Notice of Committee Passage for Senate Bill 5055 - 10 Year Analysis Complete

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SB 5055, titled AN ACT Relating to promoting agritourism in Washington, has been passed by the Senate Committee on Local Government. 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 Revenue:

CURRENT LAW:

Allows counties and cities to use a variety of innovative zoning techniques in areas designated as agricultural lands of long-term commercial significance. Counties and cities should design the zoning to conserve agricultural land and encourage the agricultural economy. Current zoning techniques counties and cities may use include, but are not limited to:

- Nonagricultural uses and activities (accessory uses) supporting, promoting, or sustaining agricultural operations and production.

- Cluster zoning which allows new development on one portion of the land, leaving the remainder for agriculture or open space uses.

- Large lot zoning which allows a minimum lot size down to the amount of land necessary to achieve a successful farming practice.

- Quarter zoning which permits one residential dwelling on a one-acre lot for each 1/16 of a section.

- Slide scale zoning which allows the number of lots for single-family  residential purposes with a minimum lot size of one-acre to increase inversely as the total acreage size increases.

Accessory uses include, but are not limited to:

- Storage, distribution, and marketing of regional agricultural products.

- Agricultural-related experiences, or the production, marketing, and distribution of value-added agricultural products.

- Nonagricultural uses and activities as long as they are consistent with the size, scale, and intensity of the existing agricultural use of the property.

- Allowable nonagricultural uses may include new buildings, parking, or supportive uses that are not outside the general area of already used developed for buildings and residential uses and don’t convert more than one acre of agricultural land to nonagricultural uses.

Counties and cities have the authority to limit or exclude accessory uses.

Under current law, the above activities may affect whether a property qualifies for current use valuation for property taxes (84.34 RCW).

There is no beer and wine license for agritourism venues to sell alcohol for on-premises consumption.

PROPOSAL:

Expands the use counties and cities may allow in areas designated as agricultural lands of long-term commercial significance to include agritourism activities (defined in RCW 4.24.830).

Counties may permit agritourism after consultation with neighboring landowners and creating criteria regarding adequate water, septic, parking, curfews, and seasons of use.

This legislation further identifies allowable agritourism activities to include, but not limited to, the following when the activities promote agriculture and rural character within agricultural zones and relate to on-site agriculture:

- Direct sales.

- Educational activities.

- Entertainment.

- Seasonal outdoor activities.

- Hospitality.

This legislation prevents the presence of agritourism activities from being used as a basis to change the taxation category of the land.

Agricultural buildings also used for agritourism purposes are not required to meet additional commercial standards if the venue is open six months or less per year.

This legislation creates a beer and wine license for agritourism venues to sell beer, strong beer, and wine for on-premises consumption. It also allows agritourism venues to sell beer and wine for off-premises consumption if a microbrewery or craft winery within Washington manufactured it. The venue must provide a plan to prevent minors from accessing alcoholic beverages. 

EFFECTIVE DATE:

The bill takes effect 90 days after the final adjournment of the session.

ASSUMPTIONS:

- This bill may require a constitutional amendment as it appears to require properties to be assessed for property tax purposes at something other than 100% of market value.

- This bill will not affect designated forestland or timberland properties.

- It is unknown which counties or cities will allow additional accessory activities and which activities they may allow.

- It is unknown how many property owners will convert agricultural land to accessory activities and how much land will be converted.

DATA SOURCES:

County assessor data.

REVENUE ESTIMATES: 

AGRITOURISM BEER AND WINE LICENSES

A minimal revenue impact on business licensing fees collected by the Department of Revenue (department).

PROPERTY TAXES

The Economic and Revenue Forecast Council predicts the state property tax levy remains below the $3.60 limit throughout the 2027-29 biennium. This new exemption results in a shift to other taxpayers and no loss to the state levy.

PROPERTY TAX SHIFTS

Under this bill, counties or cities may allow additional accessory activities on agricultural land. It is unknown which counties and cities will allow accessory activities and which activities they may allow. It is also unknown how many property owners will convert agricultural land to accessory activities and how much land will be converted. For these reasons, the state levy shift is indeterminate.

Local districts will also experience an indeterminate shift of taxes to other taxpayers. The local shift may result in a local revenue loss due to levy limits.

This proposal would allow properties to conduct commercial activities and remain in the current use program. 

Under current law, a property may be removed or partially removed from the current use program. Removing the property increases the property owner's property taxes. This does not increase state revenues but rather shifts taxes to the property owner of the removed property. However, removing the property under current law could increase local revenues where the district is limited by certain levy limits.

County assessors assess properties in the current use program based on their current use rather than market value (highest and best use). On average, agricultural properties in the current use program in western Washington have a current use value of approximately $1,700 per acre and a market value of approximately $14,500 per acre. On average, agricultural properties in the current use program in eastern Washington have a current use value of approximately $600 per acre and a market value of approximately $2,300 per acre. The difference in value can be significantly higher than this in areas closer to urban areas. When a property is in the current use program the tax savings because of the lower value shifts to other property owners.

TOTAL REVENUE IMPACT:

- State Government (cash basis, $000): Minimal

- Local Government, if applicable (cash basis, $000): Indeterminate

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

Department of Revenue

The following legislators voted do pass:

Senator Jessica Bateman
Democrat
(360) 786-7642
jessica.bateman@leg.wa.gov

Senator Jesse Salomon
Democrat
(360) 786-7662
jesse.salomon@leg.wa.gov

Senator Keith Goehner
Republican
(360) 786-7622
keith.goehner@leg.wa.gov

Senator Liz Lovelett
Democrat
(360) 786-7678
liz.lovelett@leg.wa.gov

Senator Nikki Torres
Republican
(360) 786-7684
Nikki.Torres@leg.wa.gov



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

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