Nonprofit housing providers

AN ACT Relating to ensuring nonprofit housing providers qualify 1
for a property tax exemption when the property is temporarily used 2
for certain community purposes other than affordable housing; 3
amending RCW 84.36.805, 84.36.805, 84.36.049, 84.36.815, and 4
84.36.815; creating new sections; providing effective dates; and 5
providing expiration dates. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
Sec. 1. RCW 84.36.805 and 2023 c 69 s 2 are each amended to read 8
as follows: 9
(1) In order to qualify for an exemption under this chapter, the 10
nonprofit organizations, associations, or corporations must satisfy 11
the conditions in this section. 12
(2) The property must be used exclusively for the actual 13
operation of the activity for which exemption is granted, unless 14
otherwise provided, and does not exceed an amount reasonably 15
necessary for that purpose. Notwithstanding anything to the contrary 16
in this section: 17
(a) The loan or rental of the property does not subject the 18
property to tax if: 19
(i) The rents and donations received for the use of the portion 20
of the property are reasonable and do not exceed the maintenance and 21
H-3054.1
HOUSE BILL 2610
State of Washington 69th Legislature 2026 Regular Session
By Representatives Street, Mena, Reed, Cortes, Scott, Ormsby, Obras,
and Hill
Read first time 01/21/26. Referred to Committee on Finance.
p. 1 HB 2610
operation expenses attributable to the portion of the property loaned 1
or rented; 2
(ii) Except for the exemptions under RCW 84.36.030(4), 84.36.037, 3
84.36.050, and 84.36.060(1) (a) and (b), the property would be exempt 4
from tax if owned by the organization to which it is loaned or 5
rented; and 6
(iii) This subsection (2)(a) does not apply to exemptions granted 7
under RCW 84.36.042; 8
(b) The use of the property for fund-raising events does not 9
subject the property to tax if the fund-raising events are consistent 10
with the purposes for which the exemption is granted or are conducted 11
by a nonprofit organization. If the property is loaned or rented to 12
conduct a fund-raising event, the requirements of (a) of this 13
subsection (2) apply; 14
(c) An inadvertent use of the property in a manner inconsistent 15
with the purpose for which exemption is granted does not subject the 16
property to tax, if the inadvertent use is not part of a pattern of 17
use. A pattern of use is presumed when an inadvertent use is repeated 18
in the same assessment year or in two or more successive assessment 19
years. 20
(3) The facilities and services must be available to all 21
regardless of race, color, national origin or ancestry.22
(4) The organization, association, or corporation must be duly 23
licensed or certified where such licensing or certification is 24
required by law or regulation. 25
(5) Property sold to organizations, associations, or corporations 26
with an option to be repurchased by the seller does not qualify for 27
exempt status. This subsection does not apply to: 28
(a) Limited equity cooperatives as defined in RCW 84.36.675; or29
(b) Property sold to a nonprofit entity, as defined in RCW 30
84.36.560, by: 31
(i) A nonprofit as defined in RCW 84.36.800 that is exempt from 32
income tax under 26 U.S.C. Sec. 501 (c) of the federal internal 33
revenue code; 34
(ii) A governmental entity established under RCW 35.21.660, 35
35.21.670, or 35.21.730; 36
(iii) A housing authority created under RCW 35.82.030;37
(iv) A housing authority meeting the definition in RCW 38
35.82.210(2)(a); or 39
(v) A housing authority established under RCW 35.82.300.40
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(6) The department must have access to its books in order to 1
determine whether the nonprofit organization, association, or 2
corporation is exempt from taxes under this chapter.3
(7) This section does not apply to exemptions granted under RCW 4
84.36.020, 84.36.032, 84.36.250, ((84.36.049,)) and 84.36.480(2).5
(8)(a) The use of property exempt under this chapter, other than 6
as specifically authorized by this chapter, nullifies the exemption 7
otherwise available for the property for the assessment year. 8
However, the exemption is not nullified by the use of the property by 9
any individual, group, or entity, where such use is not otherwise 10
authorized by this chapter, for not more than 50 days in each 11
calendar year, and the property is not used for pecuniary gain or to 12
promote business activities for more than 15 of the 50 days in each 13
calendar year. The 50 and 15-day limitations provided in this 14
subsection (8)(a) do not include days during which setup and takedown 15
activities take place immediately preceding or following a meeting or 16
other event by an individual, group, or entity using the property as 17
provided in this subsection (8)(a). 18
(b) If uses of the exempt property exceed the 50 and 15-day 19
limitations provided in (a) of this subsection (8) during an 20
assessment year, the exemption is removed for the affected portion of 21
the property for that assessment year. 22
(c) The 15-day and 50-day limitations provided in (a) of this 23
subsection (8) do not apply to property exempt under RCW 84.36.037 if 24
the property is used for activities related to a qualifying farmers 25
market, as defined in RCW 66.24.170, and all income received from 26
rental or use of the exempt property is used for capital improvements 27
to the exempt property, maintenance and operation of the exempt 28
property, or exempt purposes. Exempt property under RCW 84.36.037 may 29
be used for up to 53 days for the purposes of a qualifying farmers 30
market. 31
Sec. 2. RCW 84.36.805 and 2023 c 69 s 3 are each amended to read 32
as follows: 33
(1) In order to qualify for an exemption under this chapter, the 34
nonprofit organizations, associations, or corporations must satisfy 35
the conditions in this section. 36
(2) The property must be used exclusively for the actual 37
operation of the activity for which exemption is granted, unless 38
otherwise provided, and does not exceed an amount reasonably 39
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necessary for that purpose. Notwithstanding anything to the contrary 1
in this section: 2
(a) The loan or rental of the property does not subject the 3
property to tax if: 4
(i) The rents and donations received for the use of the portion 5
of the property are reasonable and do not exceed the maintenance and 6
operation expenses attributable to the portion of the property loaned 7
or rented; 8
(ii) Except for the exemptions under RCW 84.36.030(4), 84.36.037, 9
84.36.050, and 84.36.060(1) (a) and (b), the property would be exempt 10
from tax if owned by the organization to which it is loaned or 11
rented; and 12
(iii) This subsection (2)(a) does not apply to exemptions granted 13
under RCW 84.36.042; 14
(b) The use of the property for fund-raising events does not 15
subject the property to tax if the fund-raising events are consistent 16
with the purposes for which the exemption is granted or are conducted 17
by a nonprofit organization. If the property is loaned or rented to 18
conduct a fund-raising event, the requirements of (a) of this 19
subsection (2) apply; 20
(c) An inadvertent use of the property in a manner inconsistent 21
with the purpose for which exemption is granted does not subject the 22
property to tax, if the inadvertent use is not part of a pattern of 23
use. A pattern of use is presumed when an inadvertent use is repeated 24
in the same assessment year or in two or more successive assessment 25
years. 26
(3) The facilities and services must be available to all 27
regardless of race, color, national origin or ancestry.28
(4) The organization, association, or corporation must be duly 29
licensed or certified where such licensing or certification is 30
required by law or regulation. 31
(5) Property sold to organizations, associations, or corporations 32
with an option to be repurchased by the seller does not qualify for 33
exempt status. This subsection does not apply to property sold to a 34
nonprofit entity, as defined in RCW 84.36.560(7), by:35
(a) A nonprofit as defined in RCW 84.36.800 that is exempt from 36
income tax under 26 U.S.C. Sec. 501 (c) of the federal internal 37
revenue code; 38
(b) A governmental entity established under RCW 35.21.660, 39
35.21.670, or 35.21.730; 40
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(c) A housing authority created under RCW 35.82.030;1
(d) A housing authority meeting the definition in RCW 2
35.82.210(2)(a); or 3
(e) A housing authority established under RCW 35.82.300.4
(6) The department must have access to its books in order to 5
determine whether the nonprofit organization, association, or 6
corporation is exempt from taxes under this chapter.7
(7) This section does not apply to exemptions granted under RCW 8
84.36.020, 84.36.032, 84.36.250, ((84.36.049,)) and 84.36.480(2).9
(8)(a) The use of property exempt under this chapter, other than 10
as specifically authorized by this chapter, nullifies the exemption 11
otherwise available for the property for the assessment year. 12
However, the exemption is not nullified by the use of the property by 13
any individual, group, or entity, where such use is not otherwise 14
authorized by this chapter, for not more than fifty days in each 15
calendar year, and the property is not used for pecuniary gain or to 16
promote business activities for more than fifteen of the fifty days 17
in each calendar year. The fifty and fifteen-day limitations provided 18
in this subsection (8)(a) do not include days during which setup and 19
takedown activities take place immediately preceding or following a 20
meeting or other event by an individual, group, or entity using the 21
property as provided in this subsection (8)(a). 22
(b) If uses of the exempt property exceed the fifty and fifteen-23
day limitations provided in (a) of this subsection (8) during an 24
assessment year, the exemption is removed for the affected portion of 25
the property for that assessment year. 26
(c) The 15-day and 50-day limitations provided in (a) of this 27
subsection (8) do not apply to property exempt under RCW 84.36.037 if 28
the property is used for activities related to a qualifying farmers 29
market, as defined in RCW 66.24.170, and all income received from 30
rental or use of the exempt property is used for capital improvements 31
to the exempt property, maintenance and operation of the exempt 32
property, or exempt purposes. Exempt property under RCW 84.36.037 may 33
be used for up to 53 days for the purposes of a qualifying farmers 34
market. 35
Sec. 3. RCW 84.36.049 and 2024 c 273 s 1 are each amended to 36
read as follows: 37
(1) All real property is exempt from state and local property 38
taxes if owned by: 39
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(a) A nonprofit entity, or a qualified cooperative association, 1
for the purpose of developing or redeveloping on the real property 2
one or more residences to be sold to low-income households including 3
land to be leased as provided in subsection (((9))) (10)(f)(ii) of 4
this section; or 5
(b) A nonprofit entity for the purpose of selling the real 6
property to a low-income household who enters into an agreement with 7
the nonprofit to build, or have built, through a qualified mutual 8
self-help housing program a residence on the real property.9
(2) The exemption provided in this section expires on or at the 10
earlier of: 11
(a)(i) For purposes of the exemption provided in subsection 12
(1)(a) of this section, the date on which the nonprofit entity 13
transfers title to the single-family dwelling unit or the date on 14
which the qualified cooperative association first conveys, directly 15
or indirectly through the transfer of an ownership interest in the 16
association, any single-family dwelling unit on the property or any 17
part of the property; or 18
(ii) For purposes of the exemption provided in subsection (1)(b) 19
of this section, the date on which the nonprofit entity transfers 20
title to the real property to the low-income household;21
(b) The date on which the nonprofit entity or qualified 22
cooperative association executes a lease of land described in 23
subsection (((9))) (10)(f)(ii) of this section; 24
(c) The end of the seventh consecutive property tax year for 25
which the property is granted an exemption under this section or, if 26
the nonprofit entity or qualified cooperative association has claimed 27
an extension under subsection (4) of this section, the end of the 28
tenth consecutive property tax year for which the property is granted 29
an exemption under this section; or 30
(d) The property is no longer held for the purpose for which the 31
exemption was granted. 32
(3) The exemption under this section does not expire as a 33
consequence of the real property being transferred by one nonprofit 34
entity to another nonprofit entity or to a qualified cooperative 35
association so long as the transferee timely applies to the 36
department and is approved for a continuation of the exemption.37
(4) If the nonprofit entity believes that title to the single-38
family dwelling unit, or title of the real property exempt under 39
subsection (1)(b) of this section, will not be transferred by the end 40
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of the sixth consecutive property tax year or if a qualified 1
cooperative association believes that neither a single-family 2
dwelling unit nor any other part of the property will be transferred 3
by the end of the sixth consecutive property tax year, the nonprofit 4
entity or qualified cooperative association may claim a three-year 5
extension of the exemption period by: 6
(a) Filing a notice of extension with the department on or before 7
March 31st of the sixth consecutive property tax year; and8
(b) Providing a filing fee equal to the greater of $200 or 0.1 9
percent of the real market value of the property as of the most 10
recent assessment date with the notice of extension. The filing fee 11
must be deposited into the state general fund. 12
(5)(a) ((If)) Except as provided in subsection (6) of this 13
section, if the nonprofit entity has not transferred title to the 14
single-family dwelling unit to a low-income household or title to the 15
real property exempt under subsection (1)(b) of this section to a 16
low-income household, or if a qualified cooperative association has 17
not transferred either a single-family dwelling unit or any other 18
property, within the applicable period described in subsection (2)(c) 19
of this section, or if the nonprofit entity or qualified cooperative 20
association has converted the property to a purpose other than the 21
purpose for which the exemption was granted, the property is 22
disqualified from the exemption. 23
(b) Upon disqualification, the county treasurer must collect an 24
additional tax equal to all taxes that would have been paid on the 25
property but for the existence of the exemption, plus interest at the 26
same rate and computed in the same way as that upon delinquent 27
property taxes. 28
(c) The additional tax must be distributed by the county 29
treasurer in the same manner in which current property taxes 30
applicable to the subject property are distributed. The additional 31
taxes and interest are due in full 30 days following the date on 32
which the treasurer's statement of additional tax due is issued.33
(d) The additional tax and interest is a lien on the property. 34
The lien for additional tax and interest has priority to and must be 35
fully paid and satisfied before any recognizance, mortgage, judgment, 36
debt, obligation, or responsibility to or with which the property may 37
become charged or liable. If a nonprofit entity or qualified 38
cooperative association sells or transfers real property subject to a 39
lien for additional taxes under this subsection, such unpaid 40
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additional taxes must be paid by the nonprofit entity or qualified 1
cooperative association at the time of sale or transfer. The county 2
auditor may not accept an instrument of conveyance unless the 3
additional tax has been paid. The nonprofit entity, qualified 4
cooperative association, or the new owner may appeal the assessed 5
values upon which the additional tax is based to the county board of 6
equalization in accordance with the provisions of RCW 84.40.038.7
(6) The exemption under this section does not expire as a 8
consequence of the real property being transferred to another 9
nonprofit organization, association, or corporation for a use that 10
also qualifies for and is granted an exemption under this chapter.11
(7)(a) Nonprofit entities receiving an exemption under subsection 12
(1)(a) of this section must immediately notify the department when 13
the exempt real property becomes occupied. The notice of occupancy 14
made to the department must include a certification by the nonprofit 15
entity that the occupants are a low-income household and a date when 16
the title to the single-family dwelling unit was or is anticipated to 17
be transferred. 18
(b) Qualified cooperative associations receiving an exemption 19
under this section must immediately notify the department when any 20
portion of the exempt real property becomes occupied as well as when 21
all of the exempt real property becomes occupied. The notice provided 22
when all the exempt real property becomes occupied must be filed 23
within one year of all exempt real property becoming occupied and 24
demonstrate that the qualified cooperative association does, in fact, 25
meet the requirements for being a qualified cooperative association.26
(c) Nonprofit entities receiving an exemption under subsection 27
(1)(b) of this section must immediately notify the department when 28
the exempt real property is sold to the low-income household. The 29
notice must include a date when the title to the real property was or 30
is anticipated to be transferred and a certification by the nonprofit 31
entity that the purchaser is a low-income household.32
(d) The department of revenue must make the notices of occupancy 33
and real property transfers under (c) of this subsection available to 34
the joint legislative audit and review committee, upon request by the 35
committee, in order for the committee to complete its review of the 36
tax preference in this section. 37
(((7))) (8) Upon cessation of the exemption, the value of new 38
construction and improvements to the property, not previously 39
considered as new construction, must be considered as new 40
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construction for purposes of calculating levies under chapter 84.55 1
RCW. The assessed value of the property as it was valued prior to the 2
beginning of the exemption may not be considered as new construction 3
upon cessation of the exemption. 4
(((8))) (9) Nonprofit entities and qualified cooperative 5
associations receiving an exemption under this section must provide 6
annual financial statements to the joint legislative audit and review 7
committee, upon request by the committee, for the years that the 8
exemption has been claimed. The nonprofit entity or qualified 9
cooperative associations must identify the line or lines on the 10
financial statements that comprise the percentage of revenues 11
dedicated to the development of affordable housing.12
(((9))) (10) The definitions in this subsection apply throughout 13
this section unless the context clearly requires otherwise.14
(a) "Financial statements" means an audited annual financial 15
statement and a completed United States treasury internal revenue 16
service return form 990 for organizations exempt from income tax.17
(b) "Low-income household" means a single person, family, or 18
unrelated persons living together whose adjusted income is less than 19
80 percent of the median family income, adjusted for family size as 20
most recently determined by the federal department of housing and 21
urban development for the county in which the property is located.22
(c) "Nonprofit entity" means a nonprofit as defined in RCW 23
84.36.800 that is exempt from federal income taxation under 26 U.S.C. 24
Sec. 501 (c)(3) of the federal internal revenue code of 1986, as 25
amended. 26
(d) "Qualified cooperative association" means a cooperative 27
association formed under chapter 23.86 or 24.06 RCW that owns the 28
real property for which an exemption is sought under this section and 29
following the completion of the development or redevelopment of such 30
real property: 31
(i) 60 percent or more of the residences are owned by low-income 32
households; and 33
(ii) 80 percent or more of the square footage of any improvements 34
to the real property are exclusively used or available for use by the 35
owners of the residences. 36
(e) "Qualified mutual self-help housing program" is a program 37
dedicated to supporting the building of residences for low-income 38
households in Washington through a mutual self-help construction 39
method by which multiple low-income households use their own labor to 40
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reduce total construction costs of their residences. The program must 1
also be: 2
(i) Operated by a nonprofit entity; and 3
(ii) Receiving financial support from the United States 4
department of agriculture's mutual self-help housing technical 5
assistance grant program or its successor program. 6
(f) "Residence" means: 7
(i) A single-family dwelling unit whether such unit be separate 8
or part of a multiunit dwelling; and 9
(ii) The land on which a dwelling unit described in (f)(i) of 10
this subsection (((9))) (10) stands, whether to be sold, or to be 11
leased for life or 99 years, to the low-income household owning such 12
dwelling unit. 13
(((10))) (11) The department may not accept applications for the 14
initial exemption in this section after December 31, 2027. The 15
exemption in this section may not be approved for and does not apply 16
to taxes due in 2038 and thereafter. 17
(((11))) (12) To be exempt under this section, the property must 18
be used exclusively for the purposes for which the exemption is 19
granted, except as otherwise provided in this section or RCW 20
84.36.805.21
(13) This section expires January 1, 2038. 22
Sec. 4. RCW 84.36.815 and 2022 c 93 s 6 are each amended to read 23
as follows: 24
(1) In order to qualify for exempt status for any real or 25
personal property under this chapter except personal property under 26
RCW 84.36.600, all foreign national governments; cemeteries; 27
nongovernmental nonprofit corporations, organizations, and 28
associations; hospitals owned and operated by a public hospital 29
district for purposes of exemption under RCW 84.36.040(2); and soil 30
and water conservation districts must file an initial application on 31
or before March 31st with the state department of revenue. However, 32
the initial application deadline for the exemption provided in RCW 33
84.36.049 is July 1st for 2016 and March 31st for 2017 and 34
thereafter. All applications must be filed on forms prescribed by the 35
department and must be signed by an authorized agent of the 36
applicant. 37
(2)(a) In order to requalify for exempt status, all applicants 38
except nonprofit cemeteries ((and nonprofits receiving the exemption 39
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under RCW 84.36.049)) and nonprofits receiving the exemptions under 1
RCW 84.36.560 or 84.36.675 must file an annual renewal declaration on 2
or before March 31st each year. The renewal declaration must be on 3
forms prescribed by the department of revenue and must contain a 4
statement certifying the exempt status of the real or personal 5
property owned by the exempt organization. This renewal declaration 6
may be submitted electronically in a format provided or approved by 7
the department. Information may also be required with the renewal 8
declaration to assist the department in determining whether the 9
property tax exemption should continue. 10
(b) In order to requalify for exempt status, nonprofits receiving 11
the exemptions under RCW 84.36.560 or 84.36.675 must file a renewal 12
declaration on or before March 31st of every third year following 13
initial qualification for the exemption. Except for the annual 14
renewal requirement, all other requirements of (a) of this subsection 15
apply. 16
(3) When an organization acquires real property qualified for 17
exemption or converts real property to exempt status, the 18
organization must file an initial application for the property within 19
sixty days following the acquisition or conversion in accordance with 20
all applicable provisions of subsection (1) of this section. If the 21
application is filed after the expiration of the 60-day period, a 22
late filing penalty is imposed under RCW 84.36.825.23
(4) When organizations acquire real property qualified for 24
exemption or convert real property to an exempt use, the property, 25
upon approval of the application for exemption, is entitled to a 26
property tax exemption for property taxes due and payable the 27
following year. If the owner has paid taxes for the year following 28
the year the property qualified for exemption, the owner is entitled 29
to a refund of the amount paid on the property so acquired or 30
converted. 31
(5) The department must share approved initial applications for 32
the tax preferences provided in RCW 84.36.049 and 84.36.675 with the 33
joint legislative audit and review committee, upon request by the 34
committee, in order for the committee to complete its review of the 35
tax preferences provided in RCW 84.36.049 and 84.36.675.36
Sec. 5. RCW 84.36.815 and 2020 c 273 s 2 are each amended to 37
read as follows: 38
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(1) In order to qualify for exempt status for any real or 1
personal property under this chapter except personal property under 2
RCW 84.36.600, all foreign national governments; cemeteries; 3
nongovernmental nonprofit corporations, organizations, and 4
associations; hospitals owned and operated by a public hospital 5
district for purposes of exemption under RCW 84.36.040(2); and soil 6
and water conservation districts must file an initial application on 7
or before March 31st with the state department of revenue. However, 8
the initial application deadline for the exemption provided in RCW 9
84.36.049 is July 1st for 2016 and March 31st for 2017 and 10
thereafter. All applications must be filed on forms prescribed by the 11
department and must be signed by an authorized agent of the 12
applicant. 13
(2)(a) In order to requalify for exempt status, all applicants 14
except nonprofit cemeteries ((and nonprofits receiving the exemption 15
under RCW 84.36.049)) and nonprofits receiving the exemption under 16
RCW 84.36.560 must file an annual renewal declaration on or before 17
March 31st each year. The renewal declaration must be on forms 18
prescribed by the department of revenue and must contain a statement 19
certifying the exempt status of the real or personal property owned 20
by the exempt organization. This renewal declaration may be submitted 21
electronically in a format provided or approved by the department. 22
Information may also be required with the renewal declaration to 23
assist the department in determining whether the property tax 24
exemption should continue. 25
(b) In order to requalify for exempt status, nonprofits receiving 26
the exemption under RCW 84.36.560 must file a renewal declaration on 27
or before March 31st of every third year following initial 28
qualification for the exemption. Except for the annual renewal 29
requirement, all other requirements of (a) of this subsection apply.30
(3) When an organization acquires real property qualified for 31
exemption or converts real property to exempt status, the 32
organization must file an initial application for the property within 33
sixty days following the acquisition or conversion in accordance with 34
all applicable provisions of subsection (1) of this section. If the 35
application is filed after the expiration of the sixty-day period, a 36
late filing penalty is imposed under RCW 84.36.825.37
(4) When organizations acquire real property qualified for 38
exemption or convert real property to an exempt use, the property, 39
upon approval of the application for exemption, is entitled to a 40
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property tax exemption for property taxes due and payable the 1
following year. If the owner has paid taxes for the year following 2
the year the property qualified for exemption, the owner is entitled 3
to a refund of the amount paid on the property so acquired or 4
converted. 5
(5) The department must share approved initial applications for 6
the tax preference provided in RCW 84.36.049 with the joint 7
legislative audit and review committee, upon request by the 8
committee, in order for the committee to complete its review of the 9
tax preference provided in RCW 84.36.049. 10
NEW SECTION. Sec. 6. This act applies to taxes levied for 11
collection in 2027 and thereafter.12
NEW SECTION. Sec. 7. RCW 82.32.805 and 82.32.808 do not apply 13
to this act.14
NEW SECTION. Sec. 8. Section 1 of this act expires January 1, 15
2033.16
NEW SECTION. Sec. 9. Section 2 of this act takes effect January 17
1, 2033.18
NEW SECTION. Sec. 10. Section 4 of this act expires January 1, 19
2033.20
NEW SECTION. Sec. 11. Section 5 of this act takes effect 21
January 1, 2033.22
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