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SB 6175

Concerning housing affordability tax incentives for existing structures.

2023-2024 Regular Session Introduced by Andy Billig and 10 co-sponsors

Cities may create sales tax deferrals for converting underused commercial space into affordable multifamily housing; if units stay affordable 10 years, deferred taxes are forgiven.

Effective date 6/6/2024.
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Bill Summary · SB 6175

Summary — SB 6175 (Chapter 332, 2024 Laws)

Concerning housing affordability tax incentives for existing structures

Effective date: June 6, 2024.
Introduced: January 11, 2024.
Final status: Passed Legislature; signed by Governor March 28, 2024.

Main purpose

SB 6175 creates a state-authorized, locally administered incentive to spur conversion of underutilized commercial buildings (primarily retail and office space) into affordable multifamily housing. The primary tool is a limited deferral of retail sales and use taxes on eligible construction and conversion costs, with conditional forgiveness of the deferred tax if units remain in qualifying affordable use for at least 10 years.

Key provisions

  • Authorizes city legislative authorities to establish a local sales and use tax deferral program for “investment projects” that convert underutilized commercial property into multifamily affordable housing.
  • Cities may only adopt such programs after finding both (a) significant nearby underutilized commercial property and (b) a lack of affordable housing in areas proximate to the project.
  • Cities must adopt a formal resolution of intent and hold a public hearing (with published notice) before creating a deferral program; resolutions must describe the application, approval, and appeals processes and any post‑approval obligations.
  • Owners (applicants) apply to the city on standardized, sworn forms and must provide project descriptions, site plans, expected number of affordable units, and acknowledgements of tax liability risk if eligibility ends early.
  • Construction/rehabilitation must be completed within three years of approval; the governing authority may grant a one-time extension not to exceed 24 months.
  • A conditional certificate of program approval is issued to qualifying projects; if the conditional recipient maintains the property in qualifying affordable use for at least 10 years, deferred sales and use taxes are forgiven and not repaid.
  • “Underutilized commercial property” is defined as property (or portion) used or intended for retailing or office/administrative activities; for mixed uses the deferral is apportioned based on construction costs under department rules.
  • The bill includes detailed statutory definitions (affordable housing, low-income household, initiation of construction, investment project, etc.) to guide program administration.

Who is affected

  • Cities: may opt to adopt programs, must follow notice/approval and monitoring requirements.
  • Property owners/developers of underutilized commercial buildings: eligible to apply and receive conditional tax deferrals.
  • Low-income households: potential beneficiaries through creation of new affordable units targeted in program requirements.
  • State and local tax receipts: sales and use tax revenue on eligible construction activity would be deferred and potentially forgiven (reducing near‑term receipts compared to no program); repayment is required if eligibility conditions are not met.

Timelines and procedural notes

  • Project completion: ordinarily within 3 years of approval; city may grant up to 24 additional months.
  • Forgiveness condition: deferred taxes need not be repaid if the property remains in qualifying use for at least 10 years.
  • Legislative and administrative steps: cities must pass a resolution of intent, hold a public hearing, publish notice (once weekly for two consecutive weeks, 7–30 days before hearing), and adopt program rules/forms.
  • Effective date: June 6, 2024.

Potential impact

SB 6175 aims to accelerate reuse of vacant/underused downtown commercial space into affordable housing more quickly than ground‑up construction, supporting local housing goals and job creation in construction. The program is voluntary for cities and shifts some near‑term sales/use tax revenue in exchange for longer‑term housing production; localities design program specifics (eligibility standards, application fees, monitoring, enforcement).

Compiled from official sources — confirm details with the bill’s official record.

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