Parking 2 People Incentive


In 2022, the Legislature passed Senate Bill 5755, allowing eligible cities to establish a limited Sales and Use Tax Incentive to encourage redevelopment of underdeveloped lands, particularly parking lots. The incentive is meant to stimulate the redevelopment of vacant or underdeveloped property, through a 10-year limited sales-and-use-tax deferral program, thereby helping property owners or developers to revitalize properties by building affordable housing.

Parking 2 People Incentive Graphic

Spokane is the first city in Washington to adopt code enabling use of the Sales and Use Tax Incentive (aka Parking 2 People). This incentive helps the City to realize the goals of the Comprehensive Plan more fully, while also encouraging construction of more affordable housing and providing a benefit to the construction industry.

What does the Parking 2 People Incentive entail?

To encourage construction of affordable rate housing by incentivizing the redevelopment of underutilized parking lots in the City, the sales and use tax deferral program allows an applicant to defer the standard 9% sales and use tax on all applicable purchases related to their project. Upon approval, the Department of Revenue will issue a tax exemption certificate to the property owner and/or taxpayer. Spokane’s limited Sales and Use Tax Incentive is outlined in Chapter 08.07D SMC.

What kind of parking or parking lot qualifies?

  • A surface parking lot that is or was open to public use, with or without charge.
  • Parking lot does not need to have been paved or striped.
  • Surface parking that was in existence and used for parking on June 9, 2022 qualifies for the incentive.

Property owners can expect to save approximately $900 for every $10,000 spent on applicable taxed goods and services. Examples of applicable items include:

  • Purchase of construction supplies
  • Maintenance items and services
  • Purchase of common-area items

How is affordable defined for this program?

To receive approval, a project must set aside at least 50% of the units as affordable rental housing or affordable homeownership housing to very low, low, and moderate-income households. At least 50% of the investment project set aside for multifamily housing units will be rented at a price at or below fair market rent for Spokane county or sold at a price at or below Spokane county median price. For further details, see Section 08.07D.020 SMC.

Compliance and Clawbacks

One year from the issuance of the certificate of occupancy, and each year for ten years, the property owner needs to complete an annual tax performance report certifying that the property is compliant with its contract, as well as an annual Tax Performance Report to be submitted to the Washington State Department of Revenue.

The city must notify the Department of Revenue if compliance with the program is not maintained. All deferred sales and use taxes would then be immediately due and payable. The DOR would assess interest at the rate provided for delinquent taxes and penalties retroactively to the date of deferral, per RCW 82.92.110.

Application Steps

  • Before Construction (Spokane Municipal Code 08.07D.030)
    You must apply for a Conditional Sales & Use Tax Deferral. Please visit Accela Citizen Access and create an application by navigating to "Historic Preservation & MFTE" and selecting "Create an application" and then “Sales & Use Tax Incentives.”
    This application must be completed before you submit for plan review or permits.
    After receiving approval from the City, you will then complete the Department of Revenue Form 81 1035. You will need a Washington State business license to complete this form- for details on how to complete this step please visit
  • After Construction (Spokane Municipal Code 08.07D.070)
    After you have your Certificate of Occupancy, you are required to apply for a Final Sales & Use Tax Deferral with the City of Spokane. City staff will email applicants the form and assist in completing it, to ensure all requirements of the deferral have been met before approving the final application.
  • Annual Reporting (Spokane Municipal Code 08.07D.080)
    For the next 10 years you are required to file an Annual Report certifying that the property is still in compliance with its contract as well as an annual Tax Performance Report to be submitted to the Washington State Department of Revenue.
    • Contact the Washington State Department of Revenue for more information on the annual Tax Performance Form requirements.
    • Please reach out via email to if you have questions or need additional assistance submitting your application or Annual Report.

Contact Information

Planning & Economic Development Department
Economic Development Team