Washington SB5334: Enabling Local Governments to Fund Affordable Housing

Washington State Senate Bill 5334, introduced by Sen. Liz Lovelett and other Democratic lawmakers, aims to allow local governments to impose a special excise tax of up to 10% on short-term rentals to fund essential affordable housing programs. The bill, if passed, would amend existing laws and add a new section to chapter 67.28 of the Revised Code of Washington (RCW).

Under SB5334, counties, cities, and towns could levy the tax on lodging provided through short-term rental platforms. The collected funds would be used to support initiatives such as homeless housing assistance, temporary shelters, and related services. Local governments would be allowed to retain up to 5% of the annual tax revenue for administrative costs.

The bill also outlines a negotiation process for determining the tax rate, which could include exemptions based on factors like the age or income of the rental operator. Operators would be defined as individuals providing short-term rentals.

Proponents argue that SB5334 could help address Washington's housing affordability crisis by generating much-needed funding for local governments to invest in affordable housing solutions. However, the bill has faced challenges in the legislature.

Washington SB5334 Timeline and Will It Pass?

During the 2023 legislative session, SB5334 was introduced, received public hearings, and underwent amendments in both the Senate and House. The Senate passed an engrossed version of the bill in March 2023, but it was ultimately returned to the Senate Rules Committee for third reading by resolution in April.

In the 2024 session, SB5334 was reintroduced and retained its status. The Senate passed the bill again in January 2024, and was referred to the House Local Government Committee in February. A public hearing was held, but no further action has been reported as of March 28, 2024.

The future of SB5334 remains uncertain as it navigates the legislative process. If passed, it could provide a new tool for local governments in Washington to generate dedicated funding for affordable housing initiatives. However, the bill may face opposition from short-term rental platforms and those concerned about the potential impact on the tourism industry.

As the housing affordability crisis persists in Washington, lawmakers continue to explore various strategies to address the issue. SB5334 represents one potential approach, but its success will depend on balancing local communities' needs, the short-term rental market, and the broader economy.