Z 0598

Z‑0598.1 _____________________________________________

HOUSE BILL 2098

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Representatives Edmonds, Pennington, McIntire, Jarrett, Morris, Cairnes, Santos and Conway; by request of Department of Revenue

Read first time 02/14/2001. Referred to Committee on Finance.

_1 AN ACT Relating to the exemption from taxation of housing for

_2 very low-income households; amending RCW 84.36.560; and reenacting

_3 and amending RCW 84.36.805.

_4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_5 Sec. 1. RCW 84.36.560 and 1999 c 203 s 1 are each amended to read

_6 as follows:

_7 (1) The real and personal property owned or used by a nonprofit

_8 entity in providing rental housing for very low-income households

_9 or used to provide space for the placement of a mobile home for a

10 very low-income household within a mobile home park is exempt from

11 taxation if:

12 (a) The benefit of the exemption inures to the nonprofit

13 ((~~organization, association, or corporation~~)) entity;

14 (b) At least seventy-five percent of the occupied dwelling

15 units in the rental housing or lots in a mobile home park are

16 occupied by a very low-income household((s)); and

17 (c) The rental housing ((~~was~~)) or lots in a mobile home park

18 were insured, financed, or assisted in whole or in part through:

p. 1 HB 2098

_1 (i) A federal or state housing program administered by the

_2 department of community, trade, and economic development; or

_3 (ii) An affordable housing levy authorized under RCW 84.52.105.

_4 (2) If less than seventy-five percent of the occupied dwelling

_5 units within the rental housing or lots in the mobile home park

_6 are occupied by very low-income households, the rental housing

_7 ((~~used to provide housing for very low-income households~~)) or

_8 mobile home park is eligible for a partial exemption on the real

_9 property and a total exemption of the housing's or park's personal

10 property as follows:

11 (a) ((~~The~~)) A partial exemption shall be allowed for each

12 dwelling unit in the rental housing or for each lot in a mobile

13 home park occupied by a very low-income household((s)).

14 (b) The amount of exemption shall be calculated by multiplying

15 the assessed value of the property reasonably necessary to provide

16 the rental housing or to operate the mobile home park by a

17 fraction. The numerator of the fraction is the number of dwelling

18 units or lots occupied by very low-income households as of

19 December 31st of the first assessment year in which the rental

20 housing or mobile home park becomes operational or on January 1st

21 of ((~~the~~)) each subsequent assessment year for which the exemption

22 is claimed. The denominator of the fraction is the total number of

23 ((~~occupied~~)) dwelling units ((~~as of~~)) or lots occupied as of

24 December 31st of the first assessment year the rental housing or

25 mobile home park becomes operational and January 1st of ((~~the~~))

26 each subsequent assessment year for which exemption is claimed.

27 (3) ((~~Rental housing for very low-income households is exempt~~

28 ~~from property taxation only if the nonprofit operating the housing~~

29 ~~is exempt from income tax under section 501(c) of the federal~~

30 ~~internal revenue code~~)) If a currently exempt rental housing unit

31 or mobile home lot was occupied by a very low-income household at

32 the time the exemption was granted, and the income of the

33 household subsequently rises above fifty percent of the median

34 income but remains at or below eighty percent of median income

35 adjusted for family size as most recently determined by the

36 federal department of housing and urban development for the county

37 in which the rental housing or mobile home park is located, the

38 exemption will continue as long as the housing continues to meet

HB 2098 p. 2

_1 the certification requirements of a very low-income housing

_2 program administered by the department of community, trade, and

_3 economic development or the affordable housing levy under RCW

_4 84.52.105. However, if a dwelling unit or a lot becomes vacant and

_5 is subsequently re-rented, the income of the new household must be

_6 at or below fifty percent of the median income adjusted for family

_7 size as most recently determined by the federal department of

_8 housing and urban development for the county in which the rental

_9 housing or mobile home park is located to remain exempt from

10 property tax.

11 (4) If at the time of initial application the property is

12 unoccupied, or subsequent to the initial application the property

13 is unoccupied because of renovations, and the property is not

14 currently being used for the exempt purpose authorized by this

15 section but will be used for the exempt purpose within two

16 assessment years, the property shall be eligible for a property

17 tax exemption for the assessment year in which the claim for

18 exemption is submitted under the following conditions:

19 (a) A commitment for financing to acquire, construct, renovate,

20 or otherwise convert the property to provide housing for very

21 low-income households has been obtained, in whole or in part, by

22 the nonprofit entity claiming the exemption from:

23 (i) A federal or state housing program administered by the

24 department of community, trade, and economic development; or

25 (ii) An affordable housing levy authorized under RCW 84.52.105;

26 (b) The nonprofit entity has manifested its intent in writing

27 to construct, remodel, or otherwise convert the property to

28 housing for very low-income households; and

29 (c) Only the portion of property that will be used to provide

30 housing or lots for very low-income households shall be exempt

31 under this section.

32 ((~~(4)~~)) (5) To be exempt under this section, the property must

33 be used exclusively for the purposes for which the exemption is

34 granted, except as provided in RCW 84.36.805.

35 ((~~(5)~~)) (6) The nonprofit entity qualifying for ((~~the~~)) a

36 property tax exemption under this section ((~~by providing rental~~

37 ~~housing for very low-income households~~)) may agree to make

38 payments to the city, county, or other political subdivision for

p. 3 HB 2098

_1 improvements, services, and facilities furnished by the city,

_2 county, or political subdivision for the benefit of the rental

_3 housing. However, these payments shall not exceed the amount last

_4 levied as the annual tax of the city, county, or political

_5 subdivision upon the property prior to exemption.

_6 ((~~(6)~~)) (7) As used in this section:

_7 (a) "Group home" means a single-family dwelling financed, in

_8 whole or in part, by the department of community, trade, and

_9 economic development or by an affordable housing levy under RCW

10 84.52.105. The residents of a group home shall not be considered to

11 jointly constitute a household, but each resident shall be

12 considered to be a separate household occupying a separate

13 dwelling unit. The individual incomes of the residents shall not be

14 aggregated for purposes of this exemption;

15 (b) "Mobile home lot" or "mobile home park" means the same as

16 these terms are defined in RCW 59.20.030;

17 (c) "Occupied dwelling unit" means a living unit that is

18 occupied by an individual or household as of December 31st of the

19 first assessment year the rental housing becomes operational or is

20 occupied by an individual or household on January 1st of ((~~the~~))

21 each subsequent assessment year in which the claim for exemption

22 is submitted. If the housing facility is comprised of three or

23 fewer dwelling units and there are any unoccupied units on January

24 1st, the department shall base the amount of the exemption upon

25 the number of occupied dwelling units as of December 31st of the

26 first assessment year the rental housing becomes operational and

27 on May 1st of each subsequent assessment year in which the claim

28 for exemption is submitted;

29 ((~~(b)~~)) (d) "Rental housing" means a residential housing

30 facility or group home that is occupied but not owned by very low-

31 income households;

32 ((~~(c)~~)) (e) "Very low-income household((s))" means a single

33 person, family, or unrelated persons living together whose income

34 is at or below fifty percent of the median income adjusted for

35 family size as most recently determined by the federal department

36 of housing and urban development for the county in which the

37 rental housing is located and in effect as of January 1st of the

38 year the application for exemption is submitted; and

HB 2098 p. 4

_1 ((~~(d)~~)) (f) "Nonprofit entity" means a:

_2 (i) Nonprofit as defined in RCW 84.36.800 ((~~and includes a~~))

_3 that is exempt from income tax under section 501(c) of the federal

_4 internal revenue code;

_5 (ii) Limited partnership where ((~~the~~)) a nonprofit ((or)) as

_6 defined in RCW 84.36.800 that is exempt from income tax under

_7 section 501(c) of the federal internal revenue code, a public

_8 corporation established under RCW 35.21.660, 35.21.670, ((~~and~~)) or

_9 35.21.730, a housing authority created under RCW 35.82.030 or

10 35.82.300, or a housing authority meeting the definition in RCW

11 35.82.210(2)(a) is a general partner((,)); or ((a))

12 (iii) Limited liability company where ((~~the~~)) a nonprofit ((or

13 ~~the~~)) as defined in RCW 84.36.800 that is exempt from income tax

14 under section 501(c) of the federal internal revenue code, a

15 public corporation established under RCW 35.21.660, 35.21.670, or

16 35.21.730, a housing authority established under RCW 35.82.030 or

17 35.82.300, or a housing authority meeting the definition in RCW

18 35.82.210(2)(a) is a managing member.

19 Sec. 2. RCW 84.36.805 and 1999 c 203 s 2 and 1999 c 139 s 3 are

20 each reenacted and amended to read as follows:

21 (1) In order to qualify for an exemption under this chapter and

22 RCW 84.36.560, the nonprofit organizations, associations, or

23 corporations must satisfy the conditions in this section.

24 (2) The property must be used exclusively for the actual

25 operation of the activity for which exemption is granted, unless

26 otherwise provided, and does not exceed an amount reasonably

27 necessary for that purpose, except:

28 (a) The loan or rental of the property does not subject the

29 property to tax if:

30 (i) The rents and donations received for the use of the portion

31 of the property are reasonable and do not exceed the maintenance

32 and operation expenses attributable to the portion of the property

33 loaned or rented; and

34 (ii) Except for the exemptions under RCW 84.36.030(4) and

35 84.36.037, the property would be exempt from tax if owned by the

36 organization to which it is loaned or rented;

p. 5 HB 2098

_1 (b) The use of the property for fund-raising activities does

_2 not subject the property to tax if the fund-raising activities are

_3 consistent with the purposes for which the exemption is granted.

_4 (3) The property must be irrevocably dedicated to the purpose

_5 for which exemption has been granted, and on the liquidation,

_6 dissolution, or abandonment by said organization, association, or

_7 corporation, said property will not inure directly or indirectly

_8 to the benefit of any shareholder or individual, except a

_9 nonprofit organization, association, or corporation which too

10 would be entitled to property tax exemption. This property need not

11 be irrevocably dedicated if it is leased or rented to those

12 qualified for exemption under this chapter or RCW 84.36.560 for

13 leased property, but only if under the terms of the lease or

14 rental agreement the nonprofit organization, association, or

15 corporation receives the benefit of the exemption.

16 (4) The facilities and services must be available to all

17 regardless of race, color, national origin or ancestry.

18 (5) The organization, association, or corporation must be duly

19 licensed or certified where such licensing or certification is

20 required by law or regulation.

21 (6) Property sold to organizations, associations, or

22 corporations with an option to be repurchased by the seller shall

23 not qualify for exempt status. This subsection does not apply to

24 property sold to a nonprofit entity, as defined in RCW

25 84.36.560(7), by:

26 (a) A nonprofit as defined in RCW 84.36.800 that is exempt from

27 income tax under section 501(c) of the federal internal revenue

28 code;

29 (b) A governmental entity established under RCW 35.21.660,

30 35.21.670, or 35.21.730;

31 (c) A housing authority created under RCW 35.82.030;

32 (d) A housing authority meeting the definition in RCW

33 35.82.210(2)(a); or

34 (e) A housing authority established under RCW 35.82.300.

35 (7) The department shall have access to its books in order to

36 determine whether the nonprofit organization, association, or

37 corporation is exempt from taxes under this chapter and RCW

38 84.36.560.

HB 2098 p. 6

_1 (8) This section does not apply to exemptions granted under RCW

_2 84.36.020, 84.36.032, 84.36.250, and 84.36.260.

‑‑‑ END ‑‑‑

p. 7 HB 2098