HOUSE BILL REPORT
HB 2675
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
As Reported by House Committee On:
Finance
Title: An act relating to a property tax exemption for the administrative offices of certain nonprofit organizations.
Brief Description: Providing for a property tax exemption for the administrative offices of certain nonprofit organizations.
Sponsors: Representatives Hasegawa and Chase.
Brief History:
Finance: 1/25/08, 2/12/08 [DPS].
Brief Summary of Substitute Bill |
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HOUSE COMMITTEE ON FINANCE
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 9 members: Representatives Hunter, Chair; Hasegawa, Vice Chair; Orcutt, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Conway, Ericks, McIntire, Roach and Santos.
Staff: Don Taylor (786-7388).
Background:
Property tax exemptions are currently provided for a variety of nonprofit organizations.
However, the only exemption which applies to administrative offices is for religious
organizations.
Summary of Substitute Bill:
Provides a new property tax exemption for community-based development or community
housing development organizations; the exemption applies to both real and personal property
owned by an eligible entity. The exemption is restricted to administrative offices that deal
with low- and moderate-income housing programs of the organization. To qualify, the
organization must be nonprofit – 501(c)(e) of the Internal Revenue Code – and be a
community-based development organization (CBDO) or a community housing development
organization (CHDO), pursuant to the U.S. Department of Housing and Urban Development
definitions.
There are currently 10 community-based development organizations in the state – nine are in
King County and one is in Spokane County. Community housing development organizations
total 43; these are located in Chelan, Clark, King, Kitsap, Pierce, Skagit, Snohomish,
Spokane, and Thurston counties. In addition, there are four combined CBDO and CHDO
organizations located in King County.
Substitute Bill Compared to Original Bill:
Requires that the nonprofit community housing or development agency own the property and
that the organization be certified by the state or a local government jurisdiction. Specifies
that the exempt portion be primary used as an administrative office.
Appropriation: None.
Fiscal Note: Preliminary fiscal note available..
Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:
(In support) Organizations covered by this bill help to facilitate development of new housing
for low-income families, as well as the homeless. Their certification by the U.S. Department
of Housing and Urban Development requires that at least 50 percent of their clients be
low-income or small businesses. One organization in the Rainier Valley of Seattle noted that
they work with a very diverse clientele. Development programs produce increased tax
revenues from the new and rehabilitated housing facilities, as well as the new and retained
businesses they attract to the area.
Administrative costs for these organization keep rising, and the various grants they received
have not kept pace with the rising economy. Property taxes can be a significant cost for such
nonprofit groups. In response to a question from the Chair, two organizations stated the
amount of property tax they pay annually. One organization in the Belltown area of Seattle
pays approximately $21,000; another in the Rainier Valley splits the property taxes with a
sister agency – each pays approximately $9,500.
(Opposed) None.
Persons Testifying: (In support) Representative Hasegawa, prime sponsor; Tony To,
Homesight; Pat Chemnick, SEED; and Patrick Patterson, Low Income Housing Institution.
(Opposed) None.
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