal agreement with 25
one or more counties, cities, or public housing authorities in 26
accordance with chapter 39.34 RCW. The agreement may include, but is 27
not limited to, pooling the tax receipts received under this section, 28
pledging those taxes to bonds issued by one or more parties to the 29
agreement, and allocating the proceeds of the taxes levied or the 30
bonds issued in accordance with such interlocal agreement and this 31
section.32
Sec. 2. RCW 82.14.540 and 2024 c 136 s 1 are each amended to 33
read as follows: 34
(1) The definitions in this subsection apply throughout this 35
section unless the context clearly requires otherwise.36
(a) "Nonparticipating city" is a city that does not impose a 37
sales and use tax in accordance with the terms of this section.38
p. 4 HB 2359
(b) "Nonparticipating county" is a county that does not impose a 1
sales and use tax in accordance with the terms of this section.2
(c) "Participating city" is a city that imposes a sales and use 3
tax in accordance with the terms of this section. 4
(d) "Participating county" is a county that imposes a sales and 5
use tax in accordance with the terms of this section.6
(e) "Qualifying local tax" means the following tax sources, if 7
the tax source is instated no later than ((twelve)) 12 months after 8
July 28, 2019: 9
(i) The affordable housing levy authorized under RCW 84.52.105;10
(ii) The sales and use tax for housing and related services 11
authorized under RCW 82.14.530, provided the city has imposed the tax 12
at a minimum or of at least half of the authorized rate;13
(iii) The sales tax for chemical dependency and mental health 14
treatment services or therapeutic courts authorized under RCW 15
82.14.460 imposed by a city; and 16
(iv) The levy authorized under RCW 84.55.050, if used solely for 17
affordable housing. 18
(2)(a) A county or city legislative authority may authorize, fix, 19
and impose a sales and use tax in accordance with the terms of this 20
section. 21
(b) The tax under this section is assessed on the selling price 22
in the case of a sales tax, or value of the article used, in the case 23
of a use tax. 24
(c) The rate of the tax under this section for an individual 25
participating city and an individual participating county may not 26
exceed: 27
(i) Beginning on July 28, 2019, until ((twelve)) 12 months after 28
July 28, 2019: 29
(A) 0.0073 percent for a: 30
(I) Participating city, unless the participating city levies a 31
qualifying local tax; and 32
(II) Participating county, within the limits of nonparticipating 33
cities within the county and within participating cities that do not 34
currently levy a qualifying tax; 35
(B) 0.0146 percent for a: 36
(I) Participating city that currently levies a qualifying local 37
tax; 38
(II) Participating city if the county in which it is located 39
declares they will not levy the sales and use tax authorized under 40
p. 5 HB 2359
this section or does not adopt a resolution in accordance with this 1
section; and 2
(III) Participating county within the unincorporated areas of the 3
county and any city that declares they will not levy the sales and 4
use tax authorized under this section or does not adopt a resolution 5
in accordance with this section; 6
(ii) Beginning ((twelve)) 12 months after July 28, 2019:7
(A) 0.0073 percent for a: 8
(I) Participating city that is located within a participating 9
county if the participating city is not levying a qualifying local 10
tax; and 11
(II) Participating county, within the limits of a participating 12
city if the participating city is not levying a qualifying local tax;13
(B) 0.0146 percent within the limits of a: 14
(I) Participating city that is levying a qualifying local tax; 15
and 16
(II) Participating county within the unincorporated area of the 17
county and within the limits of any nonparticipating city that is 18
located within the county. 19
(d) A county may not levy the tax authorized under this section 20
within the limits of a participating city that levies a qualifying 21
local tax. 22
(e)(i) In order for a county or city legislative authority to 23
impose the tax under this section, the authority must adopt:24
(A) A resolution of intent to adopt legislation to authorize the 25
maximum capacity of the tax in this section within six months of July 26
28, 2019; and 27
(B) Legislation to authorize the maximum capacity of the tax in 28
this section within one year of July 28, 2019. 29
(ii) Adoption of the resolution of intent and legislation 30
requires simple majority approval of the enacting legislative 31
authority. 32
(iii) If a county or city has not adopted a resolution of intent 33
in accordance with the terms of this section, the county or city may 34
not authorize, fix, and impose the tax. 35
(3) The tax imposed under this section must be deducted from the 36
amount of tax otherwise required to be collected or paid to the 37
department of revenue under chapter 82.08 or 82.12 RCW. The 38
department must perform the collection of such taxes on behalf of the 39
county or city at no cost to the county or city. 40
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(4) By December 31, 2019, or within ((thirty)) 30 days of a 1
county or city authorizing the tax under this section, whichever is 2
later, the department must calculate the maximum amount of tax 3
distributions for each county and city authorizing the tax under this 4
section as follows: 5
(a) The maximum amount for a participating county equals the 6
taxable retail sales within the county in state fiscal year 2019 7
multiplied by the tax rate imposed under this section. If a county 8
imposes a tax authorized under this section after a city located in 9
that county has imposed the tax, the taxable retail sales within the 10
city in state fiscal year 2019 must be subtracted from the taxable 11
retail sales within the county for the calculation of the maximum 12
amount; and 13
(b) The maximum amount for a city equals the taxable retail sales 14
within the city in state fiscal year 2019 multiplied by the tax rate 15
imposed under subsection (1) of this section. 16
(5) The tax must cease to be distributed to a county or city for 17
the remainder of any fiscal year in which the amount of tax exceeds 18
the maximum amount in subsection (4) of this section. The department 19
must remit any annual tax revenues above the maximum to the state 20
treasurer for deposit in the general fund. Distributions to a county 21
or city meeting the maximum amount must resume at the beginning of 22
the next fiscal year. 23
(6)(a) The moneys collected or bonds issued under this section 24
may only be used for the following purposes: 25
(i) Acquiring, rehabilitating, or constructing affordable 26
housing, which may include new units of affordable housing within an 27
existing structure or facilities providing supportive housing 28
services under RCW 71.24.385; 29
(ii) Funding the operations and maintenance costs of new and 30
existing units of affordable or supportive housing; or31
(iii) For providing rental assistance to tenants.32
(b) Administrative costs of the county or city associated with 33
administering this section may not exceed 10 percent of the annual 34
tax distributed to the jurisdiction under this section.35
(7) The housing and services provided pursuant to subsection (6) 36
of this section may only be provided to persons whose income is at or 37
below 60 percent of the median income of the county or city imposing 38
the tax, or at or below 80 percent of the median income of the county 39
or city imposing the tax if it is supporting the development of 40
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affordable housing intended for owner occupancy, as defined in RCW 1
84.14.010. 2
(8) In determining the use of funds under subsection (6) of this 3
section, a county or city must consider the income of the individuals 4
and families to be served, the leveraging of the resources made 5
available under this section, and the housing needs within the 6
jurisdiction of the taxing authority. 7
(9) To carry out the purposes of this section including, but not 8
limited to, financing loans or grants to nonprofit organizations or 9
public housing authorities, the legislative authority of the county 10
or city imposing the tax has the authority to issue general 11
obligation or revenue bonds within the limitations now or hereafter 12
prescribed by the laws of this state, and may use, and is authorized 13
to pledge, the moneys collected under this section for repayment of 14
such bonds. 15
(10) A county or city may enter into an interlocal agreement with 16
one or more counties, cities, or public housing authorities in 17
accordance with chapter 39.34 RCW. The agreement may include, but is 18
not limited to, pooling the tax receipts received under this section, 19
pledging those taxes to bonds issued by one or more parties to the 20
agreement, and allocating the proceeds of the taxes levied or the 21
bonds issued in accordance with such interlocal agreement and this 22
section. 23
(11) Counties and cities imposing the tax under this section must 24
report annually to the department of commerce on the collection and 25
use of the revenue. The department of commerce must adopt rules 26
prescribing content of such reports. By December 1, 2019, and 27
annually thereafter, and in compliance with RCW 43.01.036, the 28
department of commerce must submit a report annually to the 29
appropriate legislative committees with regard to such uses.30
(12) The tax imposed by a county or city under this section 31
expires ((twenty)) 20 years after the date on which the tax is first 32
imposed. 33
Sec. 3. RCW 36.22.250 and 2025 c 408 s 3, 2025 c 100 s 2, and 34
2025 c 74 s 1 are each reenacted and amended to read as follows:35
(1) A surcharge of $183 per instrument shall be charged by the 36
county auditor for each document recorded, which will be in addition 37
to any other charge authorized by law. The following are exempt from 38
this surcharge: 39
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(a) Documents recording a birth, marriage, divorce, or death;1
(b) Any recorded documents otherwise exempted from a recording 2
fee or additional surcharges under state law; 3
(c) Marriage licenses issued by the county auditor; and4
(d) Documents recording a federal, state, county, city, or water-5
sewer district, or wage lien or satisfaction of lien.6
(2) Funds collected pursuant to this section must be distributed 7
and used as follows: 8
(a) One percent of the total funds collected shall be retained by 9
the county auditor for its fee collection activities;10
(b) 30 percent of the total funds collected shall be retained by 11
the county and used by the county as provided in subsection (3) of 12
this section; 13
(c) 54.1 percent of the total funds collected shall be 14
transmitted to the state treasurer to be deposited in the home 15
security fund account created in RCW 43.185C.060 and shall be used by 16
the department of commerce as provided in subsection (4) of this 17
section; 18
(d) 13.1 percent of the total funds collected shall be 19
transmitted to the state treasurer to be deposited in the affordable 20
housing for all account created in RCW 43.185C.190 and shall be used 21
by the department of commerce as provided in subsection (5) of this 22
section; 23
(e) 1.8 percent of the total funds collected shall be transmitted 24
to the state treasurer to be deposited in the landlord mitigation 25
program account created in RCW 43.31.615 and shall be used by the 26
department of commerce as provided in subsection (6) of this section.27
(3) The county shall use their portion of the collected funds as 28
follows: 29
(a) Except as provided in (b) of this subsection, up to 10 30
percent for the county's administration and local distribution of the 31
funds collected from the surcharge in this section, and 32
administrative costs related to the county's homeless housing plan;33
(b)(i) At least 75 percent will be retained and used by the 34
county to accomplish the purposes of its local homeless housing plan 35
pursuant to chapter 484, Laws of 2005, unless a city in the county 36
elects, as authorized in RCW 43.185C.080, to operate its own local 37
homeless housing program. 38
(ii) If a city in the county elects, as authorized in RCW 39
43.185C.080, to operate its own local homeless housing program, the 40
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10 percent for administrative costs retained under (a) of this 1
subsection and the 75 percent for local homeless housing plans 2
retained under (b) of this subsection must be combined and 3
distributed as follows: For each city in the county that elects as 4
authorized in RCW 43.185C.080 to operate its own local homeless 5
housing program, a percentage of the surcharge assessed under this 6
subsection equal to the percentage of the city's local portion of the 7
real estate excise tax collected by the county shall be transmitted 8
at least quarterly to the city treasurer, without any deduction for 9
county administrative costs, for use by the city for program costs 10
which directly contribute to the goals of the city's local homeless 11
housing plan. Each county or city receiving funds under this 12
subsection (3) may use up to 10 percent of their share of the total 13
funding retained or received under this subsection (3) after the 14
completion of the required city distributions for costs related to:15
(A) The county's administration and local distribution of the 16
funds collected from the surcharge in this section;17
(B) Administrative costs related to the county's homeless housing 18
plan; and 19
(C) Administrative costs related to the city's homeless housing 20
program; 21
(c) At least 15 percent will be retained and used by the county 22
for eligible housing activities, as described in this subsection, 23
that serve extremely low and very low-income households in the county 24
and the cities within a county according to an interlocal agreement 25
between the county and the cities within the county consistent with 26
countywide and local housing needs and policies. A priority must be 27
given to eligible housing activities that serve extremely low-income 28
households with incomes at or below 30 percent of the area median 29
income. Eligible housing activities to be funded are limited to:30
(i) Acquisition, construction, or rehabilitation of housing 31
projects or units within housing projects that are affordable to very 32
low-income households with incomes at or below 50 percent of the area 33
median income, including units for homeownership, rental units, 34
seasonal and permanent farmworker housing units, units reserved for 35
victims of human trafficking and their families, and single room 36
occupancy units; 37
(ii) Supporting building operation and maintenance costs of 38
housing projects or units within housing projects eligible to receive 39
housing trust funds, that are affordable to very low-income 40
p. 10 HB 2359
households with incomes at or below 50 percent of the area median 1
income, and that require a supplement to rent income to cover ongoing 2
operating expenses; 3
(iii) Rental assistance vouchers for housing units that are 4
affordable to very low-income households with incomes at or below 50 5
percent of the area median income, including rental housing vouchers 6
for victims of human trafficking and their families, to be 7
administered by a local public housing authority or other local 8
organization that has an existing rental assistance voucher program, 9
consistent with or similar to the United States department of housing 10
and urban development's section 8 rental assistance voucher program 11
standards; and 12
(iv) Operating costs for emergency shelters and licensed 13
overnight youth shelters. 14
(4) The department of commerce shall use the funds from the 15
document recording fee or other fund sources deposited in the home 16
security fund account as follows, except that the department of 17
commerce shall provide counties with the right of first refusal to 18
receive grant funds distributed under (b) of this subsection (4). If 19
a county refuses the funds or does not respond within a time frame 20
established by the department, the department shall make good faith 21
efforts to identify one or more suitable alternative grantees 22
operating within that county. The alternative grantee shall 23
distribute the funds in a manner that is in compliance with this 24
chapter. Funding provided through the office of homeless youth 25
prevention and protection programs created in RCW 43.330.705 is 26
exempt from the county first refusal requirement. 27
(a) Up to 10 percent for administration of the programs 28
established in chapter 43.185C RCW and in conformance with this 29
subsection (4), including the costs of creating and implementing 30
strategic plans, collecting and evaluating data, measuring and 31
reporting performance, providing technical assistance to local 32
governments, providing training to entities delivering services, and 33
developing and maintaining stakeholder relationships;34
(b) At least 90 percent for homelessness assistance grant 35
programs administered by the department, including but not limited 36
to: Temporary rental assistance; eviction prevention rental 37
assistance per RCW 43.185C.185; emergency shelter and transitional 38
housing operations and maintenance; outreach; diversion; HOPE and 39
crisis residential centers; young adult housing; homeless services 40
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and case management for adult, family, youth, and young adult 1
homeless populations and those at risk of homelessness; project-based 2
vouchers for nonprofit housing providers or public housing 3
authorities; tenant-based rent assistance; housing services; direct 4
cash assistance as provided for in RCW 43.185C.220(5)(a); rapid 5
rehousing; emergency housing; acquisition; operations; maintenance; 6
and service costs for permanent supportive housing as defined in RCW 7
36.70A.030 for individuals with disabilities. Grantees may also use 8
these funds in partnership with permanent supportive housing programs 9
administered by the office of apple health and homes created in RCW 10
43.330.181. Priority for use must be given to purposes intended to 11
house persons who are chronically homeless or to maintain housing for 12
individuals with disabilities and prior experiences of homelessness, 13
including families with children. 14
(5) The department of commerce shall use the funds from the 15
document recording fee or other fund sources deposited in the 16
affordable housing for all account as follows: 17
(a) Up to 10 percent for program administration and technical 18
assistance necessary for the delivery programs and activities under 19
this subsection (5); 20
(b) At least 90 percent for the following: 21
(i) Grants for building operation and maintenance costs of 22
housing projects, or units within housing projects, that are in the 23
state's housing trust fund portfolio ((,)) and are affordable to 24
extremely low-income households with incomes at or below 30 percent 25
of the area median income ((, and require a supplement to rent income 26
to cover ongoing operating expenses)) at the time of move-in;27
(ii) Grants to support the building operations, maintenance, and 28
supportive service costs for permanent supportive housing projects, 29
or units within housing projects, that have received or will receive 30
funding from the housing trust fund or other public capital funding 31
programs. The supported projects or units must be dedicated as 32
permanent supportive housing as defined in RCW 36.70A.030((,)) and be 33
occupied by extremely low-income households with incomes at or below 34
30 percent of the area median income ((, and require a supplement to 35
rent income to cover ongoing property operations, maintenance, and 36
supportive services expenses )) at the time of move-in . Eligible uses 37
of grant funds under this subsection (5)(b)(ii) include, but are not 38
limited to:39
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(A) Resident services, such as programming, community events, and 1
building activities, including meals and supplies;2
(B) Essential ancillary services necessary to assist program 3
participants who are not covered or are partially covered by medicaid 4
or other health insurance obtain and maintain housing. These services 5
may include, but are not limited to, annual assessments of services, 6
case management, education services, employment assistance and job 7
training, counseling, life skills training, mental health services, 8
outpatient health services, outreach, substance use treatment, 9
transportation, and other support services;10
(C) Resident needs for basic living and well-being, such as 11
hygiene products, housewares, and food; essential household goods; 12
and transportation support for health care, treatment, and case 13
management;14
(D) Essential maintenance and upkeep, including repair and 15
replacement of fixtures needed for basic building functionality and 16
occupational safety, such as lighting, security systems, locks and 17
key systems, and window and door hardware; and required operational 18
replacement reserves; and19
(E) Essential case management and other resources with 20
demonstrable connection to resident well-being and housing stability, 21
such as communal information technology hardware and software for 22
resource navigation and telehealth appointments, 24/7 security and 23
safety staff, and on-call resident emergency response.24
(6) The department of commerce shall use the funds from the 25
document recording fee or other fund sources deposited in the 26
landlord mitigation program account to administer the landlord 27
mitigation program as established in RCW 43.31.605. The department of 28
commerce may use up to 10 percent of these funds for program 29
administration and the development and maintenance of a database 30
necessary to administer the program. 31
(7) When awarding grants under subsection (5)(b)(i) and (ii) of 32
this section, the department of commerce:33
(a) May not impose a cap on administrative or overhead costs for 34
grantees of less than 15 percent of the grant award; and35
(b) Shall seek to promote continuity of operations and stability 36
for existing projects including by maintaining renewal grant amounts 37
at levels sufficient to support ongoing operations.38
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(8) The department of commerce shall require grantees to maintain 1
comprehensive records for all expenses above $50 and require 2
submission of documentation, upon request, for auditing purposes.3
Sec. 4. RCW 82.45.010 and 2025 c 159 s 1 are each amended to 4
read as follows: 5
(1) As used in this chapter, the term "sale" has its ordinary 6
meaning and includes any conveyance, grant, assignment, quitclaim, or 7
transfer of the ownership of or title to real property, including 8
standing timber, or any estate or interest therein for a valuable 9
consideration, and any contract for such conveyance, grant, 10
assignment, quitclaim, or transfer, and any lease with an option to 11
purchase real property, including standing timber, or any estate or 12
interest therein or other contract under which possession of the 13
property is given to the purchaser, or any other person at the 14
purchaser's direction, and title to the property is retained by the 15
vendor as security for the payment of the purchase price. The term 16
also includes the grant, assignment, quitclaim, sale, or transfer of 17
improvements constructed upon leased land. 18
(2)(a) The term "sale" also includes the transfer or acquisition 19
within any 36 month period of a controlling interest in any entity 20
with an interest in real property located in this state for a 21
valuable consideration. 22
(b) For the sole purpose of determining whether, pursuant to the 23
exercise of an option, a controlling interest was transferred or 24
acquired within a 36 month period, the date that the option agreement 25
was executed is the date on which the transfer or acquisition of the 26
controlling interest is deemed to occur. For all other purposes under 27
this chapter, the date upon which the option is exercised is the date 28
of the transfer or acquisition of the controlling interest.29
(c) For purposes of this subsection, all acquisitions of persons 30
acting in concert must be aggregated for purposes of determining 31
whether a transfer or acquisition of a controlling interest has taken 32
place. The department must adopt standards by rule to determine when 33
persons are acting in concert. In adopting a rule for this purpose, 34
the department must consider the following: 35
(i) Persons must be treated as acting in concert when they have a 36
relationship with each other such that one person influences or 37
controls the actions of another through common ownership; and38
p. 14 HB 2359
(ii) When persons are not commonly owned or controlled, they must 1
be treated as acting in concert only when the unity with which the 2
purchasers have negotiated and will consummate the transfer of 3
ownership interests supports a finding that they are acting as a 4
single entity. If the acquisitions are completely independent, with 5
each purchaser buying without regard to the identity of the other 6
purchasers, then the acquisitions are considered separate 7
acquisitions. 8
(3) The term "sale" does not include: 9
(a) A transfer by gift, devise, or inheritance.10
(b) A transfer by transfer on death deed, to the extent that it 11
is not in satisfaction of a contractual obligation of the decedent 12
owed to the recipient of the property. 13
(c) A transfer of any leasehold interest other than of the type 14
mentioned above. 15
(d) A cancellation or forfeiture of a vendee's interest in a 16
contract for the sale of real property, whether or not such contract 17
contains a forfeiture clause, or deed in lieu of foreclosure of a 18
mortgage. 19
(e) The partition of property by tenants in common by agreement 20
or as the result of a court decree. 21
(f) The assignment of property or interest in property from one 22
spouse or one domestic partner to the other spouse or other domestic 23
partner in accordance with the terms of a decree of dissolution of 24
marriage or state registered domestic partnership or in fulfillment 25
of a property settlement agreement. 26
(g) The assignment or other transfer of a vendor's interest in a 27
contract for the sale of real property, even though accompanied by a 28
conveyance of the vendor's interest in the real property involved.29
(h) Transfers by appropriation or decree in condemnation 30
proceedings brought by the United States, the state or any political 31
subdivision thereof, or a municipal corporation. 32
(i) A mortgage or other transfer of an interest in real property 33
merely to secure a debt, or the assignment thereof.34
(j) Any transfer or conveyance made pursuant to a deed of trust 35
or an order of sale by the court in any mortgage, deed of trust, or 36
lien foreclosure proceeding or upon execution of a judgment, or deed 37
in lieu of foreclosure to satisfy a mortgage or deed of trust.38
(k) A conveyance to the federal housing administration or 39
veterans administration by an authorized mortgagee made pursuant to a 40
p. 15 HB 2359
contract of insurance or guaranty with the federal housing 1
administration or veterans administration. 2
(l) A transfer in compliance with the terms of any lease or 3
contract upon which the tax as imposed by this chapter has been paid 4
or where the lease or contract was entered into prior to the date 5
this tax was first imposed. 6
(m) The sale of any grave or lot in an established cemetery.7
(n) A sale by the United States, this state or any political 8
subdivision thereof, or a municipal corporation of this state.9
(o) A sale to a regional transit authority or public corporation 10
under RCW 81.112.320 under a sale/leaseback agreement under RCW 11
81.112.300. 12
(p) A transfer of real property, however effected, if it consists 13
of a mere change in identity or form of ownership of an entity where 14
there is no change in the beneficial ownership. These include 15
transfers to a corporation or partnership which is wholly owned by 16
the transferor and/or the transferor's spouse or domestic partner or 17
children of the transferor or the transferor's spouse or domestic 18
partner. However, if thereafter such transferee corporation or 19
partnership voluntarily transfers such real property, or such 20
transferor, spouse or domestic partner, or children of the transferor 21
or the transferor's spouse or domestic partner voluntarily transfer 22
stock in the transferee corporation or interest in the transferee 23
partnership capital, as the case may be, to other than (i) the 24
transferor and/or the transferor's spouse or domestic partner or 25
children of the transferor or the transferor's spouse or domestic 26
partner, (ii) a trust having the transferor and/or the transferor's 27
spouse or domestic partner or children of the transferor or the 28
transferor's spouse or domestic partner as the only beneficiaries at 29
the time of the transfer to the trust, or (iii) a corporation or 30
partnership wholly owned by the original transferor and/or the 31
transferor's spouse or domestic partner or children of the transferor 32
or the transferor's spouse or domestic partner, within three years of 33
the original transfer to which this exemption applies, and the tax on 34
the subsequent transfer has not been paid within 60 days of becoming 35
due, excise taxes become due and payable on the original transfer as 36
otherwise provided by law. 37
(q)(i) A transfer that for federal income tax purposes does not 38
involve the recognition of gain or loss for entity formation, 39
liquidation or dissolution, and reorganization, including but not 40
p. 16 HB 2359
limited to nonrecognition of gain or loss because of application of 1
26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 of the internal 2
revenue code of 1986, as amended. 3
(ii) However, the transfer described in (q)(i) of this subsection 4
cannot be preceded or followed within a 36 month period by another 5
transfer or series of transfers, that, when combined with the 6
otherwise exempt transfer or transfers described in (q)(i) of this 7
subsection, results in the transfer of a controlling interest in the 8
entity for valuable consideration, and in which one or more persons 9
previously holding a controlling interest in the entity receive cash 10
or property in exchange for any interest the person or persons acting 11
in concert hold in the entity. This subsection (3)(q)(ii) does not 12
apply to that part of the transfer involving property received that 13
is the real property interest that the person or persons originally 14
contributed to the entity or when one or more persons who did not 15
contribute real property or belong to the entity at a time when real 16
property was purchased receive cash or personal property in exchange 17
for that person or persons' interest in the entity. The real estate 18
excise tax under this subsection (3)(q)(ii) is imposed upon the 19
person or persons who previously held a controlling interest in the 20
entity. 21
(r) A qualified sale of a manufactured/mobile home community, as 22
defined in RCW 59.20.030. 23
(s)(i) A transfer of a qualified low-income housing development 24
or controlling interest in a qualified low-income housing 25
development, unless, due to noncompliance with federal statutory 26
requirements, the seller is subject to recapture, in whole or in 27
part, of its allocated federal low-income housing tax credits within 28
the four years prior to the date of transfer. 29
(ii) For purposes of this subsection (3)(s), "qualified low-30
income housing development" means real property and improvements in 31
respect to which the seller or, in the case of a transfer of a 32
controlling interest, the owner or beneficial owner, was allocated 33
federal low-income housing tax credits authorized under 26 U.S.C. 34
Sec. 42 or successor statute, by the Washington state housing finance 35
commission or successor state-authorized tax credit allocating 36
agency. 37
(iii) This subsection (3)(s) does not apply to transfers of a 38
qualified low-income housing development or controlling interest in a 39
p. 17 HB 2359
qualified low-income housing development occurring on or after July 1
1, 2035. 2
(iv) The Washington state housing finance commission, in 3
consultation with the department, must gather data on: (A) The fiscal 4
savings, if any, accruing to transferees as a result of the exemption 5
provided in this subsection (3)(s); (B) the extent to which 6
transferors of qualified low-income housing developments receive 7
consideration, including any assumption of debt, as part of a 8
transfer subject to the exemption provided in this subsection (3)(s); 9
and (C) the continued use of the property for low-income housing. The 10
Washington state housing finance commission must provide this 11
information to the joint legislative audit and review committee. The 12
committee must conduct a review of the tax preference created under 13
this subsection (3)(s) in calendar year 2033, as required under 14
chapter 43.136 RCW. 15
(t)(i) A qualified transfer of residential property by a legal 16
representative of a person with developmental disabilities to a 17
qualified entity subject to the following conditions:18
(A) The adult child with developmental disabilities of the 19
transferor of the residential property must be allowed to reside in 20
the residence or successor property so long as the placement is safe 21
and appropriate as determined by the department of social and health 22
services; 23
(B) The title to the residential property is conveyed without the 24
receipt of consideration by the legal representative of a person with 25
developmental disabilities to a qualified entity; 26
(C) The residential property must have no more than four living 27
units located on it; and 28
(D) The residential property transferred must remain in continued 29
use for 50 years by the qualified entity as supported living for 30
persons with developmental disabilities by the qualified entity or 31
successor entity. If the qualified entity sells or otherwise conveys 32
ownership of the residential property the proceeds of the sale or 33
conveyance must be used to acquire similar residential property and 34
such similar residential property must be considered the successor 35
for continued use. The property will not be considered in continued 36
use if the department of social and health services finds that the 37
property has failed, after a reasonable time to remedy, to meet any 38
health and safety statutory or regulatory requirements. If the 39
department of social and health services determines that the property 40
p. 18 HB 2359
fails to meet the requirements for continued use, the department of 1
social and health services must notify the department and the real 2
estate excise tax based on the value of the property at the time of 3
the transfer into use as residential property for persons with 4
developmental disabilities becomes immediately due and payable by the 5
qualified entity. The tax due is not subject to penalties, fees, or 6
interest under this title. 7
(ii) For the purposes of this subsection (3)(t) the definitions 8
in RCW 71A.10.020 apply. 9
(iii) A "qualified entity" is: 10
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 11
of the federal internal revenue code of 1986, as amended, as of June 12
7, 2018, or a subsidiary under the same taxpayer identification 13
number that provides residential supported living for persons with 14
developmental disabilities; or 15
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 16
that exclusively serves persons with developmental disabilities.17
(iv) In order to receive an exemption under this subsection 18
(3)(t) an affidavit must be submitted by the transferor of the 19
residential property and must include a copy of the transfer 20
agreement and any other documentation as required by the department.21
(u)(i) The sale by an affordable homeownership facilitator of 22
self-help housing to a low-income household. 23
(ii) The definitions in this subsection (3)(u) apply to this 24
subsection (3)(u) unless the context clearly requires otherwise.25
(A) "Affordable homeownership facilitator" means a nonprofit 26
community or neighborhood-based organization that is exempt from 27
income tax under Title 26 U.S.C. Sec. 501 (c) of the internal revenue 28
code of 1986, as amended, as of October 1, 2019, and that is the 29
developer of self-help housing. 30
(B) "Low-income" means household income as defined by the 31
department, provided that the definition may not exceed 80 percent of 32
median household income, adjusted for household size, for the county 33
in which the dwelling is located. 34
(C) "Self-help housing" means dwelling residences provided for 35
ownership by low-income individuals and families whose ownership 36
requirement includes labor participation. "Self-help housing" does 37
not include residential rental housing provided on a commercial basis 38
to the general public. 39
p. 19 HB 2359
(v)(i) A sale or transfer of real property to a qualifying 1
grantee that uses the property for housing for low-income persons and 2
receives or otherwise qualifies the property for an exemption from 3
real and personal property taxes under RCW 84.36.560, 84.36.049, 4
35.82.210, 35.21.755, or 84.36.010. For purposes of this subsection 5
(3)(v), "qualifying grantee" means a nonprofit entity as defined in 6
RCW 84.36.560, a nonprofit entity or qualified cooperative 7
association as defined in RCW 84.36.049, a housing authority created 8
under RCW 35.82.030 or 35.82.300, a public corporation established 9
under RCW 35.21.660 or 35.21.730, or a county or municipal 10
corporation. A qualifying grantee that is a county or municipal 11
corporation must record a covenant at the time of transfer that 12
prohibits using the property for any purpose other than for low-13
income housing for a period of at least 10 years. At a minimum, the 14
covenant must address price restrictions and household income limits 15
for the low-income housing. A qualifying grantee must comply with the 16
requirements described in (v)(i)(A), (B), or (C) of this subsection 17
and must also certify, by affidavit at the time of sale or transfer, 18
that it intends to comply with those requirements.19
(A) If the qualifying grantee intends to operate existing housing 20
on the property, within ((one year )) 24 months of the sale or 21
transfer: 22
(I) The qualifying grantee must receive or qualify the property 23
for a tax exemption under RCW 84.36.560, 84.36.049, 24
35.82.210, 35.21.755, or 84.36.010; and 25
(II) The property must be used as housing for low-income persons.26
(B) If the qualifying grantee intends to develop new housing on 27
the site, within five years of the sale or transfer:28
(I) The qualifying grantee must receive or qualify the property 29
for a tax exemption under RCW 84.36.560, 84.36.049, 30
35.82.210, 35.21.755, or 84.36.010; and 31
(II) The property must be used as housing for low-income persons.32
(C) If the qualifying grantee intends to substantially 33
rehabilitate the premises as defined in RCW 59.18.200, within three 34
years: 35
(I) The qualifying grantee must receive or qualify the property 36
for a tax exemption under RCW 84.36.560, 84.36.049, 37
35.82.210, 35.21.755, or 84.36.010; and 38
(II) The property must be used as housing for low-income persons.39
p. 20 HB 2359
(ii) If the qualifying grantee fails to satisfy the requirements 1
described in (v)(i)(A), (B), or (C) of this subsection, within the 2
timelines described in (v)(i)(A), (B), or (C) of this subsection, the 3
qualifying grantee must pay the tax that would have otherwise been 4
due at the time of initial transfer, plus interest calculated from 5
the date of initial transfer pursuant to RCW 82.32.050.6
(iii) If a qualifying grantee transfers the property to a 7
different qualifying grantee within the original timelines described 8
in (v)(i)(A), (B), or (C) of this subsection, neither the original 9
qualifying grantee nor the new qualifying grantee is required to pay 10
the tax, so long as the new qualifying grantee satisfies the 11
requirements as described in (v)(i)(A), (B), or (C) of this 12
subsection within the exemption period of the initial transfer. If 13
the new qualifying grantee fails to satisfy the requirements 14
described in (v)(i)(A), (B), or (C) of this subsection, only the new 15
qualifying grantee is liable for the payment of taxes required by 16
(v)(ii) of this subsection. There is no limit on the number of 17
transfers between qualifying grantees within the original timelines.18
(iv) Each affidavit must be filed with the department upon 19
completion of the sale or transfer of property, including transfers 20
from a qualifying grantee to a different qualifying grantee. The 21
qualifying grantee must provide proof to the department as required 22
by the department once the requirements as described in (v)(i)(A), 23
(B), or (C) of this subsection have been satisfied.24
(v) For the purposes of this subsection (3)(v), "low-income" has 25
the same meaning as in (u) of this subsection. 26
(w)(i) Beginning January 1, 2026, the sale of qualified space in 27
a development that qualifies for a property tax exemption under RCW 28
84.36.560, 84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a 29
nonprofit organization, a housing authority, or public corporation 30
for use for an exempt community purpose. 31
(ii) For the purposes of this subsection (3)(w), the following 32
definitions apply: 33
(A) "Affordable housing development" means a development with 34
housing provided to households with a household income that does not 35
exceed 80 percent of median household income at initial occupancy, 36
adjusted for household size, for the county in which the dwelling is 37
located. 38
(B) "Exempt community purpose" means any use to provide a service 39
that benefits affordable housing development tenants or the public 40
p. 21 HB 2359
including, but not limited to, health clinics, senior day care, food 1
banks, community centers, and early learning facilities.2
(C) "Nonprofit organization" means an organization exempt from 3
taxation under section 501 (c)(3) of the internal revenue code of 1986 4
(26 U.S.C. Sec. 501(c)(3)), as amended. 5
(D) "Qualified space" means any portion of an affordable housing 6
development that is accessible to tenants or the public that 7
constitutes a separate legal parcel of property under chapter 64.32, 8
64.34, or 64.90 RCW. 9
Sec. 5. RCW 82.45.010 and 2025 c 159 s 2 are each amended to 10
read as follows: 11
(1) As used in this chapter, the term "sale" has its ordinary 12
meaning and includes any conveyance, grant, assignment, quitclaim, or 13
transfer of the ownership of or title to real property, including 14
standing timber, or any estate or interest therein for a valuable 15
consideration, and any contract for such conveyance, grant, 16
assignment, quitclaim, or transfer, and any lease with an option to 17
purchase real property, including standing timber, or any estate or 18
interest therein or other contract under which possession of the 19
property is given to the purchaser, or any other person at the 20
purchaser's direction, and title to the property is retained by the 21
vendor as security for the payment of the purchase price. The term 22
also includes the grant, assignment, quitclaim, sale, or transfer of 23
improvements constructed upon leased land. 24
(2)(a) The term "sale" also includes the transfer or acquisition 25
within any 36 month period of a controlling interest in any entity 26
with an interest in real property located in this state for a 27
valuable consideration. 28
(b) For the sole purpose of determining whether, pursuant to the 29
exercise of an option, a controlling interest was transferred or 30
acquired within a 36 month period, the date that the option agreement 31
was executed is the date on which the transfer or acquisition of the 32
controlling interest is deemed to occur. For all other purposes under 33
this chapter, the date upon which the option is exercised is the date 34
of the transfer or acquisition of the controlling interest.35
(c) For purposes of this subsection, all acquisitions of persons 36
acting in concert must be aggregated for purposes of determining 37
whether a transfer or acquisition of a controlling interest has taken 38
place. The department must adopt standards by rule to determine when 39
p. 22 HB 2359
persons are acting in concert. In adopting a rule for this purpose, 1
the department must consider the following: 2
(i) Persons must be treated as acting in concert when they have a 3
relationship with each other such that one person influences or 4
controls the actions of another through common ownership; and5
(ii) When persons are not commonly owned or controlled, they must 6
be treated as acting in concert only when the unity with which the 7
purchasers have negotiated and will consummate the transfer of 8
ownership interests supports a finding that they are acting as a 9
single entity. If the acquisitions are completely independent, with 10
each purchaser buying without regard to the identity of the other 11
purchasers, then the acquisitions are considered separate 12
acquisitions. 13
(3) The term "sale" does not include: 14
(a) A transfer by gift, devise, or inheritance.15
(b) A transfer by transfer on death deed, to the extent that it 16
is not in satisfaction of a contractual obligation of the decedent 17
owed to the recipient of the property. 18
(c) A transfer of any leasehold interest other than of the type 19
mentioned above. 20
(d) A cancellation or forfeiture of a vendee's interest in a 21
contract for the sale of real property, whether or not such contract 22
contains a forfeiture clause, or deed in lieu of foreclosure of a 23
mortgage. 24
(e) The partition of property by tenants in common by agreement 25
or as the result of a court decree. 26
(f) The assignment of property or interest in property from one 27
spouse or one domestic partner to the other spouse or other domestic 28
partner in accordance with the terms of a decree of dissolution of 29
marriage or state registered domestic partnership or in fulfillment 30
of a property settlement agreement. 31
(g) The assignment or other transfer of a vendor's interest in a 32
contract for the sale of real property, even though accompanied by a 33
conveyance of the vendor's interest in the real property involved.34
(h) Transfers by appropriation or decree in condemnation 35
proceedings brought by the United States, the state or any political 36
subdivision thereof, or a municipal corporation. 37
(i) A mortgage or other transfer of an interest in real property 38
merely to secure a debt, or the assignment thereof.39
p. 23 HB 2359
(j) Any transfer or conveyance made pursuant to a deed of trust 1
or an order of sale by the court in any mortgage, deed of trust, or 2
lien foreclosure proceeding or upon execution of a judgment, or deed 3
in lieu of foreclosure to satisfy a mortgage or deed of trust.4
(k) A conveyance to the federal housing administration or 5
veterans administration by an authorized mortgagee made pursuant to a 6
contract of insurance or guaranty with the federal housing 7
administration or veterans administration. 8
(l) A transfer in compliance with the terms of any lease or 9
contract upon which the tax as imposed by this chapter has been paid 10
or where the lease or contract was entered into prior to the date 11
this tax was first imposed. 12
(m) The sale of any grave or lot in an established cemetery.13
(n) A sale by the United States, this state or any political 14
subdivision thereof, or a municipal corporation of this state.15
(o) A sale to a regional transit authority or public corporation 16
under RCW 81.112.320 under a sale/leaseback agreement under RCW 17
81.112.300. 18
(p) A transfer of real property, however effected, if it consists 19
of a mere change in identity or form of ownership of an entity where 20
there is no change in the beneficial ownership. These include 21
transfers to a corporation or partnership which is wholly owned by 22
the transferor and/or the transferor's spouse or domestic partner or 23
children of the transferor or the transferor's spouse or domestic 24
partner. However, if thereafter such transferee corporation or 25
partnership voluntarily transfers such real property, or such 26
transferor, spouse or domestic partner, or children of the transferor 27
or the transferor's spouse or domestic partner voluntarily transfer 28
stock in the transferee corporation or interest in the transferee 29
partnership capital, as the case may be, to other than (i) the 30
transferor and/or the transferor's spouse or domestic partner or 31
children of the transferor or the transferor's spouse or domestic 32
partner, (ii) a trust having the transferor and/or the transferor's 33
spouse or domestic partner or children of the transferor or the 34
transferor's spouse or domestic partner as the only beneficiaries at 35
the time of the transfer to the trust, or (iii) a corporation or 36
partnership wholly owned by the original transferor and/or the 37
transferor's spouse or domestic partner or children of the transferor 38
or the transferor's spouse or domestic partner, within three years of 39
the original transfer to which this exemption applies, and the tax on 40
p. 24 HB 2359
the subsequent transfer has not been paid within sixty days of 1
becoming due, excise taxes become due and payable on the original 2
transfer as otherwise provided by law. 3
(q)(i) A transfer that for federal income tax purposes does not 4
involve the recognition of gain or loss for entity formation, 5
liquidation or dissolution, and reorganization, including but not 6
limited to nonrecognition of gain or loss because of application of 7
26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 of the internal 8
revenue code of 1986, as amended. 9
(ii) However, the transfer described in (q)(i) of this subsection 10
cannot be preceded or followed within a 36 month period by another 11
transfer or series of transfers, that, when combined with the 12
otherwise exempt transfer or transfers described in (q)(i) of this 13
subsection, results in the transfer of a controlling interest in the 14
entity for valuable consideration, and in which one or more persons 15
previously holding a controlling interest in the entity receive cash 16
or property in exchange for any interest the person or persons acting 17
in concert hold in the entity. This subsection (3)(q)(ii) does not 18
apply to that part of the transfer involving property received that 19
is the real property interest that the person or persons originally 20
contributed to the entity or when one or more persons who did not 21
contribute real property or belong to the entity at a time when real 22
property was purchased receive cash or personal property in exchange 23
for that person or persons' interest in the entity. The real estate 24
excise tax under this subsection (3)(q)(ii) is imposed upon the 25
person or persons who previously held a controlling interest in the 26
entity. 27
(r) A qualified sale of a manufactured/mobile home community, as 28
defined in RCW 59.20.030, that takes place on or after June 12, 2008, 29
but before December 31, 2018. 30
(s)(i) A transfer of a qualified low-income housing development 31
or controlling interest in a qualified low-income housing 32
development, unless, due to noncompliance with federal statutory 33
requirements, the seller is subject to recapture, in whole or in 34
part, of its allocated federal low-income housing tax credits within 35
the four years prior to the date of transfer. 36
(ii) For purposes of this subsection (3)(s), "qualified low-37
income housing development" means real property and improvements in 38
respect to which the seller or, in the case of a transfer of a 39
controlling interest, the owner or beneficial owner, was allocated 40
p. 25 HB 2359
federal low-income housing tax credits authorized under 26 U.S.C. 1
Sec. 42 or successor statute, by the Washington state housing finance 2
commission or successor state-authorized tax credit allocating 3
agency. 4
(iii) This subsection (3)(s) does not apply to transfers of a 5
qualified low-income housing development or controlling interest in a 6
qualified low-income housing development occurring on or after July 7
1, 2035. 8
(iv) The Washington state housing finance commission, in 9
consultation with the department, must gather data on: (A) The fiscal 10
savings, if any, accruing to transferees as a result of the exemption 11
provided in this subsection (3)(s); (B) the extent to which 12
transferors of qualified low-income housing developments receive 13
consideration, including any assumption of debt, as part of a 14
transfer subject to the exemption provided in this subsection (3)(s); 15
and (C) the continued use of the property for low-income housing. The 16
Washington state housing finance commission must provide this 17
information to the joint legislative audit and review committee. The 18
committee must conduct a review of the tax preference created under 19
this subsection (3)(s) in calendar year 2033, as required under 20
chapter 43.136 RCW. 21
(t)(i) A qualified transfer of residential property by a legal 22
representative of a person with developmental disabilities to a 23
qualified entity subject to the following conditions:24
(A) The adult child with developmental disabilities of the 25
transferor of the residential property must be allowed to reside in 26
the residence or successor property so long as the placement is safe 27
and appropriate as determined by the department of social and health 28
services; 29
(B) The title to the residential property is conveyed without the 30
receipt of consideration by the legal representative of a person with 31
developmental disabilities to a qualified entity; 32
(C) The residential property must have no more than four living 33
units located on it; and 34
(D) The residential property transferred must remain in continued 35
use for 50 years by the qualified entity as supported living for 36
persons with developmental disabilities by the qualified entity or 37
successor entity. If the qualified entity sells or otherwise conveys 38
ownership of the residential property the proceeds of the sale or 39
conveyance must be used to acquire similar residential property and 40
p. 26 HB 2359
such similar residential property must be considered the successor 1
for continued use. The property will not be considered in continued 2
use if the department of social and health services finds that the 3
property has failed, after a reasonable time to remedy, to meet any 4
health and safety statutory or regulatory requirements. If the 5
department of social and health services determines that the property 6
fails to meet the requirements for continued use, the department of 7
social and health services must notify the department and the real 8
estate excise tax based on the value of the property at the time of 9
the transfer into use as residential property for persons with 10
developmental disabilities becomes immediately due and payable by the 11
qualified entity. The tax due is not subject to penalties, fees, or 12
interest under this title. 13
(ii) For the purposes of this subsection (3)(t) the definitions 14
in RCW 71A.10.020 apply. 15
(iii) A "qualified entity" is: 16
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 17
of the federal internal revenue code of 1986, as amended, as of June 18
7, 2018, or a subsidiary under the same taxpayer identification 19
number that provides residential supported living for persons with 20
developmental disabilities; or 21
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 22
that exclusively serves persons with developmental disabilities.23
(iv) In order to receive an exemption under this subsection 24
(3)(t) an affidavit must be submitted by the transferor of the 25
residential property and must include a copy of the transfer 26
agreement and any other documentation as required by the department.27
(u)(i) A sale or transfer of real property to a qualifying 28
grantee that uses the property for housing for low-income persons and 29
receives or otherwise qualifies the property for an exemption from 30
real and personal property taxes under RCW 84.36.560, 84.36.049, 31
35.82.210, 35.21.755, or 84.36.010. For purposes of this subsection 32
(3)(u), "qualifying grantee" means a nonprofit entity as defined in 33
RCW 84.36.560, a nonprofit entity or qualified cooperative 34
association as defined in RCW 84.36.049, a housing authority created 35
under RCW 35.82.030 or 35.82.300, a public corporation established 36
under RCW 35.21.660 or 35.21.730, or a county or municipal 37
corporation. A qualifying grantee that is a county or municipal 38
corporation must record a covenant at the time of transfer that 39
prohibits using the property for any purpose other than for low-40
p. 27 HB 2359
income housing for a period of at least 10 years. At a minimum, the 1
covenant must address price restrictions and household income limits 2
for the low-income housing. A qualifying grantee must comply with the 3
requirements described in (u)(i)(A), (B), or (C) of this subsection 4
and must also certify, by affidavit at the time of sale or transfer, 5
that it intends to comply with those requirements. 6
(A) If the qualifying grantee intends to operate existing housing 7
on the property, within ((one year )) 24 months of the sale or 8
transfer: 9
(I) The qualifying grantee must receive or qualify the property 10
for a tax exemption under RCW 84.36.560, 84.36.049, 11
35.82.210, 35.21.755, or 84.36.010; and 12
(II) The property must be used as housing for low-income persons.13
(B) If the qualifying grantee intends to develop new housing on 14
the site, within five years of the sale or transfer:15
(I) The qualifying grantee must receive or qualify the property 16
for a tax exemption under RCW 84.36.560, 84.36.049, 17
35.82.210, 35.21.755, or 84.36.010; and 18
(II) The property must be used as housing for low-income persons.19
(C) If the qualifying grantee intends to substantially 20
rehabilitate the premises as defined in RCW 59.18.200, within three 21
years: 22
(I) The qualifying grantee must receive or qualify the property 23
for a tax exemption under RCW 84.36.560, 84.36.049, 24
35.82.210, 35.21.755, or 84.36.010; and 25
(II) The property must be used as housing for low-income persons.26
(ii) If the qualifying grantee fails to satisfy the requirements 27
described in (u)(i)(A), (B), or (C) of this subsection, within the 28
timelines described in (u)(i)(A), (B), or (C) of this subsection, the 29
qualifying grantee must pay the tax that would have otherwise been 30
due at the time of initial transfer, plus interest calculated from 31
the date of initial transfer pursuant to RCW 82.32.050.32
(iii) If a qualifying grantee transfers the property to a 33
different qualifying grantee within the original timelines described 34
in (u)(i)(A), (B), or (C) of this subsection, neither the original 35
qualifying grantee nor the new qualifying grantee is required to pay 36
the tax, so long as the new qualifying grantee satisfies the 37
requirements as described in (u)(i)(A), (B), or (C) of this 38
subsection within the exemption period of the initial transfer. If 39
the new qualifying grantee fails to satisfy the requirements 40
p. 28 HB 2359
described in (u)(i)(A), (B), or (C) of this subsection, only the new 1
qualifying grantee is liable for the payment of taxes required by 2
(u)(ii) of this subsection. There is no limit on the number of 3
transfers between qualifying grantees within the original timelines.4
(iv) Each affidavit must be filed with the department upon 5
completion of the sale or transfer of property, including transfers 6
from a qualifying grantee to a different qualifying grantee. The 7
qualifying grantee must provide proof to the department as required 8
by the department once the requirements as described in (u)(i)(A), 9
(B), or (C) of this subsection have been satisfied.10
(v) For the purposes of this subsection (3)(u), "low-income" 11
means household income as defined by the department, provided that 12
the definition may not exceed 80 percent of median household income, 13
adjusted for household size, for the county in which the dwelling is 14
located. 15
(v)(i) The sale of qualified space in a development that 16
qualifies for a property tax exemption under RCW 84.36.560, 17
84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a nonprofit 18
organization, a housing authority, or public corporation for use for 19
an exempt community purpose. 20
(ii) For the purposes of this subsection (3)(v), the following 21
definitions apply: 22
(A) "Affordable housing development" means a development with 23
housing provided to households with a household income that does not 24
exceed 80 percent of median household income at initial occupancy, 25
adjusted for household size, for the county in which the dwelling is 26
located. 27
(B) "Exempt community purpose" means any use to provide a service 28
that benefits affordable housing development tenants or the public 29
including, but not limited to, health clinics, senior day care, food 30
banks, community centers, and early learning facilities.31
(C) "Nonprofit organization" means an organization exempt from 32
taxation under section 501 (c)(3) of the internal revenue code of 1986 33
(26 U.S.C. Sec. 501(c)(3)), as amended. 34
(D) "Qualified space" means any portion of an affordable housing 35
development that is accessible to tenants or the public that 36
constitutes a separate legal parcel of property under chapter 64.32, 37
64.34, or 64.90 RCW. 38
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NEW SECTION. Sec. 6. Section 4 of this act expires January 1, 1
2030.2
NEW SECTION. Sec. 7. Section 5 of this act takes effect January 3
1, 2030.4
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p. 30 HB 2359