An affordable housing tax break on public lands

Plus a new poll in the governor’s race and some capital budget morsels

Lawmakers are mulling a big tax break to help the state’s most unassuming landlord promote more affordable housing on public lands.

The Department of Natural Resources happens to be in the real estate game and leases a wide variety of public lands. Most of the property in question is surrounded by development, which makes it unsuitable for timber sales, which is what DNR mostly does to pay for schools, among other things.

At present, DNR manages 26 ground leases, meaning it owns and leases the underlying land, but lessees own the modifications—i.e. buildings and other infrastructure. Costco inquired about a lease with DNR near Richland last summer.

Meanwhile, real estate ventures for low-income tenants aren’t generally appetizing to folks in the for-profit space and it takes a big carrot to draw moneyed interests.

Rep. April Connors, R-Kennewick, filed House Bill 2003 at the DNR’s behest to offer exactly that this year by cutting a leasehold excise tax exemption¹ for affordable housing. By affordable, we mean homes renting for 30% of tenants’ monthly income or less. The leasehold excise tax applies to the value of things built on lands leased from state or local governments.

Here’s why you should care about this. DNR says it has around 3,000² unused acres under its wing that are suitable for housing but aren’t currently making the state a dime.