Multifamily housing/tax

AN ACT Relating to providing a sales and use tax incentive for 1
multifamily affordable housing; and amending RCW 82.59.007, 2
82.59.020, 82.59.030, 82.59.040, 82.59.070, 82.59.130, and 82.59.140.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 82.59.007 and 2024 c 332 s 2 are each amended to 5
read as follows: 6
(1) It is the purpose of this chapter to encourage the 7
redevelopment of underutilized commercial property in targeted urban 8
areas, thereby increasing affordable housing, employment 9
opportunities, and helping accomplish the other planning goals of 10
Washington cities. The legislative authorities of cities to which 11
this chapter applies may authorize a sales and use tax deferral for 12
an investment project within the city if the legislative authority of 13
the city finds that there are significant areas of underutilized 14
commercial property and a lack of affordable housing in areas 15
proximate to the land. 16
(2) It is further the purpose of this chapter to stimulate the 17
construction of new multifamily affordable housing in areas having 18
insufficient housing thereby increasing housing opportunities, 19
including affordable housing opportunities, and helping accomplish 20
the planning goals of Washington cities. The legislative authorities 21
S-0654.2
SENATE BILL 5553
State of Washington 69th Legislature 2025 Regular Session
By Senators Salomon, Shewmake, Liias, Nobles, and Slatter
Read first time 01/28/25. Referred to Committee on Ways & Means.
p. 1 SB 5553
of cities to which this chapter applies may authorize a sales and use 1
tax deferral for an investment project within the city if the 2
legislative authority of the city finds that there are significant 3
housing needs in the area proximate to the land. 4
(3) If a conditional recipient maintains the property for 5
qualifying purposes for at least 10 years, deferred sales and use 6
taxes need not be repaid. 7
Sec. 2. RCW 82.59.020 and 2024 c 332 s 4 are each amended to 8
read as follows: 9
(1) For the purpose of creating a sales and use tax deferral 10
program for conversion of a commercial building or construction of 11
new multifamily housing to provide affordable housing under this 12
chapter, the governing authority must adopt a resolution of intention 13
to create a sales and use tax deferral program as generally described 14
in the resolution. The resolution must state the time and place of a 15
hearing to be held by the governing authority to consider the 16
creation of the tax deferral program and may include such other 17
information pertaining to the creation of the deferral program as the 18
governing authority determines to be appropriate to apprise the 19
public of the action intended. However, the resolution must provide 20
information pertaining to: 21
(a) The application process; 22
(b) The approval process; 23
(c) The appeals process for applications denied approval; and24
(d) Additional requirements, conditions, and obligations that 25
must be followed postapproval of an application. 26
(2) The governing authority must give notice of a hearing held 27
under this chapter by publication of the notice once each week for 28
two consecutive weeks, not less than seven days, nor more than 30 29
days before the date of the hearing in a paper having a general 30
circulation in the city. The notice must state the time, date, place, 31
and purpose of the hearing. 32
(3) Following the hearing or a continuance of the hearing, the 33
governing authority may authorize the creation of the program.34
Sec. 3. RCW 82.59.030 and 2024 c 332 s 5 are each amended to 35
read as follows: 36
An owner of ((underutilized commercial )) the property seeking a 37
sales and use tax deferral for conversion of ((a)) an underutilized 38
p. 2 SB 5553
commercial building or construction of new multifamily housing to 1
provide affordable housing under this chapter on an investment 2
project must complete the following procedures: 3
(1) The owner must apply to the city on forms adopted by the 4
governing authority. The application must contain the following:5
(a) Information setting forth the grounds supporting the 6
requested deferral including information indicated on the application 7
form or in the guidelines; 8
(b) A description of the investment project and site plan, and 9
other information requested; 10
(c) A statement of the expected number of affordable housing 11
units to be created; 12
(d) A statement that the applicant is aware of the potential tax 13
liability involved if the investment project ceases to be used for 14
eligible uses under this chapter; 15
(e) A statement that the applicant is aware that the investment 16
project must be completed within three years from the date of 17
approval of the application; 18
(f) A statement that the applicant is aware that the governing 19
authority or the city official authorized by the governing authority 20
may extend the deadline for completion of construction or 21
rehabilitation for a period not to exceed 24 consecutive months; and22
(g) A statement that the applicant would not have built in this 23
location but for the availability of the tax deferral under this 24
chapter; 25
(2) The applicant must verify the application by oath or 26
affirmation; and 27
(3) The application must be accompanied by the application fee, 28
if any, required under this chapter. The duly authorized 29
administrative official or committee of the city may permit the 30
applicant to revise an application before final action by the duly 31
authorized administrative official or committee of the city.32
Sec. 4. RCW 82.59.040 and 2024 c 332 s 6 are each amended to 33
read as follows: 34
The duly authorized administrative official or committee of the 35
city may approve the application and grant a conditional certificate 36
of program approval if it finds that: 37
(1)(a) The investment project is set aside primarily for 38
multifamily housing units and the applicant commits to renting or 39
p. 3 SB 5553
selling at least 10 percent of the units as affordable housing to 1
low-income households. In a mixed-use project, only the ground floor 2
of a building may be used for commercial purposes with the remainder 3
dedicated to multifamily housing units; and 4
(b) The applicant commits to any additional affordability and 5
income eligibility conditions adopted by the local government under 6
this chapter not otherwise inconsistent with this chapter;7
(2) The investment project is, or will be, at the time of 8
completion, in conformance with all local plans and regulations that 9
apply at the time the application is approved; 10
(3) ((The)) For conversion of an underutilized commercial 11
building, the investment project will occur on land that constitutes, 12
at the time of application, underutilized commercial property;13
(4) The area where the investment project will occur is located 14
within an area zoned for residential or mixed uses;15
(5) For construction of new multifamily housing, the investment 16
project has a conditional certificate of acceptance of tax exemption 17
for the tax exemptions under RCW 84.14.021 and 84.14.020(1)(a) 18
(ii)(B) and (C) and (iii);19
(6) The terms and conditions of the implementation of the 20
development meets the requirements of this chapter and any 21
requirements of the city that are not otherwise inconsistent with 22
this chapter; 23
(((6))) (7) The land where the investment project will occur was 24
not acquired through a condemnation proceeding under Title 8 RCW; and25
(((7))) (8) All other requirements of this chapter have been 26
satisfied as well as any other requirements of the city that are not 27
otherwise inconsistent with this chapter. 28
Sec. 5. RCW 82.59.070 and 2024 c 332 s 9 are each amended to 29
read as follows: 30
(1) Within 30 days of the issuance of a certificate of occupancy 31
for an eligible investment project, the conditional recipient must 32
file with the city the following: 33
(a) A description of the work that has been completed and a 34
statement that the eligible investment project qualifies the property 35
for a sales and use tax deferral under this chapter;36
(b) A statement of the new affordable housing to be offered as a 37
result of the conversion of underutilized commercial property to 38
multifamily housing or construction of new multifamily housing; and39
p. 4 SB 5553
(c) A statement that the work has been completed within three 1
years of the issuance of the conditional certificate of program 2
approval. 3
(2) Within 30 days after receipt of the statements required under 4
subsection (1) of this section, the city must determine and notify 5
the conditional recipient as to whether the work completed and the 6
affordable housing to be offered are consistent with the application 7
and the contract approved by the city, and the investment project 8
continues to qualify for a tax deferral under this chapter. The 9
conditional recipient must notify the department within 30 days from 10
receiving the city's determination to report the project is 11
operationally complete so the department can certify the project and 12
determine the qualifying deferred taxes. The department must 13
determine the amount of sales and use taxes qualifying for the 14
deferral. If the department determines that purchases were not 15
eligible for deferral it must assess interest, but not penalties, on 16
the nonqualifying amounts. 17
(3) The city must notify the conditional recipient within 30 days 18
that a tax deferral under this chapter is denied if the city 19
determines that: 20
(a) The work was not completed within three years of the 21
application date; 22
(b) The work was not constructed consistent with the application 23
or other applicable requirements; 24
(c) The affordable housing units to be offered are not consistent 25
with the application and criteria of this chapter; or26
(d) The owner's property is otherwise not qualified for a sales 27
and use tax deferral under this chapter. 28
(4) If the city finds that the work was not completed within the 29
required time period due to circumstances beyond the control of the 30
conditional recipient and that the conditional recipient has been 31
acting and could reasonably be expected to act in good faith and with 32
due diligence, the governing authority may extend the deadline for 33
completion of the work for a period not to exceed 24 consecutive 34
months, and must notify the department of the extension.35
(5) The city's governing authority may enact an ordinance to 36
provide a process for a conditional recipient to appeal a decision by 37
the city that the conditional recipient is not entitled to a deferral 38
of sales and use taxes. The conditional recipient may appeal a 39
decision by the city to deny a deferral of sales and use taxes in 40
p. 5 SB 5553
superior court under RCW 34.05.510 through 34.05.598, if the appeal 1
is filed within 30 days of notification by the city to the 2
conditional recipient. 3
(6) A city denying a conditional recipient of a sales and use tax 4
deferral under subsection (3) of this section must notify the 5
department and taxes deferred under this chapter are immediately due 6
and payable, subject to any appeal by the conditional recipient. The 7
department must assess interest at the rate provided for delinquent 8
taxes, but not penalties, retroactively to the date of deferral. A 9
debt for deferred taxes will not be extinguished by insolvency or 10
other failure of the recipient. 11
Sec. 6. RCW 82.59.130 and 2024 c 332 s 15 are each amended to 12
read as follows: 13
(1) This section is the tax preference performance statement for 14
the tax preference contained in chapter 332, Laws of 2024 , and 15
chapter . . ., Laws of 2025 (this act) . This performance statement is 16
only intended to be used for subsequent evaluation of the tax 17
preference. It is not intended to create a private right of action by 18
any party or to be used to determine eligibility for preferential tax 19
treatment. 20
(2) The legislature categorizes this tax preference as one 21
intended to induce certain designated behavior by taxpayers, as 22
indicated in RCW 82.32.808(2)(a). 23
(3) It is the legislature's specific public policy objective to 24
expand affordable housing options for low-income households, 25
specifically in urban areas where there is underutilized commercial 26
property and in areas having insufficient housing supply.27
(4)(a) To measure the effectiveness of the tax preference in 28
chapter 332, Laws of 2024, the joint legislative audit and review 29
committee must evaluate the number of increased housing units on 30
underutilized commercial property and in areas having insufficient 31
housing supply . If a review finds that the number of affordable 32
housing units has not increased, then the legislature intends to 33
repeal this tax preference. 34
(b) The review must be provided to the fiscal committees of the 35
legislature by December 31, 2032. 36
(5) In order to obtain the data necessary to perform the review 37
in subsection (4) of this section, the joint legislative audit and 38
p. 6 SB 5553
review committee may refer to any available data source, including 1
data collected by the department under RCW 82.59.080.2
Sec. 7. RCW 82.59.140 and 2024 c 332 s 16 are each amended to 3
read as follows: 4
(1) An owner of underutilized commercial property claiming a 5
sales and use tax deferral under this chapter may also apply for the 6
multiple-unit housing property tax exemption program under chapter 7
84.14 RCW. For applicants receiving the property tax exemption under 8
chapter 84.14 RCW, the amount of affordable housing units required 9
for eligibility under this chapter is in addition to the 10
affordability conditions in chapter 84.14 RCW. 11
(2) An owner of property claiming a sales and use tax deferral 12
under this chapter for new construction of multifamily housing must 13
also apply for the multiple-unit housing property tax exemption 14
program under RCW 84.14.021 and 84.14.020(1)(a) (ii)(B) and (C) and 15
(iii). For applicants receiving the property tax exemption under 16
chapter 84.14 RCW, the amount of affordable housing units required 17
for eligibility under this chapter is in addition to the 18
affordability conditions in chapter 84.14 RCW.19
--- END ---
p. 7 SB 5553