HB 1791 — Increasing the flexibility of existing funding sources to fund public safety and other facilities by modifying the local real estate excise tax.

H-1624.1H-0539.1 SUBSTITUTE HOUSE BILL 1791 State of Washington 69th Legislature 2025 Regular Session By House Finance (originally sponsored by Representatives Paul, Low, Ramel, Peterson, Nance, Springer, and Leavitt)Leavitt READRead FIRSTfirst TIMEtime 02/26/25.02/03/25.

Referred to Committee on Finance.

1 SHBHB 1791 also includes the grant, assignment, quitclaim, sale, or transfer of improvements constructed upon leased land.

2 SHBHB 1791 contains a forfeiture clause, or deed in lieu of foreclosure of a mortgage.

3 SHBHB 1791 children of the transferor or the transferor's spouse or domestic partner.

4 SHBHB 1791 personal property in exchange for that person or persons' interest in the entity.

5 SHBHB 1791 (A) The adult child with developmental disabilities of the transferor of the residential property must be allowed to reside in the residence or successor property so long as the placement is safe and appropriate as determined by the department of social and health services;

6 SHBHB 1791 (iv) In order to receive an exemption under this subsection (3)(t) an affidavit must be submitted by the transferor of the residential property and must include a copy of the transfer agreement and any other documentation as required by the department.

7 SHBHB 1791 and must also certify, by affidavit at the time of sale or transfer, that it intends to comply with those requirements.

8 SHBHB 1791 (iv) Each affidavit must be filed with the department upon completion of the sale or transfer of property, including transfers from a qualifying grantee to a different qualifying grantee.

(w)(i) BeginningThe January 1, 2026, the sale of qualified space in a development that qualifies for a property tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a nonprofit organization, a housing authority, or public corporation for use for an exempt community purpose.

9 SHBHB 1791 purchase real property, including standing timber, or any estate or interest therein or other contract under which possession of the property is given to the purchaser, or any other person at the purchaser's direction, and title to the property is retained by the vendor as security for the payment of the purchase price.

10 SHBHB 1791 (b) A transfer by transfer on death deed, to the extent that it is not in satisfaction of a contractual obligation of the decedent owed to the recipient of the property.

11 SHBHB 1791 (o) A sale to a regional transit authority or public corporation under RCW 81.112.320 under a sale/leaseback agreement under RCW 81.112.300.

12 SHBHB 1791 or more persons previously holding a controlling interest in the entity receive cash or property in exchange for any interest the person or persons acting in concert hold in the entity.

13 SHBHB 1791 and (C) the continued use of the property for low-income housing.

14 SHBHB 1791 (iii) A "qualified entity" is:

15 SHBHB 1791 (I) The qualifying grantee must receive or qualify the property for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 35.21.755, or 84.36.010;

16 SHBHB 1791 (v)(i) The sale of qualified space in a development that qualifies for a property tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 35.21.755, or 84.36.010 to a nonprofit organization, a housing authority, or public corporation for use for an exempt community purpose.

17 SHBHB 1791 improvements plan and local capital improvements, including those listed in RCW 35.43.040((.

(3) In lieu of imposing the tax authorized in RCW 82.14.030(2), the legislative authority of any county or any city may impose an additional excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding ((one-halfone-half of one))one 0.5 percent of the selling price.

18 SHBHB 1791 libraries;

19 SHBHB 1791 funding to pay for all capital projects, as defined in RCW 82.46.010, identified in its capital facilities plan for the succeeding two-year period.

20 SHBHB 1791 (1) ((Except for revenues used after May 13, 2021, through December 31, 2023, as provided in subsection (3) of this section, the)) The legislative authority of any county or city must identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and must indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.

(2) The legislative authority of any county or any city that plans under RCW 36.70A.040(1) may impose an additional excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding ((one-quarterone-quarter of one))one 0.25 percent of the selling price.

(3) ((Revenues))Revenues Except as provided in subsection (5) of this section, revenues generated from the tax imposed under subsection (2) of this section must be used by such counties and cities solely for ((financing)) capital projects specified in a capital facilities plan element of a comprehensive plan((, except that the greater of $100,000 or 35 percent of revenues may additionally be used for the operation of, maintenance of, and service support for, existing capital projects after May 13, 2021, through December 31, 2023)).

(5))) As used in this section, "city" means any city or town and "capital project" means those public works projects or public investments of a local government for:

(a) Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets, roads, p.

21 SHBHB 1791 (a) Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets, roads, highways, sidewalks, street and road lighting systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems;

((and)) (c) ((Until January 1, 2026, planning)) Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of facilities for those experiencing homelessness and affordable housing projects;projects ;

(((6))) (5) RevenuesA generatedcounty byor thecity taxmay imposeduse underthe subsectiongreater (2) of this$100,000 sectionor may25 bepercent usedof towardsavailable planning,funds((, acquisition,but construction,not reconstruction,to repair,exceed replacement,$1,000,000,)) rehabilitation, or improvement of facilities for thosecapital experiencing homelessness and affordable housing projects thatas aredefined supportedin throughsubsection an(((5))) interlocal(4)(c) housingof collaborationthis assection. established under chapter 39.34 RCW.

(6) A county or city may use the greater of $100,000 or 25 percent of available funds((, but not to exceed $1,000,000,)) for capital projects as defined in subsection (((5))) (4)(c) of this section.

(7)(((7))) (6) A county or city using funds for uses in subsection (((5))) (4)(c) of this section must document in its plan under RCW 36.70A.070(3) that it has funds during the next two years for capital projects in subsection (((5))) (4)(a) of this section.

(8)(((8))) (7) When the governor files a notice of noncompliance under RCW 36.70A.340 with the secretary of state and the appropriate county or city, the county or city's authority to impose the additional excise tax under this section is temporarily rescinded until the governor files a subsequent notice rescinding the notice of noncompliance.

(1) A city or county that meets the requirements of subsection (2) of this section may use the greater of $100,000 or ((25)) 35 p.percent of available funds((, but not to exceed $1,000,000 per year, except for the period from May 13, 2021, through December 31, 2023, when the greater of $100,000 or 35 percent may be used)) from revenues collected under RCW 82.46.035 for((:

22 SHB 1791 percent of available funds((, but not to exceed $1,000,000 per year, except for the period from May 13, 2021, through December 31, 2023, when the greater of $100,000 or 35 percent may be used)) from revenues collected under RCW 82.46.035 for((:

(b) The planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, improvement, or maintenance of capitalp. projects as defined in RCW 82.46.010(6)(b) that are not also included within the definition of capital projects in RCW 82.46.035(5);

22 HB 1791 capital projects as defined in RCW 82.46.010(6)(b) that are not also included within the definition of capital projects in RCW 82.46.035(5);

p.(3) The report prepared under subsection (2)(a) of this section must:

23 SHB 1791 (3) The report prepared under subsection (2)(a) of this section must: