Residential dev./commercial

AN ACT Relating to incentivizing residential development with 1
public benefits on underutilized commercial properties; amending RCW 2
84.14.010, 84.14.030, 84.14.060, 84.14.070, 84.14.090, 84.14.100, 3
84.14.110, and 82.59.010; adding a new section to chapter 43.330 RCW; 4
adding a new section to chapter 84.14 RCW; creating a new section; 5
and providing an expiration date. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
NEW SECTION. Sec. 1. The legislature finds that Washington 8
faces a housing shortage, with the greatest challenges affecting low-9
income households. The imbalance between housing supply and demand 10
has driven up costs, making it increasingly difficult for households 11
to secure housing near jobs and essential services.12
The legislature also finds that expanding development 13
opportunities on underutilized commercial properties can help 14
Washington in meeting its housing goals of over 1,000,000 new housing 15
units by 2044. Higher density, mixed-use development along 16
underutilized commercial arterials — particularly near jobs, transit, 17
and essential services— can help provide much needed housing.18
The legislature further finds that updating land use policies, 19
easing parking requirements, and increasing flexibility in 20
permitting, may help to facilitate more housing development. The 21
S-1440.2
SENATE BILL 5755
State of Washington 69th Legislature 2025 Regular Session
By Senators Alvarado, Saldaña, and C. Wilson
Read first time 02/14/25. Referred to Committee on Housing.
p. 1 SB 5755
legislature intends to incentivize the development of underutilized 1
commercial properties for mixed-income and affordable housing through 2
public and private partnerships. 3
NEW SECTION. Sec. 2. A new section is added to chapter 43.330 4
RCW to read as follows: 5
(1) The department shall solicit letters of interest from the 6
owners or developers of retail or commercial properties with 7
substantial potential for redevelopment as residential or mixed-use 8
properties providing market rate and affordable housing supply. 9
Letters of interest must be received no later than October 1, 2025. 10
The department's instructions for the letters of interest shall 11
request, at a minimum, the following information about the housing 12
redevelopment project concept: 13
(a) Information on the location of the property, and its 14
proximity to employment centers, public schools, transit, and local 15
amenities or services; 16
(b) A description of the existing land uses at the property, and 17
any available information about future operations of existing 18
businesses at the property; 19
(c) A description of any concepts or plans to convert the 20
property into primarily residential uses, along with any associated 21
commercial or retail uses that would serve residents of the area;22
(d) A description of the proposed phasing plan for the 23
development, if necessary. If phased, the applicant may provide a 24
description of how housing development may be expedited through 25
increased predictability in the applicable development regulations, 26
fees, and other construction-related regulations through vesting or 27
other mechanisms; 28
(e) An assessment of infrastructure improvements needed to 29
convert the primary use of the property from retail or commercial use 30
to residential or mixed-use purpose; 31
(f) A description of any regulatory fees, taxes, or incentives 32
that could delay or prevent the redevelopment of the property for 33
housing, and any incentives that if applied to the property, would 34
expedite redevelopment for housing purposes including affordable 35
housing; 36
(g) The status of any environmental review or permitting activity 37
to date, including the status of any development agreements with 38
local governments; and 39
p. 2 SB 5755
(h) The degree of funding that has already been committed to the 1
project by nonstate entities. 2
(2) The department must review the information provided in the 3
letter of interest to determine eligibility by October 31, 2025. 4
Eligible properties: 5
(a) Must be located: 6
(i) On sites inside existing urban growth areas designated 7
pursuant to RCW 36.70A.110 where redevelopment of the property or 8
multiple properties would produce a minimum of 250 new housing units 9
in one or more new or existing buildings; 10
(ii) In a commercial zone; and 11
(iii) On a street with a right-of-way of at least 50 to 150 feet; 12
and 13
(b) Must not: 14
(i) Be within 3,200 feet of an active oil or gas refinery;15
(ii) Be on or adjacent to a site considered to be dedicated to 16
industrial use; 17
(iii) Be on any type of environmentally sensitive area such as 18
wetlands and flood zones; 19
(iv) Require the demolition of a historic structure; or20
(v) Require demolition of housing occupied by tenants.21
(3) The department must score applications based on some or all 22
of the criteria in this subsection by November 15, 2025, to assess 23
the depth and breadth of public benefits provided in the project 24
including, but not limited to: 25
(a) The degree of leveraging of other funds that will occur;26
(b) Local government project contributions in the form of 27
infrastructure improvements, and others; 28
(c) The amount and length of affordability provided in the 29
project. Projects that provide housing for persons and families with 30
the lowest incomes shall be scored higher; 31
(d) Projects that provide employment and training opportunities 32
for disadvantaged youth under a youthbuild or youthbuild-type program 33
as defined in RCW 50.72.020; 34
(e) Projects involving collaborative partnerships between local 35
school districts and either public housing authorities or nonprofit 36
housing providers, that help children of low-income families succeed 37
in school. To receive this preference, the local school district must 38
provide an opportunity for community members to offer input on the 39
p. 3 SB 5755
proposed project at the first scheduled school board meeting 1
following submission of the grant application to the department;2
(f) Projects that include a licensed early learning facility;3
(g) Projects that incorporate energy efficient and renewable 4
energy improvements; 5
(h) Projects that include a health care facility; and6
(i) Whether or not the project will include: 7
(i) A requirement that applicants pay at least the prevailing 8
rate of hourly wage established under chapter 39.12 RCW for journey 9
level and apprentice workers on residential and commercial 10
construction; 11
(ii) Payroll record requirements consistent with 12
RCW 39.12.120(1); 13
(iii) Apprenticeship utilization requirements consistent with 14
RCW 39.04.310; and 15
(iv) A contracting inclusion plan developed in consultation with 16
the office of minority and women's business enterprises.17
(4) The department must also consider as part of the scoring 18
criteria the project location and access to: 19
(a) Employment centers in the region or area; and20
(b) Available public transportation services. 21
(5) The department must group applications as high, medium, and 22
low priority projects based on the scoring criteria.23
(6) Once the department has determined the prioritization of 24
eligible applications based on the scoring criteria, the department 25
must facilitate development agreements between local governments and 26
high priority projects. High priority projects must:27
(a) Be given technical assistance from the department with permit 28
applications. Permit applications under this section must be informed 29
of inconsistencies with all qualifying criteria within 90 days, and 30
projects must be processed and reviewed for all local objective 31
standards within 180 days. If the jurisdiction misses the 90 day 32
deadline, the project is deemed to be compliant with the relevant 33
zoning rules and other land use standards; 34
(b) Be given priority for funding awarded by the department under 35
the connecting housing to infrastructure program, early learning 36
facilities program, and energy efficiency retrofits grants if that 37
funding is necessary for an applicant to move forward with the 38
project; 39
p. 4 SB 5755
(c) Allow a density bonus consistent with local needs for any 1
affordable housing development, provided that: 2
(i) The affordable housing development is set aside for or 3
occupied exclusively by low-income households; 4
(ii) The affordable housing development is part of a lease or 5
other binding obligation that requires the development to be used 6
exclusively for affordable housing purposes for at least 50 years; 7
and 8
(iii) The affordable housing development does not discriminate 9
against any person who qualifies as a member of a low-income 10
household based on race, creed, color, national origin, sex, veteran 11
or military status, sexual orientation, or mental or physical 12
disability; or otherwise act in violation of the federal fair housing 13
amendments act of 1988, 42 U.S.C. Sec. 3601 et seq.;14
(d) Not require minimum parking requirements unless:15
(i) The parking is necessary to provide accessible parking spaces 16
in compliance with the Americans with disabilities act; or17
(ii) The project is within a one mile radius of a commercial 18
airport in Washington with at least 9,000,000 annual enplanements;19
(e) Be considered underutilized commercial property eligible for 20
the sales and use tax deferral program under chapter 82.59 RCW if it 21
meets all necessary requirements under chapter 82.59 RCW; and22
(f) Qualify for the multifamily property tax exemption under 23
section 3 of this act if it meets the necessary requirements under 24
chapter 84.14 RCW. 25
(7) For purposes of this section: 26
(a) "Affordable housing" has the meaning defined in RCW 27
36.70A.030. 28
(b) "Low income" means a single person, family, or unrelated 29
persons living together whose adjusted income is at or below 80 30
percent of the median family income adjusted for family size, for the 31
county, city, or metropolitan statistical area, where the project is 32
located, as reported by the United States department of housing and 33
urban development. 34
(c) "Substantial potential" means the project is in the planning, 35
permitting, or financing stage that demonstrates a strong readiness 36
to proceed to construction but may not be fully funded or approved 37
for construction. 38
(8) This section expires June 30, 2027. 39
p. 5 SB 5755
NEW SECTION. Sec. 3. A new section is added to chapter 84.14 1
RCW to read as follows: 2
(1) The value of new housing construction, conversion, and 3
rehabilitation improvements qualifying under this chapter is exempt 4
from ad valorem property taxation for 20 successive years beginning 5
January 1st of the year immediately following the calendar year of 6
issuance of the certificate, if the property otherwise qualifies for 7
the exemption under this chapter and meets the conditions in this 8
section. 9
(2) The exemption in this section does not include the value of 10
land or nonhousing-related improvements not qualifying under this 11
chapter. The exemption in this section includes the value of the 12
newly created housing determined by multiplying the overall value by 13
the percentage of square footage of affordable newly created housing 14
in comparison to the total square footage of housing for a qualifying 15
project. 16
(3) For the property to qualify for the exemption provided in 17
this section, the project must be approved by the department of 18
commerce as a high priority eligible project under section 2 of this 19
act. 20
(4) To qualify for the exemption provided in this section, the 21
applicant must meet all required affordability and income eligibility 22
conditions adopted by the governing authority under this chapter and 23
commit to providing at least 20 percent of the dwelling units as 24
affordable to low-income households for a term of at least 50 years.25
(5) A city or county must adopt regulations necessary for use of 26
the exemption in this section. 27
(6) A local jurisdiction must require the applicant to record a 28
covenant or deed restriction that ensures the continuing rental or 29
sale of units subject to the affordability requirements consistent 30
with the conditions in this section for a period of no less than 50 31
years. The covenant or deed restriction must also address criteria 32
and policies to maintain public benefit if the property is converted 33
to a use other than which continues to provide for permanently 34
affordable housing for low-income and moderate-income households 35
consistent with this section. 36
(7) A local jurisdiction may assign and collect a reasonable 37
administration fee at each point of sale to cover the administrative 38
costs for oversight of the exemption in this section to maintain 39
permanently affordable housing units consistent with this section.40
p. 6 SB 5755
(8) At the conclusion of the exemption period, the value of the 1
new housing construction, conversion, or rehabilitation improvements 2
must be considered as new construction for the purposes of chapters 3
84.55 and 36.21 RCW as though the property was not exempt under this 4
chapter. 5
(9) Nothing in this section prevents a governing authority from 6
adopting and implementing additional requirements for a project 7
eligible under section 2 of this act receiving an exemption under 8
this section. 9
(10) No new exemptions may be provided under this section 10
beginning June 30, 2027. 11
Sec. 4. RCW 84.14.010 and 2024 c 332 s 17 are each amended to 12
read as follows: 13
The definitions in this section apply throughout this chapter 14
unless the context clearly requires otherwise. 15
(1) "Affordable housing" means residential housing that is rented 16
by a person or household whose monthly housing costs, including 17
utilities other than telephone, do not exceed ((thirty)) 30 percent 18
of the household's monthly income. For the purposes of housing 19
intended for owner occupancy, "affordable housing" means residential 20
housing that is within the means of low or moderate -income 21
households. 22
(2) "Campus facilities master plan" means the area that is 23
defined by the University of Washington as necessary for the future 24
growth and development of its campus facilities for campuses 25
authorized under RCW 28B.45.020. 26
(3) "City" means either (a) a city or town with a population of 27
at least ((fifteen thousand )) 15,000, (b) the largest city or town, 28
if there is no city or town with a population of at least ((fifteen 29
thousand)) 15,000, located in a county planning under the growth 30
management act, (c) a city or town with a population of at least 31
((five thousand)) 5,000 located in a county subject to the provisions 32
of RCW 36.70A.215, or (d) any city that otherwise does not meet the 33
qualifications under (a) through (c) of this subsection, until 34
December 31, 2031, that complies with RCW 84.14.020(1)(a)(iii) 35
((or)), 84.14.021(1)(b), or section 2 of this act.36
(4) "Conversion" means the conversion of a nonresidential 37
building, in whole or in part, to multiple-unit housing under this 38
chapter. 39
p. 7 SB 5755
(5) "County" means a county with an unincorporated population of 1
at least 170,000. 2
(6) "Governing authority" means the local legislative authority 3
of a city or a county having jurisdiction over the property for which 4
an exemption may be applied for under this chapter.5
(7) "Growth management act" means chapter 36.70A RCW.6
(8) "Household" means a single person, family, or unrelated 7
persons living together. 8
(9) "Low-income household" means a single person, family, or 9
unrelated persons living together whose adjusted income is at or 10
below ((eighty)) 80 percent of the median family income adjusted for 11
family size, for the county, city, or metropolitan statistical area, 12
where the project is located, as reported by the United States 13
department of housing and urban development. 14
(10) "Moderate-income household" means a single person, family, 15
or unrelated persons living together whose adjusted income is more 16
than ((eighty)) 80 percent but is at or below ((one hundred fifteen)) 17
115 percent of the median family income adjusted for family size, for 18
the county, city, or metropolitan statistical area, where the project 19
is located, as reported by the United States department of housing 20
and urban development. 21
(11) "Multiple-unit housing" means a building or a group of 22
buildings having four or more dwelling units not designed or used as 23
transient accommodations and not including hotels and motels. 24
Multifamily units may result from new construction or rehabilitated 25
or conversion of vacant, underutilized, or substandard buildings to 26
multifamily housing. 27
(12) "Owner" means the property owner of record.28
(13) "Permanent residential occupancy" means multiunit housing 29
that provides either rental or owner occupancy on a nontransient 30
basis. This includes owner-occupied or rental accommodation that is 31
leased for a period of at least one month. This excludes hotels and 32
motels that predominately offer rental accommodation on a daily or 33
weekly basis. 34
(14) "Rehabilitation improvements" means modifications to 35
existing structures, that are vacant for ((twelve)) 12 months or 36
longer, that are made to achieve a condition of substantial 37
compliance with existing building codes or modification to existing 38
occupied structures which increase the number of multifamily housing 39
units. 40
p. 8 SB 5755
(15) "Residential targeted area" means an area within an urban 1
center or urban growth area that has been designated by the governing 2
authority as a residential targeted area in accordance with this 3
chapter. With respect to designations after July 1, 2007, 4
"residential targeted area" may not include a campus facilities 5
master plan. 6
(16) "Rural county" means a county with a population between 7
((fifty thousand )) 50,000 and ((seventy-one thousand )) 71,000 and 8
bordering Puget Sound. 9
(17) "Substantial compliance" means compliance with local 10
building or housing code requirements that are typically required for 11
rehabilitation as opposed to new construction. 12
(18) "Urban center" means a compact identifiable district where 13
urban residents may obtain a variety of products and services. An 14
urban center must contain: 15
(a) Several existing or previous, or both, business 16
establishments that may include but are not limited to shops, 17
offices, banks, restaurants, governmental agencies;18
(b) Adequate public facilities including streets, sidewalks, 19
lighting, transit, domestic water, and sanitary sewer systems; and20
(c) A mixture of uses and activities that may include housing, 21
recreation, and cultural activities in association with either 22
commercial or office, or both, use. 23
Sec. 5. RCW 84.14.030 and 2021 c 187 s 9 are each amended to 24
read as follows: 25
An owner of property making application under this chapter must 26
meet the following requirements: 27
(1) The new or rehabilitated multiple-unit housing must be 28
located in a residential targeted area or station area as designated 29
by the city or county; 30
(2) The multiple-unit housing must meet guidelines as adopted by 31
the governing authority that may include height, density, public 32
benefit features, number and size of proposed development, parking, 33
income limits for occupancy, limits on rents or sale prices, and 34
other adopted requirements indicated necessary by the city or county. 35
The required amenities should be relative to the size of the project 36
and tax benefit to be obtained; 37
(3) The new, converted, or rehabilitated multiple-unit housing 38
must provide for a minimum of ((fifty)) 50 percent of the space for 39
p. 9 SB 5755
permanent residential occupancy. In the case of existing occupied 1
multifamily development, the multifamily housing must also provide 2
for a minimum of four additional multifamily units. Existing 3
multifamily vacant housing that has been vacant for ((twelve)) 12 4
months or more does not have to provide additional multifamily units;5
(4) New construction multifamily housing and rehabilitation 6
improvements must be completed within three years from the date of 7
approval of the application, plus any extension authorized under RCW 8
84.14.090(5); 9
(5) Property proposed to be rehabilitated must fail to comply 10
with one or more standards of the applicable state or local building 11
or housing codes on or after July 23, 1995. If the property proposed 12
to be rehabilitated is not vacant, an applicant must provide each 13
existing tenant housing of comparable size, quality, and price and a 14
reasonable opportunity to relocate; and 15
(6) The applicant must enter into a contract with the city or 16
county approved by the governing authority, or an administrative 17
official or commission authorized by the governing authority, under 18
which the applicant has agreed to the implementation of the 19
development on terms and conditions satisfactory to the governing 20
authority. 21
Sec. 6. RCW 84.14.060 and 2014 c 96 s 5 are each amended to read 22
as follows: 23
(1) The duly authorized administrative official or committee of 24
the city or county may approve the application if it finds that:25
(a) A minimum of four new units are being constructed or in the 26
case of occupied rehabilitation or conversion a minimum of four 27
additional multifamily units are being developed; 28
(b) If applicable, the proposed multiunit housing project meets 29
the affordable housing requirements as described in ((RCW 84.14.020)) 30
this chapter; 31
(c) The proposed project is or will be, at the time of 32
completion, in conformance with all local plans and regulations that 33
apply at the time the application is approved; 34
(d) The owner has complied with all standards and guidelines 35
adopted by the city or county under this chapter; and36
(e) The site is located in a residential targeted area or station 37
area of an urban center or urban growth area that has been designated 38
p. 10 SB 5755
by the governing authority in accordance with procedures and 1
guidelines indicated in ((RCW 84.14.040)) this chapter.2
(2) An application may not be approved after July 1, 2007, if any 3
part of the proposed project site is within a campus facilities 4
master plan, except as provided in RCW 84.14.040(1)(d).5
(3) An application may not be approved for a residential targeted 6
area in a rural county on or after January 1, 2020.7
Sec. 7. RCW 84.14.070 and 2012 c 194 s 7 are each amended to 8
read as follows: 9
(1) The governing authority or an administrative official or 10
commission authorized by the governing authority must approve or deny 11
an application filed under this chapter within ((ninety)) 90 days 12
after receipt of the application. 13
(2) If the application is approved, the city or county must issue 14
the owner of the property a conditional certificate of acceptance of 15
tax exemption. The certificate must contain a statement by a duly 16
authorized administrative official of the governing authority that 17
the property has complied with the required findings indicated in RCW 18
84.14.060. A copy of the certificate must be sent to the county 19
assessor within 30 days of issuance.20
(3) If the application is denied by the authorized administrative 21
official or commission authorized by the governing authority, the 22
deciding administrative official or commission must state in writing 23
the reasons for denial and send the notice to the applicant at the 24
applicant's last known address within ((ten)) 10 days of the denial.25
(4) Upon denial by a duly authorized administrative official or 26
commission, an applicant may appeal the denial to the governing 27
authority within ((thirty)) 30 days after receipt of the denial. The 28
appeal before the governing authority must be based upon the record 29
made before the administrative official with the burden of proof on 30
the applicant to show that there was no substantial evidence to 31
support the administrative official's decision. The decision of the 32
governing body in denying or approving the application is final.33
Sec. 8. RCW 84.14.090 and 2021 c 187 s 10 are each amended to 34
read as follows: 35
(1) Upon completion of rehabilitation or new construction for 36
which an application for a limited tax exemption under this chapter 37
p. 11 SB 5755
has been approved and after issuance of the certificate of occupancy, 1
the owner must file with the city or county the following:2
(a) A statement of the amount of rehabilitation or construction 3
expenditures made with respect to each housing unit and the composite 4
expenditures made in the rehabilitation or construction of the entire 5
property; 6
(b) A description of the work that has been completed and a 7
statement that the rehabilitation improvements or new construction on 8
the owner's property qualify the property for limited exemption under 9
this chapter; 10
(c) If applicable, a statement that the project meets the 11
affordable housing requirements as described in ((RCW 84.14.020)) 12
this chapter; and 13
(d) A statement that the work has been completed within three 14
years of the issuance of the conditional certificate of tax 15
exemption. 16
(2) Within ((thirty)) 30 days after receipt of the statements 17
required under subsection (1) of this section, the authorized 18
representative of the city or county must determine whether the work 19
completed, and the affordability of the units, is consistent with the 20
application and the contract approved by the city or county and is 21
qualified for a limited tax exemption under this chapter. The city or 22
county must also determine which specific improvements completed meet 23
the requirements and required findings. 24
(3) If the rehabilitation, conversion, or construction is 25
completed within three years of the date the application for a 26
limited tax exemption is filed under this chapter, or within an 27
authorized extension of this time limit, and the authorized 28
representative of the city or county determines that improvements 29
were constructed consistent with the application and other applicable 30
requirements, including if applicable, affordable housing 31
requirements, and the owner's property is qualified for a limited tax 32
exemption under this chapter, the city or county must file the 33
certificate of tax exemption with the county assessor within ((ten)) 34
10 days of the expiration of the ((thirty)) 30-day period provided 35
under subsection (2) of this section. 36
(4) The authorized representative of the city or county must 37
notify the applicant that a certificate of tax exemption is not going 38
to be filed if the authorized representative determines that:39
p. 12 SB 5755
(a) The rehabilitation or new construction was not completed 1
within three years of the application date, or within any authorized 2
extension of the time limit; 3
(b) The improvements were not constructed consistent with the 4
application or other applicable requirements; 5
(c) If applicable, the affordable housing requirements as 6
described in ((RCW 84.14.020)) this chapter were not met; or7
(d) The owner's property is otherwise not qualified for limited 8
exemption under this chapter. 9
(5) If the authorized representative of the city or county finds 10
that construction or rehabilitation of multiple-unit housing was not 11
completed within the required time period due to circumstances beyond 12
the control of the owner and that the owner has been acting and could 13
reasonably be expected to act in good faith and with due diligence, 14
the governing authority or the city or county official authorized by 15
the governing authority may extend the deadline for completion of 16
construction or rehabilitation for a period not to exceed ((twenty-17
four)) 24 consecutive months. For preliminary or final applications 18
submitted on or before February 15, 2020, with any outstanding 19
application requirements, such as obtaining a temporary certificate 20
of occupancy, the city or county may choose to extend the deadline 21
for completion for an additional five years. The five-year extension 22
begins immediately following the completion of any outstanding 23
applications or previously authorized extensions, whichever is later.24
(6) The governing authority may provide by ordinance for an 25
appeal of a decision by the deciding officer or authority that an 26
owner is not entitled to a certificate of tax exemption to the 27
governing authority, a hearing examiner, or other city or county 28
officer authorized by the governing authority to hear the appeal in 29
accordance with such reasonable procedures and time periods as 30
provided by ordinance of the governing authority. The owner may 31
appeal a decision by the deciding officer or authority that is not 32
subject to local appeal or a decision by the local appeal authority 33
that the owner is not entitled to a certificate of tax exemption in 34
superior court under RCW 34.05.510 through 34.05.598, if the appeal 35
is filed within ((thirty)) 30 days of notification by the city or 36
county to the owner of the decision being challenged.37
Sec. 9. RCW 84.14.100 and 2021 c 187 s 5 are each amended to 38
read as follows: 39
p. 13 SB 5755
(1) Thirty days after the anniversary of the date of the 1
certificate of tax exemption and each year for the tax exemption 2
period, the owner of the rehabilitated or newly constructed property, 3
or the qualified nonprofit or local government that will assure 4
permanent affordable homeownership for at least 25 percent of the 5
units for properties receiving an exemption under RCW 84.14.021, must 6
file with a designated authorized representative of the city or 7
county an annual report indicating the following: 8
(a) A statement of occupancy and vacancy of the rehabilitated or 9
newly constructed property during the ((twelve)) 12 months ending 10
with the anniversary date; 11
(b) A certification by the owner that the property has not 12
changed use and, if applicable, that the property has been in 13
compliance with the affordable housing requirements as described in 14
((RCW 84.14.020)) this chapter since the date of the certificate 15
approved by the city or county; 16
(c) A description of changes or improvements constructed after 17
issuance of the certificate of tax exemption; and 18
(d) Any additional information requested by the city or county in 19
regards to the units receiving a tax exemption. 20
(2) All cities or counties, which issue certificates of tax 21
exemption for multiunit housing that conform to the requirements of 22
this chapter, must report annually by April 1st of each year, 23
beginning in 2007, to the department of commerce. A city or county 24
must be in compliance with the reporting requirements of this section 25
to offer certificates of tax exemption for multiunit housing 26
authorized in this chapter. The report must include the following 27
information: 28
(a) The number of tax exemption certificates granted;29
(b) The total number and type of units produced or to be 30
produced; 31
(c) The number, size, and type of units produced or to be 32
produced meeting affordable housing requirements; 33
(d) The actual development cost of each unit produced;34
(e) The total monthly rent or total sale amount of each unit 35
produced; 36
(f) The annual household income and household size for each of 37
the affordable units receiving a tax exemption and a summary of these 38
figures for the city or county; and 39
p. 14 SB 5755
(g) The value of the tax exemption for each project receiving a 1
tax exemption and the total value of tax exemptions granted.2
(3)(a) The department of commerce must adopt and implement a 3
program to effectively audit or review that the owner or operator of 4
each property for which a certificate of tax exemption has been 5
issued, except for those properties receiving an exemption that are 6
owned or operated by a nonprofit or for those properties receiving an 7
exemption from a city or county that operates an independent audit or 8
review program, is offering the number of units at rents as committed 9
to in the approved application for an exemption and that the tenants 10
are being properly screened to be qualified for an income-restricted 11
unit. The audit or review program must be adopted in consultation 12
with local governments and other stakeholders and may be based on 13
auditing a percentage of income-restricted units or properties 14
annually. A private owner or operator of a property for which a 15
certificate of tax exemption has been issued under this chapter, must 16
be audited at least once every five years. 17
(b) If the review or audit required under (a) of this subsection 18
for a given property finds that the owner or operator is not offering 19
the number of units at rents as committed to in the approved 20
application or is not properly screening tenants for income-21
restricted units, the department of commerce must notify the city or 22
county and the city or county must impose and collect a sliding scale 23
penalty not to exceed an amount calculated by subtracting the amount 24
of rents that would have been collected had the owner or operator 25
complied with their commitment from the amount of rents collected by 26
the owner or operator for the income-restricted units, with 27
consideration of the severity of the noncompliance. If a subsequent 28
review or audit required under (a) of this subsection for a given 29
property finds continued substantial noncompliance with the program 30
requirements, the exemption certificate must be canceled pursuant to 31
RCW 84.14.110. 32
(c) The department of commerce may impose and collect a fee, not 33
to exceed the costs of the audit or review, from the owner or 34
operator of any property subject to an audit or review required under 35
(a) of this subsection. 36
(4) The department of commerce must provide guidance to cities 37
and counties, which issue certificates of tax exemption for multiunit 38
housing that conform to the requirements of this chapter, on best 39
practices in managing and reporting for the exemption programs 40
p. 15 SB 5755
authorized under this chapter, including guidance for cities and 1
counties to collect and report demographic information for tenants of 2
units receiving a tax exemption under this chapter.3
(5) This section expires January 1, 2058. 4
Sec. 10. RCW 84.14.110 and 2012 c 194 s 10 are each amended to 5
read as follows: 6
(1) If improvements have been exempted under this chapter, the 7
improvements continue to be exempted for the applicable period under 8
((RCW 84.14.020)) this chapter, so long as they are not converted to 9
another use and continue to satisfy all applicable conditions. If the 10
owner intends to convert the multifamily development to another use, 11
or if applicable, if the owner intends to discontinue compliance with 12
the affordable housing requirements as described in ((RCW 84.14.020)) 13
this chapter or any other condition to exemption, the owner must 14
notify the assessor within ((sixty)) 60 days of the change in use or 15
intended discontinuance. If, after a certificate of tax exemption has 16
been filed with the county assessor, the authorized representative of 17
the governing authority discovers that a portion of the property is 18
changed or will be changed to a use that is other than residential or 19
that housing or amenities no longer meet the requirements, including, 20
if applicable, affordable housing requirements, as previously 21
approved or agreed upon by contract between the city or county and 22
the owner and that the multifamily housing, or a portion of the 23
housing, no longer qualifies for the exemption, the tax exemption 24
must be canceled and the following must occur: 25
(a) Additional real property tax must be imposed upon the value 26
of the nonqualifying improvements in the amount that would normally 27
be imposed, plus a penalty must be imposed amounting to ((twenty)) 20 28
percent. This additional tax is calculated based upon the difference 29
between the property tax paid and the property tax that would have 30
been paid if it had included the value of the nonqualifying 31
improvements dated back to the date that the improvements were 32
converted to a nonmultifamily use; 33
(b) The tax must include interest upon the amounts of the 34
additional tax at the same statutory rate charged on delinquent 35
property taxes from the dates on which the additional tax could have 36
been paid without penalty if the improvements had been assessed at a 37
value without regard to this chapter; and 38
p. 16 SB 5755
(c) The additional tax owed together with interest and penalty 1
must become a lien on the land and attach at the time the property or 2
portion of the property is removed from multifamily use or the 3
amenities no longer meet applicable requirements, and has priority to 4
and must be fully paid and satisfied before a recognizance, mortgage, 5
judgment, debt, obligation, or responsibility to or with which the 6
land may become charged or liable. The lien may be foreclosed upon 7
expiration of the same period after delinquency and in the same 8
manner provided by law for foreclosure of liens for delinquent real 9
property taxes. An additional tax unpaid on its due date is 10
delinquent. From the date of delinquency until paid, interest must be 11
charged at the same rate applied by law to delinquent ad valorem 12
property taxes. 13
(2) Upon a determination that a tax exemption is to be canceled 14
for a reason stated in this section, the governing authority or 15
authorized representative must notify the record owner of the 16
property as shown by the tax rolls by mail, return receipt requested, 17
of the determination to cancel the exemption. The owner may appeal 18
the determination to the governing authority or authorized 19
representative, within ((thirty)) 30 days by filing a notice of 20
appeal with the clerk of the governing authority, which notice must 21
specify the factual and legal basis on which the determination of 22
cancellation is alleged to be erroneous. The governing authority or a 23
hearing examiner or other official authorized by the governing 24
authority may hear the appeal. At the hearing, all affected parties 25
may be heard and all competent evidence received. After the hearing, 26
the deciding body or officer must either affirm, modify, or repeal 27
the decision of cancellation of exemption based on the evidence 28
received. An aggrieved party may appeal the decision of the deciding 29
body or officer to the superior court under RCW 34.05.510 through 30
34.05.598. 31
(3) Upon determination by the governing authority or authorized 32
representative to terminate an exemption, the county officials having 33
possession of the assessment and tax rolls must correct the rolls in 34
the manner provided for omitted property under RCW 84.40.080. The 35
county assessor must make such a valuation of the property and 36
improvements as is necessary to permit the correction of the rolls. 37
The value of the new housing construction, conversion, and 38
rehabilitation improvements added to the rolls is considered as new 39
construction for the purposes of chapter 84.55 RCW. The owner may 40
p. 17 SB 5755
appeal the valuation to the county board of equalization under 1
chapter 84.48 RCW and according to the provisions of RCW 84.40.038. 2
If there has been a failure to comply with this chapter, the property 3
must be listed as an omitted assessment for assessment years 4
beginning January 1st of the calendar year in which the noncompliance 5
first occurred, but the listing as an omitted assessment may not be 6
for a period more than three calendar years preceding the year in 7
which the failure to comply was discovered. 8
Sec. 11. RCW 82.59.010 and 2024 c 332 s 3 are each amended to 9
read as follows: 10
The definitions in this section apply throughout this chapter 11
unless the context clearly requires otherwise. 12
(1) "Affordable housing" means: 13
(a) Homeownership housing intended for owner occupancy to low-14
income households whose monthly housing costs, including utilities 15
other than telephone, do not exceed 30 percent of the household's 16
monthly income; 17
(b) "Rental housing" for low-income households whose monthly 18
housing costs, including utilities other than telephone, do not 19
exceed 30 percent of the household's monthly income.20
(2) "Applicant" means an owner of commercial property.21
(3) "City" means any city or town, including a code city.22
(4) "Conditional recipient" means an owner of commercial property 23
granted a conditional certificate of program approval under this 24
chapter, which includes any successor owner of the property.25
(5) "Eligible investment project" means an investment project 26
that is located in a city and receiving a conditional certificate of 27
program approval. 28
(6) "Governing authority" means the local legislative authority 29
of a city having jurisdiction over the property for which a deferral 30
may be granted under this chapter. 31
(7) "Household" means a single person, family, or unrelated 32
persons living together. 33
(8)(a) "Initiation of construction" means the date that a 34
building permit is issued under the building code adopted under RCW 35
19.27.031 for construction of the qualified building, if the 36
underlying ownership of the building vests exclusively with the 37
person receiving the economic benefit of the deferral.38
p. 18 SB 5755
(b) "Initiation of construction" does not include soil testing, 1
site clearing and grading, site preparation, or any other related 2
activities that are initiated before the issuance of a building 3
permit for the construction of the foundation of the building.4
(c) If the investment project is a phased project, "initiation of 5
construction" applies separately to each phase. 6
(9) "Investment project" means an investment in multifamily 7
housing, including labor, services, and materials incorporated in the 8
planning, installation, and construction of the project. "Investment 9
project" includes investment in related facilities such as 10
playgrounds and sidewalks as well as facilities used for business use 11
for mixed-use development. 12
(10) "Low-income household" means a single person, family, or 13
unrelated persons living together whose adjusted income is at or 14
below 80 percent of the median family income adjusted for family 15
size, for the county, city, or metropolitan statistical area, where 16
the project is located, as reported by the United States department 17
of housing and urban development. 18
(11) "Multifamily housing" means a building or a group of 19
buildings having four or more dwelling units not designed or used as 20
transient accommodations and not including hotels and motels. 21
Multifamily units may result from rehabilitation or conversion of 22
vacant, underutilized, or substandard buildings to multifamily 23
housing. 24
(12) "Owner" means the property owner of record.25
(13) "Underutilized commercial property" means an entire 26
property, or portion thereof, currently used or intended to be used 27
by a business for retailing or office-related or administrative 28
activities, or a high priority eligible property as determined by the 29
department of commerce under section 2 of this act . If the property 30
is used partly for a qualifying use and partly for other purposes, 31
the applicable tax deferral must be determined by apportionment of 32
the costs of construction under rules adopted by the department. For 33
the purposes of this subsection, "qualifying use" means used or 34
intended to be used by a business for retailing or office-related or 35
administrative activities. 36
--- END ---
p. 19 SB 5755