SSB 5884
In CommitteeSenate
Underutilized property/tax
Expanding the limited sales and use tax incentive program to encourage redevelopment of underutilized property.
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 a tax incentive program to encourage redevelopment of underused urban land for affordable housing by offering a deferral of state and local sales and use taxes on construction-related purchases. If developers maintain affordability for 10 years, the deferred taxes are forgiven; otherwise, they become due over time based on how long the requirements are met.
- Expands the existing sales and use tax deferral program to encourage redevelopment of underdeveloped, underutilized, or vacant land in urban areas for affordable housing.
- Allows cities to designate 'residential targeted areas' where housing shortages exist, and offers tax deferrals for qualifying multifamily housing projects that include affordable units for very low-, low-, or moderate-income households.
- Requires at least 50% of units in most projects (or 20% in certain designated areas) to be affordable, with rent or sale prices tied to fair market rent or county median price.
- Sets a 10-year affordability commitment: if the property is maintained for qualifying purposes for 10 years, deferred taxes are not repaid; otherwise, taxes become due on a sliding scale (e.g., 100% due in year 1, 10% in year 10).
- Adds new eligibility criteria for tax deferral, including requirements for prevailing wages, apprenticeship utilization, and inclusion plans for minority- and women-owned businesses in construction contracts.
Who is affected
- Property owners of underdeveloped land — Property owners who own underdeveloped, underutilized, or vacant land in eligible urban areas and wish to redevelop it for affordable housing may apply for a sales and use tax deferral on construction-related purchases.
- Multifamily housing developers and builders — Developers and builders of multifamily housing projects in participating cities may benefit from deferred state and local sales and use taxes if their projects meet affordability and other criteria.
- Low- and moderate-income households — Low- and moderate-income households benefit from increased availability of affordable rental and homeownership units in urban areas where housing is scarce.
- Participating cities — Cities with populations between 135,000 and 275,000 (e.g., Spokane, Tacoma, Everett) may establish and administer the tax deferral program, including reviewing applications and enforcing affordability requirements.
- State and federal agencies providing data — State agencies like the Washington Center for Real Estate Research and the Department of Housing and Urban Development provide data used to determine income eligibility and housing affordability standards.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Expanding tax deferrals to cities up to 275,000 population (e.g., Tacoma, Everett, Spokane) and allowing 20% affordability in designated residential targeted areas significantly increases eligible sites and project viability, directly increasing supply of affordable units for low- and moderate-income households.
HousingPeopleRef: Sec. 4(1)(a)(i), Sec. 5Requiring at least 50% affordability in most projects (or 20% in targeted areas) tied to fair market rent or county median price ensures units remain accessible to households earning 50–115% AMI, expanding access for working families in high-cost urban areas where housing is scarce.
HousingPeopleRef: Sec. 4(1)(a)(i), Sec. 5Mandating prevailing wages, apprenticeship utilization, and inclusion plans for MWBEs in construction contracts raises labor standards and creates pathways for underrepresented workers—benefiting unionized and minority workers in the construction trades.
Business & EmploymentPeopleRef: Sec. 5(6)(a)-(d)By allowing cities to designate 'residential targeted areas' based on underdeveloped land and housing shortages, the bill enables flexible, locally driven solutions that prioritize infill over sprawl—reducing displacement risk and supporting equitable urban growth.
HousingPeopleRef: Sec. 4(1)(a)(i), Sec. 5The 2032 sunset and 2030 legislative review create accountability and allow for program adjustment based on real-world outcomes, ensuring the state can scale or terminate the program based on evidence—though this also introduces some uncertainty.
Local GovernmentLean peopleRef: Sec. 9(3), Sec. 11(4)(b)
Potential Concerns (5)
The 20% affordability threshold in residential targeted areas may allow developers to build fewer affordable units than in standard projects, potentially limiting overall supply of deeply affordable housing—especially since many projects may fall into this lower threshold category, diluting impact.
HousingPeopleRef: Sec. 4(1)(a)(ii), Sec. 5While the bill increases affordability in absolute terms, the 50% affordability requirement (or 20% in targeted areas) still permits up to half of units to be market-rate, meaning many low-income households will remain excluded; the benefit is concentrated among moderate-income households rather than the very low-income.
HousingLean peopleRef: Sec. 4(1)(a)(i), Sec. 5The requirement that 50% of units be affordable may be difficult to meet in high-cost urban centers like Tacoma or Everett without additional subsidies, potentially reducing project viability and discouraging participation—especially for smaller developers—limiting overall housing production.
HousingLean peopleRef: Sec. 4(1)(a)(i), Sec. 5The 10-year affordability covenant may be insufficient to address long-term displacement risk; once the period expires, units may revert to market rate, potentially displacing current low-income residents if no additional protections are in place.
HousingPeopleRef: Sec. 4(1)(a)(i), Sec. 5The 2030 legislative review and potential repeal mechanism creates uncertainty for cities implementing the program, possibly deterring participation due to lack of long-term policy stability—though this affects all participants equally.
Local GovernmentRef: Sec. 11(4)(a), Sec. 11(4)(b)
Who Is Most Affected
Property owners of underdeveloped land may benefit from increased development opportunities and higher land values, but only if they partner with developers or secure financing—many small landowners may lack capacity to develop alone, limiting direct benefit.
Large national developers with scale and financing capacity are best positioned to navigate the application process, meet prevailing wage and MWBE requirements, and absorb upfront costs—while smaller local developers may face higher compliance burdens and reduced competitiveness.
Low- and moderate-income households benefit from increased availability of affordable units, but the 50% affordability requirement still allows 50% market-rate units, and the 10-year covenant may not prevent future displacement—benefits are real but partial.
Cities like Tacoma, Everett, and Spokane gain new tools to address housing shortages, but must invest staff time and resources to administer the program—including hearings, applications, and enforcement—creating fiscal strain without dedicated funding.
Construction unions, MWBE advocacy groups, and affordable housing advocates benefit from prevailing wage, apprenticeship, and inclusion requirements, but these may also raise project costs and reduce developer participation if not offset by subsidies.