SENATE BILL REPORT

HB 1819

BYRepresentatives Unsoeld, Belcher, Holm, Sayan, Brough, Haugen, Appelwick, Crane, Dellwo and Ebersole

Revising the property tax exemption for houses for the aged.

House Committe on Ways & Means

Senate Committee on Ways & Means

Senate Hearing Date(s):February 29, 1988

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Bauer, Bluechel, Cantu, Deccio, Hayner, Johnson, Newhouse, Smith, Vognild, Warnke, Wojahn.

Senate Staff:Gary Benson (786-7715)

                  February 29, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 29, 1988

BACKGROUND:

A nonprofit Home for the Aged can secure property tax exempt status if it meets various statutory requirements for nonprofit entities. The main requirements are as follows:

1.  The benefit of the exemption inures to the user;

2.  The property must be used exclusively for the purpose for which the exemption is granted;

3.  The property is irrevocably dedicated to the purpose for which the exemption is granted; and

4.  No part of the income of the organization may be paid to its members, stockholders, officers, directors or trustees except for actual services rendered.

When nonprofit organizations acquire or convert real property qualified for a tax exemption the property, upon approval of the application, is entitled to a cancellation of the pro rata portion of taxes payable for the remainder of the year in which the application is made and exemption for the subsequent year.

Requalification of exempt status is required every four years by filing an application for renewal.

SUMMARY:

In addition to the general criteria, a home for the aged must meet one of several additional requirements.  To secure the exemption a home must satisfy one of three conditions.

1.  Have been continuously exempt from property taxes as a home for the aged for taxes levied during 1986 and thereafter; or

2.  The home is owned or operated by an eligible nonprofit organization which has had federal tax exempt status for five years before the date of application for property tax exemption; or

3.  Upon initial application for property tax exemption, 60 percent or more of the dwelling units in the home must be occupied by persons meeting the requirements for senior citizen property tax exemption other than the ownership requirement.

For the purpose of a home for the aged, an eligible nonprofit organization is defined as one that:

(a)  Meets the statutory definition of nonprofit, and

(b)  Has secured federal tax exempt status under section 501(c) of the Internal Revenue Code, and

(c)  Certifies to the department that no officer, director, trustee, or employee of the organization has had any financial ownership or interest in the property within five years before the date of application for exemption from property tax.

Property tax exemptions for homes for the aged shall become effective in the year following the year of application.

If the department has reason to believe that property of a Home for the Aged may be taxable, it may require new initial applications prior to the time that reapplication is required.

This act is effective for taxes levied for collection in 1987 and thereafter.

SUMMARY OF PROPOSED SENATE AMENDMENT:

A nonprofit home for the aged that converts a structure from taxable to tax exempt after January 1, 1988 is eligible for only a partial tax exemption.  This partial exemption applies to only the converted structure and the land upon which it is located.  The partial exemption is for any state property tax levy and special levies.  City, county and junior district regular levies still apply to the structure and land.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Representative Jolene Unsoeld, prime sponsor; Senator Mike Kreidler; Kay Boyd, mayor of Lacey; Ann Clifton, Thurston County assessor; Paul Gronnert, citizen; Stan Finkelstein, Association of Washington Cities; Kathy Powell, Thurston County Board of Realtors; Larry Swift, Washington State School Directors Association; George Stevens, Bill Robinson, Glenn Terrell, Panorama City; Hery Faubion, citizen; Marshall Hjelte, WAHA; Lon Dickerson, Timberland Regional Library; Ken Curry, executive director, Kenney Home; Richard Milsow, The Hearthstone; Bill Bowers and Karen Tynes, Washington Association of Homes for Aging; Gene Lidell, city of Lacey; Jeanne Ward, North Thurston School District; Jim Rozmaryn, citizen