SB 5697
In CommitteeSenate
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.
This status may be delayed. See Action History below for the latest updates.
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 extends property tax exemptions to nonprofits that own property and loan or lease it to government or other nonprofits to deliver social services like youth programs, rehabilitation, or protective services. It also clarifies that fundraising through thrift stores doesn’t jeopardize the exemption if funds support the nonprofit’s mission.
- Expands property tax exemption to include property owned by qualifying nonprofits that is loaned, leased, or rented to government agencies 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 other types of nonprofits (e.g., veterans’ groups, youth organizations, churches with camps, student loan agencies), but adds new eligibility for shared-service arrangements.
- Requires that exempt property be used exclusively for the qualifying social service purpose, unless otherwise specified in law.
Who is affected
- Nonprofit organizations (especially those providing social services) — Nonprofit organizations that own property and lease or loan it to government agencies or other nonprofits to deliver social services may now qualify for property tax exemption, even if they don’t directly operate the services themselves.
- Government agencies and partner nonprofits — Government agencies (state, local, tribal) and other nonprofits that receive property on loan, lease, or rent from qualifying nonprofits to deliver social services benefit from the exemption without needing to own the property.
- Local governments — Local governments (counties, cities) may see reduced property tax revenue from properties now exempt under this law, though they may benefit from lower-cost delivery of social services through partnerships.
- Residents using social services — Residents who receive social services (e.g., youth programs, rehabilitation, protective services) may benefit from expanded access if nonprofits can more affordably provide services through shared property arrangements.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
By allowing nonprofits that own property to lease it to other entities delivering rehabilitative or protective services (e.g., substance use treatment, trauma counseling, mental health outreach), the bill may expand access to critical health-adjacent social services—especially for vulnerable populations like youth, survivors of abuse, or people in recovery—by lowering operational barriers for shared-service models.
HealthcarePeopleRef: Sec. 1(1)(b) and Sec. 1(1)(c)The exemption for property loaned/leased to government or nonprofits to provide protective or rehabilitative services (e.g., domestic violence shelters, youth diversion programs, crisis response teams) may increase capacity and affordability of community-based safety net services, particularly for marginalized groups including youth, immigrants, and low-income households.
Public SafetyPeopleRef: Sec. 1(1)(b)By clarifying that thrift store proceeds do not jeopardize tax-exempt status when used to support the nonprofit’s mission, the bill supports small-scale fundraising by community-based nonprofits—many of which employ local staff and rely on volunteer networks—helping sustain local service infrastructure.
Business & EmploymentPeopleRef: Sec. 1(1)(c)Nonprofits providing character-building, youth development, or after-school programming (e.g., Boys & Girls Clubs, Big Brothers Big Sisters, juvenile justice diversion programs) may now more easily share facilities with schools or other service providers—potentially expanding educational support for K–12 students in underserved communities.
EducationPeopleRef: Sec. 1(1)(b)Nonprofits operating transitional or supportive housing (e.g., for formerly incarcerated people, people experiencing homelessness, or survivors of trafficking) may lease or loan property to government agencies or peer nonprofits to deliver housing-adjacent services—potentially increasing access to stable housing pathways for low-income residents.
HousingLean peopleRef: Sec. 1(1)(b)
Potential Concerns (3)
The bill expands property tax exemptions to include property owned by nonprofits but leased/loaned to government or other nonprofits, which may reduce local property tax revenue in jurisdictions where such properties are located—particularly affecting counties and cities with high concentrations of social service providers.
Local GovernmentLean peopleRef: Sec. 1(1)(b)While not directly reducing public safety funding, reduced local tax revenue could indirectly strain municipal budgets, potentially limiting resources for emergency services or community policing in fiscally strained jurisdictions—though the bill’s fiscal impact statement suggests offsetting efficiency gains in social service delivery.
Public SafetyLean peopleRef: Sec. 1(1)(b)The bill does not directly affect housing affordability or availability, but if local governments reduce housing investments due to revenue loss, low- and middle-income renters could be indirectly harmed over time—though this is highly speculative and not supported by the bill text.
HousingRef: Sec. 1(1)(b)
Who Is Most Affected
Nonprofits that own property but rely on partner agencies to deliver services (e.g., regional coalitions, funders, or service coordinators) gain new eligibility for property tax exemption—reducing overhead and enabling more flexible service delivery models. This is especially beneficial for mid-sized and smaller nonprofits without large capital reserves.
Government agencies (e.g., counties, cities, tribal governments) and partner nonprofits gain access to tax-exempt facilities without needing to purchase or construct their own—lowering barriers to entry for social service programs in underserved areas. However, they may face increased oversight or compliance burdens to maintain exemption eligibility.
Local governments may experience reduced property tax revenue, especially in areas with high concentrations of exempt social service properties. However, they may benefit from lower-cost delivery of services through partnerships—net fiscal impact depends on local tax base strength and service demand.
Residents who rely on social services—particularly youth, survivors of violence, people in recovery, and low-income families—may benefit from expanded access to affordable, community-based support. However, if local tax shortfalls lead to service cuts elsewhere, some may face unintended consequences.
Thrift store operators (often run by nonprofits) gain legal clarity that their fundraising activities won’t jeopardize property tax exemption—reducing legal risk and encouraging more efficient use of donated goods to fund social services.