GOP plan would cut taxes on housing, skirt urban growth area limits


Sharon Michael, The Bellingham Herald

OLYMPIA, WA- House Republicans have a plan to make homeownership affordable for working families and first-time homebuyers.

The plan calls for cutting the cost of new houses by eliminating the state portion of sales taxes for labor and services on new residential construction in counties where the First Time Buyers Affordability Index falls below 100 for three quarters in a given year. The ability for governments to collect growth management impact fees would also be suspended in those counties.

The index, calculated by the Washington Center for Real Estate at Washington State University, measures the ability of a typical renter to afford the purchase of a typical starter home, assuming the household will purchase a home priced at 85 percent of area median household income with a 10 percent down payment and a 30-year mortgage. It also assumes the homebuyer earns 70 percent of the area median household income and 25 percent of household income can be used for house payments.

Whatcom County was well below 100 percent on the affordability index for all of 2002, although at 76.9 it was 10 points higher than two years ago.

The plan also would let local governments approve single-family detached residential housing developments outside of current urban growth areas and extend services to those developments.

Rep. Doug Ericksen, R-Ferndale, said he supports the package of bills because it make housing more affordable and increases housing stock, and it gives local government the option of approving developments outside of urban growth areas.

"The key thing about this is three of the issues are fiscal, not environmental, and the fourth - land use under GMA - is optional," Ericksen said. "So if the Whatcom County Council says we don't want to allow growth in a UGA, they don't have to."

Generation of renters

The cost of local and state government regulations is creating a generation of renters, and that is not good for families or for communities, said Rep. Lynn Schindler, R-Spokane, who is the ranking member of the House Local Government Committee.

"Taxes, fees, regulations and low housing supply work together to increase the price of housing, Schindler said. "Taxes and fees add as much as 10 percent to the price of a home."

Schindler is the primary sponsor of House Bill 2108, which would suspend Growth Management Act impact fees in counties that fall below 100 percent on the affordability index.

Rep. Cary Condotta, R-Wenatchee, is the prime sponsor of HB 2109 which would allow development outside of UGAs, and Rep. Joyce McDonald, R-Puyallup, is the prime sponsor of HB 2110, which deals with the sales tax exemption for construction labor and services.

HB 2107, a bill sponsored by Rep. Bill Hinkle, R-Cle Elum, which would protect people whose property was devalued by new land-use regulations, is also part of the package. The measure would exempt property owners from regular property tax levies by the state, city, town or county until the cumulative tax savings equals or exceeds the reduction in value.

Sponsors didn't have the numbers on potential losses in tax revenue, but Schindler and McDonald said the bills would stimulate the economy almost immediately.

"When you're building new houses, you're creating new jobs," McDonald said.


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