BILL REQ. #:  H-1144.1 

Read first time 01/29/2007.   Referred to Committee on Community & Economic Development & Trade.

     AN ACT Relating to property tax exemptions for nonprofit organizations for small business incubators which assist in the creation and expansion of innovative small commercial enterprises; adding a new section to chapter 84.36 RCW; adding a new section to chapter 84.52 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that nonprofit organizations and associations engaged in the education and training of people, located in economically disadvantaged areas, who are involved in the creation and expansion of businesses with marketable products and services in a physical location provide many public benefits to the people of the state of Washington. Therefore, the legislature finds that it is in the best interest of the state to provide a limited property tax exemption for the use of these facilities by certain organizations in order to be self-sustaining for their exempt purposes.

NEW SECTION.  Sec. 2   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 organization is exempt from property taxes levied for any state purpose if the property is:
     (a) Located in an economically distressed area; and
     (b) Used to provide shared use of equipment and work areas and daily technical resources and daily management support services that enable small start-up and emerging businesses to become successful.
     (2) The organization or association must meet all of the additional following conditions:
     (a) The organization is organized and conducted for nonsectarian purposes;
     (b) The organization is qualified for exemption under section 501(c)(3) of the federal internal revenue code; and
     (c) The organization is governed by a volunteer board of directors of at least five members.
     (3) In 2010 any nonprofit organization claiming the exemption under subsection (1) of this section must report to the department the number of businesses served by the nonprofit and the types of services provided. Nonprofits failing to report to the department are ineligible for the exemption under subsection (1) of this section. The department shall compile the information and share it with the appropriate committees of the legislature.
     (4) For the purposes of this section, the following definitions apply:
     (a) "Economically distressed area" means a rural county as defined in RCW 82.14.370, a county with a community empowerment zone under RCW 43.31C.020, or a community empowerment zone under RCW 43.31C.020.
     (b) "Emerging business" means a business that is: (i) Engaged in activities related to the development of initial product or service offerings, such as prototype development or establishment of initial production or services processes; (ii) less than five years old and during the previous fiscal year had gross revenues of no more than two million dollars; or (iii) in a growth mode, expanding its operation or its market.
     (c) "Start-up business" means a formal business venture that: (i) Is involved in activities related to the development of initial product or service offerings, such as prototype development or establishment of initial production or services processes; (ii) is less than three years old and during the previous fiscal year had gross revenues of no more than two million dollars; and (iii) has fewer than twenty employees.
     (5) The exemption may not be taken for taxes due after January 1, 2016.

NEW SECTION.  Sec. 3   A new section is added to chapter 84.52 RCW to read as follows:
     The levy for the state in any year shall be reduced as necessary to prevent exemptions under section 2 of this act resulting in a higher tax rate than would have occurred in the absence of the exemptions in section 2 of this act.

NEW SECTION.  Sec. 4   This act applies to taxes levied for collection in 2008 and thereafter.