Affordable housing funding

AN ACT Relating to providing a local government option for the 1
funding of essential affordable housing programs; amending RCW 2
67.28.181 and 82.14.410; and adding a new chapter to Title 82 RCW.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. (1)(a) The legislative body of a county, 5
city, or town may impose a special excise tax on the sale of or 6
charge made for the furnishing of lodging of short-term rentals 7
subject to tax under chapter 82.08 RCW, as provided in this section.8
(b) The tax under this section applies to the sale of or charge 9
made for the furnishing of lodging of short-term rentals.10
(c) The rate of tax under this section is imposed on the sale of, 11
or charge made for, the furnishing of lodging of a short-term rental 12
subject to tax under chapter 82.08 RCW. The rate of tax may not 13
exceed four percent on the sale of or charge made for the furnishing 14
of lodging of short-term rentals. The rate of tax under this section 15
must not be imposed in increments of less than one percent. The 16
department shall perform the collection of the tax on behalf of a 17
county, city, or town imposing the tax at no cost to the county, 18
city, or town. 19
(d) A change to the special excise tax under this section may 20
take effect: 21
H-2986.1
HOUSE BILL 2559
State of Washington 69th Legislature 2026 Regular Session
By Representatives Parshley, Ramel, Ormsby, Street, Macri, Pollet,
Reed, Duerr, and Hill
Read first time 01/19/26. Referred to Committee on Finance.
p. 1 HB 2559
(i) No sooner than 75 days after the department is notified in 1
writing of the change. The written notification must include a copy 2
of the signed ordinance or resolution. If the change to the special 3
excise tax results from an annexation, the written notification must 4
also include a copy of the complete ordinance containing a legal 5
description, a map showing specifically the boundaries of the annexed 6
territory, and a list of all included parcel numbers in the annexed 7
territory; and 8
(ii) Only on the first day of January, April, or July.9
(e) Any county ordinance or resolution adopted under this section 10
must contain a provision allowing a credit against the county tax for 11
the full amount of any city or town tax imposed under this section 12
upon the same taxable event. The legislative authority of any county 13
or any city may impose the tax authorized in this section throughout 14
the county for the county tax and in the corporate limits of the city 15
for the city tax. 16
(f) Proceeds from the tax must be deposited in the essential 17
affordable housing local assistance account created in subsection (5) 18
of this section. The department must make deposits into the account 19
on a monthly basis on the last business day of the month in which 20
distributions required in subsection (5)(b)(i) of this section are 21
due. 22
(2)(a) The legislative body of a county, city, or town must adopt 23
a resolution of intent to adopt legislation authorizing the tax under 24
this section before imposing the tax under this section.25
(b) Adoption of the resolution of intent and legislation requires 26
simple majority approval of the enacting legislative authority.27
(c) The enacting legislative authority may exclude from the tax 28
short-term rentals that: 29
(i) Are located in a common interest community as defined in RCW 30
64.90.010 that is approved by the county, city, or town as a resort, 31
second home, or vacation community including short-term rentals as a 32
permitted use; or 33
(ii) Are exempt from any ordinance of the county, city, or town 34
regulating or licensing short-term rentals or vacation lodging.35
(d) The relevant local jurisdiction must provide any information 36
requested by the department to determine which properties are 37
exempted from the tax. 38
(3)(a) Except as provided in (b) of this subsection, moneys 39
collected from the special excise tax under this section must be 40
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deposited into a separate fund to be used exclusively for the 1
following purposes: 2
(i) Acquiring, rehabilitating, or constructing affordable or 3
workforce housing, which may include new units of affordable housing 4
within an existing structure, or facilities providing supportive 5
housing services; 6
(ii) Funding the operations and maintenance costs of units of 7
affordable, workforce, or supportive housing; 8
(iii) Providing rental assistance to tenants; or9
(iv) Funding the operations of social service organizations and 10
nonprofit organizations dedicated to providing services and 11
assistance related to attaining and maintaining housing including, 12
but not limited to, employment assistance, utilities assistance, 13
nutritional assistance, and child care assistance.14
(b) A county, city, or town may retain up to 15 percent of the 15
moneys collected under this section in each calendar year for the 16
direct and indirect costs incurred in the administration of services 17
and programs as provided in (a) of this subsection.18
(c) A county, city, or town imposing the tax authorized under 19
this section may enter into an interlocal agreement under chapter 20
39.34 RCW with another county, city, or town, to jointly undertake 21
projects satisfying the requirements of (b) of this subsection.22
(4) Beginning the year after the special excise tax authorized in 23
this section is first collected, a county, city, or town imposing the 24
tax must publish an annual report by March 1st of each year detailing 25
how the revenue from the tax was spent in the prior year. The report 26
must be made available to the public. This may include posting the 27
report on the county's, city's, or town's website.28
(5)(a) The essential affordable housing local assistance account 29
is hereby created in the state treasury. All proceeds from the tax 30
authorized under this section must be deposited into the account.31
(b) Moneys in the essential affordable housing local assistance 32
account may be withdrawn only for: 33
(i) Distributions to counties, cities, and towns on a monthly 34
basis; and 35
(ii) Making refunds of taxes imposed under the authority of this 36
section. 37
(6) A city, town, or county may not impose the tax authorized 38
under this section before April 1, 2027. 39
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(7) All administrative provisions in chapters 82.08, 82.12, and 1
82.32 RCW, insofar as they are applicable, apply to the local option 2
tax authorized under this section. 3
(8) For the purposes of this section: 4
(a) "Change to the special excise tax" means an enactment or 5
revision of the tax imposed under this section, including changes 6
resulting from a referendum or annexation. 7
(b) "Operator" has the same meaning as in RCW 64.37.010.8
(c) "Short-term rental" has the same meaning as in RCW 64.37.010.9
NEW SECTION. Sec. 2. To the extent applicable, all of the 10
provisions of RCW 82.08.050 and 82.08.060 and chapter 82.32 RCW not 11
inconsistent with the provisions of this chapter have full force and 12
application with respect to taxes imposed under this chapter.13
Sec. 3. RCW 67.28.181 and 2015 3rd sp.s. c 24 s 703 are each 14
amended to read as follows: 15
(1) The legislative body of any municipality may impose an excise 16
tax on the sale of or charge made for the furnishing of lodging that 17
is subject to tax under chapter 82.08 RCW. The rate of tax shall not 18
exceed the lesser of two percent or a rate that, when combined with 19
all other taxes imposed upon sales of lodging within the municipality 20
under this chapter and chapters 36.100, ((67.40,)) 82.08, and 82.14 21
RCW, equals twelve percent. A tax under this chapter shall not be 22
imposed in increments smaller than tenths of a percent.23
(2) Notwithstanding subsection (1) of this section:24
(a) If a municipality was authorized to impose taxes under this 25
chapter or RCW 67.40.100 or both with a total rate exceeding four 26
percent before July 27, 1997, such total authorization shall continue 27
through January 31, 1999, and thereafter the municipality may impose 28
a tax under this section at a rate not exceeding the rate actually 29
imposed by the municipality on January 31, 1999. 30
(b) If a city or town, other than a municipality imposing a tax 31
under (a) of this subsection, is located in a county that imposed 32
taxes under this chapter with a total rate of four percent or more on 33
January 1, 1997, the city or town may not impose a tax under this 34
section. 35
(c) If a city has a population of ((four hundred thousand )) 36
400,000 or more and is located in a county with a population of ((one 37
million)) 1,000,000 or more, the rate of tax imposed under this 38
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chapter by the city shall not exceed the lesser of four percent or a 1
rate that, when combined with all other taxes imposed upon sales of 2
lodging in the municipality under this chapter and chapters 36.100, 3
((67.40,)) 82.08, and 82.14 RCW, equals ((fifteen and two-tenths )) 4
15.2 percent. 5
(d) If a municipality was authorized to impose taxes under this 6
chapter or RCW 67.40.100, or both, at a rate equal to six percent 7
before January 1, 1998, the municipality may impose a tax under this 8
section at a rate not exceeding the rate actually imposed by the 9
municipality on January 1, 1998. 10
(3) Any county ordinance or resolution adopted under this section 11
shall contain a provision allowing a credit against the county tax 12
for the full amount of any city or town tax imposed under this 13
section upon the same taxable event. 14
(4) In determining the effective combined rate of tax for 15
purposes of the limit in subsections (1) and (2)(c) of this section, 16
the tax rate s under RCW 82.14.530 ((is)) and section 1 of this act 17
are not included. 18
Sec. 4. RCW 82.14.410 and 2015 3rd sp.s. c 24 s 704 are each 19
amended to read as follows: 20
(1) A local sales and use tax change adopted after December 1, 21
2000, must provide an exemption for those sales of lodging for which, 22
but for the exemption, the total sales tax rate imposed on sales of 23
lodging would exceed the greater of: 24
(a) Twelve percent; or 25
(b) The total sales tax rate that would have applied to the sale 26
of lodging if the sale were made on December 1, 2000.27
(2) For the purposes of this section: 28
(a) "Local sales and use tax change" is defined as provided in 29
RCW 82.14.055. 30
(b) "Sale of lodging" means the sale of or charge made for the 31
furnishing of lodging and all other services by a hotel, rooming 32
house, tourist court, motel, trailer camp, and the granting of any 33
similar license to use real property. 34
(c) "Total sales tax rate" means the combined rates of all state 35
and local taxes imposed under this chapter and chapters 36.100, 36
67.28, ((67.40,)) and 82.08 RCW, and any other tax authorized after 37
March 29, 2001, if the tax is in the nature of a sales tax collected 38
from the buyer, but excluding taxes imposed under RCW 81.104.170 39
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before December 1, 2000, ((and)) taxes imposed under RCW 82.14.530, 1
and taxes imposed under section 1 of this act. 2
NEW SECTION. Sec. 5. Sections 1 and 2 of this act constitute a 3
new chapter in Title 82 RCW.4
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