SB 5679
In CommitteeSenate
Multifamily tax exemption
Expanding eligibility to utilize the multifamily tax exemption program to all counties required or choosing to plan under RCW 36.70A.040.
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 expands access to Washington’s multifamily tax exemption program to all counties that plan under the Growth Management Act, removing previous population-based restrictions. It adds new safeguards to prevent displacement of residents and strengthens affordability and labor standards for projects in designated areas.
- Expands eligibility for the multifamily tax exemption program to all counties required or choosing to plan under the Growth Management Act (RCW 36.70A) — previously limited to certain counties.
- Removes the previous population threshold (170,000 unincorporated population) for counties to participate, allowing more rural and mid-sized counties to join the program.
- Adds new criteria for designating ‘residential targeted areas’, including a requirement that counties evaluate and mitigate risk of displacing current residents before designation.
- Requires property owners in unincorporated county areas to set aside at least 20% of units as affordable housing for low- and moderate-income households.
- Allows local governments to impose stricter requirements — such as prevailing wage, apprenticeship utilization, and inclusion plans for minority- and women-owned businesses — as conditions for granting tax exemptions.
Who is affected
- Local governments (counties and cities) — Local governments (counties and cities) that plan under the Growth Management Act gain new authority to designate areas where tax exemptions for multifamily housing can be offered to encourage affordable housing development.
- Property owners and developers — Property owners and developers who build or rehabilitate multifamily housing in designated areas may qualify for property tax exemptions for up to 10 years if they include affordable units.
- Low- and moderate-income households — Low- and moderate-income households benefit from increased availability of affordable rental or owner-occupied housing in targeted areas, with protections against displacement.
- Rural counties and higher education institutions — Rural counties (population 50,000–71,000 and bordering Puget Sound) and counties with campuses of higher education institutions may now qualify for the program under expanded eligibility.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Mandates 20% affordable units in unincorporated county multifamily projects, directly increasing the stock of housing accessible to low- and moderate-income households—especially critical in rapidly growing areas where market-rate development has failed to meet demand.
HousingPeopleRef: Sec. 2(7), RCW 84.14.040(7)Requires counties to evaluate and mitigate displacement risk before designating areas for tax incentives, strengthening protections for vulnerable residents—particularly renters in gentrifying or rural areas—against forced relocation and loss of community ties.
HousingPeopleRef: Sec. 2(1)(e), RCW 84.14.040(1)(e)Expands access to the tax exemption program to mid-sized and rural counties (e.g., Skagit, Thurston, Island, San Juan), enabling more communities to use this tool to address local housing shortages and support inclusive growth—especially beneficial for counties with growing populations but limited development capacity.
Local GovernmentPeopleRef: Summary: Expands eligibility to all counties planning under the Growth Management Act, removing the 170,000 unincorporated population thresholdAllows local governments to impose prevailing wage, apprenticeship, and inclusion requirements, which—while increasing costs—also support higher labor standards, better wages for construction workers, and increased opportunities for MWBEs, strengthening local workforce development.
Business & EmploymentPeopleRef: Sec. 2(6)(a)–(d), RCW 84.14.040(6)(a)–(d)The combination of affordability set-asides, displacement risk evaluation, and local flexibility to impose stricter standards creates a more robust framework for equitable development—helping ensure that new housing benefits existing residents rather than displacing them.
HousingPeopleRef: Summary: Adds new safeguards to prevent displacement of residents and strengthens affordability and labor standards
Potential Concerns (5)
Mandates that property owners in unincorporated county areas set aside at least 20% of units as affordable housing, which increases development costs and may reduce developer margins—especially for smaller developers—potentially discouraging participation and slowing new housing supply in areas where market-rate development would otherwise occur.
HousingPeopleRef: Sec. 2(7), RCW 84.14.040(7)The state and local governments lose property tax revenue for up to 10 years per qualifying project; while the fiscal impact is described as “modest,” the cumulative effect across many counties could strain local budgets—particularly in counties with limited alternative revenue sources—leading to reduced funding for schools, roads, or emergency services unless offset by other revenue.
FinancialPeopleRef: Fiscal Impact (state loses property tax revenue for up to 10 years per qualifying project)The bill retains pre-existing eligibility carve-outs for rural counties and higher education areas that were in place before 2021, but the new expansion to *all* counties planning under the Growth Management Act may create administrative burdens for smaller counties without existing housing staff or capacity to evaluate displacement risk, conduct hearings, and monitor compliance.
Local GovernmentPeopleRef: Sec. 2(1)(d)(i)–(ii), RCW 84.14.040(1)(d)(i)–(ii)Mandates such as prevailing wage, apprenticeship utilization, and minority/women-owned business inclusion plans increase labor and compliance costs for developers—especially small- to mid-sized firms—potentially reducing their competitiveness relative to larger, more capitalized firms and limiting local hiring flexibility.
Business & EmploymentLean peopleRef: Sec. 2(6)(a)–(d), RCW 84.14.040(6)(a)–(d)The requirement that counties evaluate displacement risk and implement mitigation measures (e.g., right of first refusal) adds procedural complexity and legal uncertainty—especially for counties without legal or planning staff—potentially delaying projects or exposing local governments to liability if mitigation is deemed inadequate.
Local GovernmentLean peopleRef: Sec. 2(1)(e), RCW 84.14.040(1)(e)
Who Is Most Affected
Low- and moderate-income households benefit from increased access to affordable units in areas where they previously faced exclusion due to high market rents or purchase prices; displacement protections help preserve existing community ties.
Local governments gain new authority to tailor housing policy to local needs, but face added administrative and legal responsibilities—especially in smaller counties lacking planning staff or legal resources.
Developers of affordable multifamily housing may benefit from tax savings and increased project feasibility, but face higher compliance costs (e.g., prevailing wage, MWBE plans) and may be discouraged by affordability set-asides if margins are thin.
Rural counties and higher education institutions gain eligibility under the expanded program, but may lack the local capacity to implement displacement evaluations or enforce labor standards effectively.
Construction workers may benefit from prevailing wage and apprenticeship requirements, but small contractors may struggle with increased payroll costs and documentation burdens.