Policing and Public Safety
Seattle is moving backwards and pausing public safety improvements and sworn officer deployments remain well below national per capita averages – impacting retail theft, street safety and downtown core recovery. These policies often include low or no illicit drug use enforcement and prosecution. No more “Stay Out of Drug Areas” enforcement.

Retail Lease Interference
City of Seattle - passed in 2024, an ordinance that regulates commercial landlords lease rights; limits the amount retail tenants have to pay for security deposits; and limits requirements to provide personal guarantees.


Dual Agency
Twice defeated efforts to prevent dual agency in Washington State. BOMA has been essential in defeating these proposals.

Commercial Real Estate Government & Industry Affairs 
Two weeks from the end of the 2026 legislative session on March 13th

Context: Most major West Coast cities are increasingly unfavorable to commercial real estate and most businesses in their policies.  

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Sales and B &O tax on rental and lease income: Not yet passed in Washington State, but being considered by the majority party.

Vacancy Tax: First proposed in the California Assembly. Any office space vacant for 182 days or more in a year would be subject to a $5 SF tax/fee each year. BOMA California prevented the legislation from passing as proposed in 2025, but the proposal will be introduced in other West Coast cities and states in the next couple of years.

Rent Control: Seattle’s new mayor ran for office promising to institute rent control. Some are concerned this may include some form of commercial rent control.

Designating Homelessness as a Protected Class: State legislation that would have set limits on local enforcement of public camping was proposed and defeated in the 2026 session. BOMA was essential in defeating this bill.

Clean Building Performance Standards – Noncompliance Penalties:

• Washington State $5/SF/year
• City of Seattle $10/SF/Yr is the upcoming proposed penalties.

REET/RETT Taxes: Washington State has one of the highest transfer tax rates in the nation.

Capital Gains Tax: Washington State has the highest capital gains tax in the nation (currently exempts real estate, but efforts to change this is underway).

Millionaire’s Tax – Washington State: Tax on income (9.9%) on individuals or married couples earning above $1 milliion. Note: This is an income tax (if passed, would take effect in 2030). An Income Tax is prohibited by the Washington State Constitution and has been held unconstitutional numerous times by the State Supreme Court and voters have rejected it several times. Yet supporters believe the State Supreme Court will uphold this new attempt. The bill has passed the State Senate and is now in the House. The Governor has publicly supported this tax.

Boiler Licensing and Certification: Proposed overly restrictive new regulations across Washington State – BOMA has defeated this bill and proposed a working group in 2026 to craft a reasonable alternative.

Policing and Public Safety: Seattle is moving backwards and pausing public safety improvements. Sworn officer deployments remain well below national per capita averages – impacting retail theft, street safety, and downtown core recovery. These policies often include low or no illicit drug use enforcement and prosecution. No more “Stay Out of Drug Areas” enforcement.

Jump Start Payroll Tax: Passed by the City of Seattle in 2020, this long-term "payroll expense tax" targets large companies with high payrolls, which has survived legal challenges and currently funds affordable housing and services.

Social Housing Tax: City of Seattle Voter approved, adds to the Jump Start tax, adding an additional 5% payroll “excess compensation” over $1 million.

Retail Lease Interference: City of Seattle - passed in 2024, an ordinance that regulates commercial landlords lease rights; limits the amount retail tenants have to pay for security deposits; and limits requirements to provide personal guarantees.

Establishing a Non-Elected Security Guards Industry Standards Board:
This bill was defeated in the current state legislative session. It would have circumvented contract negotiations in favor of a board controlled by the Unions and their allies. BOMA was essential in defeating this bill.

Automated License Plate Readers: This bill is still moving in the legislature and would ban or limit the collection and storage of date from the readers, but now only applies to government owned properties. BOMA was essential in changing this bill.

Sales Tax on Janitorial Services: Proposed four times statewide – defeated by BOMA four times so far. BOMA has been essential in defeating these proposals.

Sales Tax on Security Guards – passed statewide in 2025, would be rescinded in 2030 if the Millionaire's Tax passes. 

Cleaning Workload Limits for Janitors – proposed twice in Washington State – defeated twice. BOMA was essential in defeating these proposals.

Dual Agency: Twice defeated efforts to prevent dual agency in Washington State. BOMA has been essential in defeating these proposals.

City Light increased energy efficiency incentives by an average of 10% in 2025—which can cover up to 70% of your capital and O&M project costs. But navigating incentive offerings can be tricky. That’s why the utility has staff dedicated to helping you assess your energy goals and finding the incentive offerings to achieve them. From lighting retrofits and HVAC upgrades to envelope improvements and process equipment replacements: our teams can guide you through from beginning to end. Each project can be eligible for energy savings! 

Plus, City Light is launching a Strategic Energy Management program to further help reduce costs, improve reliability, and benefit your bottom line and our shared energy future. Facilities over 20,000 sq. ft. are eligible for a personalized approach to lowering your energy consumption and complying with building performance standards. Sign up for an upcoming information session!

• Monday, Sept. 29, at 11:00 a.m.
• Monday, Oct. 6, at 11:00 a.m.

Learn more by reaching out to Austin Coover (austin.coover@seattle.gov) and Armando Berdiel (armando.berdiel@seattle.gov). You can find more information online on City Light's Commercial Retrofit Incentives website or review an updated list of frequently used energy conservation incentives.

July 8, 2025: State Government Affairs Update

1. BOMA successfully advocated against a proposed bill that would have tripled the annual property tax limit increases from 1% to 3% 
2. BOMA supported HB 1543 which has passed the legislature that increases compliance pathways and options for compliance with the State’s clean buildings performance standard
3. BOMA defeated consideration of adding sales tax on janitorial services.
4. BOMA defeated consideration of adding sales tax on rents and leases (Self Storage facilities). However, a B & O tax on self-storage rentals was passed and set to begin October 1, 2025. In 1959, the legislature passes a B & O tax on rents. It was later overturned by the court.  Commercial real estate in general, is the ultimate goal or proponents of a B & O tax on rental income.
5. BOMA worked tirelessly to defeated a bill that would have imposed unnecessary and significant new boiler certification and licensing greater than Seattle’s requirements statewide.  BOMA will work with interested parties before the next legislative session in 2026 to seek a better legislative bill.

Sales Tax on Security Services set to begin October 1, 2025: 

Investigation, security services, security monitoring services, and armored car services including, but not limited to, background checks, security guard and patrol services, personal and event security, armored car transportation of cash and valuables, and security system services

Some believe the new tax will only be the State portion at 6.5%. BOMA has been told by the state legislative staff in charge of this new tax that the amount of the tax is the full sales tax collection plus the city and county where sales taxes are currently being collected of other items.  

City + District Rates: These vary widely depending on the specific city or district within King County. For example:

• Seattle's combined rate can be up to 10.40%
• Mercer Island's combined rate is 10.20%
• Kent's combined rate is 10.2%

Therefore, the combined sales tax rate in King County can range from 8.80% to 10.50%


Emerging State Legislation of Concern in 2026:

1.  Tax increases to compensate for projected cut in state Medicaid from the federal government. The recently passed and signed bill sponsored by the President could mean cuts of $13 billion dollars in federal Medicaid support of Washington State.
   (See below)
2. Proposed sales taxes on the collection of rents in CRE 
3. Statewide rent control and commercial real estate 
4. New attempts to triple the annual property tax limit increase from 1% to 3% 
5. Statewide vacancy tax on commercial real estate, imposing a $5 per square foot tax on properties deemed "vacant" for 182 days in a year. 
6. Attempts to impose sales tax on janitorial services
7. Legislation that would limit janitorial workloads – significantly increasing cleaning cost and cost and therefore the elimination of janitorial jobs. 
8. “Homeless Bill of Rights” 

“Washington spends $21 billion on Medicaid annually, $13 billion of which is paid by the federal government. Kaiser Family Foundation (KFF) estimates Washington will lose between $31 billion and $51 billion in federal Medicaid dollars over the next 10 years, or at least $3 billion per year.”

Key BOMA Federal Legislation Engagement:

Environment
BOMA International continues to be a leader on the sustainability front by advocating for incentives to help the commercial real estate industry reduce energy consumption and greenhouse gas emissions. Some of our most recent initiatives include:

• SEC Climate Disclosure Rules
• Hydrogen as the Future of Energy
• H.R. 1491 Small Business Energy Loan Enhancement Act
• BOMA Electrification Study 2023
• Electric Vehicles and Charging Stations
• Energy Savings and Industrial Competitiveness Act

Energy Star Program
July 22nd the House Appropriations Committee marked up the Interior & Environment spending bill.  During the mark-up, the Subcommittee chair, Rep. Mike Simpson (R-ID), introduced an amendment that was approved by voice vote to include the following language in the committee report that accompanied the legislative text -

On page 59 of the report, before the paragraph titled “Compliance” insert the following new paragraph:
Clean Air.—Within the funds provided, at least $32,000,000 is for the Energy Star program as described in Section 131 of the Energy Policy Act of 2005 (42 U.S.C. 15941).

This is good news, BOMA’s efforts have been rewarded. This is exactly what we asked for. While we have made progress, there is a long way to go, and things can be derailed. So, we will keep up our work here in Washington D.C., but we need local BOMA members to send a letter supporting the Energy Star program to their Representative and Senators through the BOMA portal - https://boma.quorum.us/takeaction/  The letter is pre-loaded and all they have to do is enter their info and hit send.

Tax & Finance
The BOMA Advocacy Team is addressing a number of critical tax issues that affect the commercial real estate industry, including:

• Parking Taxation

Workforce Development
BOMA International’s Workforce Advocacy Committee is proud to introduce its State Workforce Development Toolkits, available to BOMA International members. Each toolkit provides an industry-specific, state-by-state outline of workforce development programs, grants, education, training and certification courses available within commercial real estate. These resources help employers within the industry to fill labor shortages with qualified talent as well as provide current and prospective employees with access to career advancement opportunities. Recent advocacy in this area includes:

• H.R. 2621 Honoring Vocational Education Act

BOMA International proudly advocates on behalf of the commercial real estate industry in states across the country, on Capitol Hill, and in federal agencies.
BOMA’s mission furthers the industry’s legislative and regulatory agendas by actively working with lawmakers and government officials to advance issues most important to its members. The scope of BOMA’s federal work primarily focuses on supporting local associations by lobbying Congress about issues related to sustainability, tax and finance, and workforce development.

If you have any questions about resources or lobbying for the commercial real estate industry, please reach out to govt@boma.org.

On June 12^th, BOMA Greater Seattle’s Local Advocacy Consultant-Catherine Stanford, BOMA President-Rod Kauffman, and Director of Operations-Cori Taniguchi, along with other leaders in real estate, met with Seattle City Council President Sara Nelson and City Attorney Ann Davison.

Sara Nelson

Ann Davison

These local elected officials spoke directly about efforts to restore public safety by increasing police hiring and training, addressing issues related to homelessness and crime, and rebuilding a strong economic future for Seattle.  The BOMA PAC of Washington also supports these two leaders running for re-election. If you would like to contribute to the PAC, you can do so via this link: https://www.bomaseattle.org/donations/donate.asp?id=12887

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City of Seattle Clean Buildings Rulemaking

Draft BEPS Director's Rule Available for Public Comment - Comments due July 7

The Seattle Office of Sustainability and Environment (OSE) has released the draft Buildings Emissions Performance Standard (BEPS) Director’s Rule. Per Seattle Municipal Code (SMC), a Director's Rule is the required next step to clarify topics such as required documentation, processes for compliance and reporting, and other key elements flagged for rulemaking in the BEPS law, SMC 22.925 — Building Emissions Performance Standard.

This draft rule covers nearly all rules needed for compliance with BEPS, which starts with the largest buildings reporting by Oct. 1, 2027. For a quick refresher on the BEPS law, watch this 12-minute recording on the basics of BEPS.  

OSE is hosting a three-week public comment period through July 7 at 5 p.m. PT to solicit input on the draft Director’s Rule.

When commenting, please include the page number(s) and the section(s) you are commenting on. You can submit your comment in the following ways:

• Using OSE’s online form (preferred)
• Emailing cleanbuildings@seattle.gov (please include “BEPS Public Comment” in the subject line)
• Writing to the Director, Seattle Office of Sustainability & Environment, PO Box 94729, Seattle, WA 98124, postmarked no later than July 7, 2025

Additional required rulemaking to cover limited topics such as updating emissions factors for 2031–2035 and other elements noted in this draft Rule and specified in SMC 22.925 will take place by Dec. 31, 2027, and at later dates as specified in SMC 22.925.

SUBMIT A RULE COMMENT

About the Rulemaking Process: The Rule is the product of more than a year of public engagement, building off the more than two years of engagement with stakeholders that preceded the BEPS law itself. To develop the Rule, OSE has:

• Convened a Technical Rulemaking Workgroup with subject matter experts from multiple sectors to weigh in on options to inform the draft. 
• Facilitated topic-specific focus groups (e.g., affordable housing, decarbonization plans, hospitals and labs, commercial real estate, and more). 
• Hosted two public webinars for feedback on key elements of the draft rule. 

SMC 22.925 includes the following building owner requirements:

• Starting in 2027, verify the previous year’s energy and emissions benchmarking data (reported to City per SMC 22.930) via Benchmarking Verification to ensure it is accurate and up to date.
• Starting in 2027, document current greenhouse gas intensity (GHGI), estimated GHGI targets (GHGIT), building equipment, and actions needed to achieve targets via a GHG Report.
• Starting in 2031, demonstrate that the building’s previous year’s emissions meet GHGIT or achieve alternative compliance. (Unless approved for an extension or exemption).
• Repeat this compliance process for each five-year compliance interval.
• By 2050 or earlier, depending on building size and type, achieve net-zero emissions.

To learn more about BEPS and the draft Director’s Rule, visit the BEPS website.

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Washington State Clean Buildings Rulemaking

BOMA supported HB1543 as it provides additional pathways to compliance. Informational sessions on and the rulemaking process will be held by the Department of Commerce.

This is also your last opportunity to take the HB 1543 Survey. The Clean Buildings Team wants your suggestions for alternative compliance pathways, extensions and exemption ideas. Please complete the survey before June 18.

Commerce filed the CR-101 to initiate the rulemaking process. We'll host a series of workshops to establish rules and reporting requirements for HB1543 and solicit public comments. Please join us for a rulemaking informational session and rulemaking workshops.

• June 18, 10-11 a.m. - Register for informational session: HB1543 and the rulemaking process
• July 2, 10 a.m.-12 p.m. - Register for HB1543 Rulemaking- Workshop 1: Extensions and exemptions
• July 23, 10 a.m.-12 p.m. - Register for HB1543 Rulemaking- Workshop 2: Alternative Compliance Pathway
• Aug 13, 10 a.m.-12 p.m. - Register for HB1543 Rulemaking- Workshop 3: Comprehensive review

We will record all events and post the recordings on the Clean Buildings webpage.

For additional questions or support, please contact us through our Clean Buildings Customer Support Form Ticket or email us at buildings@commerce.wa.gov.

Clean Buildings Portal Update
We made some updates and improvements to the Clean Buildings Portal.

What’s new?

• Shifted from parcel-based to building-based information
• Enhanced look of the building’s details page
• Updated Form B to support non-target and vacant spaces
• Enhanced look to Form C
• Added a new Grouping feature to support buildings that comply as a campus building, campus-connected building, or campus-level building
• Added a new Form J, which supports group buildings' compliance
• Added a Decarb District Energy System application

While existing Portal users may already be experiencing the exciting updates, for new users, please visit the Clean Buildings webpage to learn how to access the portal.

If you have questions or encounter any issues with the new features, please complete the Customer Support Form.

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Please consider joining a task force BOMA Washington State is forming to help guide potential new state Boiler licensing and certification regulations.  Please contact Rod Kauffman in the BOMA office with any questions or interest.  rkauffman@bomaseattle.org

As general information, the Board of Boilers Rules and the Washington State Department of Labor & Industries (L&I) have adopted two changes taking effect on July 1, 2025, as they relate to program fees and makes clarifications to the definition of pool heater.

The fee is raised 6.41% fee increase.

The proposal also clarifies inspection requirements for inspectors and installers.

See below for additional information.

L&I Adopts Fee Increases and Definition Change for Boiler

The Board of Boiler Rules and the Washington State Department of Labor & Industries (L&I) have adopted two changes that take effect July 1. One change is an increase to the agency’s Boiler Program fees, and another clarifies the definition of pool heaters.

See a list of affected Washington Administrative Codes at the end of this message.

About the changes
The agency adopted a 6.41% fee increase to cover operating expenses. It represents the maximum the state Office of Financial Management calculated for fiscal year 2026.

Another adopted change modified the definition of pool heaters.  The result clarifies inspection requirements for inspectors and installers and not change any requirements. 

The agency filed the Rulemaking Order (CR-103) on April 22.  The adopted changes take effect July 1, 2025.  

You can find out more about this rulemaking at https://www.lni.wa.gov/rulemaking-activity/?query=296-104&cardNo=AO24-31 or https://lni.wa.gov/licensing-permits/boilers/laws-rules.

If you have any questions, please feel free to contact me at Boiler@Lni.wa.gov, or call 360-902-5270.  If you need additional information or have questions about the rulemaking process, please contact Meagan Edwards at 360-522-0125 or Meagan.Edwards@lni.wa.gov

Changes affect the following:
• WAC 296-104-010, Administration—What are the definitions of terms used in this chapter?
• WAC 296-104-700, What are the inspection fees – Examination fees – Certificate fees – Expenses?

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The Department of Labor & Industries (L&I) updated its rulemaking website

Rules filed June 3, 2025

For information on all L&I meetings and public hearings related to rulemaking, please visit our public participation calendar.

Division: Field Services and Public Safety (Elevator Program)

Topic: Proposal (CR-102) – Elevator Fees Increase (FY26)

Brief Description: The purpose of this rulemaking is to propose a 6.41% fee increase for inspections of conveyances and other Elevator Program services under Chapter 296-96 WAC, Safety regulations and fees for all elevators, dumbwaiters, escalators and other conveyances. This is the Office of Financial Management’s maximum allowable fiscal growth factor rate for fiscal year 2026. The fee increases are necessary to support the operating expenses of the Elevator Program, as current fee levels are not adequate to cover current Program expenses. Additional amendments are also proposed to reorganize the existing fees for permits and inspections into a combined fee schedule to make the fees easier to locate.

Public hearing date: July 8, 2025 (Tumwater/virtual/phone)
Written comments due by: July 8, 2025, 5:00 p.m.
Intended adoption date: September 2, 2025

Additional information about this rulemaking:
CR-102 Proposal
Proposal Language

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Selected 2025 End of Legislative Session Update

The Washington State Legislature concluded with Sine Die (end of session, literal Latin meaning is “without a day”) for this year’s 105 day “long session” which began on Monday, January 13 and ended on Sunday, April 27.

All bills that did not pass in the 2025 Legislative Session will automatically be alive again in the 2026 Legislative Session which begins on Monday, January 12, 2026.

BOMA Opposed bills

1. HB 5814 – applies sales tax to security services: Passed
2. Appling sales tax to Janitorial services: Defeated before it made it in SB 5814
3. HB 1334 Property Tax Limit Increase - Allows for tripling of property tax limit increases from 1% to 3% annually: Defeated
4. SB 5694 Statewide Boiler Operator licensing and certification regulations: Defeated
5. HB 1217/SB 5222 State Authorization of Residential Rent Control, 7% + CPI annual increase limit: Passed
6. HB 1907/SB 5711 Tax on Rents – would designate self-storage as a retail transaction not a lease and therefore subject to the B & O tax and sales tax. Passed

BOMA Supported bill

1. HB 1543 Clean Buildings Compliance - Modifications proposed by Commerce Passed

Legislation of Concern in 2026:

1. All of the above defeated bills in 2025
2. Statewide vacancy tax on commercial real estate, imposing a $5 per square foot tax on properties deemed "vacant" for 182 days in a year.
3. Proposed sales taxes on the collection of rents in CRE
4. Commercial rent control

The Washington State Legislature had a challenging session this year, having started with a budget shortfall projected around $12 billion to $16 billion over the next 4 years. Along with a new Governor who publicly denounced tax proposals from his own Democratic Party, three budgets (Operating, Capital, & Transportation) were negotiated between the Senate and House, and passed out on the in the in final day of this year’s session. They await the Governor’s signature.

During this 2025 legislative session, 431 bills passed the Washington State Legislature (delivered to the Governor).  Rent control, education funding, public safety and transportation funding dominated a lot of debates. 

In his first term as Governor of Washington State, Bob Ferguson navigated a challenging legislative session with a more direct and public role than the former Governor Inslee. He successfully navigated a budget that avoided extreme proposals like the wealth tax, which he threatened to veto, while securing his own priorities like the $100 million to increase law enforcement staffing.

The 2025 legislative session was described by many Legislators as one of the most difficult in recent years, marked by a significant budget shortfall, many new taxes and fee increases, intense debates on key issues like education and public safety, and an increase of civic engagement and opposition to bills. Ferguson, in his first term, navigated the complexities with a focus on fiscal responsibility and bipartisan collaboration.

$77.8 billion Operating Budget

With a total expenditure of $77.8 billion, the budget avoids tapping into the state's emergency reserves and raises $7.4 billion in new tax revenue and nearly $3 billion in spending cuts. Major funding includes $100 million for law enforcement hiring and $4.4 billion to sustain current service levels, with significant investments in education, such as $682 million for K-12 schools. Despite anticipated cuts, such as the delay in expanding the Fair Start for Kids Act, the budget preserves state worker contracts, ensuring no furloughs or bonus alterations which was considered. Utilizing some strategic financial maneuvers, including a pension fund investment adjustment, the plan minimizes immediate fiscal strain while preparing to fund future priorities. Democrats emphasize the budget's role in supporting public education and critical services, while concerns from Republicans were that the tax burden on Washingtonians is too high.

$7.5 billion Capital Budget

The final adopted 2025-27 biennial capital budget, combined with the 2025 Supplemental capital budget, directs a total of $7.5 billion towards public infrastructure and grants across Washington State. This budget emphasizes housing, education, and natural resources, authorizing $4.7 billion in new debt limit bonds and reappropriating $4.9 billion to continue existing projects. Key investments include:

• $975 million for education,
• $827 million for natural resources, and
• $772 million for housing and homelessness.
• $375 million is designated for environmental and energy projects.

The supplemental budget provides $109.1 million in authority adjustment savings and includes $64 million in new bonds for broadband expansion, reaching a total of $114 million, while achieving $73 million in savings from the School Construction Assistance Program. This was a bipartisan budget.

$15.5 billion Transportation Budget

The 2025-27 Biennial Transportation Budget authorizes $15.5 billion in spending, with $9.2 billion designated for capital expenditures and $6.2 billion for operating expenses. Despite new revenue streams, including a 6-cent increase in the state gas tax (raising it from 49.4 cents to 55.4 cents per gallon in July) expected to generate $1.4 billion over six years, and additional vehicle and luxury taxes, some transportation projects are delayed to maintain a balanced four-year financial plan. These new revenues are projected to yield over $3 billion over six years, further supported by a 0.1% sales tax dedication beginning in 2028, contributing $300 million annually. The budget is bolstered by federal funds, nearly $3.3 billion in bond sales, and existing account balances, ensuring balanced transportation accounts over the planning horizon. Additionally, a new bond authorization for the Interstate 5 Bridge Project allows for future toll-based funding.

Highlighted Policy Bills Passed

HB 1217 – Rent Control – Delivered to Governor

• Caps annual rent increases at 7% and prohibits increases during the first 12 months of a tenancy, with exemptions for new construction, nonprofit-owned units, and certain owner-occupied properties.
• Requires 180 days' notice for rent increases of 3% or more, and mandates detailed disclosures for annual rent and fee increases.
• Allows tenants to terminate leases without penalty if rent increases exceed legal limits and prohibits evictions for nonpayment of unlawful rent or fees.
• Limits late fees to a maximum of 5% of rent and restricts move-in fees and security deposits to one month's rent, with exceptions for subsidized housing.
• Establishes a Landlord Resource Center, requires multilingual model lease provisions, and mandates a social impact assessment by 2028.

HB 1096 – Increasing housing options through lot splitting – Delivered to Governor

• Requires cities to establish an administrative approval process for a lot split, which may be combined with concurrent review of a residential building permit for new single-family or middle housing.

Revenue Bills/New Taxes

SB 5794 – Repeal of Tax Exemption Preferences

The legislature states that while some tax preferences (like food sales tax exemptions) help rebalance the tax code for working people, many others resulted from private interests securing preferential treatment. The bill implements recommendations from the Joint Legislative Audit and Review Committee, the Citizen Commission for Performance Measurement of Tax Preferences, and the Department of Revenue.

Key Tax Changes

1. Title Insurance Agent Taxation

• Removed: The bill eliminates title insurance agents from the preferential tax rate that applies to insurance producers, meaning they will no longer qualify for the 0.484% tax rate.

2. Self-Storage Facility Taxation

• Added: Effective April 1, 2026, income from renting or leasing individual storage spaces at self-service storage facilities will be subject to B&O tax at the standard service business rates (1.75% or 1.5% depending on circumstances).
• Added: Clarifies that proceeds from individual storage space rentals or leases for 30 days or longer at self-service storage facilities are not considered "sale of real estate" and thus are not exempt from B&O tax.

4. Repealed Tax Preferences

The bill completely repeals six tax preferences:

• Exclusion of precious metal and monetized bullion from "sale at wholesale" and "sale at retail" definitions
• Credit for light and power businesses and gas distribution businesses
• Credit for new employment in international service activities in eligible areas
• Deduction for interest on investments or loans secured by mortgages or deeds of trust
• Tax on loan interest
• Credit for public safety standards and testing

5. Technical and Administrative Updates

• Updates formatting in multiple sections from spelled-out numbers to numerals (e.g., changing "forty-five" to "45")
• Removes an obsolete reference to tax exemption related to foreign depository agencies
• Updates cross-references throughout the code

Effective Dates

• Most provisions take effect January 1, 2026
• Self-storage facility taxation take effect April 1, 2026
• One section related to newspaper publishing takes effect January 1, 2034
• Another section expires January 1, 2034

Legislative Findings

The legislature notes that:

• Washington currently has 786 tax exemptions resulting in nearly $200 billion in taxpayer savings for the current biennium
• Many exemptions are obsolete due to changes in law or simply not used
• More progress is needed to create a fair tax system that provides sustainable funding for public services

The bill represents an effort to evaluate the tax code and remove inefficient or no longer applicable tax exemptions while clarifying legislative intent for future tax preference reviews.

Sponsor: Senators Salomon, Lovelett, Alvarado, Bateman, Dhingra, Frame, Hasegawa, Nobles, Ramos, Riccelli, Trudeau, Wellman

Status SB:        Delivered to Governor

HB 2082/SB 5813 – Estate Tax Increase & Expansion

This bill makes significant changes to Washington State's tax structure, specifically targeting capital gains tax and estate tax to increase funding for the education legacy trust account.

Capital Gains Tax Changes

1. Additional Capital Gains Tax Rate (Section 101):
   • The bill maintains the existing 7% excise tax on long-term capital assets that began January 1, 2022
   • It adds a new 2.90% additional tax on capital gains exceeding $1,000,000, effective January 1, 2025
   • This creates a tiered system where gains above $1 million are effectively taxed at 9.90% (7% + 2.90%)
   • This change applies to taxes imposed in 2025 for collection in 2026

Estate Tax Changes

1. Increased Exclusion Amount (Section 201):
   • Raises the estate tax exclusion from $2,193,000 to $3,000,000 for estates of decedents dying on or after July 1, 2025
   • Establishes an annual inflation adjustment mechanism based on the consumer price index starting in 2026
   • The adjustment uses October 2024 as the baseline (rather than October 2012)
   • The bill codifies historical exclusion amounts that were previously adjusted for inflation
2. More Progressive Estate Tax Rate Structure (Section 202):
   • Creates a new tax rate table for estates of decedents dying on or after July 1, 2025
   • Increases rates across almost all brackets compared to the previous structure
   • The top tax rate increases from 20% to 35% for estates over $9,000,000
   • Lower brackets also see significant increases:
     • $1-2 million bracket: from 14% to 15%
     • $2-3 million bracket: from 15% to 17%
     • $3-4 million bracket: from 16% to 19%
     • $4-6 million bracket: from 18% to 23%
     • $6-7 million bracket: from 19% to 26%
     • $7-9 million bracket: from 19.5% to 30%
3. Family-Owned Business Interest Deduction (Section 203):
   • Increases the qualified family-owned business interest deduction from $2.5 million to $3 million (aligned with the estate tax exclusion amount)
   • Adds inflation adjustment provisions matching those for the estate tax exclusion
   • Maintains the requirement that family-owned business interests exceed 50% of the estate to qualify

Purpose and Implementation

• The bill explicitly states it aims to make Washington's tax system more progressive, noting it's currently "the second most regressive in the nation"
• The legislature acknowledges the 2024 voter approval (64.11%) to uphold funding for education via capital gains tax
• Revenue from these changes is dedicated to the education legacy trust account to fund K-12 education, early learning, child care, and higher education
• The bill contains an emergency clause making it effective immediately upon signing, though the actual tax provisions have later implementation dates

These changes represent a significant restructuring of Washington's capital gains and estate taxes, creating a more progressive system that increases taxes on higher-value estates and capital gains while providing targeted exemptions for family farms and businesses.

Sponsor: Representatives Street, Thai, Ryu, Ramel, Peterson, Pollet, Parshley, Scott, Reed, Berry, Santos, Macri, Tharinger; Senators Wilson, C., Stanford, Alvarado, Frame, Nobles, Pedersen, Valdez

Status HB:       DEAD – House Finance Committee | NTIB

Status SB:        Delivered to the Governor

HB 2083/SB 5814 – Tax Code Expansions

This bill aims to fund public schools, healthcare, social services, and other programs by modifying certain excise taxes in Washington State. The legislature's stated purpose is to modernize the tax code to better reflect the shift from a goods-based to a service-based economy and to update tobacco product taxation to capture new nicotine products.

Part I: Extending Retail Sales Tax to Select Services

The bill significantly expands services subject to retail sales tax by adding several new categories to RCW 82.04.050(3):

1. Information technology services including:
   • Network operations and support
   • Help desk services
   • Hardware/software training
   • Data entry and processing
2. Custom website development services
3. Investigation and security services including:
   • Background checks
   • Security guard and patrol services
   • Security monitoring services
   • Armored car services
   • Security system services (excluding locksmith services)
4. Temporary staffing services (except for hospitals)
5. Advertising services, including:
   • Creative services (layout, art direction, graphic design)
   • Production services
   • Digital marketing (search engine marketing, lead generation)
   • Online referrals and campaign planning

   Notable exclusions from advertising services:

   • Web hosting and domain registration
   • Services for newspapers
   • Out-of-home advertising (billboards, transit ads, etc.)
6. Live presentations (lectures, seminars, workshops)

The bill also creates an exemption for sales between members of an affiliated group for several of these newly taxable services.

These services will now generally be subject to retail sales tax, with limited exceptions for transactions between affiliated businesses.

HB 2081/SB 5815 – Business & Occupation (B&O) Tax Hike

This bill makes significant changes to Washington's business and occupation (B&O) tax system.

1. B&O Tax Rate Changes (Effective January 1, 2027)

The bill increases various B&O tax rates from their current rates to a uniform 0.5 percent for most business activities, including:

• Extractors: 0.484% → 0.5%
• Manufacturers: 0.484% → 0.5%
• Retailers: 0.471% → 0.5%
• Wholesalers: 0.484% → 0.5%
• Service providers: Various changes with new tiered structure

For contests of chance, the rate increases from 1.5% to 1.8%.

2. Service Business Tax Rate Restructuring (Section 109)

The bill creates a three-tiered structure for service businesses:

• 1.5% for businesses with gross income less than $1,000,000 (unchanged)
• 1.75% for businesses with gross income between $1,000,000 and $5,000,000
• 2.1% for businesses with gross income exceeding $5,000,000 (new highest tier)

3. New Surcharge on High-Grossing Businesses (Effective January 1, 2026)

The bill adds a 0.5% surcharge on businesses with Washington taxable income exceeding $250 million annually. Notable exemptions include:

• Manufacturing activities and related sales
• Income from food, prescription drugs, and certain healthcare items
• Timber industry income
• Petroleum product sales meeting specific conditions
• Fuel transactions
• Agricultural businesses

This surcharge expires December 31, 2029.

_____________________________________________________  

Draft BEPS Director's Rule Available For Public Comment - Comments due by July 7

Today, the Seattle Office of Sustainability and Environment (OSE) released the draft Buildings Emissions Performance Standard (BEPS) Director’s Rule. Per Seattle Municipal Code (SMC), a Director's Rule is the required next step to clarify topics such as required documentation, processes for compliance and reporting, and other key elements flagged for rulemaking in the BEPS law, SMC 22.925 — Building Emissions Performance Standard.

This draft rule covers nearly all rules needed for compliance with BEPS, which starts with the largest buildings reporting by Oct. 1, 2027. For a quick refresher on the BEPS law, watch this 12-minute recording on the basics of BEPS.  

OSE is hosting a three-week public comment period today through July 7 at 5 p.m. PT to solicit input on the draft Director’s Rule.

When commenting, please include the page number(s) and the section(s) you are commenting on. You can submit your comment in the following ways:

• Using OSE’s online form (preferred)
• Emailing cleanbuildings@seattle.gov (please include “BEPS Public Comment” in the subject line)
• Writing to the Director, Seattle Office of Sustainability & Environment, PO Box 94729, Seattle, WA 98124, postmarked no later than July 7, 2025

Additional required rulemaking to cover limited topics such as updating emissions factors for 2031–2035 and other elements noted in this draft Rule and specified in SMC 22.925 will take place by Dec. 31, 2027, and at later dates as specified in SMC 22.925.

SUBMIT A RULE COMMENT

About the Rulemaking Process: The Rule is the product of more than a year of public engagement, building off the more than two years of engagement with stakeholders that preceded the BEPS law itself. To develop the Rule, OSE has:

• Convened a Technical Rulemaking Workgroup with subject matter experts from multiple sectors to weigh in on options to inform the draft. 
• Facilitated topic-specific focus groups (e.g., affordable housing, decarbonization plans, hospitals and labs, commercial real estate, and more). 
• Hosted two public webinars for feedback on key elements of the draft rule. 

To learn more about BEPS and the draft Director’s Rule, visit the BEPS website.

1. BOMA successfully advocated against a proposed bill that would have tripled the annual property tax limit increases from 1% to 3%  - this proposal is now dead for this session.
2. Defeated consideration of adding sales tax on janitorial services.
3. Defeated consideration of adding sales tax on rents and leases.
4. Defeated a bill that would have imposed unnecessary and significant new boiler certification and licensing greater than Seattle’s requirements statewide. BOMA will work with interested parties before the next legislative session in 2026 to seek a better legislative bill.
5. BOMA supported HB 1543 which has passed the legislature that increases compliance pathways for the State’s clean buildings performance standard

Continuing proposals of concern are efforts in these final days of the session:

1. Make security services subject to the sales tax
2. Redefine self-storage as a retail activity subject to the sales tax and B & O tax.
3. B & O tax rate hikes on many services.
4. Passage of a form of residential rent control statewide will likely be passed into law. It is important to prevent future efforts to extend this to commercial real estate.

Background:
The 2025 legislative session was scheduled for 105 days to end April 27th. It is possible the legislature will go into an extra special session.

The 2025-2026 legislature consists of:
Senate - 49 seats - D30/R19
House - 98 seats - D59/R 39

Washington State’s two-year operating budget has grown to $78.5 billion dollars. The State is facing a 4-year projected budget shortfall between $12 and $16 billion dollars. 

Lawmakers have been holding hearings on Revenue Package legislation to balance the $16 billion dollar 4-year revenue shortfall in the projected budget.  

Both houses of the legislature submitted budgets that would have closed the projected gap almost entirely from new taxes and other revenue. Governor Ferguson has insisted that the shortfall be addressed with at least 30-35% in spending cuts. This has caused the majority party to seek “different’ revenue proposals.

• The Impact of GSA and Federal Asset Dispositions - Slides
• Trepp Research - DOGE Cuts Begin on GSA-Leased Office Space: February Data Update

Washington State Legislative Session Update

The 2025 legislative session is set to end April 27th but it’s possible the legislature will go into an extended period.

On February 26th, 35 BOMA Members traveled to Olympia to talk about our industry and the issues important to commercial real estate recovery. Read more about it here.
 

BOMA Priority real estate bills still alive in the Legislature in 2025:

1. SB 5798 (Was HB 1334)– Property Tax Increases – OPPOSE
2. HB 1217/SB 5222 – Rent Control – OPPOSE
3. HB 1907/SB 5711 – Unconstitutional Tax on Rent (Self Storage)– OPPOSE
4. HB 1543/SB 5514 – Clean Building Standards – SUPPORT

The state of Washington is facing a two-year budget deficit of some $16 billion dollars. Representatives and Senators are looking to close the gap via new taxes and revenues while the governor wants to see at least 25-30% in spending cuts.

An issue of high importance to real estate is a measure that if passed, would raise the annual maximum property tax increase capacity from 1% to 3%.  A new version of that House bill has now been incorporated into a Senate bill that removes any cap (the way it appears to be written – we are still analyzing the bill) and would allow annual property tax increases tied to population growth or CPI - whichever is higher. Unfortunately, this bill does have some momentum in both chambers.

Another key session issue is the continued effort to impose rent control on residential property investments. Rent control is prohibited in Washington State since 1981, so the sponsors are calling the bill “rent stabilization” which is, of course, rent control. BOMA is engaged because we don’t want to see this slide over into any form of commercial rent regulation.

Note: For those following the Lithium Ion Battery Standards bill, BOMA has worked to introduce and shepherd through the U.S. Congress, that bill has passed the Senate committee and is on its way to the full Senate. (S. 389 / H.R. 973) - A BILL TO ESTABLISH CONSUMER STANDARDS FOR LITHIUM-ION BATTERIES.  

Meetings were set up with district leaders and other government officials like the Secretary of State, Deputy Minority Leader, and Senators. 

Thank you to those that participated in this important event! This opportunity was free for all members thanks to our sponsor: Township-Building Services.

If you are interested in joining us for this event next year or want to get involved with the Advocacy Committee, please email Justin Wallander at justin@bomaseattle.org.

Utility Costs are Going Up

Utility Rate projections for Seattle City Light, Seattle Public Utilities, and Puget Sound Energy. Provided by your BOMA Government and Industry Affairs and Code and Utility Committees. 9/12/24 (link)

City of Seattle Budget Process

Mayor Harrell released his proposal for the 2025/2026 budget on September 24th and kicked off the city’s official process for setting the 2025-2026 budget. The Council will be reviewing and potentially making changes prior to adopting the budget in November.

Facing a significant budget gap of a $251 million shortfall in Seattle’s $1.9 billion general fund and adding about $100 million in new spending on priorities like public safety. The Mayor proposed diverting a chunk of tax revenue previously earmarked for affordable housing and by cutting about 160 jobs.

BOMA Advocacy is tracking the Council’s discussions and will work with the Council to ensure that the budget spending is consistent with our member’s needs, particularly in the area of public safety and downtown recovery.

Here is a link to additional information about the budget process and the Mayor’s proposal: Inf 2521 - Presentation (legistar.com)

Public Safety

The Seattle City Council passed two public safety ordinances that add additional tools to help fight crime in the city.

Stay Out of Drug Areas (SODA) which authorizes the courts to prohibit a defendant from entering a designated area in the city if they commit a drug-related criminal offense in that zone. Introduced in partnership with City Attorney Ann Davison, the bill provides additional ways to reduce prolific and open drug-related criminal activity in key public areas - Downtown Seattle (Belltown), the International District, Capitol Hill, the University District, and Pioneer Square. Your BOMA Advocacy team testified in favor of SODA.

Stay Out of Area Prostitution (SOAP) bill, combatting commercial sexual exploitation and gun violence connected with it. The area is along Aurora Avenue.

Police Recruitment. Currently, the Council is considering a proposal by Council President Sarah Nelson to authorize up to $50,000 for an experienced officer, the highest bonus among surrounding cities.

Since reaching a pre-pandemic peak of nearly 1,400 officers, the Police Department has fallen to around 930 fully trained officers, the lowest number since the city began keeping track in 1991. Hiring has simply not kept pace with retirements and other departures.

BOMA Advocacy is supporting this proposal. The lack of police officers has been the key to the decline of public safety, particularly in downtown.

Public Safety Survey

As the end of the year approaches, BOMA’s Public Safety Committee requests your help in sharing information on the state of public safety around your properties and tracking its year-to-year changes.

We have been doing the survey since 2019 and this project has become an essential tool in communicating with elected officials in advocating for increased public safety in the Puget Sound area.

Please assist our efforts by completing the brief (about 7 minutes to complete) survey linked below. If possible, please forward this message to other property managers within your organization that work at different properties.

The survey will be available until Friday, October 18th, at 5:00pm PST.

Here is the link to the survey: BOMA Public Safety Survey 2024

The Government Affairs Committee hosted Seattle Department of Transportation staff to review Mayor Harrell’s proposed transportation levy. The current levy expires at the end of this year. The Council is currently reviewing and amending the proposed legislation and plans to take action on July 9, 2024 to put it on the ballot this November. The mayor's proposal will increase the current levy rate from 34 cents per $1,000 valuation to 60 cents or higher.

Links to additional Information:

• Transportation Levy Renewal Proposal - City of Seattle - Draft for Public Input
• Transportation Chair Saka proposes changes to Seattle transportation levy to prioritize safety, economy, and climate - Seattle City Council Blog

Key Seattle GA Issues:

1. Building Performance Energy Standards: Rule Making Process  Will begin later this month; BOMA’s team will be fully engaged. Process will go through Q2 of next year.
   
2. Personal Guarantees and Security Deposit Limits in Commercial Leases: Finance and Administration Services has produced rules; ordinance is in effect Consumer Protection (seattle.gov)
   
3. West Seattle to Ballard Light Rail-SLU Station-Sound Transit Board voted to stay with the original plan which will shut down Mercer for eight years.
4.  Council President Nelson’s Bill to enhance the recruitment and retention program for SPD passed.

Public Safety Committee
Committee discussed Sound Transit (ST) rider security continuing concerns. People are not being removed from the cars even if they are disturbing other passengers. We are following up with ST Board as well as King County Metro Security.

There is an issue with property owners not being allowed to post “Conditions of Entry” signs in front of a vacant space. BOMA's Local Legislative Consultant, Catherine Stanford, connected with the City Attorney’s office this week to pursue other options for our members. Property owners may put up their own signs with “no trespassing/loitering” etc. It was suggested that they may want to get input from legal counsel. It was also encouraged to call 911 if trespassers refuse to move along. We asked for consideration of a more robust program; particularly given the public safety issues downtown.

There was a request for information on what is being planned for the FIFA games; follow up information coming soon.

Over the next three months BOMA's Advocacy leaders are meeting with as many as 40 lawmakers running for re-election. During those meetings we have unique opportunities to discuss the challenges unique to this real estate cycle.

The Government Affairs Committee hosted Seattle Department of Transportation staff to review Mayor Harrell’s proposed transportation levy. The current levy expires at the end of this year. The Council is currently reviewing and amending the proposed legislation and plans to take action on July 9, 2024 to put it on the ballot this November. The mayor's proposal will increase the current levy rate from 34 cents per $1,000 valuation to 60 cents or higher.

Links to additional Information:

• Transportation Levy Renewal Proposal - City of Seattle - Draft for Public Input
• Transportation Chair Saka proposes changes to Seattle transportation levy to prioritize safety, economy, and climate - Seattle City Council Blog

Key Seattle GA Issues:

1. Building Performance Energy Standards: Rule Making Process  Will begin later this month; BOMA’s team will be fully engaged. Process will go through Q2 of next year.
   
2. Personal Guarantees and Security Deposit Limits in Commercial Leases: Finance and Administration Services has produced rules; ordinance is in effect Consumer Protection (seattle.gov)
   
3. West Seattle to Ballard Light Rail-SLU Station-Sound Transit Board voted to stay with the original plan which will shut down Mercer for eight years.
4.  Council President Nelson’s Bill to enhance the recruitment and retention program for SPD passed.

Public Safety Committee
Committee discussed Sound Transit (ST) rider security continuing concerns. People are not being removed from the cars even if they are disturbing other passengers. We are following up with ST Board as well as King County Metro Security.

There is an issue with property owners not being allowed to post “Conditions of Entry” signs in front of a vacant space. BOMA's Local Legislative Consultant, Catherine Stanford, connected with the City Attorney’s office this week to pursue other options for our members. Property owners may put up their own signs with “no trespassing/loitering” etc. It was suggested that they may want to get input from legal counsel. It was also encouraged to call 911 if trespassers refuse to move along. We asked for consideration of a more robust program; particularly given the public safety issues downtown.

There was a request for information on what is being planned for the FIFA games; follow up information coming soon.

1. B&O tax on rents and leases a bill that would apply a 1.5% B & O tax on rental income residential and commercial (unless a landlord agrees to limit rent increases an attempt at Commercial Rent Control) a back door rent control effort. SB 6136
2. Real Estate Excise Tax (REET) (RETT) - a bill that would raise the transfer tax from 3% to 4% for sales above $5 million and lower it for sales below $500k. - HB 2276/SB 6191
3. Capital Gains Tax – a bill that would raise the Capital Gains tax from 7% to 9% and would add real estate gains to the tax. - SB 5335
4. Property Tax – a bill that would raise the limit on the state portion of the property tax from 1% to 3% based on CPI. - SB 5770

The BOMA International Advocacy Team has released two new documents containing helpful information regarding the SEC's new climate disclosure requirements and a policy brief on artificial intelligence.

SEC Fact Sheet- As you know, the Securities Exchange Commission last week issued a rule on climate disclosure requirements for publicly traded companies. The Advocacy Team has developed the attached PDF to highlight the key elements of the rule. It is important to note that on Friday, the Fifth Circuit granted injunctive relief (suspending the rule temporarily) amid litigation challenging the regulations brought by Liberty Energy Inc. The court ruled that the stay was issued due to "irreparable injury in the form of unrecoverable compliance costs and constitutional injuries" that would result in the rule going forward.

AI Policy Brief - Attached is the latest BOMA International Policy Brief on Artificial Intelligence.  This topic has been at the forefront of discussion in both the public and private sectors, and we hope you find the information helpful.  We will continue to update on this subject as the technology evolves.

We hope that you find these materials helpful! Please feel free to share these documents as you wish and reach out if you have any questions. Email us at govt@boma.org

center: Secretary of State, Steve Hobbs

Below is information about these proposals and their current status in this year’s 60-day legislation session which is scheduled to end March 7th.

Key BOMA Issues in the 2024 Legislative Session:

4 key tax issues:

1. Real Estate Excise Tax (REET/RETT) H 2276/SB 6191- a bill that would raise the transfer tax from 3% to 4% for sales above $3 million and lower it for sales below $500k. [BOMA continues to advocate against this ill and since it has been designated as “essential to implement the budget” means it can be active until the last day.]

2. B & O tax on rent and Leases (SB 6136) – a bill that would unconstitutionally (state of Washington) require all property owners to decide between paying B&O tax (1.5-1.8% of gross receipts) or agreeing to rent control. The rental control portion was dropped in favor of just the B & O tax proposal. The tax on residential rental property would if passed, begin January 1, 2025. The tax on commercial rental property would begin January 1, 2027 [We believe our advocacy and testimony at hearings in Olympia on behalf of BOMA Members and the CRE industry has contributed to the likelihood that this bill will not survive, but it is technically alive to end of session]

3. Property Tax (SB 5770) – a bill that would raise the annual limit on state and local portion of the property tax from 1% to 3% based on CPI. [This bill has stalled and will not go forward this session]

4. Capital Gains Tax (SB 5335) – a bill that would raise the Capital Gains tax from 7% to 8.5% and would add real estate gains to the tax. [Dead – bill did not advance]

Further detail:

HB 2276/SB 6191 – Increasing Taxes on Real Estate Sales (REET/RETT)

Increases the tax on the sale of property over $3M by adding a 1% Real Estate Transfer Tax (RETT) to the existing 3% Real Estate Excise Tax (REET).

• Beginning January 1, 2025, the rate of the tax imposed is as this follows: 1.1% of the portion of the selling price that is less than or equal to $750,000;
• 1.28% of the portion of the selling price that is greater than $750,000 and equal to or less than $1,525,000;
• 2.75% of the portion of the selling price that is greater than $1,525,000 and equal to or less than $3,025,000; and
• 3.0% of the portion of the selling price over $3,025,000, PLUS 1.0% RETT tax
• 7% of REET and RETT revenues shall go as follows:
  • 25% to the Washington State Housing Trust Fund
  • 25% to the Apple Health and Homes Account
  • 15% to a new Developmental Disabilities Trust Account
  • 25% to the Affordable Housing for All account
  • 10% to the new Housing Stability Account.

Notes:

• WA State already has one of the highest REET tax in the nation, adding RETT to REET would make WA State 33% higher tax than any other state on the sale of property.
• Increasing taxes on the sale of property will increase rents and housing costs for residential and commercial tenants.
• At a time when commercial real estate is already hurting because interest rates have increased dramatically and many companies are working from home, this would cause damage to the industry.

SB 6136 – B&O Tax or Rent Control on Commercial & Residential Rents

•  Unconstitutionally requires all property owners to decide between paying B&O tax or agreeing to rent control.
• Adds business and occupation tax (B&O) to rent for all residential and commercial property. The tax on residential rental property begins January 1, 2025. The tax on commercial rental property begins January 1, 2027.
• Directs Commerce to develop and administer residential rent control program that requires 5% rent control.
• Directs Commerce, AG, DOR, and others to develop recommendations for a rent stabilization program for commercial rental property.
• Creates a B&O tax deduction for landlords participating in the rent control programs.

Notes:

• Tax on rents is Unconstitutional according to a WA Supreme Court ruling (Schumacher 1960).
• Taxing rents would ultimately increase rents and housing costs for residential and commercial tenants.
• At a time when commercial real estate is already down because of employees working from home and high interest rates, this would cause damage to the industry.

Substitute Bill:

• Removed the Rent Control provision.
• Makes the privilege of providing all commercial & residential property for rent subject to the business and occupation tax.

SB 5770 – Property Tax

• Increases the property tax revenue limit for local property taxes. Currently property tax increases are limited to 1% increases (limiting factor) annually.
• This bill would increase the property tax limit from 1% to 1% plus population change and CPI, up to 3% annually.
• CPI is based on the CPI(U) for the Western region as of July 25th each year, provided by DOR to the County Assessor for use.
• Applies to 2024 tax collection and thereafter

Notes:

• This will increase the cost of providing housing.
• Property tax increases often drive necessary increases in residential and commercial lease rates for tenants.
• The general public does not support increases in property taxes.
• Technical corrections made in Senate Ways and Means Committee still to come.

Energy Bill:

HB 1589/SB 5562 - Banning Natural Gas through Gas Companies

 Original Bill

• Prohibits gas companies serving more than 500,000 retail natural gas customers in Washington from extending gas service after June 30, 2023.
• Requires a large gas company to file a gas decarbonization plan as part of a multiyear rate plan on or after January 1, 2026, and every four years thereafter, with the aim to achieve the company's proportional share of greenhouse gas emission reductions required under state law.
• Requires a combination utility to file an electrification plan as part of a gas decarbonization plan on or after January 1, 2026.
• Directs the Utilities and Transportation Commission to establish cost targets for gas decarbonization and electrification plans, approve plans that are in the public interest, and adopt depreciation schedules, and a single energy rate base in certain instances.
• Encourages electric utilities to work with large gas companies providing gas service within their service areas to identify opportunities for electrification and providing energy peaking service.

Amended Bill

Modifies the definition of "electrification" to "the installation by a combination utility of electric end-use equipment provided that installation: o Will result in a net reduction in statewide greenhouse gas emissions over the life of the equipment as energy resource alternative; and Reduces the sales of natural gas by the large gas company. Electrification programs of a combination utility may include, but are not limited to, programs that facilitate deep energy retrofits or the installation of electric air-source heat pumps with gas backups in existing buildings. However, electric air-source heat pumps with gas backups may not be part of any plan filed pursuant to section 4 of this act [electrification plans]."

• Modifies the definition of "emissions reduction period" to mean "one of four periods of five calendar years each, with the four periods beginning on January 1st of calendar years 2030, 2035, 2040, 2045, and 2050, respectively."
• Adds language to provide that the terms of a gas decarbonization plan filed by a large gas company shall be binding on any entity that subsequently acquires an ownership interest in all or part of the large gas company's gas storage, transmission, or distribution network.
• Requires that an electrification plan be filed by a large gas company, rather than a combination utility, as part of a gas decarbonization plan.
• Provides that the Utilities and Transportation Commission (UTC) may, rather than must, require a large gas company to achieve the maximum level of greenhouse gas emissions reductions practicable using alternative energy resources at or below the applicable cost target.

Amended Bill in Senate Environment Committee

•  Directs that until January 1, 2035, the prohibition to extend gas service in section 2 does not apply to residential facilities that use natural gas solely to supply generators for the purpose of providing emergency power during an energy supply emergency declared by the governor or during a loss of electrical service. Requires the natural gas company to include this limitation on use in its tariff.
• Authorizes the utilities and transportation commission (UTC) to extend the deadline by an additional two months for a decision in the first multiyear rate plan proposed by a combination utility, following approval or approval with conditions from the UTC of an initial integrated system plan.

Notes:

• Recent action of the State Building Code Council did not include an outright ban on national gas.
• Prohibiting new natural gas for housing will increase the cost of new middle housing between $6,200 to $13,100 more per unit. This doesn't include the annual operating costs of using natural gas which is one third of the cost of electricity.
• This bill negatively impacts independent grocers and convenience stores. These stores often rely on natural gas to run refrigeration systems to comply with the health code. The costs for running new grocery stores may exceed what people are willing to pay for food, increasing the possibility of food deserts in Washington State
  • In some areas where there is not adequate electrical infrastructure to serve new construction a requirement exists for natural gas to be provided in the land deeds for the undeveloped lots. If this bill were to pass the families who have purchased these lots will not be able to build a home, and their investment could be lost.
  • If new natural gas connections are prohibited, it will result in significant cost impacts for struggling hospitality businesses, as the demand for rent for the spaces with existing natural gas service will skyrocket. Rents may become unaffordable for small, locally owned family businesses.
  • Many Washington homeowners in the Puget Sound region need access to natural gas in order to have fireplaces and other supplemental heating devices during power outages. They may not have the ability to have woodstoves or woodburning fireplaces because of air quality ordinances.

Rent Control:

All three of these tax proposals (HB 2276/SB 6191, SB 5770, SB 6136) are going to be alive until the very last day of session because they could be considered Necessary to Implement the Budget (NTIB) and therefore survive all cutoffs.

HB 2276/SB 6191 – Increasing REET Tax
The REET Bill is still very much in consideration in both the House and the Senate even though it appears not to have been moved before the cutoff. This bill could be NTB, and therefore alive until the end of session.

SB 5770 – Property Tax Increase to 3% based on CPI
Property Tax Increase - the property tax bill SB 5770 was voted out of the Senate Ways & Means committee yesterday on a party line vote. The bill is now in the Senate Rules Committee for further action.

SB 6136 – B&O Tax or Rent Control on Commercial & Residential Rents
SB 6136 was voted out of the Senate Housing committee and was sent to Ways & Means where it did not have a hearing before yesterday’s deadline. But this bill could be NTIB and therefore alive until the end of session.

Thank you to all who attended!

Seattle: Budget Process. This month BOMA’s Government and Industry Affairs discussed the BOMA’s potential positions on budget related impacts on our industry. The Advocacy team will draft input to give to the Council. Look for information coming on how you can help. We will also use the budget process to educate policy makers about the current challenges for commercial real estate.

Information:

1. Budget Calendar and Focus Areas
2. Is Seattle really facing a budget deficit? Seattle, you have a spending problem | The Seattle Times; Chamber Analysis: https://www.seattlechamber.com/clientuploads/Documents/Advocacy%20Documents/2023-08_Demystifying_the_City_Budget.pdf?_t=1690928620

Seattle: BOMA Public Safety Committee: The Committee finalized the 2023 Public Safety Survey. Please complete and return. Advocacy will use the data to inform policy makers during the budget process.

Seattle: Unreinforced Masonry Buildings (URM): The City Council passed Resolution 32111 this month. Res 32111 - Presentation (legistar.com) The resolution accepts the URM Retrofit Technical Standards; future legislation will be proposed next year to promote voluntary seismic retrofits before mandatory standards go into effect. BOMA Advocacy has been active in this process for many years stressing that any technical standards adopted are the minimal required and that doing the work will not trigger additional code compliance.

Eastside Cities: Clean Building Symposium Clean Buildings Symposium 1 Pager (smartbuildingscenter.org)

Seattle: Lease Restriction: Councilmember Lewis introduced proposed legislation that would regulate commercial leases by capping the personal guarantees to two years worth of rent, tenant improvements paid for by the landlord.  This proposal came from the Seattle Restaurant Alliance. BOMA and our allies have met with CM Lewis and the Restaurant Alliance to educate them about the issues associated with the proposal.  Lewis has put the bill on hold for now.

Seattle: Electrification- Building Performance Standards (View the Office of Sustainability slides from last meeting here) The bill will go to the Council either this month or after the first of the year.  There were a number of changes made based on our push back, however the deadline for net zero carbon is still 2025. The rulemaking process will begin when/if the legislation passes. BOMA will be at engaged in that process since a significant part of the policy will be determined in rules.

Seattle: Drug Use Law: Substitute bill passed by the full council. Seattle City Council changes course, passes drug enforcement bill | The Seattle Times

Seattle: Transportation Impact Fees As Development Slows, Seattle Eyes Transportation Impact Fee Projects - The Urbanist; See the City of Seattle Transportation Impact Fees document here.

West Seattle/Ballard Link Light Rail: South Lake Union Station. Sound Transit to study Amazon's preferred site for SLU station - Puget Sound Business Journal (bizjournals.com)

Read more on boma.org here.

 
The linked blog below reviews the importance of examining and updating your leases in response to the Washington State Clean Building Act and Seattle’s upcoming BPS – Building Performance Standards

Blog: Building Emissions Performance

In March, BOMA Seattle King County hosted a well-attended full day seminar on “Compliance with the State Clean Building Standard and City of Seattle Proposed Building Performance Standard, Energy Code, Financing and Leasing.” Among the 12 knowledgeable speakers that day were Erik Jennings with Pacifica Law Group (erik.jennings@pacificalawgroup.com) and Nicole DeNamur with Sustainable Strategies PLLC (nicole@sustainablestrategiespllc.com).

Nicole and Erik have authored a new blog post that speaks to the following:
 
Building Performance Standards (BPS) – which set performance or emissions standards that buildings must meet over time – have completely changed the regulatory context for existing buildings. Colliding with this new regulatory framework is the steadily increasing focus on Environmental, Social, and Governance (ESG) metrics and reporting frameworks. In this new landscape, lease language should be a key part of every risk management, compliance, and ESG strategy. Leases also present an opportunity for owners to engage tenants in a dialogue regarding innovative and broader social goals that benefit the communities where assets are located.

This blog post outlines key obstacles, innovations, and opportunities to update lease language to align with BPS and ESG goals. This article expands on their presentation to BOMA and is informative and thought provoking. You will find it valuable. If you would like to see BOMA Seattle King County organize an in-person seminar in the near future, contact us.

Note: Click here for access to a BOMA commissioned study report - 20 building types vary energy use portfolios - Compliance and overlap.
 
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BOMA is the Voice of Commercial Real Estate. Just as important as representing commercial real estate’s interest before lawmakers at all levels of government is the work the BOMA PAC of Washington does to support the election of candidates from either party who understand the importance of a healthy commercial real estate market.

BOMA does not endorse or contribute to individuals running for state or local office. However, the BOMA PAC of Washington evaluates and supports candidates that work toward an improved economy, reasonable taxes, and regulations and the best interests of employers and employees.

Any Washington State company or individual may contribute to the BOMA PAC. Please consider supporting the efforts of the PAC to help elect state and local lawmakers from both parties that create a vibrant economy.

Government and Industry Affairs

Recent actions and developments impacting commercial real estate include:

• A court ruling this week prevents Seattle law enforcement from protecting property rights from taggers and those that would deface property with graffiti. BOMA will meet Monday, June 19th with a large group of real estate coalition partners to discuss avenues to restore property rights and protections. In a recent update, Judge Pechman clarified property destruction police action prohibition ruling to only include graffiti. Here is an excerpt from a Seattle Time article from June 15, 2023:
  
  "The original injunction, however, encompassed the broader property destruction policy, which also includes non-graffiti property crimes such as smashing windows, slashing tires or destroying someone’s personal property, a category of arrests that makes up about 900 referrals to the city attorney each year.
  
  After concern from both the plaintiffs and the city of Seattle on the scope of the injunction, Pechman filed an order early Thursday clarifying that only the graffiti subsection is affected by the injunction. Now Seattle police can make arrests related to other types of property damage, but are still prohibited from enforcing the graffiti portion of the law."
  

• On June 6th, the Seattle City Council voted 5-4 to reject the new State of Washington adopted drug possession law and thus preventing the Seattle City Attorney from prosecuting infractions as misdemeanors. BOMA and other downtown business leaders will actively advocate for Seattle elected officials to reconsider this vote.
• Mayor Harrell just endorsed Seattle’s proposed Building Performance Standards (BPS) on energy and emissions reduction targets for existing buildings.  BOMA has been actively advocating for our members for years and has been successful in modifying the final proposal. BOMA supports carbon reduction measures and affirms that our industry continue to be leaders in carbon reduction. BOMA’s position is that the proposed regulations are still overly aggressive, too fast and cost too much.

View the report and resources below:

• Building Performance Standards - Completed by MacDonald-Miller Facility Solutions
• Energy Reduction Compliance Resources