BILL REQ. #: H-2966.1
State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 01/13/12. Referred to Committee on Ways & Means.
AN ACT Relating to subjecting federally recognized Indian tribes to the same conditions as state and local governments for property owned exclusively by the tribe; amending RCW 82.29A.010, 82.29A.020, 84.36.010, 84.36.451, and 84.40.230; and adding a new section to chapter 52.30 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 82.29A.010 and 2010 c 281 s 2 are each amended to read
as follows:
(1)(a) The legislature hereby recognizes that properties of the
state of Washington, counties, school districts, and other municipal
corporations are exempted by Article 7, section 1 of the state
Constitution from property tax obligations, but that private lessees of
such public properties receive substantial benefits from governmental
services provided by units of government.
(b) The legislature further recognizes that a uniform method of
taxation should apply to such leasehold interests in publicly owned
property.
(c) The legislature finds that lessees of publicly owned property
or community centers are entitled to those same governmental services
and does hereby provide for a leasehold excise tax to fairly compensate
governmental units for services rendered to such lessees of publicly
owned property or community centers. For the purposes of this
subsection, "community center" has the same meaning as provided in RCW
84.36.010.
(d) The legislature also finds that eliminating the property tax on
property owned exclusively by federally recognized Indian tribes within
the state requires that the leasehold excise tax also be applied to
leasehold interests on tribally owned property.
(2) The legislature further finds that experience gained by
lessors, lessees, and the department of revenue since enactment of the
leasehold excise tax under this chapter has shed light on areas in the
leasehold excise statutes that need explanation and clarification. The
purpose of chapter 220, Laws of 1999 is to make those changes.
Sec. 2 RCW 82.29A.020 and 1999 c 220 s 2 are each amended to read
as follows:
((As used in this chapter the following terms shall be defined as
follows,)) The definitions in this section apply throughout this
chapter unless the context otherwise requires:
(1) "Leasehold interest" ((shall)) means an interest in publicly
owned real or personal property which exists by virtue of any lease,
permit, license, or any other agreement, written or verbal, between the
public owner of the property and a person who would not be exempt from
property taxes if that person owned the property in fee, granting
possession and use, to a degree less than fee simple ownership((:
PROVIDED, That)). However, no interest in personal property (excluding
land or buildings) which is owned by the United States, whether or not
as trustee, or by any foreign government ((shall)) constitutes a
leasehold interest hereunder when the right to use such property is
granted pursuant to a contract solely for the manufacture or production
of articles for sale to the United States or any foreign government.
The term "leasehold interest" ((shall)) includes the rights of use or
occupancy by others of property which is owned in fee or held in trust
by a public corporation, commission, or authority created under RCW
35.21.730 or 35.21.660 if the property is listed on or is within a
district listed on any federal or state register of historical sites.
The term "leasehold interest" ((shall)) does not include road or
utility easements, rights of access, occupancy, or use granted solely
for the purpose of removing materials or products purchased from a
public owner or the lessee of a public owner, or rights of access,
occupancy, or use granted solely for the purpose of natural energy
resource exploration. "Publicly owned real or personal property"
includes real or personal property owned by a federally recognized
Indian tribe in the state and exempt from tax under RCW 84.36.010.
(2)(a)(i) "Taxable rent" ((shall)) means contract rent as defined
in ((subsection (a))) (b) of this subsection in all cases where the
lease or agreement has been established or renegotiated through
competitive bidding, or negotiated or renegotiated in accordance with
statutory requirements regarding the rent payable, or negotiated or
renegotiated under circumstances, established by public record, clearly
showing that the contract rent was the maximum attainable by the
lessor((: PROVIDED, That)). However, after January 1, 1986, with
respect to any lease which has been in effect for ten years or more
without renegotiation, taxable rent may be established by procedures
set forth in ((subsection (b))) (c) of this subsection. All other
leasehold interests ((shall be)) are subject to the determination of
taxable rent under the terms of ((subsection (b))) (c) of this
subsection.
(ii) For purposes of determining leasehold excise tax on any lands
on the Hanford reservation subleased to a private or public entity by
the department of ecology, taxable rent ((shall)) includes only the
annual cash rental payment made by such entity to the department of
ecology as specifically referred to as rent in the sublease agreement
between the parties and ((shall)) does not include any other fees,
assessments, or charges imposed on or collected by such entity
irrespective of whether the private or public entity pays or collects
such other fees, assessments, or charges as specified in the sublease
agreement.
(((a))) (b)(i) "Contract rent" ((shall)) means the amount of
consideration due as payment for a leasehold interest, including: The
total of cash payments made to the lessor or to another party for the
benefit of the lessor according to the requirements of the lease or
agreement, including any rents paid by a sublessee; expenditures for
the protection of the lessor's interest when required by the terms of
the lease or agreement; and expenditures for improvements to the
property to the extent that such improvements become the property of
the lessor. Where the consideration conveyed for the leasehold
interest is made in combination with payment for concession or other
rights granted by the lessor, only that portion of such payment which
represents consideration for the leasehold interest ((shall be)) is
part of contract rent.
(ii) "Contract rent" ((shall)) does not include:
(((i))) (A) Expenditures made by the lessee, which under the terms
of the lease or agreement, are to be reimbursed by the lessor to the
lessee or expenditures for improvements and protection made pursuant to
a lease or an agreement which requires that the use of the improved
property be open to the general public and that no profit will inure to
the lessee from the lease;
(((ii))) (B) Expenditures made by the lessee for the replacement or
repair of facilities due to fire or other casualty including payments
for insurance to provide reimbursement for losses or payments to a
public or private entity for protection of such property from damage or
loss or for alterations or additions made necessary by an action of
government taken after the date of the execution of the lease or
agreement;
(((iii))) (C) Improvements added to publicly owned property by a
sublessee under an agreement executed prior to January 1, 1976, which
have been taxed as personal property of the sublessee prior to January
1, 1976, or improvements made by a sublessee of the same lessee under
a similar agreement executed prior to January 1, 1976, and such
improvements ((shall be)) are taxable to the sublessee as personal
property;
(((iv))) (D) Improvements added to publicly owned property if such
improvements are being taxed as personal property to any person.
(iii) Any prepaid contract rent ((shall be)) is considered to have
been paid in the year due and not in the year actually paid with
respect to prepayment for a period of more than one year. Expenditures
for improvements with a useful life of more than one year which are
included as part of contract rent ((shall be)) are treated as prepaid
contract rent and prorated over the useful life of the improvement or
the remaining term of the lease or agreement if the useful life is in
excess of the remaining term of the lease or agreement. Rent prepaid
prior to January 1, 1976, ((shall be)) is prorated from the date of
prepayment.
(iv) With respect to a "product lease", the value ((shall be)) is
that value determined at the time of sale under terms of the lease.
(((b))) (c) If it ((shall be)) is determined by the department of
revenue, upon examination of a lessee's accounts or those of a lessor
of publicly owned property, that a lessee is occupying or using
publicly owned property in such a manner as to create a leasehold
interest and that such leasehold interest has not been established
through competitive bidding, or negotiated in accordance with statutory
requirements regarding the rent payable, or negotiated under
circumstances, established by public record, clearly showing that the
contract rent was the maximum attainable by the lessor, the department
may establish a taxable rent computation for use in determining the tax
payable under authority granted in this chapter based upon the
following criteria:
(i) Consideration ((shall be)) is given to rental being paid to
other lessors by lessees of similar property for similar purposes over
similar periods of time;
(ii) Consideration ((shall be)) is given to what would be
considered a fair rate of return on the market value of the property
leased less reasonable deductions for any restrictions on use, special
operating requirements or provisions for concurrent use by the lessor,
another person or the general public.
(3) "Product lease" as used in this chapter ((shall)) means a lease
of property for use in the production of agricultural or marine
products to the extent that such lease provides for the contract rent
to be paid by the delivery of a stated percentage of the production of
such agricultural or marine products to the credit of the lessor or the
payment to the lessor of a stated percentage of the proceeds from the
sale of such products.
(4) "Renegotiated" means a change in the lease agreement which
changes the agreed time of possession, restrictions on use, the rate of
the cash rental or of any other consideration payable by the lessee to
or for the benefit of the lessor, other than any such change required
by the terms of the lease or agreement. In addition "renegotiated"
shall mean a continuation of possession by the lessee beyond the date
when, under the terms of the lease agreement, the lessee had the right
to vacate the premises without any further liability to the lessor.
(5) "City" means any city or town.
(6) "Products" includes natural resource products such as cut or
picked evergreen foliage, Cascara bark, wild edible mushrooms, native
ornamental trees and shrubs, ore and minerals, natural gas, geothermal
water and steam, and forage removed through the grazing of livestock.
Sec. 3 RCW 84.36.010 and 2010 c 281 s 1 are each amended to read
as follows:
(1) All property belonging exclusively to the United States, the
state, or any county or municipal corporation; all property belonging
exclusively to any federally recognized Indian tribe located in the
state((, if that property is used exclusively for essential government
services)); all state route number 16 corridor transportation systems
and facilities constructed under chapter 47.46 RCW; all property under
a financing contract pursuant to chapter 39.94 RCW or recorded
agreement granting immediate possession and use to the public bodies
listed in this section or under an order of immediate possession and
use pursuant to RCW 8.04.090; and, for a period of forty years from
acquisition, all property of a community center; is exempt from
taxation. All property belonging exclusively to a foreign national
government is exempt from taxation if that property is used exclusively
as an office or residence for a consul or other official representative
of the foreign national government, and if the consul or other official
representative is a citizen of that foreign nation.
(2) For the purposes of this section ((the following definitions
apply unless the context clearly requires otherwise.)) "community center" means property, including a building or
buildings, determined to be surplus to the needs of a district by a
local school board, and purchased or acquired by a nonprofit
organization for the purposes of converting them into community
facilities for the delivery of nonresidential coordinated services for
community members. The community center may make space available to
businesses, individuals, or other parties through the loan or rental of
space in or on the property.
(a)
(((b) "Essential government services" means services such as tribal
administration, public facilities, fire, police, public health,
education, sewer, water, environmental and land use, transportation,
and utility services.))
Sec. 4 RCW 84.36.451 and 2001 c 26 s 2 are each amended to read
as follows:
(1) The following property ((shall be)) is exempt from taxation:
Any and all rights to occupy or use any real or personal property owned
in fee or held in trust by:
(a) The United States, the state of Washington, or any political
subdivision or municipal corporation of the state of Washington, or a
federally recognized Indian tribe for property exempt under RCW
84.36.010; or
(b) A public corporation, commission, or authority created under
RCW 35.21.730 or 35.21.660 if the property is listed on or is within a
district listed on any federal or state register of historical sites;
and
(c) ((Including)) Any leasehold interest arising from the property
identified in (a) and (b) of this subsection as defined in RCW
82.29A.020.
(2) The exemption under this section ((shall)) does not apply to:
(a) Any such leasehold interests which are a part of operating
properties of public utilities subject to assessment under chapter
84.12 RCW; or
(b) Any such leasehold interest consisting of three thousand or
more residential and recreational lots that are or may be subleased for
residential and recreational purposes.
(3) The exemption under this section ((shall)) may not be construed
to modify the provisions of RCW 84.40.230.
Sec. 5 RCW 84.40.230 and 1994 c 124 s 25 are each amended to read
as follows:
When any real property is sold on contract by the United States of
America, the state, ((or)) any county or municipality, or any federally
recognized Indian tribe, and the contract expresses or implies that the
vendee is entitled to the possession, use, benefits and profits thereof
and therefrom so long as the vendee complies with the terms of the
contract, it shall be deemed that the vendor retains title merely as
security for the fulfillment of the contract, and the property
((shall)) must be assessed and taxed in the same manner as other
similar property in private ownership is taxed, and the tax roll
((shall)) must contain, opposite the description of the property so
assessed the following notation: "Subject to title remaining in the
vendor" or other notation of similar significance. No foreclosure for
delinquent taxes nor any deed issued pursuant thereto ((shall))
extinguishes or otherwise affects the title of the vendor. In any case
under former law where the contract and not the property was taxed no
deed of the property described in such contract ((shall)) may ever be
executed and delivered by the state or any county or municipality until
all taxes assessed against such contract and local assessments assessed
against the land described thereon are fully paid.
NEW SECTION. Sec. 6 A new section is added to chapter 52.30 RCW
to read as follows:
(1) When exempt tribal property is located within the boundaries of
a fire protection district or a regional fire protection service
authority, the fire protection district or authority is authorized to
contract with the tribe for compensation for providing fire protection
services in an amount and under such terms as are mutually agreed upon
by the fire protection district or authority and the tribe.
(2) For the purposes of this section, the following definitions
apply unless the context clearly requires otherwise:
(a) "Exempt tribal property" means property that is owned
exclusively by a federally recognized Indian tribe and that is exempt
from taxation under RCW 84.36.010.
(b) "Regional fire protection service authority" or "authority" has
the same meaning as provided in RCW 52.26.020.