Notice of Introduction for Senate Bill 5060

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SB 5060, titled AN ACT Relating to the registration of rental and vacant housing units, has been introduced in the Senate. The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

Department of Commerce:

Under this proposal owners of qualifying properties identified in section 2 would pay fees under section 3 to the department. 

This revenue estimate is based on an estimate of the number of qualifying rental housing units and vacant housing units (Sec. 2, Sec. 3), combined with an estimate of how many will be the first property registered by their owner, and how many will be an additional (e.g. 2nd, 3rd, 4th, etc.) property registered by their owner. It then presents an estimate of cash receipts based on the fee schedule (Sec. 3) for the first four years after enactment of this bill. 

Assumptions

Sec. 2- Estimated number of housing units in Washington state (US Census link: U.S. Census Bureau QuickFacts: Washington, Housing Vacancies and Homeownership - Annual Statistics (census.gov)):

3,257,185 housing units

Sec. 2- Extrapolating from national data, estimated rentals (Census data): 0.335, or

1.09 million housing units

Sec. 2- Extrapolating from national data, % WA state housing units "Held off market" or estimated vacant (Census data): 0.05, or

162,000 housing units

Estimated registration compliance rate (Overestimated based on Locating Landlords: An Analysis of Rental Property Registration Compliance in New York City – NYU Furman Center, identifies 23% compliance therein.):

33% of landlords complying

Percent of rental units owned by sole proprietors (Landlords | HUD USER , Landlord Statistics from the 2018 Rental Housing Finance Survey (nar.realtor) )

41% of all rental units,

72.5% of 1-4 unit portfolios,

Assumption: sole proprietor owners have an average of 3 units and they own 41% of all rental units in WA state. 

Estimated number of sole proprietor rental owners in WA state =

0.41 * 1.09 million rental housing units / 3 =

148,967 sole proprietor rental owners

Number of 1st rental units to register (sole proprietor) =

148,967 rental units

Number of additional units beyond 1st, based on average ownership of 3 rental units (sole proprietor) =

297,933 additional rental units

Estimated number of other ownership type, not sole proprietor rental owners in WA state =

32,155 other ownership type, not sole proprietor owners

Average units under management (other ownership type, not sole proprietor) =

Rough assumption: Other ownership type, not sole proprietor own an average of 20 rental housing units

Number of 1st rental units to register (other ownership type, not sole proprietor) =

0.05 * 0.59 * 1.09 million =

32,155 rental units

Number of additional rental units beyond 1st (other ownership type, not sole proprietor) =

0.95 * 0.59 * 1.09 million =

610,945 additional rental units

Total units to register, 1st unit (both ownership categories) =

181,122 total

Estimate complying 0.33 * 181,122 = 59,770 first rental units registered

Total units to register, each additional unit (both ownership categories) =

908,878 total

Estimate complying 0.33 * 908,878 = 299,930 additional rental units registered

Total vacant units to register

162,000 total

Estimate complying 0.33 * 162,000 = 53,790 vacant housing units registered

First three years the system is not operational due to start-up and implementation. Therefore, revenue Year 1, 2, 3 is $0.

Revenue collection begins in the fourth year (FY27) and is 75% of expected due to phased roll-out. 

Revenue sources from bill:

- Sec. 3- First housing unit registered is $70, every additional housing unit registration $15

- Sec. 3- Rentals must register every two years, or when made available for rental, or when tenancy changes

- Sec. 3- All vacant properties must register every two years.

Calculations based on assumptions:

Estimated 2-year rental housing revenue = $70/first unit * 59,770 units + $15/add unit * 299,930 units = $4,183,900 + $4,498,950 =

$8,682,850 

Estimated 2-year vacant housing revenue = $70/first unit * 53,790 =

$3,765,300

Estimate 2-year total revenue

$12,448,150 

Estimated cash receipts by FY

FY24 - $0

FY25 - $0

FY26 - $0

FY27 - pro-rated, reduced revenue - 0.5 * 0.75 * $12,448,150 = $4,668,056

FY28 - pro-rated revenue - 0.5 * $12,448,150 = $6,224,075 

FY29 - pro-rated revenue - $6,224,075

Ten-year projection prepared in consultation with the following agencies:

Department of Commerce


Bill sponsors and contact information:

Senator Patty Kuderer, Prime Sponsor
Democrat
(360) 786-7694
patty.kuderer@leg.wa.gov

Senator Yasmin Trudeau
Democrat
(360) 786-7652
yasmin.trudeau@leg.wa.gov

Senator Manka Dhingra
Democrat
(360) 786-7672
Manka.Dhingra@leg.wa.gov

Senator Noel Frame
Democrat
(360) 786-7670
noel.frame@leg.wa.gov

Senator Karen Keiser
Democrat
(360) 786-7664
karen.keiser@leg.wa.gov

Senator Joe Nguyen
Democrat
(360) 786-7667
NGUYEN_JO@leg.wa.gov

Senator T'wina Nobles
Democrat
(360) 786-7654
T'wina.Nobles@leg.wa.gov

Senator Emily Randall
Democrat
(360) 786-7650
RANDALL_EM@leg.wa.gov

Senator June Robinson
Democrat
(360) 786-7674
june.robinson@leg.wa.gov

Senator Lisa Wellman
Democrat
(360) 786-7641
lisa.wellman@leg.wa.gov




Legislative Bill Information Website: http://apps.leg.wa.gov/billinfo/

Initiative 960 Website: http://www.ofm.wa.gov/tax/default.asp