HB 2610
SignedHouse
Nonprofit housing providers
Ensuring nonprofit housing providers qualify for a property tax exemption when the property is temporarily used for certain community purposes other than affordable housing.
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 updates rules for property tax exemptions available to nonprofit housing providers in Washington, clarifying when temporary use of property for non-housing purposes won’t disqualify the exemption, extending the exemption period for affordable housing projects, and adding reporting and oversight requirements. It also sets an expiration date for the exemption program.
- Clarifies that nonprofit housing providers can temporarily use exempt property for community purposes (e.g., meetings, events) for up to 50 days per year without losing the exemption, as long as business or profit-related use doesn’t exceed 15 days.
- Allows nonprofits to rent or loan part of their exempt property for fundraising or other activities, as long as income covers only maintenance/operation costs and the recipient would also qualify for an exemption.
- Extends the property tax exemption period for affordable housing developments from 6 years to up to 9 years (via a 3-year extension), and adds new reporting and certification requirements for occupancy and transfer dates.
- Adds new restrictions and reporting requirements for nonprofits receiving exemptions under RCW 84.36.049, including annual financial reporting and certification of low-income household occupancy.
- Sets an expiration date (January 1, 2038) for the exemption under RCW 84.36.049 and prohibits new applications after December 31, 2027.
Who is affected
- Nonprofit housing providers — Nonprofit housing providers that develop or redevelop affordable housing may qualify for property tax exemptions under specific conditions, and this bill clarifies and extends eligibility rules for those exemptions.
- County governments — Local governments and county treasurers will enforce and collect property taxes, including potential additional taxes if exemptions are disqualified due to misuse or failure to meet requirements.
- Low-income households — Low-income households benefit indirectly through increased availability of affordable housing developed or preserved by nonprofits using tax-exempt status.
- State agencies (Department of Revenue, Joint Legislative Audit and Review Committee) — The state Department of Revenue and Joint Legislative Audit and Review Committee gain new reporting and oversight responsibilities related to nonprofit housing exemptions.
Pro/Con Analysis
Potential Benefits (5)
Allowing up to 50 days/year of non-housing community use (e.g., meetings, events) without losing the exemption gives nonprofits flexibility to host support services, job training, or tenant meetings—enhancing program effectiveness and community engagement for low-income residents.
HousingPeopleRef: Sec. 1(8)(a)Permitting nonprofits to loan or rent property for fundraising—so long as income covers only maintenance—enables cost-effective resource generation for affordable housing operations, helping sustain programs without relying solely on donations or grants.
HousingPeopleRef: Sec. 1(2)(a)Extending the exemption period from 6 to up to 9 years (via a 3-year extension) gives developers more time to complete projects and sell to low-income households, reducing pressure to rush development or sell to higher-income buyers—increasing the likelihood that units remain affordable.
HousingPeopleRef: Sec. 3(4)Mandating annual financial reporting and occupancy certifications to the Joint Legislative Audit and Review Committee improves transparency and accountability, helping ensure that tax exemptions are used as intended and that low-income households actually benefit from the program.
HousingPeopleRef: Sec. 3(5)(a)–(d), (7)(a)–(c)Allowing up to 53 days of use for qualifying farmers markets (under RCW 84.36.037) supports rural and urban food access initiatives, enabling nonprofits to generate revenue for property improvements while promoting local agriculture—benefiting low-income communities reliant on affordable food sources.
HousingPeopleRef: Sec. 1(8)(c)
Potential Concerns (5)
The $200+ extension fee (or 0.1% of property value, whichever is greater) is deposited into the state general fund, but the bill does not require local governments to share in this revenue—meaning local governments lose property tax revenue during the extended exemption period without direct compensation, straining local budgets that rely on property taxes for schools, roads, and emergency services.
Local GovernmentRef: Sec. 3(4)The expiration of the exemption program after 2027 (new applications) and 2038 (full expiration) creates uncertainty for long-term local fiscal planning, especially for counties with high concentrations of affordable housing developments, as they must prepare for a future reduction in tax revenue without knowing how many properties will still be exempt at expiration.
Local GovernmentRef: Sec. 3(2)(c) and (d)If a nonprofit misuses the exemption (e.g., converts property to non-qualifying use), the county treasurer must collect back taxes plus interest, but the bill does not provide additional staffing or resources to enforce compliance—increasing administrative burden on county assessors and treasurers without funding, potentially delaying revenue collection and enforcement.
Public SafetyRef: Sec. 3(5)(a)–(d)While the extension to 9 years helps some projects, the 2027 application cutoff and 2038 expiration date severely limit the program’s long-term impact—many nonprofits will be unable to start new projects in time to benefit, reducing the number of new affordable units delivered, especially in high-cost areas where development timelines are longer.
HousingPeopleRef: Sec. 3(1), (2)(c), (11)The requirement to repay back taxes plus interest upon disqualification creates a significant financial risk for nonprofits—especially smaller ones—potentially forcing them to sell properties to avoid liability, reducing long-term affordable housing stock and destabilizing low-income neighborhoods.
HousingPeopleRef: Sec. 3(5)(a), (b)
Who Is Most Affected
Nonprofits with existing affordable housing projects benefit significantly from the 9-year exemption extension and flexibility in property use—reducing financial risk and increasing operational capacity. However, smaller nonprofits may struggle with new reporting burdens and repayment liability if projects stall.
Low-income households benefit indirectly through increased availability and stability of affordable housing, especially where projects can now extend exemption periods. However, if nonprofits face repayment risks or fail to meet occupancy requirements, units may be lost—reducing long-term access.
Counties face reduced property tax revenue during the extended exemption period, especially in areas with many qualifying projects. While the $200 fee goes to the state, counties receive no direct compensation, straining budgets for schools, roads, and emergency services.
The Department of Revenue and JLARC gain oversight responsibilities but no new funding, increasing administrative workload without additional resources. However, improved data collection enhances accountability and future policy development.