Senate Bill Report SB 5052 — Leasehold Excise Tax Parity for Arenas and Stadiums (January 17, 2023)
Summary
Senate Bill Report on SB 5052, as of January 17, 2023, for an act relating to establishing leasehold excise tax parity and accountability for certain arenas and stadiums, with Senators Liias, King, Mullet and Van De Wege listed as sponsors. The bill creates a Leasehold Excise Tax (LET) exemption for leasehold interests in the public or entertainment areas of arenas that meet several requirements, and it requires review by the Joint Legislative Audit and Review Committee (JLARC). Two separate Tax Preference Performance Statements are set out, one for arenas with a seating capacity of more than 17,000 and one for arenas with a seating capacity of 17,000 or less. The report lists Appropriation: None and says the bill takes effect on October 1, 2023.
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- Issuer
- Congressional materials
- Document type
- Report
- Date
- 2023-01-19
- Case
- 2023 01 19 A30404 D248076 Bill Report 5052 Sba Bfgt 23
Cite this document
“Senate Bill Report SB 5052 — Leasehold Excise Tax Parity for Arenas and Stadiums (January 17, 2023).”
Original at app.leg.wa.gov, dated 2023-01-19. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-01-19-2023-01-19-a30404-d248076-bill-report-5052-sba-bfgt-23/
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SENATE BILL REPORT
SB 5052
As of January 17, 2023
Title: An act relating to establishing leasehold excise tax parity and accountability for certain
arenas and stadiums.
Brief Description: Establishing leasehold excise tax parity and accountability for certain arenas
and stadiums.
Sponsors: Senators Liias, King, Mullet and Van De Wege.
Brief History:
Committee Activity: Business, Financial Services, Gaming & Trade: 1/19/23.
Brief Summary of Bill
• Creates a Leasehold Excise Tax (LET) exemption for leasehold interests
in the public or entertainment areas of arenas with a seating capacity of
at least 4000 and meeting several other requirements.
• Requires a review of the LET exemption prior to its expiration in 2033
by the Joint Legislative Audit and Review Committee (JLARC).
• Extends a JLARC review to several existing LET exemptions for public
stadiums and arenas.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE
Staff: Jeff Mitchell
Background: Leasehold Excise Tax. Leasehold excise tax (LET) is paid by a private entity
that leases or uses public property under current law. This includes leases of government-
owned property exempt from property taxes. The combined state and local rate for LET is
12.84 percent of the rent paid for the property. The state general fund receives 6.84 percent
and the remaining 6 percent goes to local governments. The Legislature has exempted a
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- SB 5052
variety of leasehold interests including several public stadiums and arenas such as the
stadiums used for professional football and baseball, as well as several other types of public
facilities.
Tax Preference Review Requirements. State law provides a range of tax preferences that
confer reduced tax liability upon a designated class of taxpayer. Tax preferences include
tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits.
Legislation that establishes or expands a tax preference must include a Tax Preference
Performance Statement (TPPS) that identifies the public policy objective of the preference,
as well as specific metrics the Joint Legislative Audit and Review Committee (JLARC) can
use to review the effectiveness of the preference in achieving its stated public policy
objectives. Tax preferences must be reviewed by JLARC at least once every ten years,
unless state statute requires otherwise. All new tax preferences automatically expire after
ten years unless an alternative expiration date is provided or the tax preference is exempted
from expiration. In order to assist the Legislature in its evaluation of economic
development-related tax preferences, taxpayer beneficiaries are required to file annual tax
preference performance reports detailing wages and employment of the taxpayer as well as
tax savings from the tax preference.
Summary of Bill: All leasehold interests in the public or entertainment areas of an arena
are exempted from LET if:
• the arena has a seating capacity of more than 4000;
• the arena is located on city-owned land;
• the arena is located within a city with a population over 100,000; and
• private entities were responsible for 100 percent of the cost of constructing
improvements to the arena, which were not reimbursed by the public owner.
The LET exemption expires January 1, 2034.
Two separate TPPS are established for the new LET exemption.
The first TPPS is for arenas with a seating capacity of more than 17,000. The stated public
policy objectives are to provide tax parity resulting in leasehold excise tax relief for large
arena facilities used for professional sports with the expectation that an operational entity
overseeing operations at a facility will provide substantial economic benefits to its specific
region with a focus on:
• providing employment opportunities for women and minority-owned businesses;
• fostering equity and social justice with an emphasis on arena-impacted communities;
• providing general community resource support; and
• ensuring quality access to the facility for people across a range of income levels.
JLARC will specifically review:
• state and local fiscal impacts;
• the number of employment positions and wages at the facility for all employers, and
Senate Bill Report -2- SB 5052
to the extent data is available, the degree to which employment positions at the
facility have been filled by people residing in economically distressed regions of the
county in which the facility is located;
• the extent to which the operational entity provides opportunities for patrons of all
income levels to enjoy programming by offering seating at a range of price points that
are equitably distributed throughout the facility; and
• the extent to which the operational entity generally contributes resources to
organizations that serve the region, the communities surrounding the facility, and
programs and services for youth, arts, music, and culture.
JLARC will conduct a similar evaluation of the existing LET exemptions for the
professional football and baseball stadiums. Taxpayers subject to this JLARC review must
submit tax preference performance reports beginning in calendar year 2024.
The second TPPS is for arenas with a seating capacity of 17,000 or less. The stated public
policy objectives are to provide tax parity resulting in leasehold excise tax relief with the
expectation that employees employed at the facilities receive competitive wages and
benefits and the facilities advance and promote diverse and inclusive voices, experiences,
perspectives, and employment opportunities.
JLARC will specifically evaluate:
• state and local fiscal impacts;
• the number of employment positions and wages at the facility for all employers
operating at the facility;
• the financial stability of the facility;
• the types of programming and events scheduled at the facility; and
• the economic impact of the facility in the county in which the facility is located.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: The bill takes effect on October 1, 2023.
Senate Bill Report -3- SB 5052
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