PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 00-01-044.
Title of Rule: Amendatory sections WAC 458-16A-010 Nonprofit homes for the aging and 458-16A-020 Nonprofit homes for the aging -- Initial application and annual renewal.
Purpose: WAC 458-16A-010 explains the basis and requirements related to the property tax exemption, either total or partial, available to homes for the aging under RCW 84.36.041. WAC 458-16A-020 discusses the initial application and renewal process that must be followed for a nonprofit home to receive or retain a property exemption under RCW 84.36.041.
Statutory Authority for Adoption: RCW 84.36.041 and 84.36.865.
Statute Being Implemented: RCW 84.36.041.
Summary: These rules are being amended because the 1999 legislature amended the statute being implemented. Chapter 356, Laws of 1999, amended by RCW 84.36.041 regarding homes for the aging that are completed or begin operations after the January 1st assessment date, including the definition of "eligible resident." The changes will enable such homes to now qualify for at least a partial exemption during its first year of business operation based on the number of dwelling units occupied by eligible residents on December 31st. The legislature also amended the definition of "combined disposable income" to reflect a change in the federal internal revenue code.
Reasons Supporting Proposal: The proposed changes to WAC 458-16A-010 and 458-16A-020 will update the rules so that they reflect the present contents of the underlying statute, RCW 84.36.041.
Name of Agency Personnel Responsible for Drafting: Kim M. Qually, 711 Capitol Way South, #303, Olympia, WA, (360) 664-0086; Implementation and Enforcement: Sandy Guilfoil, 6004 Capitol Boulevard, Tumwater, WA, (360) 753-5503.
Name of Proponent: Department of Revenue, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: The 1999 legislature amended RCW 84.36.041 regarding homes for the aging that are completed or begin operations after the January 1st assessment date and the definition of "eligible resident." Under the amended statute, if a home becomes operational after January 1st, the number of dwelling units occupied by eligible residents on December 31st of that assessment year will determine the size of the property tax exemption. For all subsequent assessment years, the number of units occupied on January 1st will determine the size of the exemption. Chapter 356, Laws of 1999, also changed the definition of "disposable income" to reflect a change in the federal internal revenue code. The proposed changes to both rules are intended to reflect the current contents of RCW 84.36.041. The proposed amendments to WAC 458-16A-020 also explain how the amount of the exemption will be determined when the home for the aging receives more than one government housing subsidy. The changes to WAC 458-16A-010 and 458-16A-020 will assist taxpayers in understanding how the exemption statute will be applied.
Proposal Changes the Following Existing Rules: WAC 458-16A-010 and 458-16A-020 are being revised to comply with 1999 changes to the underlying statute, RCW 84.36.041. The definition of eligible residents has been expanded to include nonprofit homes for the aging that begin operations or become occupied by eligible residents after the January 1st assessment date. The proposed amendments to WAC 458-16A-020 explain how the amount of the exemption will be determined when a home for the aging receives more than one government housing subsidy. A processing deadline not authorized by statute is also being deleted from this rule.
No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement is not required because the rule and the proposed amendments do not impose any requirements or burdens upon small businesses that are not already specifically required by statute.
RCW 34.05.328 does not apply to this rule adoption. This is an interpretative rule as defined in RCW 34.05.328.
Hearing Location: Evergreen Plaza Building, 711 Capitol Way South, 2nd Floor Conference Room, Olympia, WA, on April 4, 2000, at 9:30 a.m.
Assistance for Persons with Disabilities: Contact Ginny Dale no later than ten days before the hearing date, TDD 1-800-451-7985, or (360) 586-0721.
Submit Written Comments to: Kim M. Qually, Department of Revenue, P.O. Box 47467, Olympia, WA 98504-7467, fax (360) 664-0693, e-mail kimq@dor.wa.gov, by April 4, 2000.
Date of Intended Adoption: April 15, 2000.
March 1, 2000
Claire Hesselholt
Rules Manager
Legislation and Policy Division
OTS-3714.1
AMENDATORY SECTION(Amending WSR 99-04-016, filed 1/22/99,
effective 2/22/99)
WAC 458-16A-010
Nonprofit homes for the aging.
(1) Introduction. Under RCW 84.36.041, a nonprofit home for the aging may be totally or partially exempt from property tax. This section explains the exemptions allowed and the criteria that must be met in order to receive an exemption under this statute. Throughout this section, all requirements will pertain to all types of homes for the aging including, but not limited to, adult care homes, assisted living facilities, continuing care retirement communities (CCRC), and independent housing, unless a particular type of home is separately identified.
(2) Definitions. For purposes of this section, the following definitions apply:
(a) "Acquisition" means that an existing home for the aging (or home) currently in operation is acquired by a nonprofit organization and the ownership of the facility will change as a result of a purchase, gift, foreclosure, or other method.
(b) "Assistance with activities of daily living" means the home provides, brokers, or contracts for the provision of auxiliary services to residents, such as meal and housekeeping service, transportation, ambulatory service, and attendant care including, but not limited to, bathing and other acts related to personal hygiene, dressing, shopping, food preparation, monitoring of medication, and laundry services.
(c) "Combined disposable income" means the disposable income
of the person submitting the income verification form, plus the
disposable income of ((his or her)) the person's spouse, and the
disposable income of each cotenant occupying the dwelling unit
for the preceding calendar year, less amounts paid by the person
submitting the income verification form or ((his or her)) the
person's spouse or cotenant during the previous year for the
treatment or care of either person received in the dwelling unit
or in a nursing home.
(i) If the person submitting the income verification form was retired for two months or more of the preceding calendar year, the combined disposable income of the person will be calculated by multiplying the average monthly combined disposable income of the person during the months the person was retired by twelve.
(ii) If the income of the person submitting the income verification form is reduced for two or more months of the preceding calendar year because of the death of the person's spouse, the combined disposable income of the person will be calculated by multiplying the average monthly combined disposable income of the person after the death of the spouse by twelve.
(d) "Complete and separate dwelling units" means that the individual units of a home contain complete facilities for living, sleeping, cooking, and sanitation.
(e) "Construction" means the actual construction or building of all or a portion of a home that did not exist prior to the construction.
(f) "Continuing care retirement community" or "CCRC" means an entity that provides shelter and services under continuing care contracts with its residents or includes a health care facility or health service.
(g) "Continuing care contract" means a contract to provide a person, for the duration of that person's life or for a term in excess of one year, shelter along with nursing, medical, health-related or personal care services, that is conditioned upon the transfer of property, the payment of an entrance fee to the provider of the services, and/or the payment of periodic charges in consideration for the care and services provided. A continuing care contract is not excluded from this definition because the contract is mutually terminable or because shelter and services are not provided at the same location.
(h) "Cotenant" means a person who resides with an eligible resident and who shares personal financial resources with the eligible resident.
(i) "Disposable income" means adjusted gross income as defined in the federal Internal Revenue Code, as amended prior to January 1, 1994, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:
(i) Capital gains, other than ((nonrecognized gain on the
sale of a principal residence under section 1034 of the federal
Internal Revenue Code, or)) gain excluded from income under
section 121 of the federal Internal Revenue Code to the extent it
is reinvested in a new principal residence;
(ii) Amounts deducted for loss;
(iii) Amounts deducted for depreciation;
(iv) Pension and annuity receipts;
(v) Military pay and benefits other than attendant-care and medical-aid payments;
(vi) Veterans benefits other than attendant-care and medical-aid payments;
(vii) Federal Social Security Act and railroad retirement benefits;
(viii) Dividend receipts; and
(ix) Interest received on state and municipal bonds.
(j) "Eligible resident" means a person who:
(i) Occupied the dwelling unit as ((a)) their principal
place of residence as of December 31st of the assessment year the
home first became operational or in each subsequent year,
occupied the dwelling unit as their principal place of residence
as of January 1st of the assessment year ((in which the claim for
exemption is filed. The exemption will not be nullified if
the)). If an eligible resident is confined to a hospital or
nursing home and the dwelling unit is temporarily unoccupied or
occupied by a spouse, a person financially dependent on the
claimant for support, or both, the dwelling will still be
considered occupied by the eligible resident;
(ii) Is sixty-one years of age or older on December 31st of the year in which the claim for exemption is filed, or is, at the time of filing, retired from regular gainful employment by reason of physical disability. A surviving spouse of a person who was receiving an exemption at the time of the person's death will qualify for this exemption if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this subsection; and
(iii) Has a combined disposable income that is no more than the greater of twenty-two thousand dollars or eighty percent of the median income adjusted for family size as determined by the federal Department of Housing and Urban Development (HUD) for the county in which the person resides and in effect as of January 1 of the year the application for exemption is submitted.
(k) "First assessment year the home becomes operational" or "the assessment year the home first became operational" means the first year the home becomes occupied by and provides services to eligible residents. Depending upon the facts, this year will be the year during which construction of the home is completed or the year during which a nonprofit organization purchases or acquires an existing home and begins to operate it as a nonprofit home for the aging.
(l) "Home for the aging" or "home" means a residential housing facility that:
(i) Provides a housing arrangement chosen voluntarily by the resident, the resident's guardian or conservator, or another responsible person;
(ii) Has only residents who are at least sixty-one years of age or who have needs for care generally compatible with persons who are at least sixty-one years of age; and
(iii) Provides varying levels of care and supervision, as agreed to at the time of admission or as determined necessary at subsequent times of reappraisal.
(((l))) (m) "HUD" means the federal Department of Housing
and Urban Development.
(((m))) (n) "Local median income" means the median income
adjusted for family size as most recently determined by HUD for
the county in which the home is located and in effect on January
1st of the year the application for exemption is submitted.
(((n))) (o) "Low income" means that the combined disposable
income of a resident is eighty percent or less of the median
income adjusted for family size as most recently determined by
HUD for the county in which the home is located and in effect as
of January 1st of the year the application for exemption is
submitted.
(((o))) (p) "Occupied dwelling unit" means a living unit
that is occupied either on January 1st of the year ((in)) for
which the ((claim)) application for exemption is ((filed)) made
or on December 31st of the assessment year the home first becomes
operational and for which application for exemption is made.
(((p))) (q) "Property that is reasonably necessary" means
all property that is:
(i) Operated and used by a home; and
(ii) The use of which is restricted to residents, guests, or employees of a home.
(((q))) (r) "Refinancing" means the discharge of an existing
debt with funds obtained through the creation of new debt. For
purposes of this section, even if the application for tax exempt
bond financing to refinance existing debt is treated by the
financing agent as something other than refinancing, an
application for a property tax exemption because of refinancing
by tax exempt bonds will be treated as refinancing and the
set-asides specific to refinancing will be applied. "Refinancing" shall include tax exempt bond financing in excess
of the amount of existing debt that is obtained to modify,
improve, restore, extend, or enlarge a facility currently being
operated as a home.
(((r))) (s) "Rehabilitation" means that an existing building
or structure, not currently used as a home, will be modified,
improved, restored, extended, or enlarged so that it ((will)) can
be used as a home for elderly and disabled individuals. A
project will be considered a rehabilitation if the costs of
rehabilitation exceed five thousand dollars. If a home has
acquired tax exempt bond financing and does not meet the
definition of "rehabilitation" contained in this subsection, the
home may be eligible for a total exemption under the
"refinancing" definition and if it meets the "refinancing"
set-aside requirements. If such a home is not eligible for a
total exemption, the department will determine the home's
eligibility for a partial exemption in accordance with the
pertinent parts of RCW 84.36.041 and this section.
(((s))) (t) "Set-aside(s)" means the percentage of dwelling
units reserved for low-income residents when the construction,
rehabilitation, acquisition, or refinancing of a home is financed
under a financing program using tax exempt bonds.
(((t))) (u) "Shared dwelling units" or "shared units" means
individual dwelling units of a home that do not contain complete
facilities for living, eating, cooking, and sanitation.
(((u))) (v) "Taxable value" means the value of the home upon
which the tax rate is applied in order to determine the amount of
property taxes due.
(((v))) (w) "Total amount financed" means the total amount
of financing required by the home to fund construction,
acquisition, rehabilitation, or refinancing. Seventy-five
percent of this amount must be supplied by tax exempt bonds to
receive the total exemption from property tax available under the
tax exempt bond financing provision of RCW 84.36.041.
(3) General requirements. To be exempt under this section, a home for the aging must be:
(a) Exclusively used for the purposes for which exemption is granted, except as provided in RCW 84.36.805;
(b) Operated by an organization that is exempt from income tax under section 501(c) of the federal Internal Revenue Code; and
(c) The benefit of the exemption must inure to the home.
(4) Total exemption. There are three ways in which a home may be totally exempt from property tax. All real and personal property used by a nonprofit home that is reasonably necessary for the purposes of the home is exempt if it meets the general requirements listed in subsection (3) of this section and:
(a) At least fifty percent of the occupied dwelling units in the home are occupied by eligible residents;
(b) The home is subsidized under a HUD program; or
(c) The construction, rehabilitation, acquisition, or refinancing of a home is financed under a program using bonds exempt from federal income tax if at least seventy-five percent of the total amount financed uses tax exempt bonds and the financing program requires the home to reserve or set-aside a percentage of all dwelling units so financed for low-income residents. See subsections (5), (6), and (7) of this section for tax exempt bond requirements and the percentage of units that must be set-aside for low-income residents in order for the home to be totally exempt.
(5) Homes or CCRCs financed by tax exempt bonds--Generally. All real and personal property used by a nonprofit home or CCRC may be totally exempt from property tax if at least seventy-five percent of the total amount financed for construction, rehabilitation, acquisition, or refinancing uses tax exempt bonds and the financing program requires the home or CCRC to reserve or set-aside a percentage of all dwelling units so financed for low-income residents.
(a) The percentage of set-aside units required will vary depending on whether the home is a CCRC, the purpose for which the tax exempt bond financing was obtained, the type of dwelling unit, and the receipt of Medicaid funds. The set-aside requirements for homes are set forth in subsection (6) of this section and for CCRCs are set forth in subsection (7) of this section.
(b) The exemption will be granted in direct correlation
((between)) to the total amount financed by tax exempt bonds and
the portion of the home or CCRC that is constructed, acquired,
rehabilitated, or refinanced by tax exempt bonds.
(c) If tax exempt bonds are used for refinancing, the set-aside requirements set forth in subsections (6) and (7) of this section will be applied to the actual area or portion of the home or CCRC to which the bonds correspond.
(i) Example 1. A CCRC (that accepts Medicaid funds) is composed of a multistory building, six duplexes, and two independent homes and the CCRC has secured tax exempt bonds to satisfy an existing mortgage on the multistory building. Only the multistory building will be considered eligible for a total exemption from property tax because of tax exempt bond financing. To receive the exemption, at least twenty percent of the dwelling units of the multistory building must be set-aside for residents at or below fifty percent of the local median income or at least forty percent of the dwelling units must be set-aside for residents at or below sixty percent of the local median income.
(ii) Example 2. A home obtains tax exempt bonds to refinance a portion of the home and to fund construction. The department will separately consider the area of the home that corresponds to the purpose for which the tax exempt bonds were obtained. The set-aside requirements related to refinancing will be applied to the portion of the home that corresponds to the mortgage being refinanced and the set-aside requirements related to construction will be applied to the area of the home to be newly constructed. The department will determine the eligibility for partial exemption of the remainder of the home that is not being refinanced or constructed.
(d) If a total exemption is granted under the tax exempt bond financing provision, the total exemption will remain in effect as long as:
(i) The home or CCRC remains in compliance with the requirements under which it received the tax exempt bonds;
(ii) The tax exempt bonds are outstanding; and
(iii) The set-aside requirements are met.
(e) If a home or CCRC has obtained tax exempt bond financing
to modify, improve, restore, extend, or enlarge its existing
facility and the project does not meet the definition of
rehabilitation contained in subsection (2) of this section, the
project will not be considered a rehabilitation ((and)). In this
situation, the set-aside requirements related to refinancing or
acquisition will be applied in determining eligibility for a
total exemption.
(f) When a home or CCRC no longer meets the criteria for exemption under the tax exempt bond financing portion of the statute, eligibility for exemption under RCW 84.34.041 will be determined by the other provisions of the statute. In other words, a home may receive a total or partial exemption depending on the number of residents who are deemed to be "eligible residents" or who require "assistance with activities of daily living." For example, if a home that previously received a total exemption due to the receipt of tax exempt bond financing has one hundred dwelling units and sixty of those dwelling units are occupied by eligible residents, the home may receive a total exemption.
(6) Set-aside requirements related to homes and tax exempt bond financing. A specified number of dwelling units within a home must be set-aside for low income residents to obtain a total property tax exemption because of tax exempt bond financing. The set-aside requirements for homes will be determined according to the type of dwelling units contained in the home and the purpose for which the tax exempt bond financing was obtained. The provisions of this section do not apply to CCRCs. The specific set-aside requirements for CCRCs are described in subsection (7) of this section.
A home must meet the following set-aside requirements to be totally exempt from property tax:
| PURPOSE OF BOND FINANCING | TYPE OF DWELLING UNIT | SET-ASIDE REQUIREMENTS |
| New construction or Rehabilitation | Complete Separate units | 10% of total units set-aside for residents at or below 80% of local median income and 10% of total units set-aside for residents at or below 50% of local median income |
| Acquisition or Refinancing of dwelling units currently satisfying 10% and 10% set-aside requirements | Complete Separate units | 10% of total
units set-aside
for residents at
or below 80% of
local median
income and
10% of total
units set-aside for residents at or below 50% of local median income |
| Acquisition or Refinancing of dwelling units not currently satisfying 10% and 10% set-aside requirements | Complete Separate units | 20% of total
units set-aside
for residents at
or below 50% of
local median
income or 40%
of total units
set-aside for residents at or below 60% of local median income |
| Acquisition, New Construction, Refinancing, or Rehabilitation | Shared units | 10% of total units set-aside for residents at or below 80% of local median income and 10% of total units set-aside for residents at or below 50% of local median income |
(7) Set-aside requirements related to CCRCs and tax exempt
bond financing. A specified number of dwelling units of a CCRC
must be set-aside for low income residents to obtain a total
property tax exemption because of tax exempt bond financing. The
set-aside requirements for CCRCs will be determined by whether
the CCRC does or does not have Medicaid contracts for continuing
care contract residents and the purpose for which the tax exempt
bond financing was obtained. The provisions of this section do
not apply to other homes. The specific set-aside requirements
for other homes are described in subsection (6) of this section.
(a) The continuing care contract between the resident and the CCRC is a contract to provide shelter along with nursing, medical, health-related or personal care services to the resident for the duration of the resident's life or for a term in excess of one year. A resident's tenancy may not be terminated due to inability of the resident to fully pay the monthly service fee when the resident establishes facts to justify a waiver or reduction of these charges. This provision shall not apply if the resident, without the CCRC's consent, has impaired his and/or her ability to meet financial obligations required by the continuing care contract due to a transfer of assets, after signing the continuing care contract, other than to meet ordinary and customary living expenses, or by incurring unusual or unnecessary new financial obligations.
(b) A CCRC without Medicaid contracts for continuing care contract residents may not receive Medicaid funds from Washington state or the federal government during the term that the bonds are outstanding, except during the initial transition period as allowed by state law or if the regulatory agreement with the tax exempt bond financier exempts the CCRC from compliance with this requirement.
(c) The following set-aside requirements must be met by CCRCs not receiving Medicaid funds (including CCRCs that are permitted to receive Medicaid funds during an initial transition period only) to receive a total exemption:
| PURPOSE OF BOND FINANCING | SET-ASIDE REQUIREMENTS |
| New construction or Rehabilitation | 10% of total units set-aside for residents at or below 80% of local median income and 15% of total units set-aside for residents at or below 100% of local median income |
| Acquisition or Refinancing of dwelling units currently satisfying 10% and 15% set-aside requirements | 10% of total units set-aside for residents at or below 80% of local median income and 15% of total units set-aside for residents at or below 100% of local median income |
| Acquisition or Refinancing of dwelling units not currently satisfying 10% and 15% set-aside requirements | 20% of total units set-aside for residents at or below 50% of local median income or 40% of total units set-aside for residents at or below 60% of local median income |
(d) The following set-aside requirements must be met by CCRCs receiving Medicaid funds to receive a total exemption:
| PURPOSE OF BOND FINANCING | SET-ASIDE REQUIREMENTS |
| New construction or Rehabilitation | 10% of total units set-aside for residents at or below 80% of local median income and 10% of total units set-aside for residents at or below 100% of local median income |
| Acquisition or Refinancing of dwelling units currently satisfying 10% and 10% set-aside requirements | 10% of total units set-aside for residents at or below 80% of local median income and 10% of total units set-aside for residents at or below 100% of local median income |
| Acquisition or Refinancing of dwelling units not currently satisfying 10% and 10% set-aside requirements | 20% of total units set-aside for residents at or below 50% of local median income or 40% of total units set-aside for residents at or below 60% of local median income |
(8) Partial exemption. If a home does not qualify for a total exemption from property tax, the home may receive a partial exemption for its real property on a unit by unit basis and a total exemption for its personal property.
(a) Real property exemption. If the real property of a home is used in the following ways, the portion of the real property so used will be exempt and the home may receive a partial exemption for:
(i) Each dwelling unit occupied by a resident requiring significant assistance with activities of daily living;
(ii) Each dwelling unit occupied by an eligible resident; and
(iii) Common or shared areas of the home that are jointly used for two or more purposes that are exempt from property tax under chapter 84.36 RCW.
(b) Assistance with activities of daily living. A home may
receive a partial exemption for each dwelling unit that is
occupied by a resident who requires significant assistance with
the activities of daily living and the home provides, brokers,
facilitates, or contracts for the provision of this assistance. A resident requiring assistance with the activities of daily
living must be a resident who requires significant assistance
with at least three of the nonexclusive list of activities set
forth below and who, unless ((he or she)) the resident receives
the assistance, would be at risk of being placed in a nursing
home. Activities of daily living include, but are not limited
to:
(i) Shopping;
(ii) Meal and/or food preparation;
(iii) Housekeeping;
(iv) Transportation;
(v) Dressing;
(vi) Bathing;
(vii) General personal hygiene;
(viii) Monitoring of medication;
(ix) Ambulatory services;
(x) Laundry services;
(xi) Incontinence management; and
(xii) Cuing for the cognitively impaired.
(c) Examples of assistance with the activities of daily living:
(i) If the resident of a home requires ((someone to assist
him or her)) assistance with daily dressing, bathing, and
personal hygiene, weekly housekeeping chores, and daily meal
preparation, ((he or she)) the person is a resident requiring
significant assistance with activities of daily living and the
home may receive a partial exemption for the dwelling unit in
which ((he or she)) the person resides.
(ii) If the resident of a CCRC only requires someone to
clean ((his or her)) the house weekly and to do the laundry
weekly, the resident does not require significant assistance with
activities of daily living and the CCRC may not receive a partial
exemption for the dwelling unit.
(d) Common or shared areas. Areas of a home that are jointly used for two or more purposes exempt from property tax under chapter 84.36 RCW will be exempted under RCW 84.36.041.
(i) The joint use of the common or shared areas must be reasonably necessary for the purposes of the nonprofit organization, association, or corporation exempt from property tax under chapter 84.36 RCW. A kitchen, dining room, and laundry room are examples of the types of common or shared areas for which a partial property tax exemption may be granted.
(ii) Example. A nonprofit organization uses its facility as a home for the aging and a nursing home. The home and nursing home jointly use the kitchen and dining room. The home may receive a property tax exemption for the common or shared areas under RCW 84.36.041. The eligibility of the other areas of the facility will be determined by the appropriate statute. The home's eligibility will be determined by RCW 84.36.041 and the nursing home's eligibility will be determined by RCW 84.36.040.
(e) Amount of partial exemption. The amount of partial exemption will be calculated by multiplying the assessed value of the property reasonably necessary for the purposes of the home, minus/less the assessed value of any common or shared areas, by a fraction. The numerator and denominator of the fraction will vary depending on the first assessment year the home became operational and occupied by eligible residents.
(i) Numerator. If the home becomes operational after the
January 1st assessment date, the numerator is the number of
dwelling units occupied by eligible residents and by residents
requiring assistance with activities of daily living on December
31st. The December 31st date will be used only in the first year
of operation. In any other assessment year, the numerator ((of
the fraction)) is the number of the dwelling units occupied on
January 1st of the assessment year by eligible residents and by
residents requiring assistance with activities of daily living.
(ii) Denominator. If the home becomes operational after the
January 1st assessment date, the denominator is the number of
dwelling units occupied on December 31st. The December 31st date
will be used only in the first assessment year the home becomes
operational. In any other assessment year, the denominator ((of
the fraction)) is the total number of occupied dwelling units as
of January 1st of the assessment year.
(iii) Example:
| Assessed value of home: | $500,000 | ||
| Less assessed value of common area: | - 80,000 | ||
| Total | $420,000 |
||
| Number of units occupied on 1/1 by eligible residents and people requiring assistance with daily living activities Total of occupied units on 1/1 |
= |
6 40 or .15 |
|
| $420,000 x .15 = $63,000 Amount of partial exemption | |||
| $420,000 - $63,000 = $357,000 Taxable value of home | |||
(f) Valuation of the home. The assessor will value a home that receives a partial exemption by considering only the current use of the property during the period in which the partial exemption is received and will not consider any potential use of the property.
(9) Income verification required from some residents. If a home seeks a total property tax exemption because at least fifty percent of the occupied dwelling units are occupied by eligible residents or seeks to receive a partial exemption based upon the number of units occupied by eligible residents, the residents must submit income verification forms. The department may request income verification forms from residents of homes receiving a total exemption because of tax exempt bond financing.
(a) The income verification forms must be submitted to the assessor of the county in which the home is located by July 1st of the assessment year in which the application for exemption is made. If the home becomes operational after the January 1st assessment date, these forms must be submitted to the assessor as soon as they are available but no later than December 31st of that assessment year.
(b) The income verification form will be prescribed and furnished by the department of revenue.
(c) If an eligible resident filed an income verification
form for a previous year, ((he or she)) the resident is not
required to submit a new form unless there is a change in status
affecting the resident's eligibility, such as a significant
increase or decrease in disposable income, or the assessor or the
department requests a new income verification form to be
submitted.
(10) Additional requirements. Any nonprofit home for the aging that applies for a property tax exemption under this section must also comply with the provisions of WAC 458-16A-020 and 458-16-165. WAC 458-16A-020 contains information regarding the initial application and renewal procedures relating to the exemption discussed in this section. WAC 458-16-165 sets forth additional requirements that must be complied with to obtain a property tax exemption pursuant to RCW 84.36.041.
[Statutory Authority: RCW 84.36.041 and 84.36.865. 99-04-016, § 458-16A-010, filed 1/22/99, effective 2/22/99. Statutory Authority: RCW 84.08.010, 84.08.070 and 84.36.041. 95-06-041, § 458-16A-010, filed 2/24/95, effective 3/27/95.]
OTS-3715.1
AMENDATORY SECTION(Amending WSR 95-06-042, filed 2/24/95,
effective 3/27/95)
WAC 458-16A-020
Nonprofit homes for the aging -- Initial
application and annual renewal.
(1) Introduction. This section
explains the initial application process that must be followed
((for)) when a home for the aging wishes to obtain a property tax
exemption under RCW 84.36.041. This section also describes the
annual renewal requirements that a home must follow to retain its
tax exempt status, as well as the role of the assessor's office
and the department of revenue in administering this exemption. Throughout this section, all requirements will pertain to all
types of homes for the aging including, but not limited to, adult
care homes, assisted living facilities, continuing care
retirement communities (CCRC), and independent housing.
(2) Definitions. For purposes of this section, the following definitions apply:
(a) "Assessor" means the county assessor or any agency or person who is duly authorized to act on behalf of the assessor.
(b) "Combined disposable income" means the disposable income
of the person submitting the income verification form, plus the
disposable income of ((his or her)) the persons's spouse, and the
disposable income of each cotenant occupying the dwelling unit
for the preceding calendar year, less amounts paid by the person
submitting the income verification form or ((his or her)) the
person's spouse or cotenant during the previous year for the
treatment or care of either person received in the dwelling unit
or in a nursing home.
(i) If the person submitting the income verification form was retired for two months or more of the preceding calendar year, the combined disposable income of the person will be calculated by multiplying the average monthly combined disposable income of the person during the months the person was retired by twelve.
(ii) If the income of the person submitting the income verification form is reduced for two or more months of the preceding calendar year by reason of the death of the person's spouse, the combined disposable income of the person will be calculated by multiplying the average monthly combined disposable income of the person after the death of the spouse by twelve.
(c) "Continuing care retirement community" or "CCRC" means an entity that provides shelter and services under continuing care contracts with its residents or includes a health care facility or health service.
(d) "Continuing care contract" means a contract to provide a person, for the duration of that person's life or for a term in excess of one year, shelter along with nursing, medical, health-related or personal care services, that is conditioned upon the transfer of property, the payment of an entrance fee to the provider of the services, and/or the payment of periodic charges in consideration for the care and services provided. A continuing care contract is not excluded from this definition because the contract is mutually terminable or because shelter and services are not provided at the same location.
(e) "Cotenant" means a person who resides with an eligible resident and who shares personal financial resources with the eligible resident.
(f) "Department" means the department of revenue.
(g) "Eligible resident" means a person who:
(i) Occupied the dwelling unit as ((his or her)) their
principal place of residence as of December 31st of the
assessment year the home first became operational or in each
subsequent year, occupied the dwelling unit as their principal
place of residence as of January 1st of the assessment year ((in
which the claim for exemption is filed. The exemption will
continue if the)). If an eligible resident is confined to a
hospital or nursing home and the dwelling unit is temporarily
unoccupied or occupied by a spouse, a person financially
dependent on the claimant for support, or both, the dwelling will
still be considered occupied by the eligible resident;
(ii) Is sixty-one years of age or older on December 31st of the year in which the claim for exemption is filed, or is, at the time of filing, retired from regular gainful employment by reason of physical disability. A surviving spouse of a person who was receiving an exemption at the time of the person's death will qualify for this exemption if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this subsection; and
(iii) Has a combined disposable income that is no more than the greater of twenty-two thousand dollars or eighty percent of the median income adjusted for family size as determined by federal Department of Housing and Urban Development (HUD) for the county in which the person resides.
(h) "First assessment year the home becomes operational" or "the assessment year the home first became operational" means the first year the home becomes occupied by and provides services to eligible residents. Depending upon the facts, this year will be the year during which construction of the home is completed or the year during which a nonprofit organization purchases or acquires an existing home and begins to operate it as a nonprofit home for the aging.
(i) "Homes for the aging" or "home(s)" means a residential housing facility that:
(i) Provides a housing arrangement chosen voluntarily by the resident, the resident's guardian or conservator, or another responsible person;
(ii) Has only residents who are at least sixty-one years of age or who have needs for care generally compatible with persons who are at least sixty-one years of age; and
(iii) Provides varying levels of care and supervision, as agreed to at the time of admission or as determined necessary at subsequent times of reappraisal.
(((i))) (j) "HUD" means the federal Department of Housing
and Urban Development.
(((j))) (k) "Occupied dwelling unit" means a living unit
that is occupied either on January 1st of the year in which the
claim for exemption is filed or on December 31st of the first
assessment year the home becomes operational and in which the
claim for exemption is filed.
(((k))) (l) "Property that is reasonably necessary" means
all property that is:
(i) Operated and used by a home; and
(ii) The use of which is restricted to residents, guests, or employees of a home.
(3) Application for exemption. The tax exemption authorized
by RCW 84.36.041 is claimed by and benefits a nonprofit home for
the aging, not the residents of ((a)) the home. Therefore, the
claim for this exemption is submitted by a home to the
department.
(a) If a claim for exemption is filed on behalf of a home under RCW 84.36.041 and the exemption is granted, no resident of that home may receive a personal exemption under RCW 84.36.381.
(b) A listing of the varying levels of care and supervision provided or coordinated by the home must accompany all initial applications submitted for exemption. Examples of the varying levels of care and supervision include, but are not limited to, the following:
(i) Conducting routine room checks;
(ii) Arranging for or providing transportation;
(iii) Arranging for or providing meals;
(iv) On site medical personnel;
(v) Monitoring of medication; or
(vi) Housekeeping services.
(c) Homes having real property that is used for purposes other than as a home (for example, property used for a barber shop) must provide the department with a floor plan identifying the square footage devoted to each exempt and nonexempt use.
(d) At the time an application for exemption is submitted, the home must submit proof that it is recognized by the Internal Revenue Service as a 501(c) organization.
(e) Homes that apply for a total exemption because of tax exempt bond financing must submit a copy of the regulatory agreement between the home and the entity that issues the bonds. When only a portion of the home is financed by a program using tax exempt bonds, the home must submit a site plan of the home indicating the areas so financed.
(4) Segregation. A nonprofit organization that provides shelter and services to elderly and disabled individuals may use the facility for more than one purpose that is exempt from property tax under chapter 84.36 RCW. Property that is used for more than one exempt purpose and that qualifies for exemption under a statute other than RCW 84.36.041 will be segregated and exempted pursuant to the applicable statute.
(a) If a home includes a nursing home, the department will segregate the home and the part of the facility that is used as a nursing home. The department will separately determine the eligibility of the home under RCW 84.36.041 and the nursing home under RCW 84.36.040 for the property tax exemption available under each statute.
Exception:
If the home does not receive Medicaid funds (including CCRCs that are permitted to receive Medicaid funds
during an initial transition period only) and is seeking a total exemption because of tax exempt bond financing,
the home and nursing home will be considered as a whole when the set-aside requirements are applied.
(b) Dwelling units that are occupied by residents who do not
meet the age or disability requirements of RCW 84.36.041 will be
segregated and taxed.
(c) Common or shared areas. Areas of a home that are jointly used for two or more purposes exempt from property tax under chapter 84.36 RCW will be exempted under RCW 84.36.041.
(i) The joint use of the common or shared areas must be reasonably necessary for the purposes of the nonprofit organization, association, or corporation exempt from property tax under chapter 84.36 RCW. A kitchen, dining room, and laundry room are examples of the types of common or shared areas for which a property tax exemption may be granted.
(ii) Example. A nonprofit organization uses its facility as a home for the aging and a nursing home. The home and nursing home jointly use the kitchen and dining room. The home may receive a property tax exemption for the common or shared areas under RCW 84.36.041. The eligibility of the other areas of the facility will be determined by the appropriate statute. The home's eligibility will be determined by RCW 84.36.041 and the nursing home's eligibility will be determined by RCW 84.36.040.
(5) Homes subsidized by HUD. Homes subsidized by a HUD program must initially and each March 31st thereafter provide the department with a letter of certification from HUD of continued HUD subsidy and a list of the name, age, and/or disability of all residents. If the property is subsidized by more than one HUD contract and one of the contracts expires or is otherwise no longer in effect, the eligibility of the portion of the facility still subsidized by HUD will be conditioned on receipt of a letter of certification from HUD and a listing of all persons residing on the property. The eligibility of the remainder of the property will be determined by the number of dwelling units occupied by eligible residents on January 1st following the expiration or cancellation of the HUD subsidy.
(6) Homes that are not subsidized by HUD. If a home is not
subsidized by HUD or does not meet the requirements to receive a
total exemption because of tax exempt bond financing, it may
receive a total or partial exemption from property tax. The
extent of the exemption will be determined by the number of
dwelling units occupied by eligible residents. If more than
fifty percent of the dwelling units are occupied by eligible
residents, the home may receive a total exemption. Alternatively, if less than fifty percent of the dwelling units
are occupied by eligible residents, the home may receive partial
exemption for its real property on a unit by unit basis and a
total exemption for its personal property. An income
verification form((, Form REV 64-0043,)) will be used to
determine if a resident of a home meets the criteria of "eligible
resident." During the initial application process, the residents
of a home applying for exemption will be asked to submit an
income verification form with the assessor of the county in which
the home is located and the assessor and/or the department may
request any relevant information it deems necessary to make its
determination.
(a) ((Between January 1st and July 1st of the year preceding
the year in which the tax is due, residents must file Form REV
64-0043 with the assessor of the county in which the home is
located.)) The type of income verification form required and its
due date depends upon the date the home first became operational
and began to provide services to eligible residents:
(i) If the home was operating and providing services to eligible residents on the January 1st assessment date, the residents are to submit Form REV 64-0043 between January 1st and July 1st of the year preceding the year in which the tax is due; or
(ii) If the home started operating and providing services to eligible residents after the January 1st assessment date, the residents are to submit Form REV 64-0042 on or before December 31st of the year preceding the year in which the tax is due. In this situation, no income verification forms will be required during the following year if the same eligible residents occupy the same dwelling units on December 31st and January 1st of the subsequent year.
(b) If two or more residents occupy one unit, only one cotenant is required to file verification of combined disposable income, as defined in subsection (2) of this section, with the assessor.
(c) Form REV 64-0043 will not be accepted by the assessor if it is submitted or postmarked after July 1st unless the assessor and/or the department has agreed to waive this deadline. Form REV 64-0042 will not be accepted if it is submitted or postmarked after December 31st unless the assessor and/or department has agreed to waive this deadline.
(d) After the application for exemption is approved,
residents will not be required to file a new income verification
form unless a change in their circumstances occurs or the
assessor requests it. However, at any time after the initial
application ((for exemption)) is approved, assessors and/or the
department may:
(i) Request residents to complete Form REV 64-0043((, the
verification of income form));
(ii) Conduct audits; and
(iii) Request other relevant information to ensure continued eligibility.
(e) ((If)) By March 31st each year, a home not subsidized by
HUD that wishes to retain its exempt property tax status((, the
home)) must ((by March 31st of each year)) file with the
department a list of the total number of dwelling units in
((their)) its complex, the number of occupied dwelling units in
((their)) its complex as of January 1st, the number of previously
qualified dwelling units in ((their)) its complex that are no
longer occupied by the same eligible residents, and a list of the
name, age, and/or disability of all residents and the date upon
which they moved into or occupied the home. If a home's
eligibility was based upon the number of units occupied on
December 31st, the home must only provide the department with an
amended list of additions or deletions as of the subsequent
January 1st assessment date.
(7) Homes financed by tax exempt bonds. Homes that receive a total property tax exemption because of tax exempt bond financing must initially and each March 31st thereafter provide the department with a letter of certification from the agency or organization monitoring compliance with the bond requirements. The letter of certification must verify that the home is in full compliance with all requirements and set-asides of the underlying regulatory agreement.
(a) If the set-aside requirements contained in the regulatory agreement differ from the set-aside requirements established by the department and set forth in WAC 458-16A-010, the department may require the residents of the home to submit income verification forms (Form REV 64-0042 or 64-0043) to the assessor of the county in which the home is located.
(b) ((The)) A home for the aging that is receiving a
property tax exemption must ((also)) annually submit a list of
the name, age, and/or disability of all residents in the home to
the department.
(8) Assessor's responsibilities. Assessors will determine the age or disability and income eligibility of all residents who file Form REV 64-0042 or 64-0043, the income verification forms. By July 15th each year or by January 15th of the assessment year following the first assessment year a home becomes operational, the assessor will forward a copy of Form REV 64-0042 or 64-0043 to the department for each resident who meets the eligibility requirements.
(9) ((Department of revenue responsibilities. The
department will make its determination by August 31st, or within
thirty days of the date all required information is submitted to
the department, of the exempt status of a home that applies for
this exemption.
(10))) Appeals. An applicant who is determined not to be an "eligible resident" by the assessor and a home that is denied a property tax exemption by the department each have the right to appeal. Appeals must be filed within thirty days of the date the notice of ineligibility or denial was mailed by the assessor or the department.
(a) If the assessor determines that an applicant does not
meet the ((criteria to be)) definition of an "eligible resident"
((of a home)), the resident may appeal this decision to the board
of equalization of the county in which the home is located.
(b) If the department denies, in whole or in part, an application for exemption, the home may appeal this denial to the state board of tax appeals.
(((11))) (10) Additional requirements. Any nonprofit home
for the aging that applies for a property tax exemption under
this section must also comply with the provisions of WAC 458-16A-010 and 458-16-165. WAC 458-16A-010 contains information
regarding the basic eligibility requirements to receive a total
or partial exemption under RCW 84.36.041. WAC 458-16-165 sets
forth additional requirements that must be complied with to
obtain a property tax exemption pursuant to RCW 84.36.041.
[Statutory Authority: RCW 84.08.010, 84.08.070 and 84.36.041. 95-06-042, § 458-16A-020, filed 2/24/95, effective 3/27/95.]