HB 1763
In CommitteeHouse
Affordable housing funding
Providing state funding for essential affordable housing programs.
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 creates a new 6% tax on short-term rental lodging booked through online platforms, with revenue dedicated to local governments for affordable housing and infrastructure. It also tightens rules for collecting unpaid taxes from business leaders of insolvent companies and updates tax cap rules to ensure the new tax doesn’t count toward existing lodging tax limits.
- Imposes a new 6% special excise tax on short-term rental lodging sales facilitated through online platforms (e.g., Airbnb, Vrbo), effective January 1, 2026.
- Creates the Essential Affordable Housing Local Assistance Account in the state treasury to collect and distribute tax revenue monthly to counties and cities based on where the short-term rental is located.
- Requires local governments to use the funds exclusively for affordable housing programs (e.g., shelters, supportive services, permanent housing) or housing infrastructure (e.g., water, sewer, roads), with strict conditions if used for infrastructure.
- Allows local governments to keep up to 20% of funds each year to cover administrative costs of managing housing programs.
- Amends existing laws to clarify that the new tax does not count toward existing local lodging tax caps (e.g., the 12% or 15.2% combined tax limits for cities/ counties).
- Expands the state’s authority to hold individual executives (CEOs/CFOs) personally liable for unpaid trust fund taxes (e.g., sales taxes) from insolvent or dissolved business entities.
Who is affected
- Local governments in Washington — Local governments (counties, cities, and towns) where short-term rentals operate will receive new funding tied to short-term rental activity to support affordable housing and infrastructure.
- Short-term rental operators using platforms — Operators of short-term rentals (e.g., Airbnb, Vrbo hosts) in Washington will face a new 6% tax on their lodging sales, but only if the rental is booked through a platform like Airbnb or Vrbo.
- Nonprofit and public housing service providers — Nonprofit housing providers and public housing authorities may receive grants, loans, or contracts from local governments to deliver affordable housing or supportive services.
- Housing developers — Developers of new housing projects that rely on local infrastructure (e.g., roads, water, sewer) may be affected by new rules limiting single-family home sizes and requiring annexation in urban growth areas.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The bill generates dedicated, predictable funding for affordable housing and infrastructure—estimated to be tens of millions annually—targeted to local jurisdictions where short-term rentals operate, directly supporting shelters, supportive services, and permanent housing for low-income and unhoused Washingtonians.
HousingPeopleRef: Sec. 1, Sec. 3Mandating that local governments use funds exclusively for affordable housing—including contracts with nonprofits and public housing authorities—ensures that resources flow directly to service providers, expanding access to critical housing and support programs for vulnerable populations.
HousingPeopleRef: Sec. 3(2)(a)Excluding the new 6% tax from existing lodging tax caps allows local governments to raise additional revenue without violating statutory limits, preserving local fiscal flexibility while expanding housing investment capacity—especially valuable in high-demand tourism areas like Seattle, Spokane, or the Olympic Peninsula.
Local GovernmentPeopleRef: Sec. 5, Sec. 6Holding CEOs and CFOs strictly liable for unpaid trust fund taxes (e.g., sales tax) from insolvent entities deters tax evasion and improves compliance—protecting public revenue streams used for essential services like law enforcement, fire response, and emergency shelter, especially in jurisdictions with high short-term rental activity.
Public SafetyPeopleRef: Sec. 7(3)(a)Linking infrastructure funding to density and impact fee reductions creates strong incentives for new housing—including multi-family units—while reducing developer costs, potentially accelerating housing supply growth and lowering long-term costs for moderate-income households.
HousingPeopleRef: Sec. 3(2)(b)(i)-(ii)
Potential Concerns (5)
Short-term rental operators using online platforms (e.g., Airbnb, Vrbo) face a new 6% excise tax on platform-facilitated bookings, increasing operating costs and potentially reducing net income—especially for part-time or low-volume hosts who rely on short-term rentals as supplemental income.
Business & EmploymentRef: Sec. 1The bill restricts how local governments may use infrastructure funds—prohibiting projects in areas zoned exclusively for single-family homes and imposing unit-size caps (≤2,000 sq ft)—which may limit housing supply flexibility and discourage larger-family or higher-density development, potentially worsening housing shortages in some regions.
HousingRef: Sec. 3(2)(a)The infrastructure use conditions—including annexation mandates and single-family unit size limits—may disincentivize private developers from pursuing projects in urban growth areas, especially those targeting middle- or upper-income households, thereby reducing housing diversity and potentially increasing costs for new units.
HousingLean peopleRef: Sec. 3(2)(b)(iii)-(v)Allowing local governments to retain up to 20% of funds for administrative costs may reduce the net amount available for direct housing services—particularly burdensome for small jurisdictions with limited staff, potentially diluting program effectiveness in rural or low-capacity counties.
Local GovernmentRef: Sec. 3(2)(c)Expanding personal liability for CEOs/CFOs to include *any* trust fund tax liability—regardless of fault or awareness—may deter qualified individuals from accepting executive roles in small or financially fragile businesses, especially in high-compliance industries like short-term rentals, due to heightened personal risk.
Business & EmploymentRef: Sec. 7(3)(a)
Who Is Most Affected
Low- and moderate-income households, especially those experiencing homelessness or housing insecurity, benefit significantly from expanded funding for shelters, supportive services, and permanent housing—this is the primary intended beneficiary group.
Local governments in high-tourism areas (e.g., King, Snohomish, Pierce counties) gain new revenue for housing and infrastructure, but may face administrative burdens and compliance costs—net benefit is positive for most, but varies by capacity.
Part-time or part-revenue short-term rental hosts (e.g., homeowners renting a room or secondary unit) face a 6% tax on platform bookings, which may reduce net income—especially impactful for those near the poverty line; larger professional operators may absorb or pass on the cost more easily.
Nonprofit housing providers and public housing authorities are likely to receive increased funding via contracts or grants from local governments, expanding their capacity to deliver services—this group is a clear beneficiary.
Housing developers face new constraints (e.g., unit size caps, annexation mandates, density requirements) that may increase complexity and reduce profitability on certain projects—especially single-family developers may be disadvantaged, while multi-family or infill developers may benefit from increased infrastructure funding.