WENATCHEE — More funding may be on the way to counties meant to go toward homeless assistance, temporary shelters and affordable housing by placing an excise tax on the sale of lodging or short-term rentals.
For the second year in a row, the state legislature is considering allowing cities and counties adopt an excise tax at a rate of up to 10% on short-term rental lodging in Senate Bill 5334.
In Chelan County, more than 500 short-term rentals exist, according to Chelan County, which permits and regulates the business in the cities urban growth areas and unincorporated parts of the county.
The county passed new regulations in July 2021 for homes rented for 30 days or less. Under the new code, short-term rental owners need to apply for a permit as an existing or new rental business.
Leavenworth, Manson and Chelan are hot spots for short-term rentals but are capped at representing 6% of the total housing stock in each area with the exception of the Malaga urban growth area where the cap is set at 9%.
The revenue generated from the excise tax would only be used for the “operating and capital costs of affordable housing programs, including homeless housing assistance, temporary shelters and other related services” according to the bill report.
The bill allows governments to exempt some short-term rental operators based on their age or income, like seniors, according to the bill report.
The bill most recently passed in the state senate and is currently in the House of Representatives.
Commissioner Kevin Overbay said that if the bill should pass that the board will research any potential impacts from a potential excise tax.
“As with any new excise tax, the unintended consequences must be considered before moving forward,” he said in an email via the county’s spokesperson. “It’s still too early to comment on the proposed legislation, but we will continue to monitor it this session.”
