wa-law.org > bill > 2025-26 > HB 1974 > Original Bill
The legislature finds the following:
Providing local governments with more options to increase residential capacity, especially in urban areas, consistent with RCW 43.21C.420, is essential to building affordable housing;
A history of racial segregation and displacement has led to disparities in access to education, living wage employment, affordable housing, and transportation, particularly for black and indigenous communities. This history has also allowed certain populations to obtain and build wealth and to access critical resources at the expense of others. Over time these factors have put pressure on, marginalized, and displaced many from these same communities; and
Housing can drive economic growth within neighborhoods if developed with a focus on services, jobs, public improvements, open spaces, equity, and other elements that make housing vital and economically additive to nearby residents and the region.
The legislature intends to establish a land bank grant program which, using a land acquisition and deployment strategy, would produce more affordable low-income and moderate-income housing, ensuring any loss of affordable housing in areas of public infrastructure investment is exceeded by new affordable units, to enable all members of the workforce to live in the community in which they serve, including members of racial and ethnic groups disproportionately experiencing adverse housing outcomes, to make sure that the public improvement and housing investments in our state help to foster racial equity and rectify discriminatory practices.
The legislative authority of a county may authorize an entity to serve as a land bank throughout the county.
The entity authorized as a land bank must be a public corporation established under RCW 35.21.730, a public housing authority established under chapter 35.82 RCW, or an entity exempt from taxation under 26 U.S.C. Sec. 501(c)(3) of the internal revenue code of 1986, as amended.
The legislative authorities of two or more contiguous counties may authorize a regional land bank to be administered in accordance with an interlocal agreement.
A county authorizing a land bank must establish a land bank advisory board to provide oversight and technical assistance to the land bank. The county executive must appoint nine members to the land bank advisory board as follows:
One member with public or private real estate finance experience;
One member with affordable housing development experience;
One member with market rate housing development experience;
One member with experience in neighborhood and community planning;
One member with design and architecture experience;
One member with economic development experience;
One member representing advocates for affordable housing for marginalized communities;
One member representing nonprofit housing developers; and
The county executive must strive to make appointments that reflect the racial and ethnic makeup of the region the land banking authority will cover.
A land bank may acquire, hold, improve, fund, lease, sell, and engage in predevelopment contracting for land within the urban growth areas of the authorizing county.
Land acquisitions and dispositions must be consistent with any existing local, regional, or state housing plans and chapter 43.185B RCW, including the antidisplacement policies in the comprehensive plans of the authorizing county and any cities or towns within that county.
A land bank may work with other public entities, nonprofit developers, and private landowners to acquire, assemble, lease, or land bank parcels.
The authorizing county and any city or town within that county must give a land bank within its jurisdiction priority for acquiring any existing surplus land and any properties foreclosed due to nuisance or unpaid taxes. Any property conveyed to a land bank must have a clear title and address payment or forgiveness of any back taxes.
A land bank may lease or sell land to a housing developer at less than market rate in exchange for compliance with affordability requirements.
A land bank may negotiate sales with developers and is not required to sell or lease land to the highest bidder. A land bank may prioritize community needs, such as affordable housing, workforce housing, a grocery store, or expanded recreational space.
A land bank may sell land to any entity for any purpose if it can clearly demonstrate that it is not financially feasible to lease the parcel, and the net proceeds are directed to subsidies for affordable housing and permanently affordable homeownership units or public improvement costs necessary for the development of affordable housing or permanently affordable homeownership.
A land bank may lease properties for temporary uses, if more permanent options are not reasonably available.
A land bank must plan for and facilitate the following mix of housing:
At least 33 percent affordable to extremely low-income, very low-income, and low-income households;
No more than 33 percent at market rate; and
Housing affordable to moderate-income households.
Land or property leased or sold by a land bank must include a covenant or deed restriction that the housing units developed or operated must maintain any affordability requirements for at least 99 years.
Each land bank must develop a land bank planning strategy that includes:
Land acquisition and disposition policies;
An equitable framework and equity goals;
Identification of a community vision that includes people who are most impacted by housing and transportation disparities;
An assessment of the current regulatory environment and identification of possible barriers to affordable housing development;
An assessment of displacement risk for current low-income residents and underrepresented racial and ethnic minorities;
A displacement mitigation plan that aligns with the city or county's antidisplacement policies;
Prioritization of homeownership opportunities for underrepresented racial and ethnic minorities, including first-time homeowners qualifying for the covenant homeownership program under chapter 43.181 RCW;
An assessment of alternate pathways to homeownership, including permanently affordable homeownership, community land trusts, and limited or shared equity cooperatives;
Consideration to the preservation of historical and cultural communities and investments in low-income, very low-income, extremely low-income, and moderate-income housing; and
Consideration of land that may be used for affordable housing.
Subject to appropriation, the housing finance commission shall develop and administer a competitive grant program for land banks. Grants may be used for:
Land bank planning strategies;
Public improvements; and
Land acquisition.
Up to one percent of the grant funds may be used for the actual costs incurred by a land bank advisory board in the performance of its oversight and technical assistance duties.
To be eligible for a grant under this section, each county creating the land bank must:
Levy a local tax dedicated to the construction, acquisition, or rehabilitation of housing affordable to households at or below 80 percent of area median income;
Have removed barriers to the siting of permanent supportive housing; and
Have expedited permit issuance timelines for housing affordable to low-income, very low-income, and extremely low-income households.
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The land bank must perform an annual review of all undeveloped properties held or transferred to determine progress towards the mix of affordable housing required under section 4 of this act.
The land bank must submit the results of its review to its land bank advisory board.
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The county authorizing a land bank must conduct an audit of all housing developed on land sold or leased by the land bank to ensure affordability and other conditions continue to be met. Audits must be performed on each property at least every three years.
If an audit finds that an owner or manager of housing units is not in compliance with a minor or inadvertent variation of the affordability requirements, the county must direct the land bank to establish a plan to bring the owner or manager into compliance.
If an audit finds that an owner or manager of housing units is not in compliance with a significant variance or variances from the affordability or other requirements, the county must provide notification of the noncompliance to any local, state, or federal agency awarding funds for the housing development.
Any state agency, municipality, or political subdivision, with authority to dispose of surplus public property, may transfer, lease, or otherwise dispose of such property for a public benefit purpose, consistent with and subject to this section. Any such transfer, lease, or other disposal may be made to a public, private, or nongovernmental body on any mutually agreeable terms and conditions, including a no cost transfer, subject to and consistent with this section. Consideration must include appraisal costs, debt service, all closing costs, and any other liabilities to the agency, municipality, or political subdivision. However, the property may not be so transferred, leased, or disposed of if such transfer, lease, or disposal would violate any bond covenant or encumber or impair any contract.
A deed, lease, or other instrument transferring or conveying property pursuant to subsection (1) of this section must include:
A covenant or other requirement that the property shall be used for the designated public benefit purpose; and
Remedies that apply if the recipient of the property fails to use it for the designated public purpose or ceases to use it for such purpose.
To implement the authority granted by this section, the governing body or legislative authority of a municipality or political subdivision must enact rules to regulate the disposition of property for public benefit purposes. Any transfer, lease, or other disposition of property authorized under this section must be consistent with existing locally adopted comprehensive plans as described in RCW 36.70A.070. The state, a municipality, or a political subdivision must prioritize the transfer of surplus land to any land bank authorized in the county in which the surplus land is located.
This section is deemed to provide a discretionary alternative method for the doing of the things authorized herein, and shall not be construed as imposing any additional condition upon the exercise of any other powers vested in any state agency, municipality, or political subdivision.
No transfer, lease, or other disposition of property for public benefit purposes made pursuant to any other provision of law prior to June 7, 2018, may be construed to be invalid solely because the parties thereto did not comply with the procedures of this section.
The transfer at no cost, lease, or other disposal of surplus real property for public benefit purposes is deemed a lawful purpose of any state agency, municipality, or political subdivision, for which accounts are kept on an enterprise fund or equivalent basis, regardless of the primary purpose or function of such agency.
This section does not apply to the sale or transfer of any state forestlands, any state lands or property granted to the state by the federal government for the purposes of common schools or education, or subject to a legal restriction that would be violated by compliance with this section.
For purposes of this section:
"Affordable housing" means:
For rental housing, 30 percent of the household's monthly income for rent and utilities, other than telephone; or
For permanently affordable homeownership, 38 percent of the household's monthly income for mortgage principal, interest, property taxes, homeowner's insurance, homeowner's association fees, and land lease fees, as applicable. In addition, total household debt is no more than 45 percent of the monthly household income;
"Public benefit" means affordable housing, which can be rental housing or permanently affordable homeownership for low-income and very low-income households as defined in RCW 43.63A.510, and related facilities that support the goals of affordable housing development in providing economic and social stability for low-income persons; and
"Surplus public property" means excess real property that is not required for the needs of or the discharge of the responsibilities of the state agency, municipality, or political subdivision.
The county legislative authority may dispose of tax foreclosed property by private negotiation, without a call for bids, for not less than the principal amount of the unpaid taxes in any of the following cases: (a) When the sale is to any governmental agency and for public purposes; (b) when the county legislative authority determines that it is not practical to build on the property due to the physical characteristics of the property or legal restrictions on construction activities on the property; (c) when the property has an assessed value of less than $500 and the property is sold to an adjoining landowner; (d) when the sale is to a land bank authorized under section 2 of this act; or (e) when no acceptable bids were received at the attempted public auction of the property, if the sale is made within 12 months from the date of the attempted public auction.
Except when a county legislative authority purchases the tax foreclosed property for public purposes, the county legislative authority must give notice to any city in which any tax foreclosed property is located within at least 60 days of acquiring such property, and the county may not dispose of the property at public auction or by private negotiation before giving such notice. The notice must offer the city the opportunity to purchase the property for the original minimum bid under RCW 84.64.080, together with any direct costs incurred by the county in the sale. If the city chooses to purchase the property, the following conditions apply:
The city must accept the offer within 30 days of receiving notice, unless the county agrees to extend the offer;
The city must provide that the property is suitable and will be used for an affordable housing development as defined in RCW 36.130.010; and
The city must agree to transfer the property to a local housing authority, land bank, or nonprofit entity eligible to receive assistance from the affordable housing program under chapter 43.185A RCW. The city must be reimbursed by the housing authority, land bank, or nonprofit entity for the amount the city paid to purchase the property together with any direct costs incurred by the city in the transfer to the housing authority, land bank, or nonprofit entity.
A public corporation, commission, or authority created pursuant to RCW 35.21.730, 35.21.660, or 81.112.320 shall receive the same immunity or exemption from taxation as that of the city, town, or county creating the same: PROVIDED, That, except for (a) any property within a special review district established by ordinance prior to January 1, 1976, or listed on or which is within a district listed on any federal or state register of historical sites, or (b) any property owned, operated, or controlled by a public corporation that is used primarily for low-income housing, or that is used as a convention center, performing arts center, public assembly hall, public meeting place, public esplanade, street, public way, public open space, park, public utility corridor, or view corridor for the general public, or (c) any blighted property owned, operated, or controlled by a public corporation that was acquired for the purpose of remediation and redevelopment of the property in accordance with an agreement or plan approved by the city, town, or county in which the property is located, or (d) any property owned, operated, or controlled by a public corporation created under RCW 81.112.320, or (e) any property owned, operated, or controlled by a public corporation authorized as a land bank by a county under section 2 of this act, any such public corporation, commission, or authority shall pay to the county treasurer an annual excise tax equal to the amounts which would be paid upon real property and personal property devoted to the purposes of such public corporation, commission, or authority were it in private ownership, and such real property and personal property is acquired and/or operated under RCW 35.21.730 through 35.21.755, and the proceeds of such excise tax shall be allocated by the county treasurer to the various taxing authorities in which such property is situated, in the same manner as though the property were in private ownership: PROVIDED FURTHER, That the provisions of chapter 82.29A RCW shall not apply to property within a special review district established by ordinance prior to January 1, 1976, or listed on or which is within a district listed on any federal or state register of historical sites and which is controlled by a public corporation, commission, or authority created pursuant to RCW 35.21.730 or 35.21.660, which was in existence prior to January 1, 1987: AND PROVIDED FURTHER, That property within a special review district established by ordinance prior to January 1, 1976, or property which is listed on any federal or state register of historical sites and controlled by a public corporation, commission, or authority created pursuant to RCW 35.21.730 or 35.21.660, which was in existence prior to January 1, 1976, shall receive the same immunity or exemption from taxation as if such property had been within a district listed on any such federal or state register of historical sites as of January 1, 1976, and controlled by a public corporation, commission, or authority created pursuant to RCW 35.21.730 or 35.21.660 which was in existence prior to January 1, 1976.
As used in this section:
"Low-income" means a total annual income, adjusted for family size, not exceeding 50 percent of the area median income.
"Area median income" means:
For an area within a standard metropolitan statistical area, the area median income reported by the United States department of housing and urban development for that standard metropolitan statistical area; or
For an area not within a standard metropolitan statistical area, the county median income reported by the department of commerce.
"Blighted property" means property that is contaminated with hazardous substances as defined under RCW 70A.305.020.
All real and personal property owned or leased by a nonprofit land bank authorized by a county under section 2 of this act is exempt from property taxation.
To qualify for this exemption, the nonprofit organization, corporation, or association must be qualified for exemption under section 501(c)(3) of the internal revenue code of 1986 (26 U.S.C. Sec. 501(c)(3)). It must also have been organized to provide low-cost land for affordable housing development.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Affordable housing" means residential housing that is rented by a person or household whose monthly housing costs, including utilities other than telephone, do not exceed 30 percent of the household's monthly income.
"City" means a city or town as defined in Title 35 or 35A RCW.
"Community land trust" means a community housing development organization:
That is not sponsored by a for-profit organization;
That is established to:
Acquire parcels of land, held in perpetuity, primarily for conveyance under long-term ground leases;
Transfer ownership of any structural improvements located on such leased parcels to the lessee; and
Retain a preemptive option to purchase any such structural improvement at a price determined by formula that is designed to ensure that the improvement remains affordable to low-income and moderate-income families in perpetuity;
Whose corporate membership is open to any adult resident of a particular geographic area specified in the bylaws of the organization; and
Whose board of directors:
Includes a majority of members who are elected by the corporate membership; and
Is composed of equal numbers of:
(A) Lessees pursuant to (b) of this subsection;
(B) Corporate members who are not lessees; and
(C) Any other category of persons described in the bylaws of the organization.
"County" means a county as defined in Title 36 RCW.
"Extremely low-income household" means a single person, family, or unrelated persons living together whose income is at or below 30 percent of the median income, as determined by the United States department of housing and urban development, with adjustments for household size, for the county where the land bank is located.
"Land bank" means a land bank authorized by a county to serve the urban growth areas of the county.
"Low-income household" means a single person, family, or unrelated persons living together whose income is above 50 percent and at or below 80 percent of the median income, as determined by the United States department of housing and urban development, with adjustments for household size, for the county where the land bank is located.
"Moderate-income household" means a single person, family, or unrelated persons living together whose income is above 80 percent and at or below 120 percent of the median income, as determined by the United States department of housing and urban development, with adjustments for household size, for the county where the land bank is located.
"Permanently affordable homeownership" means units that, in addition to meeting the definition of "affordable housing" in RCW 43.185A.010, are:
Sponsored by a nonprofit organization or governmental entity;
Subject to a ground lease or deed restriction, the forms of which may include a ground lease, deed restriction, community land trust lease, or affordability covenant that includes:
A resale restriction designed to provide affordability for future low and/or moderate-income homebuyers;
A right of first refusal for the sponsor organization to purchase the home at resale, except in cases where the sponsoring organization is a limited equity cooperative as defined by RCW 64.90.010 and is not partnered with a community land trust; and
A requirement that the sponsor must approve any refinancing secured by the home, including home equity lines of credit, except in cases where the sponsoring organization is a limited equity cooperative as defined by RCW 64.90.010 and is not partnered with a community land trust; and
Sponsored by a nonprofit organization or governmental entity and the sponsor organization:
Executes a new ground lease or deed restriction, the forms of which may include a ground lease, deed restriction, community land trust lease, or affordability covenant with a duration of at least 99 years at the initial sale and at each successive sale of the home; and
Supports homeowners and enforces the ground lease or deed restriction.
"Public improvements" has the same meaning as "public improvement costs" as defined in RCW 39.114.010.
"Very low-income household" means a single person, family, or unrelated persons living together whose income is above 30 percent and at or below 50 percent of the median income, as determined by the United States department of housing and urban development, with adjustments for household size, for the county where the land bank is located.