BY: MARY HULL-DRURY, WA REALTORS®, GOVERNMENT AFFAIRS
The 2021 legislative session will likely go down in history as one of the most unique sessions ever. During these three short months, ZOOM has become a verb, “unmute your mic” is the new meeting motto, and sweatpants are considered business attire. One constant that has remained is the pace of session goes fast (for policy bills), then slow (during floor action), then fast again (for fiscal bills). Currently, we are at the fiscal stage, and the pace is quickening.
To keep you up to speed, some of the bills that are no longer moving forward are:
Rent Control, SB 5139 – This bill would have prevented rent increases for 6 months directly following expiration of the eviction moratorium and the subsequent 6 months would have limited rent increases to 3% CPI.
Building Decarbonization, HB 1084 – This bill would have required accelerated benchmarking requirements to convert commercial buildings away from using natural gas and convert to electricity.
These bills were not voted out of Committee and are no longer advancing. However, legislative sessions are spread over a biennium period (two years), so these may get “picked up” in 2022, and we will be focused on these.
The bills that are currently “in the hopper” that we are focused on are:
Capital Gains, ESSB 5096 – This bill has been amended since its original introduction. Currently, the bill imposes a 7% tax on Washington capital gains from the sale of long-term assets. Washington Realtors has been working with Legislators toward an exemption for all real estate. The discussions have been promising, and we hope to come to a resolution within the coming weeks.
MFTE (Multi Family Tax Exemption), E2SSB 5287 - The MFTE program provides a 12-year property tax incentive for eligible multifamily housing projects that dedicate 20% of its units as affordable for low- and moderate-income households who make 80% area median income (AMI). The bill also expands the program to a wider range of cities while allowing existing projects to extend their participation in the program so current affordable units don’t expire out of the 12-year program. The extension of the MFTE program hopes to prevent the loss of over 7,000 affordable units in the next decade.
Condo Liability Reform, ESSB 5024 – This bill intends to promote condo construction and development by exempting buildings with ten (10) or fewer units and no more than two stories from the definition of "multiunit residential building.” The exemption from the definition would also exempt: (1) building enclosure design and inspection requirements; and (2) the alternative disputes resolution process that alleges breaches of implied or express warranty under the Washington Condominium Act until June 30, 2031.
Tax Increment Financing (TIF), ESHB 1189 – This is an economic development bill that we support. Essentially, the bill would allow local property taxes collected from designated Tax Increment Zones to pay down infrastructure bonds. Currently, there is a difference of opinion between the ports and cities. In basic terms, the ports are worried about overlay implications on their taxing authority. However, cities support the bill for the economic development it will bring.
Eviction Reform, E2SSB 5160 – This bill proposes to address landlord-tenant relations by providing additional tenant protections during and after public health emergencies, provide legal representation in eviction cases, and provide landlords access to state rental assistance programs. Several amendments have been made since introduction, most notably the removal of the 2-year extension of the current eviction moratorium, which was one of our largest sticking points.
There’s momentum behind this bill as it’s the only remaining vehicle addressing landlord assistance and how to address the bottleneck of evictions. We’re working with the Landlord/Multifamily housing organizations and hope to see continued improvements to the bill.
Just Cause Evictions, ESHB 1236 – This bill proposes that pursuit of an eviction must meet one of sixteen (16) causes for termination. The bill passed out of the house after two days of passionate floor debate, which is consistent with the high volume of testimony all session long.
There have been significant changes to the bill since its introduction to include adding a provision that if there are four (4) instances of lease policy violations in 1-year is cause for termination, a reduction in landlord penalties for violating cause provisions from 4.5 times monthly rent down to 3 times monthly rent, and expanded number of causes from 11 to 16.
At this point, one of the main sticking points concerns fixed-term leases. Essentially, the bill requires residential landlords to renew a fixed-term lease at the end of the term.
DNR Lease Lands, HB 1430 – This has been a fun bill to work. This bill increases the maximum length of a commercial, industrial, business, or recreational lease of land managed by the Department of Natural Resources from 55 years to 99 years. We caught wind of this bill from our friends at DNR, and Craig Soehren, a WSCAR member from Spokane, has testified on this bill in support. Craig has become the good-luck charm for this bill as it has passed out of the House with unanimous support.
Despite a remote session, there has been a lot of activity for our industry, and “working across the aisle” has become more common since we don’t have the benefit of in-person interactions. Admittedly, this phenomenon doubles the number of meetings required to adequately “work” a bill, but at the end of the day, it’s well worth the effort.
Finally, these are just some of the bills we have been working on this session. If you have any questions on these or any other bill, I’m always happy to chat!