HB 1094
SignedHouse
Social services/property tax
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.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill expands Washington’s property tax exemption to allow qualifying nonprofits to receive tax-exempt status for property they loan, lease, or rent to government or other nonprofits—provided the property is used to deliver social services like youth programs, job training, or crisis support. It also clarifies that thrift store sales don’t jeopardize the exemption if funds support the nonprofit’s mission.
- Expands property tax exemption to include property owned by qualifying nonprofits but loaned, leased, or rented to government or other nonprofits to provide character-building, benevolent, protective, or rehabilitative social services.
- Clarifies that selling donated merchandise (e.g., thrift store sales) does not disqualify a nonprofit from the exemption if proceeds support the organization’s social service mission.
- Maintains existing exemptions for church camps (up to 200 acres), youth organizations serving those under age 18 (or up to 21 if historically allowed), veterans’ groups, and certain federal aid organizations.
- Requires that exempt property be used exclusively for the purposes justifying the exemption, unless otherwise specified.
Who is affected
- Nonprofit organizations providing social services — Nonprofit organizations that own property and lease/loan it to government or other nonprofits to deliver social services may now qualify for property tax exemption on that property.
- Government and nonprofit service providers — Government agencies (state, county, city, tribal) and other nonprofits that receive property on loan, lease, or rent from qualifying nonprofits to deliver social services benefit from reduced operating costs.
- Residents receiving social services — Families and individuals who receive character-building, benevolent, protective, or rehabilitative services (e.g., youth programs, job training, crisis support) may see expanded access or improved service quality due to lower overhead for providers.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
By enabling nonprofits to lease exempt property to governments or other nonprofits for social services—including crisis response, youth diversion, and trauma-informed care—the bill expands capacity for community-based public safety infrastructure without new tax burdens.
Public SafetyPeopleRef: Sec. 1(1)(a), (b)Nonprofits can now operate thrift stores to fund social services without risking tax-exempt status, lowering overhead and enabling job creation (especially for people with barriers to employment) while sustaining vital community programs.
Business & EmploymentPeopleRef: Sec. 1(1)(b), (c)Nonprofits providing mental health, substance use, or trauma recovery services can now lease exempt property to government agencies or other providers—reducing their operational costs and enabling expansion of access to care, especially in underserved areas.
HealthcarePeopleRef: Sec. 1(1)(a), (b)Youth-serving nonprofits (e.g., after-school programs, job training, mentoring) can expand service delivery by leasing exempt property to schools or other nonprofits—increasing access to character-building and academic support for K–12 students statewide.
EducationPeopleRef: Sec. 1(1)(b), (c)Nonprofits operating supportive housing or transitional shelters can lease exempt property to government agencies or peer nonprofits—reducing overhead and enabling more units or services for people experiencing homelessness or housing instability.
HousingPeopleRef: Sec. 1(1)(b)
Potential Concerns (4)
The expansion of property tax exemptions will reduce local government revenue, potentially straining budgets for public services like schools, roads, and emergency response—especially in counties with high concentrations of qualifying nonprofit-owned properties being leased to governments or other nonprofits.
Local GovernmentRef: Sec. 1(1)(b)Local assessors and auditors will face increased administrative burden verifying eligibility of leased/loaned properties—including tracing multi-tiered leasing arrangements between nonprofits and governments—requiring additional staffing or system upgrades without new funding.
Local GovernmentRef: Sec. 1(1)(b)While not directly affecting housing stock, reduced local revenue may pressure municipalities to increase other fees (e.g., building permits, business licenses) or delay affordable housing investments—indirectly burdening low- and middle-income renters and buyers.
HousingLean peopleRef: Sec. 1(1)(b)If local governments shift costs to maintain service levels after tax revenue loss, they may reduce non-emergency public safety investments (e.g., community violence intervention, crisis response teams), disproportionately affecting vulnerable neighborhoods reliant on such programs.
Public SafetyLean peopleRef: Sec. 1(1)(b)
Who Is Most Affected
Nonprofits that own property and lease it to governments or other nonprofits for social services gain direct tax savings, enabling them to redirect funds to program expansion or lower service costs. However, smaller grassroots nonprofits without real estate assets may not benefit directly.
Local governments (cities, counties, tribes) that receive property on lease/loan from qualifying nonprofits benefit from reduced rent or capital costs for delivering social services—freeing general fund dollars for other priorities. This is especially valuable for cash-strapped rural or high-need jurisdictions.
Residents who rely on social services (youth programs, job training, crisis support) benefit from expanded access and potentially improved quality due to lower provider overhead. However, benefits are indirect and depend on provider uptake of the new exemption.
Local governments face reduced property tax revenue, which may require budget reallocations or service cuts—particularly impactful in counties with high nonprofit property leasing activity. This is a structural revenue loss, not a one-time adjustment.
Thrift store operators (often run by nonprofits) gain regulatory clarity and stability, enabling sustainable fundraising. This helps small-to-midsize nonprofits that rely on donated goods for program funding—though large national chains are unaffected since they rarely qualify for exemption.