SHB 1867
In CommitteeHouse
Affordable housing REET
Allowing counties or cities to impose a real estate excise tax for the purpose of developing affordable housing, subject to the will of the voters.
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 allows Washington counties and cities to impose a 0.5% real estate excise tax on property sales to fund affordable housing—only if voters approve it. Revenue must be used exclusively for building, buying, rehabilitating, or operating housing for low- and moderate-income residents. Cities can act if their county does not adopt the tax by early 2027.
- Allows counties to impose a 0.5% real estate excise tax (REET) on property sales to fund affordable housing—subject to voter approval.
- If a county does not adopt the tax by January 1, 2027, cities within that county may instead impose the same tax, also subject to voter approval.
- Tax revenue must be placed in a dedicated affordable housing account and used exclusively for developing or maintaining housing for very low-, low-, and moderate-income households and people with special needs.
- Funds must be distributed through a competitive grant and loan process, with priority given to nonprofits, housing authorities, and public agencies partnering with nonprofits.
- Requires voter approval via ballot measure before the tax can take effect—either through a local government resolution or a voter petition (signed by at least 10% of recent voters).
- Requires a public spending plan and at least one public hearing before the election, and mandates that expenditures follow the approved plan.
Who is affected
- Low-, moderate-, and very low-income households and individuals with special housing needs — Residents of Washington counties or cities that choose to implement the tax may benefit from increased funding for affordable housing projects, including rental assistance, supportive housing, and homebuyer assistance for low- and moderate-income households.
- Homebuyers and property sellers in jurisdictions where the tax is imposed — May be required to pay an additional 0.5% tax on real estate sales (as part of the purchase/sale transaction), depending on local voter approval and implementation.
- County and city governments (including legislative bodies and auditors) — Would be responsible for proposing, holding elections on, and administering the tax—including developing spending plans and managing grant/loan programs for affordable housing.
- Affordable housing developers (especially private nonprofits and public agencies) — Could receive competitive grants or loans to build, acquire, or rehabilitate affordable housing units for low-income residents.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The bill creates a new, dedicated revenue stream for affordable housing—targeting very low-, low-, and moderate-income households and people with special needs—potentially increasing supply of units, rental assistance, and supportive housing in high-need areas where market forces have failed.
HousingPeopleRef: Sec. 1(1), (2), (3)By funding stable, supportive housing for people with special needs (e.g., mental health, substance use, formerly incarcerated), the bill may reduce emergency service calls, homelessness-related policing, and ER visits—freeing public safety resources for other priorities.
Public SafetyPeopleRef: Sec. 1(3), (5)(b)Increased stable housing for low-income families can improve school attendance, reduce student mobility, and support academic outcomes—particularly for children in foster care, experiencing homelessness, or in transient living situations.
EducationPeopleRef: Sec. 1(3)The requirement for a public spending plan and at least one public hearing before the election ensures transparency and community input, strengthening democratic accountability in how housing funds are allocated.
Local GovernmentPeopleRef: Sec. 1(3), (5)(a)(i)Funding flowing through competitive grants to nonprofits and housing authorities may create jobs in construction, architecture, social services, and property management—particularly benefiting local small businesses and service providers in the affordable housing sector.
Business & EmploymentLean peopleRef: Sec. 1(3)
Potential Concerns (5)
The 0.5% REET could increase housing transaction costs for homebuyers and sellers in jurisdictions where the tax is imposed, potentially reducing real estate activity and dampening home price appreciation—especially in already tight markets where even small transaction costs affect affordability.
HousingPeopleRef: Sec. 1(1), (2)The requirement for voter approval via ballot measure (either by resolution or petition signed by 10% of recent voters) creates a high barrier to implementation, especially for smaller or less-resourced jurisdictions, potentially limiting the policy’s reach despite broad public support for affordable housing.
Local GovernmentLean peopleRef: Sec. 1(5)(a)Local governments will incur administrative costs to run elections, manage the affordable housing account, and administer competitive grant/loan processes—costs that may strain budgets in smaller counties or cities without existing housing infrastructure.
Local GovernmentLean peopleRef: Sec. 1(3)The tax is imposed on both buyer and seller, with at least half the obligation on the buyer—potentially distorting real estate market incentives and discouraging mobility (e.g., job-related moves), especially among middle-income households seeking housing in high-cost areas.
Business & EmploymentRef: Sec. 1(4)The 10% voter-petition threshold may disproportionately burden grassroots or low-income organizing efforts, as gathering signatures in low-turnout or marginalized communities is resource-intensive and legally complex—effectively privileging well-organized or wealthier advocacy groups.
Rights & LibertiesLean peopleRef: Sec. 1(5)(a)(ii)
Who Is Most Affected
Low- and moderate-income households in jurisdictions that adopt the tax stand to benefit significantly from increased access to affordable rental units, down payment assistance, and supportive housing—reducing housing cost burden and homelessness risk.
Homebuyers and sellers in counties or cities that implement the tax will pay an additional 0.5% transaction cost—this may reduce net proceeds for sellers and increase upfront costs for buyers, especially impacting first-time and working-class buyers in high-cost markets like King or Snohomish counties.
Counties and cities gain new authority to fund housing but must bear election, administration, and oversight costs; smaller jurisdictions may lack capacity to implement the program, while larger ones (e.g., Seattle, Spokane) are more likely to adopt it quickly.
Nonprofit housing developers and public agencies (e.g., housing authorities) are prioritized for funding, potentially expanding their capacity to build and manage units—but competitive grant processes may favor well-established or urban-based organizations over rural or newer providers.
Real estate agents, title companies, and lenders may face additional administrative burdens (e.g., collecting, reporting, and remitting the tax), but could benefit from increased housing activity if the tax stabilizes neighborhoods and boosts long-term demand.