Tri-City Area and Real Estate Blog

Legislators in Washington State tried to slip in bills that would allow use of REET for local government operations and maintenance expenses, rather than its originakl intent of basic infrastructure needed for accomodating growth.

Realtors statewide responded in large caravans to Olympia to oppose the provisions in HB 3179 and HB 6424. At the end, legislators voted to remove the objectionable provisions. “Realtors believe that the diversion of local real estate excise tax from basic infrastructure would have negative impacts of job growth, economic recovery and the quality of life in their communities,” per the Washington Realtors website.

Dr. Arun Raha, Washington State Chief Economist reported lately that our state will lead the country in the recovery. He said that getting folks out to buy a house….or even a strip mall will assist revenues to surpass forecasts.

Wind, solar, hydro, nuclear and biomass power production are the new clean energy fields to bring further job growth to the Tri Cities and Washington State, according to officials attending the 10th Harvesting Clean Energy Conference in Pasco.  It is believed that the Tri Cities will be at the tip of the spear of this economic development.

“The Tri Cities is perfectly positioned for the next great wave of technological development,” said Rep. Jay Inslee. The conference is aimed at advancing clean energy economic development throughout the region, with emphasis on developing and producing more clean energy.

Wine! Wine! Wine! Wow – the wine industry is still growing with leaps and bounds here in Washington State with 165,000 tons of grapes crushed last fall, which is an increase of 20,000 tons from 2008, with Reisling and Chardonnay being the largest crops.

Washington State is the second largest wine producing state in the nation, but a far cry from California’s number of 3.44 million tons crushed last year. However, we are the country’s largest producer of juice grapes, which are mostly Concorde grapes.

60 percent of the grapes grown in Washington are owned by or contracted to Ste. Michelle, who ownes the three wineries Columbia Crest, Chateau Ste. Michelle and Snoqualmie Vineyards. Chateau Ste. Michelle is the world’s largest producer of Reisling, which is fast becoming the country’s favorite in sales.

Here in the Tri Cities there are several wineries of merit, tasting rooms popping up all over, and many fine dining establishments carry local wines for you to sample. Come enjoy our wonderful weather, our outstanding recreational activities, and after a long day in the fun and the sun – enjoy the taste of our premium wines from vineyards right here in the Columbia Basin!

The real estate market in Washington State from 2003 to 2006 was credited with bolstering jobs and revenue collections that exceeded forecasts for more than a dozen consecutive quarterly revenue reports, leading us out of the recession after 9/11. Our economic recovery is dependent on the recovery of Washington’s real estate market with real estate transactions providing millions of dollars in state and local revenue. The housing market, and the jobs it generates, accounts for 24% of the state’s employment.

However, legislators in Olympia are hoping to bridge a nearly $3 billion budget deficit, they created, off the backs of real estate agents and associative businesses, by establishing taxes on service-oriented businesses (excluding lawyers, of course), closing tax exemptions and increasing existing taxes, including Real Estate Excise Tax, the Business & Occupation tax, among others.  According to policy makers, “All taxes are on the table.”

Only harm will come to Washington’s economic recovery if increases to the Real Estate Excise Tax (REET) and/or Business & Occupation Tax (B&O), or if they impose a Sales Tax on Professional Services (excluding lawyers).

KEY POINTS:

• Real estate excise taxes are a volatile source of revenue and Washington is already one of the highest in the nation.
• An increased REET tax would reduce the availability of affordable housing.
• 68% of home buyers cited low home prices as the number one factor to buy now.
• Families would face higher closing costs and need even more income to qualify for a home loan.
• An increase as little as .65% in the REET means than more than 19,000 people in Washington would get priced out of the housing market, according to the National Center for Real Estate Research.

Business and Occupation Tax (B&O)

• This is a regressive tax that hurts jobs because it is payable whether or not a business generates a profit.

Sales Tax on Services

• A sales tax on business and professional services would impose multi-layered harm on housing affordability as it would be passed onto consumers in the price of a home.
• Multiple real estate services of affiliate businesses involved in the real estate transaction could be subjected to a sales tax, i.e. appraisal fees, architectural services, credit reports, mortgage origination, attorney’s fees, surverys, home inspection fees.

These are but a few examples of the issues involved with proposed legislation in Olympia. It may not appear to be something most people care about, until you try and purchase a home. Then, the increased costs will certainly be obvious to you and unfortunately those costs will be passed onto you, the homebuyer.  We are hopeful that you will contact your legislator and ask them to vote ‘no’ on this proposed legislation.

Proposed reform to combat private property being seized under the Eminent Domain laws and then being turned over to private developments for economic development are scheduled for a public hearing this month. Attorney General Rob McKenna revealed two proposals that he indicated will protect the individual property rights from governmental abuse of power.

“The authority to confiscate homes and businesses is one of the most intimidating powers granted to government by the people,” McKenna said. “There must be limits to that power. One of those limits should be on the government’s authority to take your land, only to hand it over to private developers.”

In Washington State, our constitution does not allow property to be taken from land owners for private use, but the state’s Community Renewal Law does allow eminent domain to be used to eliminate blight. This, of course, allows the state to announce any land “blighted” as they please.

A recent study by the Washington Policy Center said governments in Washington state have attempted to use the Renewal Law to seize the property from more than 71,000 land owners since 2000, which equals just under 8,000 owners a year for the past 9 years.

HB 2423 and SB 6199 will attempt to reform the renewal law to restrict the government from declaring entire neighborhoods “blighted” in order to sell them to private developers. Additionally, HB2425 and SB 6200 will proscribe using eminent domain for economic development.

Parties on both sides of the aisle are in support of this legislation.