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Koster, Maycumber introduce bill to provide expedited property tax relief to landowners affected by Hirst water decision

Mar 31, 2017

A bill that would expedite tax reassessments of properties adversely affected by court rulings that restrict water usage was introduced in the House of Representatives this week by Rep. John Koster, R-Arlington, and Rep. Jacquelin Maycumber, R-Republic. House Bill 2195 could potentially save land owners millions of dollars in tax payments when their property values diminish due to court-related water decisions.

The two Republican state lawmakers represent districts made up of largely rural lands in Western and Eastern Washington (Koster in the 39th District and Maycumber in the 7th District). Their districts, they say, are expected to be among rural areas statewide where land values could drop significantly due to the state Supreme Court’s Hirst decision.

In Whatcom County vs. Hirst, Futurewise, et al. decision, the court ruled 6-3 on Oct. 6 that Whatcom County failed to comply with the Growth Management Act (GMA) requirements to protect water resources.

“The Hirst decision effectively eliminates the category of permit-exempt wells and effectively halts the ability of landowners to dig wells,” said Koster. “Because of this ruling, many counties are already refusing to issue building permits unless the property owner can hire a hydrologist to prove that not one drop of water from a well would affect in-stream flows. That’s nearly impossible to prove.”

“Without water, there is no development. Without water, banks will not issue loans on those properties. So those lands become worthless, or at best, significantly lose their market value,” said Maycumber.

“We strongly feel that if a court decision has removed the ability of a landowner to access water for the property and the property value has plummeted because of the ruling, the owner should not be taxed at the rate before devaluation,” added Koster.

Reassessments are traditionally conducted every three to six years, depending upon the county. Under House Bill 2195, if water supply to any real property is impacted by a federal or state appellate court ruling, the property must be reassessed within one year by the county assessor to reflect the true and fair market value after the water ruling. If taxes have been paid at the higher rate, the legislation requires the difference to be refunded. The state would be required to pay counties for the costs of reassessment. The state would also be responsible to pay counties to provide a report of the number of parcels with reduced value and the extent of the tax shift.

“This legislation would ensure immediate property tax relief to the landowner affected by the ruling, reflecting the true value of that property once the water ruling has taken effect,” noted Maycumber.

“We’ve been warning this Hirst decision could have far-reaching effects, not just to property owners affected by the inability of using water on their property, but it will be extremely costly to every property owner with water. As these land values plummet, so will the tax collections on those properties. So it will create a tax shift. Everyone else’s property tax bills will significantly increase to compensate for the lost revenue in every county in Washington,” said Koster, a former Snohomish County councilman.

Koster and Maycumber cited a court decision in 2013 ruling in favor of the Swinomish Tribe that challenged Skagit River minimum instream flows. On Tuesday, Skagit County Commissioner Ron Wesen told the House Agriculture and Natural Resources Committee the ruling created a $22 million loss of property tax collections from the diminished value of 785 parcels affected. He added, “those properties are basically worthless.”

“The Skagit County case is the canary in the coal mine. It gives us a credible and important preview of the effects the Hirst decision will have on all properties across the state of Washington,” said Maycumber.

The so-called “Hirst fix bill,” Senate Bill 5239 that would ensure water is available to support development was bottled up by Democratic leaders in the House Agriculture and Natural Resources Committee, who did not bring the measure up for a vote. It is unknown whether Senate Bill 5239 will advance before the scheduled end of the regular session, April 23.

In addition to property tax relief for affected landowners, the two lawmakers hope their bill would create greater public awareness to all property owners about the effects of such rulings that diminish property values on rural and undeveloped land.

“We want every landowner in the state of Washington, whether or not they have water, and whether they live in rural Washington or downtown Seattle, to know the full implications of the Hirst decision and understand that if Hirst is allowed to stand, it will adversely affect them in some way,” concluded Koster.

The bill has been referred to the House Finance Committee.