This bill modifies the existing limited sales and use tax deferral program in chapter 82.92 RCW. It amends multiple sections and adds at least one new section to encourage redevelopment of "underdeveloped property" (replacing prior language referring to "underdeveloped land"), allows deferred sales and use taxes to be forgiven if a conditional recipient maintains qualifying property for at least ten years, and changes program eligibility, application, approval, and postapproval procedures. Key substantive changes include rules for cities (only those with populations between 135,000 and 275,000 at program establishment) to adopt a resolution of intention describing application, approval, appeals, postapproval requirements, and additional affordability and income eligibility conditions; criteria and procedures for granting conditional certificates of program approval; affordability set-asides (generally at least 50% of units affordable to very low, low, and moderate-income households, or 20% where a designated "area of reduced affordability requirements" applies); mixed-use limits (commercial use limited to ground floor); definitions (including initiation of construction tied to building permit issuance); application and timing rules (applications for tax deferral certificates to the department before initiation of construction, departmental review and issuance within 60 days, certificate validity during active construction and expiring on certificate of occupancy); post-occupancy reporting deadlines (conditional recipient files statements within 30 days of certificate of occupancy, city determination within 30 days, department audit scheduling); and a required waiver of the four-year limitation in RCW 82.32.100 as part of the application. The bill also sets procedures and criteria for designating an "area of reduced affordability requirements," requires public notice and hearings, and authorizes cities to impose prevailing wage, payroll record, apprenticeship utilization, and contracting inclusion plan requirements as contractual prerequisites. The bill makes procedural and enforcement changes: if a city denies qualification or a transferor fails to timely notify the city and department of an ownership transfer, deferred taxes become immediately due and payable; the department must assess interest retroactive to the date of deferral but in specified steps does not assess penalties (other penalties and interest for delinquent taxes may apply); the department must keep a running total of deferrals and is prohibited from accepting new applications after June 30, 2032, with certain sections expiring July 1, 2032. The joint legislative audit and review committee must evaluate whether the program increases affordable housing on underdeveloped property and report to fiscal committees by December 31, 2030, with legislative intent to repeal the tax preferences if affordable units have not increased. The provided facts omit the name of the department that issues certificates and performs audits, truncate several amended sections (including the full new section and the specific year-by-year percentage schedule for post-occupancy tax recapture), and do not specify some effective date language; those details are therefore uncertain from the excerpts given.

If enacted, this bill makes it easier for mid-size Washington cities (those with 135,000–275,000 people when they set up a program) to offer builders of housing on “underdeveloped” urban parcels a deferral of state and local sales and use taxes during construction, with the practical incentive that taxes deferred do not have to be repaid if the project stays in compliance for at least 10 years. Owners of qualifying parcels would get lower upfront construction costs and faster cash flow, but they must meet strict approval steps, commit large shares of units as affordable (generally 50% or 20% in designated lower-requirement areas), meet local standards (which can include prevailing wages, payroll and apprenticeship rules, and contracting inclusion plans), file post-occupancy reports quickly, and notify city and state if they sell — failure to comply or to notify within 60 days can trigger immediate repayment with interest. The direct fiscal effect is a likely short-term reduction or delay in state and local sales tax revenue for projects that receive deferrals, and added administrative work and oversight for cities and the tax department (which must issue certificates, audit deferred amounts, keep biennial totals, and stop accepting applications after June 30, 2032 for the expiring sections). Taxing districts will get notice rights but may see deferred receipts, and construction costs may rise if cities enforce prevailing wage and apprenticeship requirements. Important details are missing from the available text — notably the name of the department administering certificates, the full criteria and boundaries for “areas of reduced affordability requirements,” the exact repayment schedule for noncompliance, and the act’s effective date — so some implementation timing and revenue impacts remain uncertain.