Lawmakers hear Leavenworth testimony on short-term rental tax for affordable housing

LEAVENWORTH — Local officials, residents and business owners met with state legislators on Jan. 20 to express their views on a proposed short-term rental tax for affordable housing.

House Bill 2559 would authorize counties, cities and towns to adopt a new local excise tax on short-term lodging, generating revenue exclusively earmarked for affordable and workforce housing support. Under the bill, local governments could impose the tax by a simple majority vote, taking effect as early as April 1, 2027.

“We need a tool like this in Leavenworth and tourist areas where local governments may choose  to apply it to support affordable housing,” Leavenworth resident Barbara Rossing told the House Finance Committee during a hearing.

Similar legislation has been introduced to each session over the last several years, but never adopted. Last year, Senate Bill 5576 originally proposed a statewide, higher tax cap, but was later lowered to 4 percent and amended to give local jurisdictions the option to enact. It passed the state Senate last year before stalling out in the House.

“Help us get it over the finish line this year,” said Mayor Carl Florea.

Under the bill, cities and counties could impose up to a 4 percent tax on short-term rentals, which does not include units in the same home where the owner lives, as long as fewer than three rooms are rented at a time.

Local governments would be allowed to use the money to acquire, build or rehabilitate affordable and workforce housing, fund operations and maintenance, provide rental assistance, or support nonprofit and social service organizations that help local residents with housing stability. Up to 15 percent of annual revenue could be retained for administrative costs.

The tax has received pushback from short-term rental hosts, as well as AirBnB. Last year, the company put nearly $4 million into lobbying against the “vacation tax.” Tuesday’s hearing heard from a handful of hosts who were against the bill.

“HB2559 is well-intended, but it has unintended consequences, some of which could harm Washington's hosts and the hospitality service workers who potentially need housing relief the most,” said Sean Lynn of Love Leavenworth Vacation Rentals, suggesting a smaller tax on all lodging types. Lynn advised the broad-based approach would reduce incentives to shift consumer demand to other lodging options.

At the time of writing, the House Finance Committee had yet to vote on moving HB2559 forward.

Taylor Caldwell: 509-433-7276 or taylor@ward.media