In the just concluded Washington state legislative session, the commercial real estate industry received good news and bad news. The Bad News was in the form of raising the Real Estate Excise Tax on the sale of real estate. The professionals of Seattle Commercial Real Estate had aggressively argued against this proposal as was the case for all industry lobbying groups. It was a foregone conclusion that with both the State House and both legislative branches under Democratic control that this measure would pass and in fact that was the case. Ultimately, we have concluded that though onerous, this tax will do little to affect the momentum we currently enjoy in our industry.
The Good News was the passage of legislation easing the probability of legislation regarding condominium construction. In our state for years it was a foregone conclusion that if a developer constructed a multi-family project and chose to convert it to condominiums, then there would be litigation. This was based on the probability of the existence of construction defects. Now the law is changed to preclude litigation unless it is predicated on actual damages. Most of this was centered on building envelope issues. With the new legislation, it is timely to note that this is fortuitous. We are struggling with the issue of Affordable Housing and the development of additional multi-family units to address entry level ownership is a great opportunity for those entering the ownership market.
On the whole Seattle Commercial Real Estate feels that we made out relatively well in this legislative session. The real danger is that we have created a new tax which is projected to generate $586M in revenue to the State. What is to prevent Olympia from increasing the charges on this new source of revenue? We fear that as long as control is vested in one party, the answer is nothing…
