SB 6256
In CommitteeSenate
Unoccupied housing/tax
Concerning tax exemptions for unoccupied property used for affordable housing that is owned by a nonprofit entity.
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 expands property tax exemptions for nonprofit-owned affordable housing to include unoccupied properties that are in the process of being converted to affordable housing, and clarifies how exemptions apply when only part of a property is used for qualifying housing. It also allows partial exemptions and extended eligibility for households whose incomes rise slightly above the threshold.
- Expands existing property tax exemption for nonprofit-owned affordable housing to include unoccupied properties that are committed to becoming affordable housing within three assessment years (instead of two).
- Allows full or partial property tax exemptions based on the share of units occupied by qualifying households (households earning ≤50% or ≤60% of area median income, depending on when the exemption is claimed).
- Permits partial exemption for properties where fewer than 75% of units are occupied by qualifying households—exemption is proportional to the share of qualifying units.
- Allows nonprofits to make payments in lieu of taxes (PILOTs) to local governments for services or infrastructure, capped at the property’s prior annual tax amount.
- Maintains exemption for units occupied by households whose income rises above 50% but stays at or below 80% of area median income, as long as other requirements are met.
- Requires that the property be financed, insured, or assisted through specified affordable housing programs (e.g., federal/state programs, local housing levies, or housing finance commission funds).
Who is affected
- Nonprofit housing providers — Nonprofit organizations that own or operate affordable rental housing or mobile home parks may receive full or partial property tax exemptions if their properties meet income and funding criteria.
- Low- and moderate-income renters — Low- to moderate-income households (earning ≤50% or ≤60% of area median income, depending on timing) who live in qualifying housing may benefit indirectly from lower rents or more stable housing due to reduced property tax burden on their housing provider.
- Local governments — Local governments (cities, counties, special districts) may lose some property tax revenue from affected properties but can receive payments in lieu of taxes (PILOTs) up to the prior tax level for services or improvements provided.
- State housing agencies — State agencies like the Department of Commerce and the Washington State Housing Finance Commission may see increased use of their affordable housing programs, as tax exemptions can make projects more financially viable.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Partial exemptions and extended eligibility for households earning up to 80% AMI increase housing stability for moderate-income renters who might otherwise be priced out—helping prevent displacement in rapidly gentrifying areas.
HousingPeopleRef: Sec. 1(2), (3)Expanding exemption eligibility to unoccupied properties in the process of conversion significantly improves the financial viability of developing or rehabilitating affordable housing, especially for nonprofits facing high upfront costs and long development timelines.
HousingPeopleRef: Sec. 1(4)Linking the exemption to existing affordable housing financing programs (e.g., Washington State Housing Finance Commission, local levies) strengthens program coordination and leverages existing infrastructure to expand supply without creating new bureaucratic layers.
HousingPeopleRef: Sec. 1(1)(c)Treating residents of group homes as separate households (not aggregating incomes) allows more individuals with disabilities or seniors to qualify for affordable housing, supporting vulnerable populations often excluded from income-based tests.
HousingLean peopleRef: Sec. 1(7)(a)Raising the income threshold to 60% AMI for new exemptions (effective July 1, 2021) broadens access to affordable housing for working families who earn too much for 50% AMI units but still cannot afford market rents—especially in urban counties like King and Snohomish.
HousingPeopleRef: Sec. 1(1)(e)(ii)
Potential Concerns (5)
The bill reduces property tax revenue for local governments by exempting portions of nonprofit-owned affordable housing from taxation, and while PILOTs are permitted, they are capped at the prior tax amount and not guaranteed—creating fiscal uncertainty for cities and counties that rely on property tax revenue to fund essential services like schools, roads, and emergency response.
Local GovernmentRef: Sec. 1(2), (6)The income eligibility thresholds (≤50% or ≤60% AMI) and funding-source requirements may exclude many moderate-income households who still struggle with housing costs but earn just above the thresholds—particularly in high-cost areas where 60% AMI may still be unaffordable for market-rate units.
HousingRef: Sec. 1(1)(c), Sec. 1(7)(e)(i)-(ii)Allowing continued exemption for households earning up to 80% AMI after exceeding the initial threshold may delay unit turnover and reduce availability for lower-income applicants, especially in high-demand markets where housing waitlists are long.
HousingLean peopleRef: Sec. 1(3)The three-assessment-year window for unoccupied properties to become eligible for exemption may create administrative complexity and delay in realizing tax relief, potentially slowing project timelines for nonprofits with limited staff capacity.
HousingRef: Sec. 1(4)(a)(iii)PILOTs are voluntary and capped at the prior tax amount, meaning local governments may receive less than full compensation—especially if the property’s prior tax was low due to prior exemptions or low assessed value—limiting their ability to offset revenue loss.
Local GovernmentRef: Sec. 1(6)
Who Is Most Affected
Nonprofits that own or operate affordable housing gain greater financial predictability and expanded eligibility for tax exemptions, especially for projects in development or renovation phases. This lowers operating costs and improves long-term sustainability of affordable units.
Low- and moderate-income renters benefit from increased housing stability, reduced risk of displacement, and potentially lower rents due to reduced property tax burden on providers. However, benefits are indirect and depend on nonprofit landlords passing savings through in rent reductions.
Local governments face reduced property tax revenue, which may strain budgets for public services—especially in jurisdictions with high concentrations of exempt properties. PILOTs provide partial relief but are not mandatory and may not fully offset losses.
State agencies like the Department of Commerce and Housing Finance Commission may see increased participation in their affordable housing programs, as tax exemptions improve project feasibility and attract more nonprofit applicants—strengthening program impact without new funding.
Developers and for-profit housing companies are not direct beneficiaries, as the exemption applies only to nonprofit entities. This may create a competitive disadvantage for for-profit providers seeking to enter the affordable housing market, potentially limiting supply diversity.