Bill Summary – FastDemocracy

H-2489.2
                                 HOUSE BILL 2422
     State of Washington         68th Legislature      2024 Regular Session
     By Representatives Corry and Walen
     Read first time 01/18/24.   Referred to Committee on Finance.
      AN ACT Relating to expanding affordable housing incentives
  available to rural counties; amending RCW 84.14.010, 84.14.020,
  84.14.021, 84.14.030, and 84.14.060; and creating new sections.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.   RCW 84.14.010 and 2021 c 187 s 2 are each amended to
 read as follows:
     The definitions in this section apply throughout this chapter
 unless the context clearly requires otherwise.
     (1) "Affordable housing" means residential housing that is rented
 by a person or household whose monthly housing costs, including
 utilities other than telephone, do not exceed thirty percent of the
 household's monthly income. For the purposes of housing intended for
 owner occupancy, "affordable housing" means residential housing that
 is within the means of low or moderate-income households.
     (2) "Campus facilities master plan" means the area that is
 defined by the University of Washington as necessary for the future
 growth and development of its campus facilities for campuses
 authorized under RCW 28B.45.020.
     (3) "City" means either (a) a city or town with a population of
 at least fifteen thousand, (b) the largest city or town, if there is
 no city or town with a population of at least fifteen thousand,
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 located in a county planning under the growth management act, (c) a
 city or town with a population of at least five thousand located in a
 county subject to the provisions of RCW 36.70A.215, or (d) any city
 that otherwise does not meet the qualifications under (a) through (c)
 of this subsection, until December 31, 2031, that complies with RCW
 84.14.020(1)(a)(iii) or 84.14.021(1)(b).
     (4) (("County")) Except as provided in RCW 84.14.020(1)(a)(iv)
 and 84.14.021(1)(c), "county" means a county with an unincorporated
 population of at least 170,000.
     (5) "Governing authority" means the local legislative authority
 of a city or a county having jurisdiction over the property for which
 an exemption may be applied for under this chapter.
     (6) "Growth management act" means chapter 36.70A RCW.
     (7) "Household" means a single person, family, or unrelated
 persons living together.
     (8) "Low-income household" means a single person, family, or
 unrelated persons living together whose adjusted income is at or
 below eighty percent of the median family income adjusted for family
 size, for the county, city, or metropolitan statistical area, where
 the project is located, as reported by the United States department
 of housing and urban development.
     (9) "Moderate-income household" means a single person, family, or
 unrelated persons living together whose adjusted income is more than
 eighty percent but is at or below one hundred fifteen percent of the
 median family income adjusted for family size, for the county, city,
 or metropolitan statistical area, where the project is located, as
 reported by the United States department of housing and urban
 development.
     (10) "Multiple-unit housing" means a building or a group of
 buildings having four or more dwelling units not designed or used as
 transient accommodations and not including hotels and motels.
 Multifamily units may result from new construction or rehabilitated
 or conversion of vacant, underutilized, or substandard buildings to
 multifamily housing.
     (11) "Owner" means the property owner of record.
     (12) "Permanent residential occupancy" means multiunit housing
 that provides either rental or owner occupancy on a nontransient
 basis. This includes owner-occupied or rental accommodation that is
 leased for a period of at least one month. This excludes hotels and
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 motels that predominately offer rental accommodation on a daily or
 weekly basis.
     (13)   "Rehabilitation   improvements"   means   modifications   to
 existing structures, that are vacant for twelve months or longer,
 that are made to achieve a condition of substantial compliance with
 existing building codes or modification to existing occupied
 structures which increase the number of multifamily housing units.
     (14) "Residential targeted area" means an area within an urban
 center or urban growth area that has been designated by the governing
 authority as a residential targeted area in accordance with this
 chapter.   With  respect   to   designations   after   July  1,   2007,
 "residential targeted area" may not include a campus facilities
 master plan.
     (15) "Rural county" means a county with a population between
 fifty thousand and seventy-one thousand and bordering Puget Sound.
     (16) "Substantial compliance" means compliance with local
 building or housing code requirements that are typically required for
 rehabilitation as opposed to new construction.
     (17) "Urban center" means a compact identifiable district where
 urban residents may obtain a variety of products and services. An
 urban center must contain:
     (a)   Several   existing   or   previous,    or   both,   business
 establishments that may include but are not limited to shops,
 offices, banks, restaurants, governmental agencies;
     (b) Adequate public facilities including streets, sidewalks,
 lighting, transit, domestic water, and sanitary sewer systems; and
     (c) A mixture of uses and activities that may include housing,
 recreation, and cultural activities in association with either
 commercial or office, or both, use.
     Sec. 2.   RCW 84.14.020 and 2021 c 187 s 3 are each amended to
 read as follows:
     (1)(a) The value of new housing construction, conversion, and
 rehabilitation improvements qualifying under this chapter is exempt
 from ad valorem property taxation, as follows:
     (i) For properties for which applications for certificates of tax
 exemption eligibility are submitted under this chapter before July
 22, 2007, the value is exempt for ten successive years beginning
 January 1 of the year immediately following the calendar year of
 issuance of the certificate;
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     (ii) For properties for which applications for certificates of
 tax exemption eligibility are submitted under this chapter on or
 after July 22, 2007, the value is exempt:
     (A) For eight successive years beginning January 1st of the year
 immediately following the calendar year of issuance of the
 certificate;
     (B) For twelve successive years beginning January 1st of the year
 immediately following the calendar year of issuance of the
 certificate, if the property otherwise qualifies for the exemption
 under this chapter and meets the conditions in this subsection
 (1)(a)(ii)(B). For the property to qualify for the twelve-year
 exemption under this subsection, the applicant must commit to renting
 or selling at least twenty percent of the multifamily housing units
 as affordable housing units to low and moderate-income households,
 and the property must satisfy that commitment and any additional
 affordability and income eligibility conditions adopted by the local
 government under this chapter. In the case of projects intended
 exclusively for owner occupancy, the minimum requirement of this
 subsection (1)(a)(ii)(B) may be satisfied solely through housing
 affordable to moderate-income households; or
     (C) For 20 successive years beginning January 1st of the year
 immediately following the calendar year of issuance of the
 certificate, if the property otherwise qualifies for the exemption
 under this chapter and meets the conditions in this subsection
 (1)(a)(ii)(C). For the property to qualify for the 20-year exemption
 under this subsection, the project must be located within one mile of
 high capacity transit of at least 15 minute scheduled frequency, in a
 city that has implemented, as of July 25, 2021, a mandatory
 inclusionary zoning requirement for affordable housing that ensures
 affordability of housing units for a period of at least 99 years and
 that has a population of no more than 65,000 as measured on July 25,
 2021. To qualify for the exemption provided in this subsection
 (1)(a)(ii)(C), the applicant must commit to renting at least 20
 percent of the dwelling units as affordable to low-income households
 for a term of at least 99 years, and the property must satisfy that
 commitment and all required affordability and income eligibility
 conditions adopted by the local government under this chapter. A city
 must require the applicant to record a covenant or deed restriction
 that ensures the continuing rental of units subject to these
 affordability requirements consistent with the conditions in this
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 subsection (1)(a)(ii)(C) for a period of no less than 99 years. The
 covenant or deed restriction must also address criteria and policies
 to maintain public benefit if the property is converted to a use
 other than which continues to provide for permanently affordable low-
 income housing consistent with this subsection (1)(a)(ii)(C); ((and))
     (iii) Until December 31, 2026, for a city as defined in RCW
 84.14.010(3)(d), for 12 successive years beginning January 1st of the
 year immediately following the calendar year of issuance of the
 certificate, if the property otherwise qualifies for the exemption
 under this chapter and meets the conditions in this subsection
 (1)(a)(iii). For the property to qualify for the 12-year exemption
 under this subsection, the applicant must commit to renting or
 selling at least 20 percent of the multifamily housing units as
 affordable housing units to low and moderate-income households, the
 property   must   satisfy   that   commitment   and   any   additional
 affordability and income eligibility conditions adopted by the local
 government under this chapter, and the area must be zoned to have an
 average minimum density equivalent to 15 dwelling units or more per
 gross acre, or for cities with a population over 20,000, the area
 must be zoned to have an average minimum density equivalent to 25
 dwelling units or more per gross acre. In the case of projects
 intended exclusively for owner occupancy, the minimum requirement of
 this subsection (1)(a)(iii) may be satisfied solely through housing
 affordable to low-income or moderate-income households; and
     (iv) Until December 31, 2035, for any county, for 12 successive
 years beginning January 1st of the year immediately following the
 calendar year of issuance of the certificate. For the property to
 qualify for the 12-year exemption under this subsection, the
 applicant must commit to renting or selling at least 20 percent of
 the multifamily housing units as affordable housing units to low-
 income and moderate-income households, and the density of the
 development must be 15 dwelling units or more per gross acre. For
 purposes of this subsection, "any county" means a county of any size
 that cannot designate a residential targeted area for any reason.
     (b) The exemptions provided in (a)(i) through (((iii))) (iv) of
 this subsection do not include the value of land or nonhousing-
 related improvements not qualifying under this chapter.
     (c) For properties receiving an exemption as provided in
 (a)(ii)(B) of this subsection that are in compliance with existing
 contracts and where the certificate of tax exemption is set to expire
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 after June 11, 2020, but before December 31, 2021, the exemption is
 extended until December 31, 2021, provided that the property must
 satisfy any eligibility criteria or limitations provided in this
 chapter as a condition to the existing exemption for a given property
 continue to be met. For all properties eligible to receive an
 extension pursuant to this subsection (1)(c), the city or county that
 issued the initial certificate of tax exemption, as required in RCW
 84.14.090, must notify the county assessor and the applicant of the
 extension of the certificate of tax exemption.
     (2) When a local government adopts guidelines pursuant to RCW
 84.14.030(2) and includes conditions that must be satisfied with
 respect to individual dwelling units, rather than with respect to the
 multiple-unit housing as a whole or some minimum portion thereof, the
 exemption may, at the local government's discretion, be limited to
 the value of the qualifying improvements allocable to those dwelling
 units that meet the local guidelines.
     (3) In the case of rehabilitation of existing buildings, the
 exemption does not include the value of improvements constructed
 prior to the submission of the application required under this
 chapter. The incentive provided by this chapter is in addition to any
 other incentives, tax credits, grants, or other incentives provided
 by law.
     (4) This chapter does not apply to increases in assessed
 valuation made by the assessor on nonqualifying portions of building
 and value of land nor to increases made by lawful order of a county
 board of equalization, the department of revenue, or a county, to a
 class of property throughout the county or specific area of the
 county to achieve the uniformity of assessment or appraisal required
 by law.
     (5) At the conclusion of the exemption period, the value of the
 new housing construction, conversion, or rehabilitation improvements
 must be considered as new construction for the purposes of chapters
 84.55 and 36.21 RCW as though the property was not exempt under this
 chapter.
     (6) For properties that qualified for, satisfied the conditions
 of, and utilized the exemption under subsection (1)(a)(ii)(A) or (B)
 of this section, following the initial exemption period or the
 extension period authorized in subsection (1)(c) of this section, the
 exemption period may be extended for an additional 12 years for
 projects that are within 18 months of expiration contingent on city
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 or county approval. For the property to qualify for an extension
 under this subsection (6), the applicant must meet at a minimum the
 locally adopted requirements for the property to qualify for an
 exemption   under  subsection   (1)(a)(ii)(B) of   this  section  as
 applicable at the time of the extension application, and the
 applicant commits to renting or selling at least 20 percent of the
 multifamily housing units as affordable housing units for low-income
 households.
     (7) At the end of both the tenth and eleventh years of an
 extension, for twelve-year extensions of the exemption, applicants
 must provide tenants of rent-restricted units with notification of
 intent to provide the tenant with rental relocation assistance as
 provided in subsection (8) of this section.
     (8)(a) Except as provided in (b) of this subsection, for any 12-
 year exemption authorized under subsection (1)(a)(ii)(B) or (iii) of
 this section after July 25, 2021, or for any 12-year exemption
 extension authorized under subsection (6) of this section, at the
 expiration of the exemption the applicant must provide tenant
 relocation assistance in an amount equal to one month's rent to a
 qualified tenant within the final month of the qualified tenant's
 lease. To be eligible for tenant relocation assistance under this
 subsection, the tenant must occupy an income-restricted unit at the
 time the exemption expires and must qualify as a low-income household
 under this chapter at the time relocation assistance is sought.
     (b) If affordability requirements consistent, at a minimum, with
 those required under subsection (1)(a)(ii)(B) or (iii) of this
 section remain in place for the unit after the expiration of the
 exemption, relocation assistance in an amount equal to one month's
 rent must be provided to a qualified tenant within the final month of
 a qualified tenant's lease who occupies an income-restricted unit at
 the time those additional affordability requirements cease to apply
 to the unit.
     (9) No new exemptions may be provided under this section
 beginning on or after January 1, 2032. No extensions may be granted
 under subsection (6) of this section on or after January 1, 2046.
     Sec. 3.   RCW 84.14.021 and 2021 c 187 s 7 are each amended to
 read as follows:
     (1)(a) The value of new housing construction, conversion, and
 rehabilitation improvements qualifying under this chapter is exempt
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 from ad valorem property taxation, as follows: For 20 successive
 years beginning January 1st of the year immediately following the
 calendar year of issuance of the certificate, if the property
 otherwise qualifies for the exemption under this chapter and meets
 the conditions in this section. For the prope