AN ACT Relating to providing a property tax exemption for property owned by a qualifying nonprofit organization and loaned, leased, or rented to and used by any government entity to provide character-building, benevolent, protective, or rehabilitative social services;
SB 5697 expands Washington’s property tax exemption rules for certain nonprofit-owned property. The bill adds an exemption for real and personal property owned by a qualifying nonprofit organization and loaned, leased, or rented to a government entity when the property is used to provide character-building, benevolent, protective, or rehabilitative social services. It also clarifies related exemption language for nonprofit property used for social services, including property used by nonprofits that are federally tax-exempt under section 501(c)(3) and involved in guaranteed student loan activities, and it preserves existing exemptions for certain church camps, youth-serving organizations, veterans’ organizations, and other nonprofit uses already recognized in statute.
The bill’s practical effect is to reduce property tax liability for qualifying nonprofit-owned property used by public entities for social-service purposes, and to make those properties eligible for exemption even when the nonprofit is not the direct operator of the services, so long as the property is used by a government entity for the specified purposes. It amends RCW provisions governing property tax exemptions and adds new sections stating that the act applies prospectively to taxes levied for collection in the future and that certain existing RCW provisions do not apply to the act.
The overall sentiment appears favorable. The Senate Committee on Ways & Means recommended the bill “do pass” unanimously, 18-0, and the bill passed the Senate on third reading by a substantial margin, 41-7. That voting pattern suggests broad support for the measure, likely reflecting agreement that the exemption supports nonprofit and public-service uses of property.
The main point of contention is likely fiscal rather than policy-based: the bill narrows the property tax base by exempting additional property, which can reduce local government tax revenue. Any opposition would likely come from concerns about revenue loss, the scope of the exemption, or whether the property use qualifies closely enough as social service activity. Supporters, by contrast, appear to view the exemption as a targeted way to encourage nonprofit-government partnerships that deliver social services to the public.
SB 5697 amends Washington property tax exemption statutes to add a new exemption category for nonprofit-owned property that is leased, rented, or loaned to government entities and used for specified social services. It also revises existing exemption language in RCW provisions governing nonprofit, church, veterans, and other charitable property uses, and adds effective-date language applying the act to future tax collections. The bill affects nonprofit organizations, government entities using such property, and local taxing districts that would otherwise collect property taxes on the property.
The bill appears to have strong support in the Legislature. It received a unanimous do-pass recommendation from the Senate Committee on Ways & Means and then passed the Senate 41-7 on final passage. The available record shows no committee transcript debate, but the vote totals indicate the measure was generally viewed positively as a targeted tax exemption for charitable and public-service uses.
The likely controversy centers on the fiscal impact of expanding a property tax exemption and the breadth of the qualifying use. Critics would be expected to question whether exempting nonprofit-owned property used by government entities is too broad or could erode local revenue, while supporters would emphasize that the property is being used to deliver character-building, benevolent, protective, or rehabilitative social services. Another possible point of discussion is the bill’s interaction with existing exemption categories and whether the new language could create administrative complexity in determining eligibility.