SHB 1746, sponsored by Rep. Jake Fey (D–Tacoma), increases incentives for commercial office space development in cities outside King County. Cities may establish both a local sales and use tax credit program and a local property tax investment program to incentivize the development of commercial office space. To qualify, the commercial office space must be a high-quality building, at least 50,000 square feet, and at least three stories in height. The space must also be centrally located within a city, near public transit, and offer amenities and advanced technology services to tenants.
A commercial office space project may apply for a sales and use tax credit. The application must include:
- Written agreement for the use of local sales and use tax credit;
- Estimate of the tax revenue that will be credited to the taxpayer;
- The date the tax revenue will be credited; and
- The criteria by which a project can receive confirmation that the taxpayer is eligible for credit.
A project may be eligible for a sales and use tax credit on labor and services with respect to the project’s construction, and the sales or use of personal property incorporated as a component of the property.
Additionally, a project may apply to participate in a city’s property tax reinvestment program. If the city approves the application, the city must then deposit the equivalent of the city’s share of the associated ad valorem property tax into a public improvement fund. The city can then transfer funding to the project applicant.
The Joint Legislative Audit and Review Committee (JLARC) will study the effectiveness of the local sales and use tax credit program and the local property tax reinvestment program and submit a report to the legislature by 2028. The report will include an assessment of the availability of quality office space and the effect of HB 1746 on affordable housing, transportation, traffic congestion, greenhouse gas emission, and job creation.