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News / Business / Clark County Business

Washington Legislature’s real estate excise tax bill HB 1628 creates a stir

Foes challenge claim it would aid affordable housing; disability advocates say it would help close housing gap

By Mia Ryder-Marks, Columbian staff reporter
Published: April 14, 2023, 6:03am

House Bill 1628, coined the Affordable Housing Act, is causing a stir among Washington residents, real estate agents and legislators.

The bill is sponsored by Rep. Frank Chopp, D-Seattle, and proposes increasing the supply of affordable housing by allowing cities to adjust state and local real estate excise tax. The proposed measure would improve real estate excise tax on the state level by adding a new tier of 4 percent to the portion of a property’s sales price if it’s $5 million or more — timberland and agriculture are excluded.

Currently, the ceiling is a 3 percent tax on properties more than $3 million.

“Across the state, there is a housing crisis. Housing is the top priority for the people of Washington. … There is a tremendous shortage of housing, and the great need is for homes for people with low incomes,” Chopp said in a March public hearing.

But what has caught many housing advocates’ attention is the subsequent revenue that would be gained from the increased real estate excise tax that would stream into funding for affordable housing. The new revenue would target groups most impacted and at risk of housing insecurity, such as people with intellectual and developmental disabilities.

According to the state’s budgetary note, HB 1628 will generate nearly $288 million during the 2026 fiscal year, which would be the first full year of revenue collection from the proposed increase.

The proposed real estate excise tax’s revenue would be divided as:

  • 30 percent to the Housing Trust Fund.
  • 30 percent to the Apple Health and Homes program for permanent supportive housing to eradicate homelessness.
  • 25 percent to support the operations and services associated with housing and ending homelessness.
  • 15 percent to address the affordable housing needs for people with developmental disabilities.

HB 1628 is subject to an executive session in the Housing Committee on Finance this morning.

Still, some, such as the real estate group Washington Realtors, oppose the bill. In March, it published an advertisement criticizing the bill for proposing increased taxes amid a “housing and affordability crisis.”

The actors on screen point out what they consider ironic about the bill — to make homes more affordable, they are raising taxes for homeowners and buyers.

But in an April 6 press conference, hosted by the Washington Low Income Housing Alliance, Michele Thomas, director of policy and advocacy, argued the tax hike would be “modest.”

“Nobody likes to raise taxes. I don’t think anybody likes to pay them either, but taxes are how we pay for our civil society and the things that we need and the things that other people need that we want them to have,” Rep. Sharon Wylie, D-Vancouver, said in a phone interview.

‘Game changer’

“What will happen to my child when I die?” This a customary worry for most parents, but for those with a child with a developmental or intellectual disability, the stress is heightened with the thought of leaving their child in a new housing environment.

If HB 1628 passes, the 15 percent projected from the real estate excise tax change — to address affordable housing needs for people with developmental disabilities — would be an anticipated $40 million every biennium, according to Stacy Dym, the executive director of the disability advocacy group Arc of Washington.

Dym said the bill would be a “game changer” and directly solve the affordable housing gap for that community. She explained this would be a first-of-its-kind, ongoing and sustainable source of funding, dedicated to the disabilities community.

In a Washington legislative report, about 37,000 people with developmental disabilities are experiencing housing instability. An additional 18,000 are at risk of housing insecurity, given the chance their caregiver dies.

“We have many parents in their 70s, 80s and 90s taking care of their child, and they don’t have any way to really plan for when they die or for their child’s future,” Dym said. “Right now, we don’t have sufficient resources to even begin that process before it’s a tragedy. Now, someone not only has lost their parents but now is living on their own for the first time.”

Due to long wait lists for housing vouchers and few options for those on fixed incomes, many people with disabilities fall into housing insecurity or homelessness.

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Dym said when an individual with developmental disabilities turns 18, they can begin collecting Supplemental Security Income, a poverty program that provides about $900 a month to recipients.

“For people (with a disability) who do not live with their family, if you spend more than $300 a month you are rent burdened because you also need to provide for all of your other needs. There’s just no way for someone to rent with (about $900) a month, and vouchers are very hard to come by,” Dym said.

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This story was made possible by Community Funded Journalism, a project from The Columbian and the Local Media Foundation. Top donors include the Ed and Dollie Lynch Fund, Patricia, David and Jacob Nierenberg, Connie and Lee Kearney, Steve and Jan Oliva, The Cowlitz Tribal Foundation and the Mason E. Nolan Charitable Fund. The Columbian controls all content. For more information, visit columbian.com/cfj.