H-1928.4
SECOND SUBSTITUTE HOUSE BILL 1628
State of Washington 68th Legislature 2023 Regular Session
By House Finance (originally sponsored by Representatives Chopp,
Macri, Peterson, Alvarado, Taylor, Reed, Pollet, Lekanoff,
Fitzgibbon, Berg, Riccelli, Davis, Street, Ramel, Duerr, Senn,
Doglio, Cortes, Stonier, Gregerson, Mena, Berry, Fosse, Goodman,
Bergquist, Slatter, Ormsby, Thai, Farivar, Simmons, and Wylie)
READ FIRST TIME 04/17/23.
1 AN ACT Relating to increasing the supply of affordable housing by
2 modifying the state and local real estate excise tax; amending RCW
3 82.45.060, 82.45.230, 82.46.035, 82.46.010, 82.46.015, 82.46.037,
4 82.45.010, 82.45.010, and 43.185.030; adding a new section to chapter
5 82.45 RCW; adding a new section to chapter 82.46 RCW; creating new
6 sections; providing effective dates; and providing an expiration
7 date.
8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
9 NEW SECTION. Sec. 1. The legislature finds that the lack of
10 housing affordability and related instances of homelessness are
11 issues that affect every community in Washington. The legislature
12 also finds that increased homelessness is overwhelmingly caused by
13 growing rents, which push people living at the margins into
14 homelessness, erode public confidence, and undermine the shared
15 values that have driven our state's prosperity. The legislature
16 further finds that problems caused by rent increases are exacerbated
17 by the associated issue of very low vacancy rates, which make it
18 difficult for people to find a unit even when they have sufficient
19 income or rental assistance to pay market rates. The legislature
20 finds that low housing vacancy rates and the growth in population
21 have produced a tight housing market in which existing inventory is
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 1 priced at a premium. The legislature also finds that although
2 household incomes have grown along with the economy, income increase
3 for those with moderate and lower incomes have not kept pace with
4 rent and purchase price increases. This problem is especially
5 impacting lower and fixed income households, including seniors,
6 veterans, and people with disabilities. Indeed, these trends, in
7 combination with other market factors, have created a deficit of
8 affordable and available housing, particularly for Washingtonians
9 within the low to middle income range who are increasingly more
10 vulnerable to homelessness. Moreover, the legislature finds that
11 these households have the fewest options available in the private
12 housing market. In strong housing markets, builders seek the highest
13 achievable price to offset higher development costs, which means new
14 production does not result in more affordable units.
15 The legislature further finds that having a home is fundamental
16 for Washington residents and that all Washingtonians should be able
17 to afford safe and dependable housing with access to opportunities
18 such as education, employment, transit, and amenities. The
19 legislature finds that affordable housing is an essential part of
20 every community's infrastructure, serving as a platform for
21 individuals and families to stabilize and build their economic
22 futures. It serves as a platform for better health and creates jobs
23 and attracts investment, making it a prerequisite to economic growth
24 and stronger communities. In addition, the legislature finds that a
25 variety of affordable housing types is needed to provide options for
26 families of all sizes and stages of life. Furthermore, the
27 legislature finds that increasing the supply of permanently
28 affordable housing and reducing homelessness is a priority of the
29 people of Washington state and that reducing homelessness lessens
30 fiscal impact to the state and improves the economic vitality of our
31 businesses.
32 Moreover, the legislature finds that the private real estate
33 market does not provide adequate affordable housing options for all
34 economic segments, and therefore government assistance is needed to
35 offer the full range of affordable housing options.
36 Therefore, it is the intent of the legislature to increase the
37 supply of affordable housing through a permanent, dedicated
38 investment in the Washington housing trust fund and ongoing local
39 option investment in affordable housing for Washington residents in
40 the low to middle income range.
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 1 Sec. 2. RCW 82.45.060 and 2019 c 424 s 1 are each amended to
2 read as follows:
3 (1) There is imposed an excise tax upon each sale of real
4 property.
5 (a) Through December 31, 2019, the rate of the tax imposed under
6 this section is 1.28 percent of the selling price.
7 (b) Beginning January 1, 2020, through December 31, 2024, and
8 except as provided in (c) of this subsection, the rate of the tax
9 imposed under this section is as follows:
10 (i) 1.1 percent of the portion of the selling price that is less
11 than or equal to ((five hundred thousand dollars)) $500,000;
12 (ii) 1.28 percent of the portion of the selling price that is
13 greater than ((five hundred thousand dollars)) $500,000 and equal to
14 or less than ((one million five hundred thousand dollars))
15 $1,500,000;
16 (iii) 2.75 percent of the portion of the selling price that is
17 greater than ((one million five hundred thousand dollars)) $1,500,000
18 and equal to or less than ((three million dollars)) $3,000,000; and
19 (iv) Three percent of the portion of the selling price that is
20 greater than ((three million dollars)) $3,000,000.
21 (c) The sale of real property that is classified as timberland or
22 agricultural land is subject to the tax imposed under this section at
23 a rate of 1.28 percent of the selling price.
24 (d) Beginning January 1, 2025, and except as provided in (c) and
25 (e) of this subsection, the rate of the tax imposed under this
26 section is as follows:
27 (i) 1.1 percent of the portion of the selling price that is less
28 than or equal to $750,000;
29 (ii) 1.28 percent of the portion of the selling price that is
30 greater than $750,000 and equal to or less than $1,525,000;
31 (iii) 2.75 percent of the portion of the selling price that is
32 greater than $1,525,000 and equal to or less than $3,025,000; and
33 (iv) 3.5 percent of the portion of the selling price that is
34 greater than $3,025,000.
35 (e) Beginning January 1, 2025, through December 31, 2026, the
36 sale of real property that is classified as commercial property is
37 subject to the rates as provided in (d)(i), (ii), and (iii) of this
38 subsection. For the portion of the selling price that is greater than
39 $3,025,000, the sale of real property that is classified as
40 commercial property is subject to the rate of three percent.
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 1 Beginning January 1, 2027, and thereafter, the sale of real property
2 classified as commercial property is subject to the rates and selling
3 price thresholds in (d)(i) through (iv) of this subsection.
4 (2) Beginning July 1, 2022, and every fourth year thereafter:
5 (a) The department must adjust the applicable selling price
6 threshold in subsection (1)(b)(i) or (d)(i) of this section to
7 reflect the lesser of the growth of the consumer price index for
8 shelter or five percent. If the growth is equal to or less than zero
9 percent, the current selling price threshold continues to apply.
10 (b) The department must adjust the applicable selling price
11 thresholds in subsection (1)(b)(ii) through (iv) or (d)(ii) through
12 (iv) of this section by the dollar amount of any increase in the
13 applicable selling price threshold in subsection (1)(b)(i) or (d)(i)
14 of this section.
15 (c) The department must publish updated selling price thresholds
16 by September 1, 2022, and September 1st of every fourth year
17 thereafter. Updated selling price thresholds ((will)) apply beginning
18 January 1, 2023, and January 1st every fourth year thereafter.
19 Adjusted selling price thresholds must be rounded to the nearest
20 ((one thousand dollars)) $1,000. No changes may be made to adjusted
21 selling price thresholds once such adjustments take effect.
22 (d) The most recent selling price threshold becomes the base for
23 subsequent adjustments.
24 (e) The department must report adjustments to the selling price
25 thresholds to the fiscal committees of the legislature, beginning
26 December 1, 2022, and December 1st every fourth year thereafter.
27 (3)(a) The department must publish guidance to assist sellers in
28 properly classifying real property on the real estate excise tax
29 affidavit for purposes of determining the proper amount of tax due
30 under this section. Real property with multiple uses must be
31 classified according to the property's predominant use. The
32 department's guidance must include factors for use in determining the
33 predominant use of real property.
34 (b) County treasurers are not responsible for verifying that the
35 seller has properly classified real property reported on a real
36 estate excise tax affidavit. The department is solely responsible for
37 such verification as part of its audit responsibilities under RCW
38 82.45.150.
39 (4)(a) Beginning July 1, 2013, and ending December 31, 2019, an
40 amount equal to two percent of the proceeds of this tax must be
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 1 deposited in the public works assistance account created in RCW
2 43.155.050, an amount equal to ((four and one-tenth)) 4.1 percent
3 must be deposited in the education legacy trust account created in
4 RCW 83.100.230, an amount equal to ((one and six-tenths)) 1.6 percent
5 must be deposited in the city-county assistance account created in
6 RCW 43.08.290, and the remainder must be deposited in the general
7 fund.
8 (b) Beginning January 1, 2020, amounts collected from the tax
9 imposed under this section must be deposited as provided in RCW
10 82.45.230.
11 (5) The definitions in this subsection apply throughout this
12 section unless the context clearly requires otherwise.
13 (a) "Agricultural land" means farm and agricultural land and farm
14 and agricultural conservation land, as those terms are defined in RCW
15 84.34.020, including any structures on such land.
16 (b) "Commercial property" means real property that is used
17 primarily for business activities including, but not limited to,
18 manufacturing, transportation, communication, utilities, trade,
19 services, entertainment, and recreation. However, commercial property
20 does not include agricultural land, timberland, or real property
21 consisting solely of residential structures.
22 (c) "Consumer price index for shelter" means the most current
23 seasonally adjusted index for the shelter expenditure category of the
24 consumer price index for all urban consumers (CPI-U) as published by
25 July 31st by the bureau of labor statistics of the United States
26 department of labor.
27 (((c))) (d) "Growth of the consumer price index for shelter"
28 means the percentage increase in the consumer price index for shelter
29 as measured from data published by the bureau of labor statistics of
30 the United States department of labor by July 31st for the most
31 recent three-year period for the selling price threshold adjustment
32 in 2022, and the most recent four-year period for subsequent selling
33 price threshold adjustments.
34 (((d))) (e) "Timberland" means land classified under chapter
35 84.34 RCW or designated under chapter 84.33 RCW, including any
36 structures and standing timber on such land, and standing timber sold
37 apart from the land upon which it sits.
38 Sec. 3. RCW 82.45.230 and 2019 c 424 s 2 are each amended to
39 read as follows:
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 1 (1) Beginning January 1, 2020, and ending June 30, 2023, the
2 amounts received for the tax imposed on each sale of real property
3 under RCW 82.45.060 must be deposited as follows:
4 (a) 1.7 percent must be deposited into the public works
5 assistance account created in RCW 43.155.050;
6 (b) 1.4 percent must be deposited into the city-county assistance
7 account created in RCW 43.08.290;
8 (c) 79.4 percent must be deposited into the general fund; and
9 (d) The remainder must be deposited into the educational legacy
10 trust account created in RCW 83.100.230.
11 (2) Beginning July 1, 2023, ((and thereafter)) through December
12 31, 2024, the amounts received for the tax imposed on each sale of
13 real property under RCW 82.45.060 must be deposited as follows:
14 (a) 5.2 percent must be deposited into the public works
15 assistance account created in RCW 43.155.050;
16 (b) 1.4 percent must be deposited into the city-county assistance
17 account created in RCW 43.08.290;
18 (c) 79.4 percent must be deposited into the general fund; and
19 (d) The remainder must be deposited into the education legacy
20 trust account created in RCW 83.100.230.
21 (3) Beginning January 1, 2025, through December 31, 2026, the
22 amounts received for the tax imposed on each sale of real property
23 under RCW 82.45.060 must be deposited as follows:
24 (a) 5.07 percent must be deposited into the public works
25 assistance account created in RCW 43.155.050;
26 (b) 1.36 percent must be deposited into the city-county
27 assistance account created in RCW 43.08.290;
28 (c) 77.36 percent must be deposited into the general fund;
29 (d) 13.64 percent must be deposited into the education legacy
30 trust account created in RCW 83.100.230;
31 (e) 0.77 percent must be deposited into the Washington housing
32 trust fund created in RCW 43.185.030;
33 (f) 0.77 percent must be deposited into the apple health and
34 homes account created in RCW 43.330.184;
35 (g) 0.39 percent must be deposited into the developmental
36 disabilities housing and services account created in section 4 of
37 this act; and
38 (h) 0.64 percent must be deposited into the affordable housing
39 for all account created in RCW 43.185C.190 for operations,
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 1 maintenance, and service costs for permanent supportive housing as
2 defined in RCW 36.70A.030.
3 (4) Beginning January 1, 2027, and thereafter, the amounts
4 received for the tax imposed on each sale of real property under RCW
5 82.45.060 must be deposited as follows:
6 (a) 4.94 percent must be deposited into the public works
7 assistance account created in RCW 43.155.050;
8 (b) 1.33 percent must be deposited into the city-county
9 assistance account created in RCW 43.08.290;
10 (c) 75.40 percent must be deposited into the general fund;
11 (d) 13.29 percent must be deposited into the education legacy
12 trust account created in RCW 83.100.230;
13 (e) 1.51 percent must be deposited into the Washington housing
14 trust fund created in RCW 43.185.030;
15 (f) 1.51 percent must be deposited into the apple health and
16 homes account created in RCW 43.330.184;
17 (g) 0.76 percent must be deposited into the developmental
18 disabilities housing and services account created in section 4 of
19 this act; and
20 (h) 1.26 percent must be deposited into the affordable housing
21 for all account created in RCW 43.185C.190 for operations,
22 maintenance, and service costs for permanent supportive housing as
23 defined in RCW 36.70A.030.
24 NEW SECTION. Sec. 4. A new section is added to chapter 82.45
25 RCW to read as follows:
26 (1) The developmental disabilities housing and services account
27 is created in the state treasury. Receipts from the real estate
28 excise tax directed to this account pursuant to RCW 82.45.230 (3)(g)
29 and (4)(g) must be deposited into the account. Moneys in the account
30 may only be spent after appropriation.
31 (2) Expenditures from the account may be used only for:
32 (a)(i) Housing to support people with developmental disabilities,
33 including acquisition, development, or construction of permanent
34 housing, housing developments, or units, including new units in
35 existing structures;
36 (ii) Up to 15 percent of the total cost of a housing project that
37 qualifies under (a) of this subsection may include acquisition,
38 development, or construction of nonresident spaces that are integral
39 to the overall design and support successful community living;
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 1 (b) Preservation, operations, and maintenance costs of housing
2 for people with developmental disabilities;
3 (c) Housing-related services for individuals with developmental
4 disabilities;
5 (d) Rental subsidies; and
6 (e) Technical assistance to support nonprofit organizations in
7 applying for this funding through the account in order to expand the
8 pool of eligible developers for construction and long-term
9 sustainable maintenance for housing that meets the needs of people
10 with developmental disabilities.
11 (3) Expenditures from the account must be grants