Affordable housing funding

AN ACT Relating to providing state funding for essential 1
affordable housing programs; amending RCW 67.28.181, 82.14.410, and 2
82.32.145; 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. Beginning January 1, 2026, there is levied 5
and collected a special excise tax of six percent on each retail sale 6
of the furnishing of lodging constituting a short-term rental subject 7
to tax under chapter 82.08 RCW. The revenue collected under this 8
section must be deposited in the essential affordable housing local 9
assistance account created in section 3 of this act. The special 10
excise tax authorized under this section applies exclusively to sales 11
of furnishing of short-term rental lodging facilitated through a 12
short-term rental platform.13
NEW SECTION. Sec. 2. The definitions in this section apply 14
throughout this chapter unless the context clearly requires 15
otherwise.16
(1) "Housing infrastructure" means all costs for the improvements 17
needed in an area necessary to provide services that support the 18
construction and ongoing use of new housing. The variety of services 19
that support the construction and ongoing use of new housing include 20
S-0858.1
SENATE BILL 5576
State of Washington 69th Legislature 2025 Regular Session
By Senators Lovelett, Alvarado, Saldaña, Bateman, Salomon, Valdez,
Hasegawa, Nobles, C. Wilson, and Ramos
Read first time 01/29/25. Referred to Committee on Ways & Means.
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transportation, water, sewer, stormwater, electricity, broadband, and 1
others as appropriate. 2
(2) "Short-term rental" and "short-term rental platform" have the 3
same meanings as in RCW 64.37.010. 4
NEW SECTION. Sec. 3. (1) The essential affordable housing local 5
assistance account is hereby created in the state treasury. All 6
receipts from the special excise tax authorized under section 1 of 7
this act must be deposited in the account. Moneys in the account may 8
be spent only after appropriation. The state treasurer shall 9
distribute funds in the account on a monthly basis. A local 10
jurisdiction must use the funds as provided in subsection (2) of this 11
section.12
(a) Counties shall receive the special excise tax amounts from 13
the furnishing of lodging of short-term rentals within the 14
unincorporated areas of the county; and 15
(b) Cities and towns shall receive the special excise tax amounts 16
from the furnishing of lodging of short-term rentals within the 17
incorporated area of the city or town. 18
(2)(a) Except as provided in (b) of this subsection, expenditures 19
from the account may be used by counties, cities, and towns 20
exclusively for the operating and capital costs of affordable housing 21
programs including, but not limited to, homeless housing assistance, 22
temporary shelters, and other related services, or housing 23
infrastructure projects. A county, city, or town may use revenues 24
collected under this section for contracts, loans, or grants to 25
nonprofit organizations or public housing authorities for services 26
related to affordable housing programs. 27
(b) If using the funding collected from the special excise tax 28
under this section for housing infrastructure projects, a county, 29
city, or town must meet the following requirements:30
(i) The housing infrastructure project must be designed to meet 31
the maximum allowed density of the parcels it will serve;32
(ii) If the county, city, or town imposes impact fees for new 33
development, the county, city, or town must reduce the impact fees by 34
the proportional costs that are paid by the moneys collected from the 35
special excise tax under this section; 36
(iii) Projects may not be in areas limited only to single-family 37
residential housing; 38
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(iv) The county, city, or town must limit the size of any single-1
family residential unit constructed in the area served by the housing 2
infrastructure project funded, wholly or partially, to 2,000 square 3
feet or less; and 4
(v) If the housing infrastructure project is within an urban 5
growth area designated as the 20-year growth boundary for a city, the 6
city must agree to annex the project area upon completion of the 7
project. 8
(c) A county, city, or town may retain up to 20 percent of the 9
moneys received under this section in each calendar year for the 10
direct and indirect costs incurred in the administration of services 11
and programs as provided in (a) of this subsection.12
(3) The definitions in this subsection apply throughout this 13
section unless the context clearly requires otherwise.14
(a) "Housing infrastructure" means all costs for the improvements 15
needed in an area necessary to provide services that support the 16
construction and ongoing use of new housing. The variety of services 17
that support the construction and ongoing use of new housing include 18
transportation, water, sewer, stormwater, electricity, broadband, and 19
others as appropriate. 20
(b) "Short-term rental" and "short-term rental platform" have the 21
same meanings as in RCW 64.37.010. 22
NEW SECTION. Sec. 4. (1) Except as otherwise provided by law 23
and to the extent not inconsistent with this chapter, chapter 82.32 24
RCW applies to the administration of taxes imposed under this 25
chapter.26
(2) The department may adopt rules for administering the tax 27
under this chapter. 28
Sec. 5. RCW 67.28.181 and 2015 3rd sp.s. c 24 s 703 are each 29
amended to read as follows: 30
(1) The legislative body of any municipality may impose an excise 31
tax on the sale of or charge made for the furnishing of lodging that 32
is subject to tax under chapter 82.08 RCW. The rate of tax shall not 33
exceed the lesser of two percent or a rate that, when combined with 34
all other taxes imposed upon sales of lodging within the municipality 35
under this chapter and chapters 36.100, ((67.40,)) 82.08, and 82.14 36
RCW, equals ((twelve)) 12 percent. A tax under this chapter shall not 37
be imposed in increments smaller than tenths of a percent.38
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(2) Notwithstanding subsection (1) of this section:1
(a) If a municipality was authorized to impose taxes under this 2
chapter or RCW 67.40.100 or both with a total rate exceeding four 3
percent before July 27, 1997, such total authorization shall continue 4
through January 31, 1999, and thereafter the municipality may impose 5
a tax under this section at a rate not exceeding the rate actually 6
imposed by the municipality on January 31, 1999. 7
(b) If a city or town, other than a municipality imposing a tax 8
under (a) of this subsection, is located in a county that imposed 9
taxes under this chapter with a total rate of four percent or more on 10
January 1, 1997, the city or town may not impose a tax under this 11
section. 12
(c) If a city has a population of ((four hundred thousand )) 13
400,000 or more and is located in a county with a population of ((one 14
million)) 1,000,000 or more, the rate of tax imposed under this 15
chapter by the city shall not exceed the lesser of four percent or a 16
rate that, when combined with all other taxes imposed upon sales of 17
lodging in the municipality under this chapter and chapters 36.100, 18
((67.40,)) 82.08, and 82.14 RCW, equals ((fifteen and two-tenths )) 19
15.2 percent. 20
(d) If a municipality was authorized to impose taxes under this 21
chapter or RCW 67.40.100, or both, at a rate equal to six percent 22
before January 1, 1998, the municipality may impose a tax under this 23
section at a rate not exceeding the rate actually imposed by the 24
municipality on January 1, 1998. 25
(3) Any county ordinance or resolution adopted under this section 26
shall contain a provision allowing a credit against the county tax 27
for the full amount of any city or town tax imposed under this 28
section upon the same taxable event. 29
(4) In determining the effective combined rate of tax for 30
purposes of the limit in subsections (1) and (2)(c) of this section, 31
the tax rate under RCW 82.14.530 ((is)) and section 1 of this act are 32
not included. 33
Sec. 6. RCW 82.14.410 and 2015 3rd sp.s. c 24 s 704 are each 34
amended to read as follows: 35
(1) A local sales and use tax change adopted after December 1, 36
2000, must provide an exemption for those sales of lodging for which, 37
but for the exemption, the total sales tax rate imposed on sales of 38
lodging would exceed the greater of: 39
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(a) Twelve percent; or 1
(b) The total sales tax rate that would have applied to the sale 2
of lodging if the sale were made on December 1, 2000.3
(2) For the purposes of this section: 4
(a) "Local sales and use tax change" is defined as provided in 5
RCW 82.14.055. 6
(b) "Sale of lodging" means the sale of or charge made for the 7
furnishing of lodging and all other services by a hotel, rooming 8
house, tourist court, motel, trailer camp, and the granting of any 9
similar license to use real property. 10
(c) "Total sales tax rate" means the combined rates of all state 11
and local taxes imposed under this chapter and chapters 36.100, 12
67.28, ((67.40,)) and 82.08 RCW, and any other tax authorized after 13
March 29, 2001, if the tax is in the nature of a sales tax collected 14
from the buyer, but excluding taxes imposed under RCW 81.104.170 15
before December 1, 2000, ((and)) taxes imposed under RCW 82.14.530, 16
and taxes imposed under section 1 of this act. 17
Sec. 7. RCW 82.32.145 and 2020 c 301 s 6 are each amended to 18
read as follows: 19
(1) Whenever the department has issued a warrant under RCW 20
82.32.210 for the collection of unpaid trust fund taxes from a 21
limited liability business entity and that business entity has been 22
terminated, dissolved, or abandoned, or is insolvent, the department 23
may pursue collection of the entity's unpaid trust fund taxes, 24
including penalties and interest on those taxes, against any or all 25
of the responsible individuals. For purposes of this subsection, 26
"insolvent" means the condition that results when the sum of the 27
entity's debts exceeds the fair market value of its assets. The 28
department may presume that an entity is insolvent if the entity 29
refuses to disclose to the department the nature of its assets and 30
liabilities. 31
(2) Personal liability under this section may be imposed for 32
state and local trust fund taxes. 33
(3)(a) For a responsible individual who is the current or a 34
former chief executive or chief financial officer, liability under 35
this section applies regardless of fault or whether the individual 36
was or should have been aware of the unpaid trust fund tax liability 37
of the limited liability business entity. 38
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(b) For any other responsible individual, liability under this 1
section applies only if he or she willfully fails to pay or to cause 2
to be paid to the department the trust fund taxes due from the 3
limited liability business entity. 4
(4)(a) Except as provided in this subsection (4)(a), a 5
responsible individual who is the current or a former chief executive 6
or chief financial officer is liable under this section only for 7
trust fund tax liability accrued during the period that he or she was 8
the chief executive or chief financial officer. However, if the 9
responsible individual had the responsibility or duty to remit 10
payment of the limited liability business entity's trust fund taxes 11
to the department during any period of time that the person was not 12
the chief executive or chief financial officer, that individual is 13
also liable for trust fund tax liability that became due during the 14
period that he or she had the duty to remit payment of the limited 15
liability business entity's taxes to the department but was not the 16
chief executive or chief financial officer. 17
(b) All other responsible individuals are liable under this 18
section only for trust fund tax liability that became due during the 19
period he or she had the responsibility or duty to remit payment of 20
the limited liability business entity's taxes to the department.21
(5) Persons described in subsection (3)(b) of this section are 22
exempt from liability under this section in situations where 23
nonpayment of the limited liability business entity's trust fund 24
taxes is due to reasons beyond their control as determined by the 25
department by rule. 26
(6) Any person having been issued a notice of assessment under 27
this section is entitled to the appeal procedures under RCW 28
82.32.160, 82.32.170, 82.32.180, 82.32.190, and 82.32.200.29
(7) This section does not relieve the limited liability business 30
entity of its trust fund tax liability or otherwise impair other tax 31
collection remedies afforded by law. 32
(8) Collection authority and procedures prescribed in this 33
chapter apply to collections under this section. 34
(9) The definitions in this subsection apply throughout this 35
section unless the context clearly requires otherwise.36
(a) "Chief executive" means: The president of a corporation; or 37
for other entities or organizations other than corporations or if the 38
corporation does not have a president as one of its officers, the 39
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highest ranking executive manager or administrator in charge of the 1
management of the company or organization. 2
(b) "Chief financial officer" means: The treasurer of a 3
corporation; or for entities or organizations other than corporations 4
or if a corporation does not have a treasurer as one of its officers, 5
the highest senior manager who is responsible for overseeing the 6
financial activities of the entire company or organization.7
(c) "Limited liability business entity" means a type of business 8
entity that generally shields its owners from personal liability for 9
the debts, obligations, and liabilities of the entity, or a business 10
entity that is managed or owned in whole or in part by an entity that 11
generally shields its owners from personal liability for the debts, 12
obligations, and liabilities of the entity. Limited liability 13
business entities include corporations, limited liability companies, 14
limited liability partnerships, trusts, general partnerships and 15
joint ventures in which one or more of the partners or parties are 16
also limited liability business entities, and limited partnerships in 17
which one or more of the general partners are also limited liability 18
business entities. 19
(d) "Manager" has the same meaning as in RCW 25.15.006.20
(e) "Member" has the same meaning as in RCW 25.15.006, except 21
that the term only includes members of member-managed limited 22
liability companies. 23
(f) "Officer" means any officer or assistant officer of a 24
corporation, including the president, vice president, secretary, and 25
treasurer. 26
(g)(i) "Responsible individual" includes any current or former 27
officer, manager, member, partner, or trustee of a limited liability 28
business entity with an unpaid tax warrant issued by the department.29
(ii) "Responsible individual" also includes any current or former 30
employee or other individual, but only if the individual had the 31
responsibility or duty to remit payment of the limited liability 32
business entity's unpaid trust fund tax liability reflected in a tax 33
warrant issued by the department. 34
(iii) Whenever any taxpayer has one or more limited liability 35
business entities as a member, manager, or partner, "responsible 36
individual" also includes any current and former officers, members, 37
or managers of the limited liability business entity or entities or 38
of any other limited liability business entity involved directly in 39
the management of the taxpayer. For purposes of this subsection 40
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(9)(g)(iii), "taxpayer" means a limited liability business entity 1
with an unpaid tax warrant issued against it by the department.2
(h) "Trust fund taxes" means taxes collected from purchasers and 3
held in trust under RCW 82.08.050, including taxes imposed under RCW 4
82.08.020, 82.08.150, ((and)) 82.51.010, and section 1 of this act.5
(i) "Willfully fails to pay or to cause to be paid" means that 6
the failure was the result of an intentional, conscious, and 7
voluntary course of action. 8
NEW SECTION. Sec. 8. Sections 1 through 4 of this act 9
constitute a new chapter in Title 82 RCW.10
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