S-1744

AN ACT Relating to exemption of property taxes for assisted housing; reenacting and amending RCW 84.36.805 and 84.36.810; adding a new section to chapter 84.36 RCW; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 84.36 RCW to read as follows:

(1) The real and personal property owned or used by a nonprofit entity and used to provide rental housing for very low-income households is exempt from taxation if:

(a) All of the occupied dwelling units in the rental housing are occupied by very low-income households;

(b) The rental housing program was assisted by the department of community, trade, and economic development, including but not limited to those assisted under chapter 43.185 RCW; or

(c) The rental housing program was assisted by funds obtained through an affordable housing levy authorized under RCW 84.52.105.

(2) If less than one hundred percent of the dwelling units are occupied by very low-income households, the rental housing used to provide housing for very low-income households is eligible for a partial exemption on the real property and a total exemption of the housing's personal property as follows:

(a) The partial exemption shall be allowed for each dwelling unit in the rental housing occupied by very low-income households.

(b) The amount of exemption shall be calculated by multiplying the assessed value of the property reasonably necessary to provide the rental housing by a fraction. The numerator of the fraction is the number of dwelling units occupied by very low-income households as of December 31st of the year for which the exemption is claimed. The denominator of the fraction is the total number of occupied dwelling units as of December 31st of the year for which exemption is claimed.

(3) The nonprofit entity must certify to the department of revenue the total number of occupied dwelling units, and the total number of dwelling units occupied by low-income households by January 31st of the assessment year immediately following the year for which the exemption is claimed. This certification shall be made on a form prescribed by the department of revenue and signed by an authorized agent of the applicant.

(4) Rental housing for very low-income households is exempt from property taxation only if the organization, association, or corporation operating the housing is exempt from income tax under section 501(c) of the federal internal revenue code.

(5) To be exempt under this section, the property must be used exclusively for the purposes for which exemption is granted, except as provided in RCW 84.36.805.

(6) The nonprofit entity qualifying for the exemption under this section by providing rental housing for very low-income households may agree to make payments to the city, county, or other political subdivision for improvements, services, and facilities furnished by the city, county, or political subdivision for the benefit of the rental housing. However, these payments shall not exceed the amount last levied as the annual tax of the city, county, or political subdivision upon the property prior to exemption.

(7) As used in this section:

(a) "Nonprofit" has the same meaning as provided in RCW 84.36.800 and includes a limited partnership where the nonprofit or public corporation established under RCW 35.21.660, 35.21.670, or 35.21.730 through 35.21.755 is a general partner, or a limited liability company where the nonprofit or public corporation is a managing member;

(b) "Federally assisted housing" has the same meaning as in RCW 59.28.020;

(c) "Occupied dwelling unit" means a living unit that is occupied on December 31st of the year for which the claim for exemption is submitted;

(d) "Rental housing" means residential housing that is occupied but not owned by very low-income households; and

(e) "Very low-income households" means a single person, family, or unrelated persons living together whose income is at or below fifty percent of the median income adjusted for family size as most recently determined by the federal department of housing and urban development for the county in which the rental housing is located and in effect as of January 1st of the year the application for exemption is submitted.

Sec. 2. RCW 84.36.805 and 1998 c 311 s 25, 1998 c 202 s 3, and 1998 c 184 s 2 are each reenacted and amended to read as follows:

In order to be exempt pursuant to RCW 84.36.030, 84.36.035, 84.36.037, 84.36.040, 84.36.041, 84.36.043, 84.36.045, 84.36.046, 84.36.047, 84.36.050, 84.36.060, 84.36.350, 84.36.480, 84.36.550, ((~~and~~)) 84.36.042, and section 1 of this act, the nonprofit organizations, associations, or corporations shall satisfy the following conditions:

(1) The property is used exclusively for the actual operation of the activity for which exemption is granted, unless otherwise provided, and does not exceed an amount reasonably necessary for that purpose, except:

(a) The loan or rental of the property does not subject the property to tax if:

(i) The rents and donations received for the use of the portion of the property are reasonable and do not exceed the maintenance and operation expenses attributable to the portion of the property loaned or rented; and

(ii) Except for the exemptions under RCW 84.36.030(4) and 84.36.037, the property would be exempt from tax if owned by the organization to which it is loaned or rented;

(b) The use of the property for fund-raising activities does not subject the property to tax if the fund-raising activities are consistent with the purposes for which the exemption is granted;

(2) The property is irrevocably dedicated to the purpose for which exemption has been granted, and on the liquidation, dissolution, or abandonment by said organization, association, or corporation, said property will not inure directly or indirectly to the benefit of any shareholder or individual, except a nonprofit organization, association, or corporation which too would be entitled to property tax exemption. This property need not be irrevocably dedicated if it is leased or rented to those qualified for exemption pursuant to RCW 84.36.035, 84.36.040, 84.36.041, 84.36.043, 84.36.045, 84.36.046, ((or)) 84.36.042, or section 1 of this act, or those qualified for exemption as an association engaged in the production or performance of musical, dance, artistic, dramatic, or literary works pursuant to RCW 84.36.060, but only if under the terms of the lease or rental agreement the nonprofit organization, association, or corporation receives the benefit of the exemption;

(3) The facilities and services are available to all regardless of race, color, national origin or ancestry;

(4) The organization, association, or corporation is duly licensed or certified where such licensing or certification is required by law or regulation;

(5) Property sold to organizations, associations, or corporations with an option to be repurchased by the seller shall not qualify for exempt status;

(6) The director of the department of revenue shall have access to its books in order to determine whether such organization, association, or corporation is exempt from taxes within the intent of RCW 84.36.030, 84.36.035, 84.36.037, 84.36.040, 84.36.041, 84.36.043, 84.36.045, 84.36.046, 84.36.047, 84.36.050, 84.36.060, 84.36.350, 84.36.480, ((~~and~~)) 84.36.042, and section 1 of this act.

Sec. 3. RCW 84.36.810 and 1998 c 311 s 26 and 1998 c 202 s 4 are each reenacted and amended to read as follows:

(1) Upon cessation of a use under which an exemption has been granted pursuant to RCW 84.36.030, 84.36.037, 84.36.040, 84.36.041, 84.36.043, 84.36.046, 84.36.050, 84.36.060, 84.36.550, ((~~and~~)) 84.36.042, and section 1 of this act, the county treasurer shall collect all taxes which would have been paid had the property not been exempt during the three years preceding, or the life of such exemption, if such be less, together with the interest at the same rate and computed in the same way as that upon delinquent property taxes. Where the property has been granted an exemption for more than ten years, taxes and interest shall not be assessed under this section.

(2) Subsection (1) of this section applies only when ownership of the property is transferred or when fifty-one percent or more of the area of the property has lost its exempt status. The additional tax under subsection (1) of this section shall not be imposed if the cessation of use resulted solely from:

(a) Transfer to a nonprofit organization, association, or corporation for a use which also qualifies and is granted exemption under the provisions of chapter 84.36 RCW;

(b) A taking through the exercise of the power of eminent domain, or sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of such power;

(c) Official action by an agency of the state of Washington or by the county or city within which the property is located which disallows the present use of such property;

(d) A natural disaster such as a flood, windstorm, earthquake, or other such calamity rather than by virtue of the act of the organization, association, or corporation changing the use of such property;

(e) Relocation of the activity and use of another location or site except for undeveloped properties of camp facilities exempted under RCW 84.36.030;

(f) Cancellation of a lease on property that had been exempt under RCW 84.36.040, 84.36.041, 84.36.043, 84.36.046, 84.36.060, ((or)) 84.36.042, or section 1 of this act;

(g) A change in the exempt portion of a home for the aging under RCW 84.36.041(3), as long as some portion of the home remains exempt((;

~~(h) The conversion of a full exemption of a home for the aging to a partial exemption or taxable status or the conversion of a partial exemption to taxable status under RCW 84.36.041(8)~~)).

NEW SECTION. Sec. 4. The department of community, trade, and economic development shall immediately notify all owners of federally assisted housing of the availability of this tax exemption. The department shall also prepare an annual report addressing the cost of this tax exemption and its effectiveness in preserving federally assisted housing in the state of Washington.

NEW SECTION. Sec. 5. This act applies to taxes levied in 1999 for collection in 2000 and thereafter.