ESHB 1717
In CommitteeHouse
Affordable housing/sales tax
Creating a sales and use tax remittance program for affordable housing.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill establishes a sales and use tax remittance program to support affordable housing development in Washington. Developers who build qualifying projects with at least 50% affordable units for low-income households can apply to local governments for a refund of half the taxes they paid on construction materials and services. Cities and counties that adopt the program receive the other half of the remittance and must use those funds for affordable housing and related services. The program runs through 2035 and is subject to legislative review in 2033.
- Creates a new tax remittance program allowing cities and counties to refund 50% of sales and use taxes paid by developers on qualifying affordable housing projects.
- Requires qualifying projects to include at least 50% affordable units (rental or ownership) for low-income households, with affordability maintained for at least 40 years.
- Sets eligibility criteria: developers must be nonprofit or other approved entities, and projects must meet local zoning, affordability, and timeline requirements (e.g., completion within 3 years, extendable to 5 years under certain conditions).
- Requires local governments that adopt the program to use remittance funds exclusively for affordable housing development, acquisition, rehabilitation, or related services (e.g., behavioral health).
- Imposes reporting and compliance requirements, including annual reports for 40 years and verification that units remain affordable; failure to comply triggers repayment of remitted taxes with interest.
Who is affected
- Affordable housing developers (nonprofit and for-profit) — Nonprofit and for-profit housing developers who build or rehabilitate affordable housing projects meeting the bill’s criteria can apply for and receive tax remittances on sales and use taxes paid during construction.
- City and county governments — Local governments (cities and counties) that adopt the program can receive 50% of state sales and use tax remittances and must use all remittance funds to support affordable housing and related services.
- Low-income households — Low-income households benefit from increased availability of affordable rental and ownership housing units that must remain affordable for at least 40 years.
- Washington State Housing Finance Commission — The Washington State Housing Finance Commission sets eligibility rules for applicants and plays a role in overseeing program participation.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The program directly increases the supply of affordable housing by refunding up to 50% of construction-related taxes, lowering net development costs and making projects financially viable that otherwise would not proceed — especially impactful for nonprofit and public housing developers who lack access to low-cost capital.
HousingPeopleRef: Sec. 9(2)(a); Sec. 11(1)(a)-(d)By allowing remittance funds to be used for behavioral health services and supported housing, the bill supports integrated care models that reduce emergency department and incarceration costs — particularly beneficial for people with serious mental illness or substance use disorders who are disproportionately represented among unhoused populations.
HealthcarePeopleRef: Sec. 11(1)(d); Sec. 11(1)(a)The 40-year affordability covenant ensures long-term housing stability for low-income households, preventing displacement and gentrification pressure — a structural safeguard that benefits vulnerable renters who would otherwise face steep rent increases or eviction in tight markets.
HousingPeopleRef: Sec. 1(1)(b); Sec. 1(1)(a); Sec. 4(1)The program allows cities and counties to use remittance funds for operating and maintaining existing affordable housing, helping preserve aging units and avoid costly rehabilitation later — a cost-effective strategy that supports long-term housing stock health.
Local GovernmentPeopleRef: Sec. 11(2); Sec. 11(1)(c)Mandating a 2033 legislative review based on unit production metrics creates accountability and could drive future improvements — if the review leads to policy adjustments, it may improve targeting and outcomes over time.
Public SafetyLean peopleRef: Sec. 15(3)(a); Sec. 15(3)(b)
Potential Concerns (5)
Local governments that adopt the program must forgo 50% of sales and use tax revenue on qualifying projects — a direct reduction in general fund revenue — and are required to redirect those remittance receipts exclusively to affordable housing, limiting fiscal flexibility. While the bill allows recompense for general fund expenditures on qualifying projects (Sec. 11(1)(e)), this is narrow and does not fully offset lost revenue for most jurisdictions, especially those not actively investing in such projects.
Local GovernmentPeopleRef: Sec. 9(2)(b); Sec. 11(1)The program imposes significant compliance and monitoring burdens on eligible organizations and local governments, including annual reporting for 40 years, recapture of remitted taxes with interest if affordability covenants are breached, and legal risks if ownership transfers are not properly reported — costs disproportionately borne by small and nonprofit developers who lack legal and compliance staff.
FinancialPeopleRef: Sec. 9(2)(a); Sec. 13(1)(b)The 80% AMI (or 100% AMI in rural areas) income cap for “low-income” households is relatively high — in high-cost areas like King County, 80% AMI is ~$85,000 for a family of four — meaning many units may serve middle-income households rather than the deepest poverty populations, diluting impact for the most vulnerable.
HousingLean peopleRef: Sec. 1(7)(a); Sec. 1(7)(b); Sec. 1(4)The remittance structure favors large, well-resourced developers and nonprofits that can navigate complex application, certification, and 40-year compliance regimes — smaller for-profit developers and sole proprietors may be priced or administratively excluded, reducing competition and innovation in the affordable housing market.
Business & EmploymentPeopleRef: Sec. 10(2); Sec. 9(1); Sec. 11(1)The 2033 legislative review hinges on unit count metrics alone, ignoring quality, sustainability, resident outcomes, or cost-effectiveness — potentially incentivizing quantity over long-term viability or integration with supportive services, which could undermine public safety and health outcomes.
Public SafetyLean peopleRef: Sec. 15(3)(a); Sec. 15(3)(b)
Who Is Most Affected
Nonprofit developers benefit significantly — the program lowers barriers to entry for mission-driven organizations that lack equity access but face high compliance costs. For-profit developers may benefit less unless large-scale, as smaller firms struggle with administrative burden.
Local governments gain flexibility to fund housing and behavioral health services but lose sales tax revenue. Smaller or fiscally strained jurisdictions may be net losers unless they actively develop qualifying projects.
Low-income households benefit from increased housing supply and long-term affordability, but the 80% AMI threshold means many units serve moderate-income households — the deepest poverty populations (<30% AMI) may see less direct benefit.
The Washington State Housing Finance Commission gains oversight authority but faces no new funding or staffing mandates — its role is administrative, and impact depends on how rigorously it enforces eligibility rules.
Existing homeowners and renters in high-cost areas benefit indirectly from reduced displacement pressure and stabilized neighborhoods, but may face higher property taxes long-term if local revenues shrink and services are cut.