An exciting trio of new proposals providing cities flexibility with the use of real estate excise tax (REET) funds have been introduced. Rep. Dave Paul (D–Oak Harbor) has sponsored HB 1791 which proposes multiple changes long-desired by cities:
- Harmonizes authorized uses of REET 1 and REET 2. REET 2 funds could be used for REET 1 purposes, and vice versa. Under existing law, the definition of “capital project” for REET 2 is more restrictive than it is in the REET 1 statute.
- Makes permanent the authority to use up to 35% of REET funds for operations and maintenance.
- Removes administratively burdensome reporting requirements.
- Eliminates the 2026 sunset use of REET funds for affordable housing.
HB 1694, sponsored by Rep. My-Linh Thai (D–Mercer Island), also eliminates the sunset on the use of funds for affordable housing purposes, and then makes an important clarification that those funds can be used through the interlocal regional housing collaborations that are in place in many parts of the state—where multiple cities pool resources to support housing investments in the region.
Finally, HB 1867, sponsored by Rep. Alex Ramel (D–Bellingham), would provide an option for cities to go to the voters to establish a 0.5 percent REET for the development of affordable housing. AWC greatly appreciates Rep. Ramel’s willingness to re-introduce this bill to make it clear that, in addition to counties, cities could also exercise this authority.
Date to remember
HB 1791, HB 1694, and HB 1867 are all scheduled for public hearing in the House Finance Committee on Thursday, February 13 at 1:30 pm.