2014 Legislative Summary


Property Tax Bills – Passed in 2014 Regular Session

The following is a summary of the significant property tax legislation approved during the regular session of the 2014 Washington State Legislature. We have included links to the Legislature’s site for each of the bills that were adopted. These sites give a very complete picture of how the measures moved through the legislative process and provide copies of the measures that have been enacted into law. We’ve also provided contact information for our staff members that may be involved in the implementation of the bill or the ongoing administration of related programs.

2ESHB 1117 Transfers of real property by deed taking effect at the grantor’s death
EHB 1287 Subjecting federally recognized Indian Tribes to the same conditions as state and local governments for property owned exclusively by the tribe.
SHB 1634 Including the value of solar, biomass, and geothermal facilities in the property tax levy limit calculation.
SHB 2309 Providing fairness and flexibility in the payment of property taxes.
HB 2446 Simplifying the procedures for obtaining an order for a property tax refund.
E2SHB 2493 Concerning current use valuation for land primarily used for commercial horticultural purposes
HB 2547 Relating to the creation of a less than countywide port district within a county containing no port districts
ESB 6031 Lake and beach management districts
SB 6180 Consolidating designated forest lands and open space timber lands for ease of administration.
SB 6216 Relating to the establishment of county ferry districts.
2SSB 6330 Promoting affordable housing in unincorporated areas of rural counties within urban growth areas
SSB 6333 Concerning tax statute clarifications, simplifications, and technical corrections
SB 6405 An act providing greater consistency for nonprofit property tax exemption.
SB 6505 Clarifying that marijuana, useable marijuana, and marijuana-infused products are not agricultural.

2ESHB 1117 This bill allows the transfer of real property by a “transfer on death” deed which takes effect upon the grantor’s death. A “transfer on death” (TOD) deed must contain the essential elements and formalities of a properly recordable deed and must state that the transfer to the designated beneficiary is to occur at the transferor's death. The deed must be recorded prior to the transferor's death in the public records office of the county auditor in the county in which the property is located. A TOD deed is fully revocable during the transferor's lifetime, even if the deed or another instrument contains a contrary provision. Beneficiaries have no present interest in the property until the TOD deed takes effect at the transferor's death. A certified copy of the death certificate is recorded to perfect title. Beneficiaries need not be notified of the pending interest during the transferor's lifetime in order for the TOD deed to be effective. At the transferor's death, the transferor's interest in the property passes automatically to the beneficiary, subject to applicable taxes and all other interests in the property including liens, mortgages, and other encumbrances. Beneficiaries may disclaim the interest if they do so in writing within nine months of the interest becoming effective. If the beneficiary fails to survive the transferor, the interest lapses. This bill takes effect June 12, 2014. DOR Contact: Peggy Davis at PeggyD@dor.wa.gov or (360) 534-1410


HB 1287- Subjecting federally recognized Indian Tribes to the same conditions as state and local governments for property owned exclusively by the tribe This bill extends exemption from property tax to properties owned in-fee exclusively by federally recognized Indian Tribes and used for economic development (business activities). Only properties acquired by such tribe before March 1, 2014 may qualify for the exemption. The key provisions of the bill include:

  • Expanding the tribal property tax exemption under RCW 84.36.010 for essential government services to include property used for economic development purposes.
  • Imposing a leasehold excise tax (LET) obligation on leasehold interests in tribal property exempt from property taxes under RCW 84.36.010, in much the same manner as users of other public properties are assessed.
  • Imposing a payment in lieu of tax (PILT) obligation on the tribe with respect to properties owned by the tribe that are not leased to others, but used for tribal business purposes. The PILT is due if the tax-exempt property is used exclusively for economic development, is located outside of the tribe’s reservation and is not otherwise exempt from property taxation by federal law.
  • A provision that the PILT amount be determined jointly in good faith negotiation between the tribal owner and the county in which the property is located. The PILT amount may not be more than what the LET would be if the property were subject to LET.
  • A requirement that the Department determine the PILT amount if the tribe and county cannot agree.
  • A requirement that counties distribute PILT payments to the local taxing districts, including cities, in the same proportion as the LET they would have shared had LET applied with respect to the property.
  • Fire protection districts and regional fire protection service authorities to contract with tribes for fire protection if the tribe owns property exempt from property taxes under RCW 84.36.010 within the boundaries of the district or authority.
  • A requirement that the Joint Audit and Review Committee (JLARC) to provide an economic impact report to the Legislature by December 1, 2020, evaluating the impacts of the bill.
The bill takes effect June 12, 2014 and expires January 1, 2022. It will apply to taxes levied for collection in 2015 through 2021. DOR Contacts: For agency-wide implementation questions contact Miki Gearhart at MikiG@dor.wa.gov or (360) 534-1526. For specific application & renewal questions contact Sindy Armstrong at SindyA@dor.wa.gov or (360) 534-1412.


SHB 1634- Including the value of solar, biomass, and geothermal facilities in the property tax levy limit calculation This bill would allow the assessed value of solar, biomass, and geothermal facilities that generate electricity and operate entirely within a single county to be treated like new construction for purposes of calculating levies. Under current law when calculating the highest lawful levy for a taxing district, an additional dollar amount is added by multiplying the regular property tax levy rate of the district from the preceding year by the increase in assessed value in the district resulting from new construction, increases in assessed value due to construction of electric generation wind turbine facilities classified as personal property, improvements to property, and any increase in the assessed value of state assessed property. This bill allows an additional dollar amount to be added to the levy by multiplying the regular property tax levy rate of the district from the preceding year by the increase in assessed value in the district resulting from the construction of solar, biomass, and geothermal facilities that generate electricity. The bill takes effect on June 12, 2014 for property taxes collected in 2015 and thereafter. DOR Contact: Diann Locke at DiannL@dor.wa.gov or (360) 534-1427.


SHB 2309- Providing fairness and flexibility in the payment of property taxes The bill provides a reduction of penalties and interest on delinquent property taxes and allows new flexibility for county treasurers in the collection of those taxes. The measure provides that:

  • Penalties and interest apply only to the delinquent tax (unpaid balance).
  • County treasurers may accept partial payments of delinquent property taxes including penalties and interest through electronic means.
  • County treasurers are given the authority to waive interest and penalties on property taxes when a taxpayer pays an erroneous amount, but then corrects the payment within 30 days of receiving notice of the error.
The bill takes effect on June 12, 2014 for property taxes collected in 2015 and thereafter. DOR Contact: Harold Smith at HaroldS@dor.wa.gov or (360) 534-1411.


HB 2446– Simplifying the procedures for obtaining an order for a property tax refund The bill relieves property owners of the necessity to file a claim for refund when the refund is the result of a Board of Equalization, State Board of Tax Appeals, or Court decision, or decisions made by the county treasurer or assessor within 3 years of the tax due date. The refund can also be made without a claim when the county assessor or Department of Revenue approves a property tax exemption authorized under chapter 84.36 RCW within 3 years of the tax due date. This bill takes effect June 12, 2014. DOR Contact: Harold Smith at HaroldS@dor.wa.gov or (360) 534-1411.


E2SHB 2493- Concerning current use valuation for land primarily used for commercial horticultural purposes Under the Open Space Taxation Act, a property owner of “farm and agricultural land” may have their land assessed at its “current use” rather than its highest and best use, or market value. Under existing law, land used primarily to grow plants directly in the ground qualifies for current use valuation. Land used primarily to grow plants in containers, whether under a structure or not, such as a greenhouse, does not qualify for current use valuation unless the land is considered incidental to the other classified farm and agricultural land being used primarily to grow plants in the ground. Incidental use cannot exceed 20% of the total classified farm and agricultural land. This legislation allows land primarily used for commercial horticultural purposes, including growing plants in containers, to qualify for the farm and agricultural land classification under the following provisions:

  • The land is not primarily used for the storage, care, or selling of plants purchased from other growers for retail sale;
  • Land less than 5 acres used primarily to grow plants in containers does not qualify as “farm and agricultural land” if more than 25% of the land used primarily to grow plants in containers is open to the general public for on-site retail sales;
  • If more than 20% of the land used for growing plants in containers is covered by pavement, none of the paved area is eligible for classification as “farm and agricultural land” but may still qualify as “incidental use”;
  • If the total contiguous land being classified as farm and agricultural land is less than 20 acres, it must meet existing income or investment requirements for “farm and agricultural land” under 20 acres.

This bill takes effect June 12, 2014. DOR Contact: Judy Wells at JudyW@dor.wa.gov or (360) 534-1360.


HB 2547- Relating to the creation of a less than countywide port district within a county containing no port districts Under the provisions of this bill, a less than countywide port district with an assessed value of $150 million or more may be created in a county without an existing port district, if the port district is created before December 31, 2020. This bill takes effect June 12, 2014. DOR Contact: Diann Locke at DiannL@dor.wa.gov or (360) 534-1427.


ESB 6031– Lake and beach management districts With written approval of a majority of property owners of a lake or beach management district, a district can acquire real property or property rights. These rights may include conservation easements to promote the conservation and stewardship of shorelines and upland properties for conservation or for minimal development. The real property or property rights proposed for acquisition must be in a county located west of the crest of the Cascade mountain range that plans under chapter 36.70A.040 and has a population of more than 40,000 and fewer than 65,000 persons as of April 1, 2013. The bill also modifies or creates new administrative provisions related to acquiring property, financing, using revenue from special assessments, and the dissolution of districts. A county may impose a special assessment or rates and charges after a district is dissolved to fulfill unpaid financial obligations. A district without bond debt can be dissolved when the county legislative authority finds they have accomplished their reasons why the district was created or by vote of the property owners. The bill also increased the threshold of signatures from 15 to 20 percent when filing a petition to create a district. This bill takes effect June 12, 2014. DOR Contact: Diann Locke at DiannL@dor.wa.gov or (360) 534-1427.


SB 6180- Consolidating designated forest lands and open space timber lands for ease of administration This measure allows a county legislative authority to merge its timber land classification into their designated forest land (DFL) program and terminate the timber land classification. The effects of consolidation of these programs include:

  • Land classified as timber land before the merger is considered DFL as of the date the land was initially classified as timber land.
  • The county assessor must notify timber land owners and the Department of the merger.
  • The Department must keep a list on its internet site of counties that have merged its timber land classification with its DFL program.
  • An owner of land classified under the timber land classification in a county that is merging the two programs who has submitted a two-year notice of withdrawal request has specific options regarding withdrawal or removal from the programs.
Regardless of whether a county chooses to merge their current use timber land classification with their DFL program, this bill reduces the minimum acreage requirement for the DFL program from 20 acres to five acres, changed the approval date for DFL applications from May 1 to July 1 of the year following application, and also authorizes the assessor to require a timber management plan for DFL, less than 20 acres, if the assessor has reason to believe the land is no longer being used primarily for growing and harvesting timber. This bill takes effect June 12, 2014.

SB 6216– Relating to the establishment of county ferry districts. This bill establishes the procedures and requirements for a county with a population of one million or more to assume the rights, powers, functions, and obligations of a county ferry district established with the same boundaries as the county. This bill takes effect June 12, 2014. DOR Contact: Diann Locke at DiannL@dor.wa.gov or (360) 534-1427.


2SSB 6330 - Promoting affordable housing in unincorporated areas of rural counties within urban growth areas Under current law, the value of new housing construction, conversion and rehabilitation improvements qualifying under chapter 84.14 RCW (New and rehabilitated multiple-unit dwellings in urban centers) is exempt from ad valorem property taxation for 8 to 12 years, depending on certain criteria. The value of the land or non-housing related improvements do not qualify for the exemption. To apply for exemption under current law, an application must be provided to the city or county and the property must meet several requirements including location within a designated area. Under this measure, a rural county with a population between 50,000 and 71,000 and bordering Puget Sound, for purposes of granting new or rehabilitated multiple-unit housing exemptions, may designate a residential targeted area and offer this exemption. The area must be within the unincorporated area of the rural county, within an urban growth area designated by the county prior to January 1, 2013; and the area must be served by a sewer system. An application for this option of the property tax exemption may not be approved in a residential targeted area in a rural county on or after January 1, 2020. This bill takes effect June 12, 2014. DOR Contact: Harold Smith at HaroldS@dor.wa.gov or (360) 534-1411.


SSB 6333- Concerning tax statute clarifications, simplifications, and technical corrections When existing statutes become outdated as a result of court cases, are impacted by initiatives, or contain drafting errors, minor changes to the statutes are needed. Additionally, these technical corrections to existing laws may be needed to clarify the statute or improve the tax administration. This large agency bill included several clarifications and technical corrections to property tax statutes: Designated Forest Land, Compensating Tax - In Section 309 (RCW 84.33.140) the bill clarifies that the treasurer, not the assessor, must mail a notice of the amount of compensating tax due along with the date it is due. The bill also adds the requirement that upon removal, land will be exempt from compensating tax if there is a sale or transfer of property to an entity having the power of eminent domain in anticipation of the exercise of such power based on official action taken by the entity or if confirmed in writing. This makes administration similar to the removal exception in the current use statutes (RCW 84.34.108 (6)(b)). Open Space, Farm and Agricultural, and Timber Lands - Section 311 (RCW 84.34.108) – Clarifies that interest and penalty are also due when land is removed from classification. Section 312 (RCW 84.34.300) – Clarifies when special benefit assessments for the improvement or construction of sanitary and/or storm sewerage service, or domestic water service, or certain road construction apply when land is removed or withdrawn from classification. Section 313 (RCW 84.34.320) – Provides consistency between certain provisions that apply when the land is either removed or withdrawn from classification. Section 314 (RCW 84.34.330) – Provides consistency that certain provisions apply when the land is either removed or withdrawn from classification. Section 315 (RCW 84.34.370) - Provides consistency that certain provisions apply when the land is either removed or withdrawn from classification. Owner Petitions to County Board of Equalization Section 407 (RCW 84.40.038) - In addition to the July 1 and 30 days after mailing deadlines, a taxpayer can appeal a decision 30 days after information was transmitted or made available electronically to be accessed. Valuing and Listing Publicly Owned Property Section 408 (84.40.175) – Clarifies that certain valuation and listing requirements do not apply to publicly-owned property exempt under 84.36.010. This bill takes effect June 12, 2014. DOR Contact: Michael Braaten at MichaelB@dor.wa.gov or (360) 534-1428


SB 6405- An act providing greater consistency for nonprofit property tax exemptions In general, exempt nonprofit properties must be used exclusively for exempt activities and cannot be used for pecuniary gain or to promote business activities. Most nonprofits could only rent or loan their exempt properties to other organizations that qualified for exemption or were conducting charitable activities. Over recent years, the legislature has provided unique exceptions to a few specific exempt categories, but not to others. ESB 6405 amended a number of sections within chapter 84.36 RCW to provide churches and other nonprofit organizations with new flexibility to share the use of their exempt properties with the community. The bill now applies consistent criteria for all the various nonprofit exempt categories, so that all nonprofits will operate under the same guidelines and limitations, without losing their exemption. These options for sharing exempt property are comparable to those granted to performing arts facilities and museums a few years ago. The key changes allow virtually all nonprofit organizations, including churches to:

  • Loan or rent their facilities to others for nonexempt activities on up to 50 days in a calendar year (Note: Any rental fees or donations charged must not exceed the cost of operation and maintenance for the area rented),
  • Allow the use of their exempt properties for pecuniary gain or to promote business activities on up to 15 of those 50 days.
  • Continue to host occasional, short duration fundraising activities outside of these new criteria, as long as the host receives 51% of the net proceeds from the business activity involved. Fund-raising events that don’t meet the 51% criteria, like festivals and bazaars, may be hosted by the exempt nonprofit, but must stay within the new, overall 15-day limit on business activity.
While the revisions do not change the exemptions for public assembly halls, performing arts facilities or museums, this is a significant change for all other exemptions. The property tax division is preparing recommendations for the revision of the rules and will develop summaries and Q & A for all major categories of exemptions that benefit from the new flexibility in the use of exempt property. This bill takes effect June 12, 2014. DOR Contacts: Sindy Armstrong at SindyA@dor.wa.gov or (360) 534-1412 or Linda Smith at LindaSm@dor.wa.gov or (360) 534-1416.


SB 6505- Clarifying that marijuana, useable marijuana, and marijuana-infused products are not agricultural products This bill excludes land used for the growing, raising, or producing of marijuana, useable marijuana, or marijuana-infused products from benefitting from the Current Use Program under chapter 84.34 RCW. The bill also excludes farm machinery and equipment used for the growing, raising, or producing of marijuana, useable marijuana, or marijuana-infused products from benefitting from the personal property tax exemption for farm machinery and equipment. This bill takes effect June 12, 2014. DOR Contact: Judy Wells at JudyW@dor.wa.gov or (360) 534-1360.


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