Date of Adoption: November 28, 2001.

     Purpose: WAC 458-16-260 explains the property tax exemption available under the provisions of RCW 84.36.040 for property used by nonprofit day care centers, libraries, orphanages, homes for the sick or infirm, hospitals, outpatient dialysis facilities. WAC 458-16-270 explains the property tax exemption available under the provisions of RCW 84.36.050 to nonprofit schools and colleges.

     These rules are being amended to reflect legislative changes to RCW 84.36.040 and 84.36.050, codified as sections 1 and 2, chapter 126, Laws of 2001. The amendments to WAC 458-16-260 include new statutory provisions that expand the exemption to property leased to and used by a hospital that is owned and operated by a public hospital district established under chapter 70.44 RCW. The amendments to WAC 458-16-270 describe the expanded exemption to property owned by a not-for-profit foundation but leased to an institution of higher education, exclusively used for campus or college purposes, and principally designed to further the educational functions of the institution.

     Citation of Existing Rules Affected by this Order: Amending WAC 458-16-260 Nonprofit day care centers, libraries, orphanages, homes for the sick or infirm, hospitals, outpatient dialysis facilities and 458-16-270 Schools and colleges.

     Statutory Authority for Adoption: RCW 84.36.865.

     Other Authority: RCW 84.36.040 and 84.36.050.

      Adopted under notice filed as WSR 01-19-063 on September 18, 2001.

     Changes Other than Editing from Proposed to Adopted Version: Only minor editorial changes were made to WAC 458-16-260.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 2, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 2, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 2, Repealed 0.
     Effective Date of Rule: Thirty-one days after filing.

November 28, 2001

Russell W. Brubaker

Assistant Director

Legislation and Policy

OTS-5178.2

AMENDATORY SECTION(Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)

WAC 458-16-260   Nonprofit day care centers, libraries, orphanages, homes for sick or infirm, hospitals, outpatient dialysis facilities.   (1) Introduction. This ((section)) rule explains the property tax exemption available under the provisions of RCW 84.36.040 to property used by nonprofit day care centers, libraries, orphanages, homes for the sick or infirm, hospitals, ((and)) outpatient dialysis facilities, and to property leased to and used by a hospital that is owned and operated by a public hospital district for hospital purposes.

     (2) Definitions. For purposes of this ((section)) rule, the following definitions apply:

     (a) "Convalescent and chronic care" means any or all procedures commonly employed in caring for the sick including, but not limited to, administering medicines, preparing special diets, providing bedside nursing care, applying dressings and bandages, and carrying out any treatment prescribed by a duly licensed practitioner of the healing arts.

     (b) "Day care center" means a facility that regularly provides care for a group of children for periods of less than twenty-four consecutive hours.

     (c) "Home for the sick or infirm" means any home, place, or institution that operates or maintains facilities to provide convalescent or chronic care, or both, for three or more persons not related by blood or marriage to the operator, who by reason of illness or infirmity, are unable to properly care for themselves.

     (i) The services must be provided to persons over a continuous period of twenty-four hours or more.

     (ii) A boarding home, guest home, hotel, or similar institution that is held forth to the public as providing and supplying only room, board, or laundry services to persons who do not need medical or nursing treatment or supervision is not considered a "home for the sick or infirm" for purposes of this ((section)) rule.

     (d) "Hospital" means a nonprofit organization, association, or corporation or public hospital established in accordance with chapter 70.44 RCW engaged in providing medical, surgical, nursing or related health care services for the prevention, diagnosis or treatment of human disease, pain, injury, disability, deformity, mental illness, or retardation, as well as the equipment and facilities used by a nonprofit organization, association, or corporation or hospital established in accordance with chapter 70.44 RCW to deliver such services to inpatients. These services must be provided over a continuous period of twenty-four hours or more.

     (i) "Hospital" also means any portion of a hospital building, or other buildings used in connection therewith, and the equipment therein operated as a part of a hospital unit or used as a residence for persons engaged or employed in the operation of a hospital including, but not limited to, a nurse's home or a residence for hospital employees.

     (ii) "Hospital" does not mean:

     (A) Hotels or similar places that furnish only food and lodging or simple domiciliary care;

     (B) Clinics or physician's offices where patients are not regularly kept as bed patients for twenty-four hours or more;

     (C) Nursing homes as defined in chapter 18.51 RCW; and

     (D) Maternity homes as defined in 18.46 RCW.

     (e) "Hospital unit" means all buildings or properties that are part of an integrated, interrelated, homogeneous unit exclusively used for exempt hospital purposes. The term includes residential units exclusively used to temporarily house families of inpatients in an integrated program of hospital therapy.

     (f) "Property" means real or personal property used by a nonprofit organization, association, or corporation or leased to and used by a hospital that is owned and operated by a public hospital district established under chapter 70.44 RCW.

     (3) Exemption for exclusively used property. All real and personal property exclusively used by a nonprofit organization, association, or corporation for the following institutions ((shall be)) is exempt from taxation:

     (a) Day care centers;

     (b) Preschools;

     (c) Free public libraries;

     (d) Orphanages and orphan asylums;

     (e) Homes for the sick or infirm;

     (f) Hospitals for the sick; and

     (g) Outpatient dialysis facilities.

     (4) Exemption for loaned or rented property. Property loaned ((to)) or rented ((by)) to an institution listed in subsections (3) (a) through (g) of this ((section shall)) rule is also ((be)) exempt from taxation if:

     (a) The property is exclusively used by the nonprofit organization, association, or corporation;

     (b) The benefit of the exemption inures to the user; and

     (c) The property was specifically identified as loaned or rented when the application for exemption was made.

     (5) Property leased to and used by a hospital that is owned and operated by a public hospital district. All real and personal property leased to and used by a hospital owned and operated by a public hospital district established under chapter 70.44 RCW for hospital purposes is exempt from taxation. The benefit of the exemption must inure to the entity using the exempt property.

     (6) Exclusive use required. Any portion of property exempt under ((either)) subsections (3) ((or (4))) through (5) of this ((section)) rule that is not exclusively used in a manner furthering the exempt purposes of the nonprofit organization, association, or corporation or the hospital purposes of public hospital district must be segregated and taxed. For example, hospital property used by a physician to conduct his private practice must be segregated and taxed.

     (((6))) (7) Actual use and irrevocable dedication required. To be exempt from taxation under this ((section)) rule, all property owned by a nonprofit organization, association, or corporation or owned and operated by a public hospital district established under chapter 70.44 RCW must be:

     (a) In use; and

     (b) Irrevocably dedicated to the exempt purpose of the nonprofit organization, association, or corporation.

     (((7))) (8) Additional requirements. Any organization or association that applies for a property tax exemption under this ((section)) rule must also comply with the provisions of WAC 458-16-165. WAC 458-16-165 sets forth additional conditions and requirements that must be complied with to obtain a property tax exemption ((pursuant to)) under RCW 84.36.040.

[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, § 458-16-260, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 88-02-010 (Order PT 87-10), § 458-16-260, filed 12/28/87; 85-05-025 (Order PT 85-1), § 458-16-260, filed 2/15/85. Statutory Authority: RCW 84.36.389 and 84.36.865. 83-19-029 (Order PT 83-5), § 458-16-260, filed 9/14/83. Statutory Authority: RCW 84.36.865. 81-05-017 (Order PT 81-7), § 458-16-260, filed 2/11/81; Order PT 77-2, § 458-16-260, filed 5/23/77; Order PT 76-2, § 458-16-260, filed 4/7/76. Formerly WAC 458-12-225.]

OTS-5179.1

AMENDATORY SECTION(Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)

WAC 458-16-270   Schools and colleges.   (1) Introduction. This ((section)) rule explains the two property tax exemptions available under the provisions of RCW 84.36.050 to property owned by or used for a nonprofit school or college and to property owned by a not-for-profit foundation established for the exclusive support of an institution of higher education, as defined in RCW 28B.10.016, that is leased to and used by the institution.

     (2) Definitions. For purposes of this ((section)) rule, the following definitions apply:

     (a) "Campus or college purposes" means property that is only needed because of the presence of the nonprofit school or college and is principally designed to further the educational purposes and functions of a nonprofit school or college or an institution of higher education, as defined in RCW 28B.10.016.

     (b) "Cultural or art education program" includes and is limited to:

     (i) An exhibition or presentation of works of art or objects of cultural or historical significance, such as those commonly displayed in art or history museums;

     (ii) A musical or dramatic performance or series of performances; or

     (iii) An educational seminar or program, or series of such programs, offered by a nonprofit school or college to the general public on an artistic, cultural, or historical subject.

     (c) "Educational purposes" means systematic instruction, either formal or informal, in any and all branches of learning directed to an indefinite class of persons and from which a substantial public benefit is derived. The term includes all purposes that seek to promote or advance education.

     (d) "Schools and colleges" means:

     (i) Nonprofit educational institutions that are approved by the superintendent of public instruction or whose students and credentials are accepted without examination by schools and colleges established under either Title 28A or 28B RCW and offer students an educational program of a general academic nature;

     (ii) An institution of higher education, as defined in RCW 28B.10.016; or

     (((ii))) (iii) Nonprofit institutions that meet the following criteria:

     (A) They have a definable curriculum and measurable outcomes for a specific group of students;

     (B) They have a qualified or certified faculty;

     (C) They have facilities and equipment that are designed for the primary purpose of the educational program;

     (D) They have an attendance policy and requirement;

     (E) They have a schedule or course of study that supports the instructional curriculum; and

     (F) They are accredited, recognized, or approved by an external agency that certifies educational institutions and the transferability of courses.

     (e) "Revenue" means income received from the loan or rental of exempt property when the income exceeds the amount of the maintenance and operation expenses attributable to the portion of the property loaned or rented.

     (3) Exemption - nonprofit schools or colleges. Property owned or used by any nonprofit school or college within this state ((shall be)) is exempt to the extent that it is used exclusively for educational purposes or cultural or art educational programs.

     (a) Real property exempt under this ((section shall not)) rule cannot exceed four hundred acres and ((shall)) must be used exclusively for school, college, or campus purposes. The property ((shall)) includes, but is not limited to:

     (i) Buildings and grounds principally designed for the educational, athletic, or social programs of the nonprofit school or college and the need for which would be nonexistent except for the existence of the school or college;

     (ii) Buildings that house part-time or full-time students;

     (iii) Buildings that house religious faculty; and

     (iv) Buildings that house the chief administrator.

     (b) The use of exempt property by professional organizations for conferences, seminars, or other activities that enhance the reputation of the nonprofit school or college will not nullify the exemption. Similarly, the use of exempt property owned by a nonprofit school or college for any education purpose will not nullify the exemption.

     (c) All property that is not part of the main campus of a school or college and for which the institution wishes to obtain an exemption under this ((section)) rule, the department may require said institution to provide, in detail, the following information:

     (i) The names of courses taught at the off-campus site;

     (ii) A calendar of dates and times that shows how the subject property was used; and

     (iii) The number of students that participated in the educational activities conducted at the off-campus site.

     (d) To be eligible to receive this exemption, the nonprofit school or college must be open to all persons regardless of race, color, national origin, or ancestry. However, there is no limitation on the type of courses the institution may offer.

     (4) Property leased to a nonprofit school or college. If property is leased to a nonprofit school or college, in order to be exempt, the property must be:

     (a) Irrevocably dedicated to the purpose for which exemption has been granted; and

     (b) The benefit of the exemption must inure to the user.

     (c) For example, if a ((nonprofit foundation)) private citizen leases real or personal property to a nonprofit school or college to be used for educational purposes or cultural or art educational programs, the leased property may qualify for exemption if it meets the requirements of subsection (3)(a), (b), and (c) of this ((section)) rule.

     (5) Production of financial records - nonprofit schools or colleges. In addition to the financial records that must be produced to comply with the requirements of WAC 458-16-165, a nonprofit school or college claiming exemption under this ((section shall)) rule must annually submit a detailed summary containing the following information regarding the previous calendar year:

     (a) A list of all property that it claimed was exempt;

     (b) The purpose for which the property was used;

     (c) The income derived from the property;

     (d) The manner in which the income received was applied;

     (e) The number of students who attended the school or college;

     (f) The total income of the school or college and the sources from which it was derived; and

     (g) The purposes to which the total income of the school or college was applied including, but not limited to, all income received and expenditures made.

     (6) Exemption - property owned by a not-for-profit foundation that is leased to and used by an institution of higher education. RCW 84.36.050 also provides a property tax exemption to real or personal property owned by a not-for-profit foundation that is established for the exclusive support of an institution of higher education, as defined in RCW 28B.10.016, if it is leased to and used by the institution exclusively for campus or college purposes and is principally designed to further the educational functions of the institution.

     (a) An institution of higher education is defined in RCW 28B.10.016 as synonymous with "postsecondary institutions" and means the University of Washington, Washington State University, Western Washington University at Bellingham, Central Washington University at Ellensburg, Eastern Washington University at Cheney, The Evergreen State College, the community colleges, and the technical colleges.

     (b) The exemption can only be obtained for property actively utilized by currently enrolled students.

     (c) The benefit of the exemption must inure to the educational institution using the exempt property.

     (7) Additional requirements. Any organization, association, ((or)) corporation, or foundation that applies for a property tax exemption under this ((section)) rule must also comply with the provisions of WAC 458-16-165. WAC 458-16-165 sets forth additional conditions and requirements that must be complied with to obtain a property tax exemption ((pursuant to)) under RCW 84.36.050.

[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, § 458-16-270, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 85-05-025 (Order PT 85-1), § 458-16-270, filed 2/15/85. Statutory Authority: RCW 84.36.389 and 84.36.865. 83-19-029 (Order PT 83-5), § 458-16-270, filed 9/14/83. Statutory Authority: RCW 84.36.865. 82-22-060 (Order PT 82-8), § 458-16-270, filed 11/2/82; 81-05-017 (Order PT 81-7), § 458-16-270, filed 2/11/81; Order PT 77-2, § 458-16-270, filed 5/23/77; Order PT 76-2, § 458-16-270, filed 4/7/76. Formerly WAC 458-12-230.]

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