HB 2297 — Incentivizing grocery stores located in underserved communities.

and (c)for Anypurposes otherof documentationthis supportingsection the remittanceterm application."janitorial services" means those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery.

(5)The Aterm person"janitorial mayservices" does not applyinclude forpainting, morepapering, thanrepairing, onefurnace remittanceor underseptic thistank sectioncleaning, insnow aremoval calendaror quarter.sandblasting;

(6)p. The department must rule on the application within 90 days, except that the department may extend the time of processing such application upon providing notice to the person that ruling on the application cannot be completed within such time.

NEW5 SECTION.HB 2297 (e) Automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW;

(f) The furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it is presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same.

For the purposes of this subsection, it is presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same.

For the purposes of this section, it is presumed that the sale of and charge made for the furnishing of lodging offered regularly for public occupancy for periods of less than a month constitutes a license to use or enjoy the property subject to sales and use tax and not a rental or lease of property;

(g) The installing, repairing, altering, or improving of digital goods for consumers;

(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) of this subsection when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption.

Nothing contained in this subsection may be construed to modify subsection (1) of this section and nothing contained in subsection (1) of this section may be construed to modify this subsection.

(3) The term "sale at retail" or "retail sale" includes the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities:

(a) Abstract, title insurance, and escrow services;

(b) Credit bureau services;

(c) Automobile parking and storage garage services;

(d) Landscape maintenance and horticultural services but excluding (i) horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and clearing of trees and p.

6 HB 2297 brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility;

(e) Service charges associated with tickets to professional sporting events;

(f) The following personal services:

Tanning salon services, tattoo parlor services, steam bath services, turkish bath services, escort services, and dating services;

(g) Information technology training services, technical support, and other services including, but not limited to, assisting with network operations and support, help desk services, in-person training related to hardware or software, network system support services, data entry services, and data processing services;

(h) Custom website development services.

For the purposes of this subsection (3), "website development services" means the design, development, and support of a website provided by a website developer to a customer;

(i) Investigation, security services, security monitoring services, and armored car services including, but not limited to, background checks, security guard and patrol services, personal and event security, armored car transportation of cash and valuables, and security system services and monitoring.

This does not include locksmith services.

For purposes of this subsection (3)(i), the terms "sale at retail" and "retail sale" do not include a sale made to a grocery store, farmers market, or other food retailer;

(j) Temporary staffing services.

For the purposes of this subsection (3), "temporary staffing services" means providing workers to other businesses, except for hospitals licensed under chapter 70.41 or 71.12 RCW, for limited periods of time to supplement their workforce and fill employment vacancies on a contract or for fee basis;

(k) Advertising services.

(i) For the purposes of this subsection (3), "advertising services" means all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements including, but not limited to:

(A) Layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice concerning the best methods of advertising products or services;

and (B) Online referrals, search engine marketing((,)) and lead generation optimization, web campaign planning, the acquisition of p.

7 HB 2297 advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign.

(ii) "Advertising services" do not include:

(A) Web hosting services and domain name registration;

(B) Services rendered in respect to the following:

(I) "Newspapers" as defined in RCW 82.04.214;

(II) Printing or publishing under RCW 82.04.280;

and (III) "Radio and television broadcasting" within this state as defined in RCW 82.04.281;

and (C) Services rendered in respect to out-of-home advertising, including:

Billboard advertising;

street furniture advertising;

transit advertising;

place-based advertising, such as in-store display advertising or point-of-sale advertising;

dynamic or static signage at live events;

naming rights;

and fixed signage advertising.

Out-of-home advertising does not include direct mail;

(l) Live presentations including, but not limited to, lectures, seminars, workshops, or courses where participants attend either in- person or via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time;

and (m)(i) Operating an athletic or fitness facility, including all charges for the use of such a facility or for any associated services and amenities, except as provided in (m)(ii) of this subsection.

(ii) Notwithstanding anything to the contrary in (m)(i) of this subsection (3), the term "sale at retail" and "retail sale" under this subsection does not include:

(A) Separately stated charges for the use of an athletic or fitness facility where such use is primarily for a purpose other than engaging in or receiving instruction in a physical fitness activity;

(B) Separately stated charges for the use of a discrete portion of an athletic or fitness facility, other than a pool, where such discrete portion of the facility does not by itself meet the definition of "athletic or fitness facility" in this subsection;

(C) Separately stated charges for services, such as massage, nutritional consulting, and body composition testing, that do not require the customer to engage in physical fitness activities to receive the service.

The exclusion in this subsection (3)(m)(ii)(C) does not apply to personal training services and instruction in a physical fitness activity;

p.

8 HB 2297 (D) Separately stated charges for physical therapy provided by a physical therapist, as those terms are defined in RCW 18.74.010, or occupational therapy provided by an occupational therapy practitioner, as those terms are defined in RCW 18.59.020, when performed pursuant to a referral from an authorized health care practitioner or in consultation with an authorized health care practitioner.

For the purposes of this subsection (3)(m)(ii)(D), an authorized health care practitioner means a health care practitioner licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A RCW, or, until July 1, 2022, chapter 18.57A RCW;

(E) Rent or association fees charged by a landlord or residential association to a tenant or residential owner with access to an athletic or fitness facility maintained by the landlord or residential association, unless the rent or fee varies depending on whether the tenant or owner has access to the facility;

(F) Services provided in the regular course of employment by an employee with access to an athletic or fitness facility maintained by the employer for use without charge by its employees or their family members;

(G) The provision of access to an athletic or fitness facility by an educational institution to its students and staff.

However, charges made by an educational institution to its alumni or other members of the public for the use of any of the educational institution's athletic or fitness facilities are a retail sale under this subsection (3)(m).

For purposes of this subsection (3)(m)(ii)(G), "educational institution" has the same meaning as in RCW 82.04.170;

(H) Yoga, chi gong, or martial arts classes, training, or events held at a community center, park, school gymnasium, college or university, hospital or other medical facility, private residence, or any other facility that is not operated within and as part of an athletic or fitness facility.

(iii) Nothing in (m)(ii) of this subsection (3) may be construed to affect the taxation of sales made by the operator of an athletic or fitness facility, where such sales are defined as a retail sale under any provision of this section other than this subsection (3).

(iv) For the purposes of this subsection (3)(m), the following definitions apply:

(A) "Athletic or fitness facility" means an indoor or outdoor facility or portion of a facility that is primarily used for:

p.

9 HB 2297 Exercise classes;

strength and conditioning programs;

personal training services;

tennis, racquetball, handball, squash, or pickleball;

or other activities requiring the use of exercise or strength training equipment, such as treadmills, elliptical machines, stair climbers, stationary cycles, rowing machines, pilates equipment, balls, climbing ropes, jump ropes, and weightlifting equipment.

(B) "Martial arts" means any of the various systems of training for physical combat or self-defense.

"Martial arts" includes, but is not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, Kendo, tai chi, and mixed martial arts.

(C) "Physical fitness activities" means activities that involve physical exertion for the purpose of improving or maintaining the general fitness, strength, flexibility, conditioning, or health of the participant.

"Physical fitness activities" includes participating in yoga, chi gong, or martial arts.

For the purposes of (g) through (i) and (k) of this subsection (3), the terms "sale at retail" and "retail sale" do not include a sale between members of an affiliated group as defined in RCW 82.04.299(1)(f).

(4)(a) The term also includes the renting or leasing of tangible personal property to consumers.

(b) The term does not include the renting or leasing of tangible personal property where the lease or rental is for the purpose of sublease or subrent.

(5) The term also includes the providing of "competitive telephone service," "telecommunications service," or "ancillary services," as those terms are defined in RCW 82.04.065, to consumers.

(6)(a) The term also includes the sale of prewritten computer software, custom software, and customization of prewritten computer software to a consumer, regardless of the method of delivery to the end user.

For purposes of this subsection (6)(a), the sale of prewritten computer software includes the sale of or charge made for a key or an enabling or activation code, where the key or code is required to activate prewritten computer software and put the software into use.

There is no separate sale of the key or code from the prewritten computer software, regardless of how the sale may be characterized by the vendor or by the purchaser.

p.

10 HB 2297 (b)(i) The term also includes the charge made to consumers for the right to access and use prewritten computer software, custom software, and customization of prewritten computer software, where possession of the software is maintained by the seller or a third party, regardless of whether the charge for the service is on a per use, per user, per license, subscription, or some other basis.

(ii)(A) The service described in (b)(i) of this subsection (6) includes the right to access and use prewritten computer software, custom software, and customization of prewritten computer software to perform data processing.

(B) For purposes of this subsection (6)(b)(ii), "data processing" means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information.

Data processing includes check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities.

(7) The term also includes the sale of or charge made for an extended warranty to a consumer.

For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events.

The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement.

For purposes of this subsection, "sales price" has the same meaning as in RCW 82.08.010.

(8)(a) The term also includes the following sales to consumers of digital goods, digital codes, and digital automated services:

(i) Sales in which the seller has granted the purchaser the right of permanent use;

(ii) Sales in which the seller has granted the purchaser a right of use that is less than permanent;

(iii) Sales in which the purchaser is not obligated to make continued payment as a condition of the sale;

and (iv) Sales in which the purchaser is obligated to make continued payment as a condition of the sale.

p.

11 HB 2297 (b) A retail sale of digital goods, digital codes, or digital automated services under this subsection (8) includes any services provided by the seller exclusively in connection with the digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services.

(c) A retail sale of digital goods, digital codes, or digital automated services does not include the following services if the sale occurs between members of an affiliated group as defined in RCW 82.04.299(1)(f):

(i) Any service that primarily involves the application of human effort by the seller, and the human effort originated after the customer requested the service;

(ii) Live presentations, such as lectures, seminars, workshops, or courses, where participants are connected to other participants via the internet or telecommunications equipment, which allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time;

(iii) Advertising services.

For purposes of this subsection (8)(c), "advertising services" means all services directly related to the creation, preparation, production, or dissemination of advertisements.

Advertising services include layout, art direction, graphic design, mechanical preparation, production supervision, placement, and rendering advice to a client concerning the best methods of advertising that client's products or services.

Advertising services also include online referrals, search engine marketing and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign.

Advertising services do not include web hosting services and domain name registration;

and (iv) Data processing services.

For purposes of this subsection (8)(c), "data processing service" means a primarily automated service provided to a business or other organization where the primary object of the service is the systematic performance of operations by the service provider on data supplied in whole or in part by the customer to extract the required information in an appropriate form or to convert the data to usable information.

Data processing services include check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar p.

12 HB 2297 activities.

Data processing does not include the service described in subsection (6)(b) of this section.

(d) For purposes of this subsection, "permanent" means perpetual or for an indefinite or unspecified length of time.

A right of permanent use is presumed to have been granted unless the agreement between the seller and the purchaser specifies or the circumstances surrounding the transaction suggest or indicate that the right to use terminates on the occurrence of a condition subsequent.

(9) The term also includes the charge made for providing tangible personal property along with an operator for a fixed or indeterminate period of time.

A consideration of this is that the operator is necessary for the tangible personal property to perform as designed.

For the purpose of this subsection (9), an operator must do more than maintain, inspect, or set up the tangible personal property.

(10) The term does not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of- way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.

(11) The term also does not include sales of chemical sprays or washes to persons for the purpose of postharvest treatment of fruit for the prevention of scald, fungus, mold, or decay, nor does it include sales of feed, seed, seedlings, fertilizer, agents for enhanced pollination including insects such as bees, and spray materials to:

(a) Persons who participate in the federal conservation reserve program, the environmental quality incentives program, the wetlands reserve program, and the wildlife habitat incentives program, or their successors administered by the United States department of agriculture;

(b) farmers for the purpose of producing for sale any agricultural product;

(c) farmers for the purpose of providing bee pollination services;

and (d) farmers acting under cooperative habitat development or access contracts with an organization exempt from federal income tax under 26 U.S.C.

202.501(c)(3) of the federal internal revenue code or the Washington state department of fish and wildlife to produce or improve wildlife habitat on land that the farmer owns or leases.

Ap. new section is added to chapter 82.12 RCW to read as follows:

(1)13 HB 2297 (12) The provisionsterm does not include the sale of thisor chaptercharge domade notfor applylabor withand services rendered in respect to the useconstructing, repairing, decorating, or improving of investigationnew andor securityexisting servicesbuildings subjector other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the taxinstalling, imposedor inattaching RCWof 82.12.020any byarticle groceryof storestangible locatedpersonal inproperty underservedtherein communityor zonesthereto, aswhether definedor innot sectionsuch 302personal property becomes a part of thisthe act.realty by virtue of installation.

(2)Nor Adoes personthe claimingterm ainclude remittancethe undersale thisof sectionservices mustor paycharges made for the stateclearing of land and localthe salesmoving andof useearth taxof onor suchfor salesthe andUnited applyStates, toany theinstrumentality departmentthereof, foror a remittancecounty ofor thecity taxhousing paid.authority.

(3)Nor Thedoes conditionsthe andterm requirementsinclude the sale of sectionservices 201or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other by-products of thisweapons actproduction applyand tonuclear thisresearch section.and development.

PART(13) IIIThe p.term does not include the sale of or charge made for labor, services, or tangible personal property pursuant to agreements providing maintenance services for bus, rail, or rail fixed guideway equipment when a regional transit authority is the recipient of the labor, services, or tangible personal property, and a transit agency, as defined in RCW 81.104.015, performs the labor or services.

5(14) SHBThe 2297term NEWdoes SECTION.not include the sale for resale of any service described in this section if the sale would otherwise constitute a "sale at retail" and "retail sale" under this section.

(15)(a) The term "sale at retail" or "retail sale" includes amounts charged, however labeled, to consumers to engage in any of the activities listed in this subsection (15)(a), including the furnishing of any associated equipment or, except as otherwise provided in this subsection, providing instruction in such activities, where such charges are not otherwise defined as a "sale at retail" or "retail sale" in this section:

(i)(A) Golf, including any variant in which either golf balls or golf clubs are used, such as miniature golf, hitting golf balls at a driving range, and golf simulators, and including fees charged by a golf course to a player for using his or her own cart.

However, charges for golf instruction are not a retail sale, provided that if the instruction involves the use of a golfing facility that would otherwise require the payment of a fee, such as green fees or driving range fees, such fees, including the applicable retail sales tax, p.

14 HB 2297 must be separately identified and charged by the golfing facility operator to the instructor or the person receiving the instruction.

(B) Notwithstanding (a)(i)(A) of this subsection (15) and except as otherwise provided in this subsection (15)(a)(i)(B), the term "sale at retail" or "retail sale" does not include amounts charged to participate in, or conduct, a golf tournament or other competitive event.

However, amounts paid by event participants to the golf facility operator are retail sales under this subsection (15)(a)(i).

Likewise, amounts paid by the event organizer to the golf facility are retail sales under this subsection (15)(a)(i), if such amounts vary based on the number of event participants;

(ii) Ballooning, hang gliding, indoor or outdoor sky diving, paragliding, parasailing, and similar activities;

(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, ping pong, and similar games;

(iv) Access to amusement park, theme park, and water park facilities, including but not limited to charges for admission and locker or cabana rentals.

Discrete charges for rides or other attractions or entertainment that are in addition to the charge for admission are not a retail sale under this subsection (15)(a)(iv).

For the purposes of this subsection, an amusement park or theme park is a location that provides permanently affixed amusement rides, games, and other entertainment, but does not include parks or zoos for which the primary purpose is the exhibition of wildlife, or fairs, carnivals, and festivals as defined in (b)(i) of this subsection;

(v) Batting cage activities;

(vi) Bowling, but not including competitive events, except that amounts paid by the event participants to the bowling alley operator are retail sales under this subsection (15)(a)(vi).

Likewise, amounts paid by the event organizer to the operator of the bowling alley are retail sales under this subsection (15)(a)(vi), if such amounts vary based on the number of event participants;

(vii) Climbing on artificial climbing structures, whether indoors or outdoors;

(viii) Day trips for sightseeing purposes;

(ix) Bungee jumping, zip lining, and riding inside a ball, whether inflatable or otherwise;

(x) Horseback riding offered to the public, where the seller furnishes the horse to the buyer and providing instruction is not the p.

15 HB 2297 primary focus of the activity, including guided rides, but not including therapeutic horseback riding provided by an instructor certified by a nonprofit organization that offers national or international certification for therapeutic riding instructors;

(xi) Fishing, including providing access to private fishing areas and charter or guided fishing, except that fishing contests and license fees imposed by a government entity are not a retail sale under this subsection;

(xii) Guided hunting and hunting at game farms and shooting preserves, except that hunting contests and license fees imposed by a government entity are not a retail sale under this subsection;

(xiii) Swimming, but only in respect to (A) recreational or fitness swimming that is open to the public, such as open swim, lap swimming, and special events like kids night out and pool parties during open swim time, and (B) pool parties for private events, such as birthdays, family gatherings, and employee outings.

Fees for swimming lessons, to participate in swim meets and other competitions, or to join a swim team, club, or aquatic facility are not retail sales under this subsection (15)(a)(xiii);

(xiv) Go-karting, bumper cars, and other motorized activities where the seller provides the vehicle and the premises where the buyer will operate the vehicle;

(xv) Indoor or outdoor playground activities, such as inflatable bounce structures and other inflatables;

mazes;

trampolines;

slides;

ball pits;

games of tag, including laser tag and soft-dart tag;

and human gyroscope rides, regardless of whether such activities occur at the seller's place of business, but not including playground activities provided for children by a licensed child day care center or licensed family day care provider as those terms are defined in RCW 43.216.010;

(xvi) Shooting sports and activities, such as target shooting, skeet, trap, sporting clays, "5" stand, and archery, but only in respect to discrete charges to members of the public to engage in these activities, but not including fees to enter a competitive event, instruction that is entirely or predominately classroom based, or to join or renew a membership at a club, range, or other facility;

(xvii) Paintball and airsoft activities;

(xviii) Skating, including ice skating, roller skating, and inline skating, but only in respect to discrete charges to members of the public to engage in skating activities, but not including skating p.

16 HB 2297 lessons, competitive events, team activities, or fees to join or renew a membership at a skating facility, club, or other organization;

(xix) Nonmotorized snow sports and activities, such as downhill and cross-country skiing, snowboarding, ski jumping, sledding, snow tubing, snowshoeing, and similar snow sports and activities, whether engaged in outdoors or in an indoor facility with or without snow, but only in respect to discrete charges to the public for the use of land or facilities to engage in nonmotorized snow sports and activities, such as fees, however labeled, for the use of ski lifts and tows and daily or season passes for access to trails or other areas where nonmotorized snow sports and activities are conducted.

However, fees for the following are not retail sales under this subsection (15)(a)(xix):

(A) Instructional lessons;

(B) permits issued by a governmental entity to park a vehicle on or access public lands;

and (C) permits or leases granted by an owner of private timberland for recreational access to areas used primarily for growing and harvesting timber;

and (xx) Scuba diving;

snorkeling;

river rafting;

surfing;

kiteboarding;

flyboarding;

water slides;

inflatables, such as water pillows, water trampolines, and water rollers;

and similar water sports and activities.

(b) Notwithstanding anything to the contrary in this subsection (15), the term "sale at retail" or "retail sale" does not include charges:

(i) Made for admission to, and rides or attractions at, fairs, carnivals, and festivals.

For the purposes of this subsection, fairs, carnivals, and festivals are events that do not exceed 21 days and a majority of the amusement rides, if any, are not affixed to real property;

(ii) Made by an educational institution to its students and staff for activities defined as retail sales by (a)(i) through (xx) of this subsection.

However, charges made by an educational institution to its alumni or other members of the general public for these activities are a retail sale under this subsection (15).

For purposes of this subsection (15)(b)(ii), "educational institution" has the same meaning as in RCW 82.04.170;

(iii) Made by a vocational school for commercial diver training that is licensed by the workforce training and education coordinating board under chapter 28C.10 RCW;

or p.

17 HB 2297 (iv) Made for day camps offered by a nonprofit organization or state or local governmental entity that provide youth not older than age 18, or that are focused on providing individuals with disabilities or mental illness, the opportunity to participate in a variety of supervised activities.

(16)(a) The term "sale at retail" or "retail sale" includes the purchase or acquisition of tangible personal property and specified services by a person who receives either a qualifying grant exempt from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under RCW 82.04.4339, except for transactions excluded from the definition of "sale at retail" or "retail sale" by any other provision of this section.

Nothing in this subsection (16) may be construed to limit the application of any other provision of this section to purchases by a recipient of either a qualifying grant exempt from tax under RCW 82.04.767 or a grant deductible under RCW 82.04.4339, or by any other person.

(b) For purposes of this subsection (16), "specified services" means:

(i) The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation;

(ii) The clearing of land or the moving of earth, whether or not associated with activities described in (b)(i) of this subsection (16);

(iii) The razing or moving of existing buildings or structures;

and (iv) Landscape maintenance and horticultural services.

PART III NEW SECTION.

NEWp. SECTION.

18 HB 2297 NEW SECTION.

(2) "Frontier county" means a rural county with a population density of fewer than 50 persons per square milemile. as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.

(7) "Rural censuscounty" tract" means a censuscounty tract with a population-population weighteddensity centroidof thatfewer isthan not100 withinpersons per square mile or a censuscounty urbansmaller areathan 225 square miles, as classifieddetermined by the Unitedoffice Statesof censusfinancial bureaumanagement and published each year by the department for the mostperiod recentJuly decennial1st census.to June 30th.

(8) "Rural"Small county"food retailer" means a countyretail outlet with aless population density of fewer than 1002,500 persons per square milefeet orthat sells a countylimited smallerselection thanof 225foods squareand miles,other asproducts, determinedsuch byas thea officebodega, ofconvenience financialstore, managementcorner andstore, publishedneighborhood eachstore, yearsmall bygrocery, theor departmentsmall-scale forstore. the period July 1st to June 30th.

(9) "Small"Supermarket" food retailer" means a retail outlet with lessat thanleast 2,50016,000 square feetfeet, that sells a limited selection of foodswhich andat otherleast products,90 suchpercent asis aoccupied bodega,by conveniencefood store,and cornerrelated store,products. neighborhood store, small grocery, or small-scale store.

p.(10) "Underserved community zone" means an area of land designated by a governing authority in this chapter.

6(11) SHB"Urban 2297area" (10) "Supermarket" means a retailzip outletcode with ata leastpopulation 16,000 square feet, of whichmore atthan least3,000 90residents percentper issquare occupiedmile. by food and related products.

(11)(12) "Urban censuscounty" tract" means a censuscounty tractlocated within a population-metropolitan weightedstatistical centroidarea thatas isdetermined withinand adefined censusby urbanthe areaUnited asStates classifiedoffice byof themanagement Unitedand Statesbudget censusor bureauother forappropriate theagency mostor recentoffice decennialof census.the federal government.

(12) "Underserved community zone" means an area of land designated by a governing authority in this chapter.

(13) "Urban county" means a county that is not a rural county as determined by the office of financial management and that is located in a metropolitan statistical area as determined and defined by the United States office of management and budget or other appropriate agency or office of the federal government.

(1) A city governing authority may by ordinance or resolution establish an underserved community grocery store property tax exemption program to provide property tax exemptionsp. to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.

19 HB 2297 exemptions to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.

(1) For the purpose of creating an underserved community grocery store property p.tax exemption program, the governing authority of a city or county must adopt a resolution of intent to create an underserved community grocery store property tax exemption program and designate one or more areas as underserved community zones as generally described in the resolution.

7 SHB 2297 tax exemption program, the governing authority of a city or county must adopt a resolution of intent to create an underserved community grocery store property tax exemption program and designate one or more areas as underserved community zones as generally described in the resolution.

(2)p. The governing authority must give notice of a hearing held under this chapter by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than 30 days before the date of the hearing in a paper having a general circulation in the city or county.

20 HB 2297 (2) The governing authority must give notice of a hearing held under this chapter by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than 30 days before the date of the hearing in a paper having a general circulation in the city or county.

(1) Except as otherwise provided in this section, the governing authority of a city or county may designate an underserved community zone if it determines that a census tract or contiguous group of census tracts within the city's or county's jurisdiction meets the following requirements:

or p.(b) The area must meet the criterion for health disadvantaged areas and the low-access criterion;

8 SHB 2297 (b) The area must meet the criterion for health disadvantaged areas and the low-access criterion;

(2) TheFor governinga authorityproperty tax exemption for an existing grocery store, as an alternative to meeting the requirements in subsection (1) of this section, a county,governing whenauthority designatingmust establish that without the creation of an underserved community zone,tax mustincentive considerprogram designatingand zonesthe indesignation areasof withan theunderserved highestcommunity disparitieszone, andthe wherearea will meet the highestrequirements numberof subsection (1) of Washingtoniansthis willsection bedue positivelyto affected.the closure of an existing grocery store.

(3) A city may apply to the governing authority ofmay ause countyan toalternative requestmethodology for the creation of an underserved community zone usingthat anfits applicationits processcommunity's designatedneeds if the methodology and accompanying data is submitted to and it is approved by the county.department of commerce.

(4) ForThe atotal property tax exemption for an existing grocery store, as an alternative to meeting the requirements in subsection (1) of this section, a governing authority must establish that without the creation of an underserved community taxzone incentivedesignations programallowed andper thecounty designationare ofas anfollows: underserved community zone, the area will meet the requirements of subsection (1) of this section due to the closure of an existing grocery store.

(5)p. A governing authority may use an alternative methodology for the identification of underserved areas and the creation of an underserved community zone that fits its community's needs if the methodology and accompanying data is submitted to and it is approved by the department of commerce.

(6)21 TheHB total2297 underserved(a) communityFor zoneurban designationscounties, alloweda permaximum countyof are10 asunderserved follows:community zones;

(a)(b) For urbanrural counties, a maximum of 10five underserved community zones;

(b) For rural counties that are not frontier counties, a maximum of five underserved community zones;

(7)(5) Five years after the establishment of an underserved community zone and every five years thereafter, a governing authority may add, remove, or alter the boundaries of an underserved community zone.

(8)(6) The removal or altering of an underserved community zone does not disqualify any existing property tax exemptions granted under this chapter.

(7) The governing authority must provide information regarding the location of the designated zones to the department of commerce.

(8) Low-income criteria are as follows:

(a) Census tracts meeting one or more income criteria used in the food access research atlas published by the United States department of agriculture;

or (b) Census tracts in which 25 percent or more of the population have incomes at or below 200 percent of poverty thresholds reflected in the most recently available five-year American community survey estimates.

(9) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Health disadvantaged areas" include census tracts with an index score of eight or above on the most recently published department of health environmental health disparities map index, indicating the highest composite levels of health disadvantage based on a combination of environmental, health, socioeconomic, and demographic factors.

(b) "Low-access area" means a grouping of contiguous census tracts in which at least 500 people or 33 percent of the population is greater than 0.5 miles from the nearest supermarket or an urban area or greater than 10 miles for a rural area.

(c) "Low-transportation-access area" means a grouping of census tracts in which:

922 SHBHB 2297 (9)(i) TheMore governingthan authority100 musthouseholds providehave informationno regardingaccess theto locationa ofvehicle, according to the designatedmost zonesrecently topublished five-year American community survey estimate and the departmentgrouping of commerce.census tracts is located more than 0.5 miles from the nearest supermarket;

(10)or Low-income(ii) criteriaAt areleast as500 follows:people or 33 percent of the population live more than 20 miles from the nearest supermarket.

(a) Each census tract within the area meets one or more income criteria used in the food access research atlas published by the United States department of agriculture;

or (b) Twenty-five percent or more of the population in each census tract within the area has an income at or below 200 percent of poverty thresholds reflected in the most recently available five-year American community survey estimates.

(11) To meet the criteria for a health disadvantaged area, each census tract in the area must have an index score of eight or above on the most recently published department of health environmental health disparities map index, indicating the highest composite levels of health disadvantage based on a combination of environmental, health, socioeconomic, and demographic factors.

(12) To meet the criteria for a low-access area, at least 500 people within each tract or 33 percent of the population within each tract must reside more than 0.5 miles from the nearest grocery store for an urban census tract or greater than 10 miles from the nearest grocery store for a rural census tract.

(13) To meet the criteria for a low-transportation-access area:

(a) Each urban census tract in the area has more than 100 households that do not have access to a vehicle, according to the most recently published five-year American community survey estimate, and reside more than 0.5 miles from the nearest grocery store;

or (b) In each census tract in the area, at least 500 people or 33 percent of the population live more than 20 miles from the nearest grocery store for a rural census tract.

The value is p.exempt under this section for 30 successive years beginning on the day the certificate is approved by the governing authority.

10 SHB 2297 exempt under this section for 30 successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate.

The value is exempt under this section for 30 successive years beginning Januaryon 1st of the yearday immediately following the calendarcertificate yearis ofgranted issuanceby of the conditionalgoverning certificate.authority.

If a final certificate is not issued due to a denial under section 309(4) of this act, taxes are immediately due and payable by the property owner under section 312 (4) of this act.

The value is exempt under this section for 30 successive years beginning Januaryon 1st of the yearday immediately following the calendarcertificate yearis ofapproved issuanceby of the conditionalgoverning certificate.authority.

If a final certificate is not issued due to a denial under section 309(4) of this act, taxes are immediately due and payable by the property owner under section 312(4) of this act.

(6)p. The exemptions provided in this section do 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, 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.

(7)23 HB 2297 (6) The realexemptions propertyprovided consistingin this section do not apply to increases in assessed valuation made by the assessor on nonqualifying portions of anbuilding existingand groceryvalue store,of land nor to increases made by lawful order of a rehabilitatedcounty groceryboard store,of equalization, the department, or newlya constructedcounty groceryto storea mustclass beof locatedproperty inthroughout anthe underservedcounty communityor zonespecific asarea identifiedof bythe county to achieve the p.uniformity of assessment or appraisal required by law.

11(7) SHBThe 2297real property consisting of an existing grocery store, a rehabilitated grocery store, or newly constructed grocery store must be located in an underserved community zone as identified by the governing authority under section 305 of this act on the date the tax exemption certificate is granted to the owner by the governing authority.

and (b) Be partyzoned toas a contractcommercial with the city or countymixed-use approveddevelopment; by the governing authority under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the governing authority.

and (c) Be party to a contract with the city or county approved by the governing authority under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the governing authority.

(11) At the conclusion of the exemption period, the valuecost of new construction and rehabilitative improvements to the property must be considered as new construction for the purposes of chapters 84.55 and 36.21 RCW.

(b)p. For rehabilitation projects and new construction, a description of the site plan, a statement that the applicant would not have built in this location but for the availability of the tax exemption under this chapter, and other information requested;

24 HB 2297 (b) For rehabilitation projects and new construction, a description of the site plan, a statement that the applicant would not have built in this location but for the availability of the tax exemption under this chapter, and other information requested;

The governing authority may p.permit the applicant to revise an application before final action by the governing authority.

12 SHB 2297 permit the applicant to revise an application before final action by the governing authority.

(a) The existing grocery store, the rehabilitated grocery store, or the newly constructed grocery store will provide fresh and affordable groceries to an underserved community located in an underserved community zonezone; and complies with any city or county requirements to accept supplemental nutrition assistance program benefits or Washington basic food benefits or participate in applicable local, state, or federally supported fruit and vegetable nutrition incentive programs including, but not limited to, fresh bucks, fruit and vegetable prescription programs, or similar incentive programs that increase purchasing power for fruits and vegetables;

(5)(a)p. If the application for a rehabilitated grocery store or a newly constructed grocery store is approved, the city or county must issue the owner of the property a conditional certificate of tax exemption.

The25 certificateHB must2297 contain(5)(a) If the application for a statementrehabilitated bygrocery store or a dulynewly p.constructed grocery store is approved, the city or county must issue the owner of the property a conditional certificate of tax exemption.

13The SHBcertificate 2297must contain a statement by a duly authorized administrative official of the governing authority that the property has complied with the required criteria of this chapter.

(a) The work was not constructed consistent with the application or other applicable requirements;

or (b) The owner's property is otherwise not qualified for an exemption under this chapter.

1426 SHBHB 2297 (5)(a) The city'swork orwas county'snot governingconstructed authorityconsistent maywith enact an ordinance to provide a process for an owner to appeal a decision by the cityapplication or countyother thatapplicable therequirements; owner is not entitled to a certificate of tax exemption to the city or county.

or (b) The owner's property is otherwise not qualified for an exemption under this chapter.

(5) The city's or county's governing authority may enact an ordinance to provide a process for an owner to appeal a decision by the city or county that the owner is not entitled to a certificate of tax exemption to the city or county.

(2)p. A city or county that issues a certificate of tax exemption under this chapter must report annually by December 31st of each year, beginning in 2026, to the department of commerce.

27 HB 2297 (2) A city or county that issues a certificate of tax exemption under this chapter must report annually by December 31st of each year, beginning in 2026, to the department of commerce.

p.(b) The total number and type of existing buildings exempted, and the total number and type of rehabilitated and new grocery stores constructed;

15 SHB 2297 (b) The total number and type of existing buildings exempted, and the total number and type of rehabilitated and new grocery stores constructed;

and (e) An explanation of how the program is working to supply fresh and healthy food and new or ongoing job opportunities to underserved communities.

If the transferor fails to notify the city or county within 60 days, the tax exemption is terminated and all exempted property taxes from the date of the transfer are immediately due and payablep. by the transferor as required in subsection (4) of this section.

(3)28 IfHB an2297 ownerpayable voluntarilyby optsthe totransferor discontinueas compliancerequired within thesubsection requirements(4) of this chapter,section. the owner must notify the county assessor within 60 days of the change in use or intended p.

16(3) SHBIf 2297an owner voluntarily opts to discontinue compliance with the requirements of this chapter, the owner must notify the county assessor within 60 days of the change in use or intended discontinuance and all exempted property taxes from the date of the initialtransfer exemption are immediately due and payable by the transferor as required in subsection (4) of this section.

(5)p. Upon a determination that a tax exemption is to be terminated for a reason stated in this section, the city's or county's governing authority must notify the record owner of the property as shown by the tax rolls by mail, return receipt requested, of the determination to terminate the exemption.

The29 HB 2297 (5) Upon a determination that a tax exemption is to be terminated for a reason stated in this section, the city's or county's governing authority must notify the record owner mayof appealthe property as shown by the tax rolls by mail, return receipt requested, of the determination to p.terminate the exemption.

17The SHBowner 2297may appeal the determination to the city or county, within 30 days by filing a notice of appeal with the city or county, which notice must specify the factual and legal basis on which the determination of termination is alleged to be erroneous.

(1) Beginning January 1, 2027, a person is allowed a credit against the tax imposed in this chapter equal to 0.029 percent multipliedp. by the gross income of a grocery store operating in an underserved community zone.

(2)30 ToHB qualify2297 formultiplied thisby credit,the agross groceryincome storeof mustthe begrocery locatedstore operating in an underserved community zonezone. established in section 305 of this act.

The(2) creditTo appliesqualify onlyfor tothis thecredit, grossa incomeperson ofmust thebe grocery store located in thean underserved community zone.zone established in section 305 of this act.

p.(3) Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department that includes the established underserved community zone boundaries within their jurisdiction and any other information required by the department to verify taxpayer eligibility under this section.

18 SHB 2297 (3) Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department that includes the established underserved community zone boundaries within their jurisdiction and any other information required by the department to verify taxpayer eligibility under this section.

Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than one calendar year immediately following the year that the credit was earnedearned. and may be used until January 1, 2038.

(6) CreditsNo areapplication availableis onnecessary afor first-in-timethe basis.tax credit.

The departmentperson must disallowkeep anyrecords credits,necessary orfor portion thereof, that would cause the totaldepartment amountto ofverify creditseligibility claimed under this sectionsection. during any calendar year to exceed $5,000,000.

TheTo departmentclaim musta providecredit notificationa onperson itsmust websiteelectronically monthlyfile onwith the numberdepartment ofall creditsreturns, thatforms, haveand beenother appliedinformation for, the numberdepartment issued,requires andin thean numberelectronic remainingformat beforeas theprovided statewideand annualapproved limitby isthe reached.department.

InAny addition,return, theform, departmentor mustinformation providerequired writtento noticebe tofiled anyin personelectronic whoformat hasunder appliedthis tosection claimis taxnot creditsfiled inuntil excessreceived ofby the limitationdepartment in thisan subsection.electronic format.

(7) No refunds may be granted for credits under this section.

(8) For the purposes of the limits provided in this section, a credit must be counted against such limits for the calendar year in which the credit is earned.

(9) To claim a credit under this section, the person applying must complete an application for the credit as required by the department.

A person must also electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided and approved by the department.

Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format.

(10)(7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

p.(a) "Grocery store" has the same meaning as in section 302 of this act.

19 SHB 2297 (a) "Grocery store" has the same meaning as in section 302 of this act.

(1)p. This chapter does not apply to any person engaging within this state in the business as a consumer-owned, cultural, employee- owned, locally owned, or union-represented grocery store that operates in an underserved community zone established in section 305 of this act.

31 HB 2297 (1) This chapter does not apply to any person engaging within this state in the business as a locally owned, employee-owned, union run, or cultural grocery store that operates in an underserved community zone established in section 305 of this act.

(a) "Consumer-owned"Cultural grocery store" means a grocery store inwhose whichsales a significant portion of theculturally ownershiprelevant isfood heldor byitems customers,make suchup as,a butminimum notof limited40 to,percent through purchase of membershipthe thatstore's qualifiestotal asannual asales. controlling stake, or cooperative ownership.

(b) "Cultural"Employee-owned grocery store" means a grocery store whosein saleswhich of culturally relevant food or items make up a minimumsignificant ofportion 40 percent of the store'sownership totalis annualheld salesby theemployees. year before the exemption in this section is taken.

(c) "Employee-owned"Grocery grocery store" meanshas athe grocerysame storemeaning as in whichsection a302 significant portion of thethis ownershipact. is held by employees.

(d) "Grocery"Underserved store"community haszone" themeans samean meaningunderserved ascommunity zone established in section 302305 of this act.

(e) "Locally"Union owned"run grocery store" means a grocery store thatin iswhich family-owneda labor union serves as the primary operator or privatelycontrolling held.entity and exercises direct authority over management, governance, and business operations.

(f) "Underserved community zone" means an underserved community zone established in section 305 of this act.

p.

20 SHB 2297 (g) "Union-represented grocery store" means a grocery store that is party to a collective bargaining agreement with a labor organization representing the grocery store's nonsupervisory employees.

(3)p. It is the legislature's specific public policy objective to provide reduced tax liability for businesses that operate grocery stores in underserved communities.

32 HB 2297 (3) It is the legislature's specific public policy objective to provide reduced tax liability for businesses that operate grocery stores in underserved communities.

PART VII p.NEW SECTION.

21 SHB 2297 NEW SECTION.

RCW 82.32.805 and 82.32.808 do not apply to sectionssection 201 and 202 of this act.

This act takes effect JanuaryJuly 1, 2027.2026.

2233 SHBHB 2297