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State law changed to allow more rental of meeting space
posted 03/08/2006
The state Legislature gave its final stamp of approval to a measure granting greater flexibility to non-profit community groups. Under the act, non-profit groups may more easily rent meeting room space to other organizations without jeopardizing their non-profit status. House Bill 1510 received unanimous votes in both the House and Senate and now awaits the Governor’s signature.
"When the San Juan County senior center wanted to rent its meeting room to non-profit community groups, it nearly lost its non-profit tax status," said Rep. Jeff Morris (D-Anacortes). "This solution will allow non-profit organizations like the senior center to provide an important public service for the community."
The legislation allows the following provisions if there is no comparable for-profit facility within 10 miles of the non-profit:
- The number of days a public assembly hall or meeting place may loan or rent its property for private use is increased from seven to 15 days per year.
- A public assembly hall or meeting place may be used for dance lessons, art classes, or music lessons for any number of days in counties under 20,000 in population.
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Non-profit, nonsectarian, character-building, benevolent, protective, and rehabilitative social service organizations in counties with less than 20,000 in population may loan or rent their property for private business use for up to 15 days per year.
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In addition, these organizations may also loan or rent their property to a non-profit community group or other non-profit organization that might not qualify for exemption, for up to 15 days per year, if the property is used for the general public good.
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The number of days a veterans' organization may loan or rent its property for private use is increased from three to 15 days per year.
Mullis Center to be tax-exempt
posted 11/26/01
The Mullis Center Advisory Committee voted last week to run the center as a tax-exempt facility. According to Committee Chair Georgia Baciu, the committee wants to meet with a representative from the state Dept. of Revenue (DOR) to clarify the acceptable uses. Until then the building will only be rented out to groups the committee knows qualify under the tax laws.
The tax status of the building was one of the controversies surrounding the center during the past year. Part of the center was placed in a non-exempt tax status in March 2001 in order to market it to for-profit groups. (See the previous stories on this page for more background.)
Former Acting Chair Pam Starr contacted the DOR in August for more information. In a letter dated Aug. 23, 2001 Joyce Marcel of the Dept. of Revenue wrote:
Return all property to exempt status. Your group would need to cease all rentals or loans of the facility to private individuals for gatherings and/or for commercial activities. You may continue to rent or loan to other non-profit groups such as Boy Scouts, Girl Scouts, 4-H, schools and churches. However, the rental amount must be reasonable and designed to cover operational costs only. Should you decide to return all property to exempt status, you would have to reapply for this exemption.
Baciu said the committee hopes to have clarification by the end of the year. The center's tax bill for 2001 is unknown at this time. If the center was taxed on its entire property it the bill would be approximately $10,000.
Besides working on the tax-status dilemma the committee has been busy with other tasks. Bonnie Sliger who was hired by the previous committee to work 20 hours per week answering phones will have her hours reduced to 10 per week in December. She will help Committee Treasurer Betty Conrad organize the bookkeeping records. Sliger's job will be eliminated beginning in January.
Conrad will be handling bank deposits and bookkeeping chores for the committee. "Betty Conrad is a former bookkeeper and legal secretary," said Baciu. "We're really lucky to have her on the committee."
Committee member Joyce Harrell is working on a plan for volunteers to handle other tasks involved in the operation of the center.
A landscaping work party was held Nov. 16, 2001. Once the landscaping required by the town is completed, the center will receive its occupancy permit. A temporary permit was issued earlier this year. Trees are part of the requirements. The trees are being sponsored for $200 each. Sixteen of the 25 trees have already been sponsored.
Chris Lawson graded the area. Other volunteers included: Bob Roseburg, Ed Strum, Marjorie Puckett, Jim Burerbaugh, Joann Lally, Jim Gimlett, Gary Smith, Chris Watling, Harv Watling, Peter Morrision and Missy the dog.
Committee formed to resolve Mullis tax status
posted 09/19/01
A subcommittee to research the tax status of Mullis Center is being formed by the senior center advisory committee. Questions have been raised about how the Center can be used and still be tax exempt. Committee member Pam Starr passed on information she received from the state Department of Revenue (DOR).
Under the direction of former advisory committee chair Andy Hengesteg, a portion of the Mullis Center was put on the tax rolls beginning in April.
The subcommittee could recommend the entire center be put on the tax rolls which would allow the facility to be rented to a wide variety of groups. The tax bill would be an estimated $11,000 to $14,000 per year.
The subcommittee will submit recommendations to the advisory committee. Several people expressed a hope a tax attorney would volunteer to join the subcommittee.
Text of letter from state Dept. of Revenue
This letter dated Aug. 23, 2001 was sent to Pam Starr to clarify the tax status of the Mullis Center.
Dear Ms. Starr,
Subject: Property Tax Exemption -- Mullis Community Senior Center
The purpose of this letter is to confirm our telephone conversation today, and to provide you with requested information regarding property tax exemption status for the Mullis Community Senior Center. As you are aware, a portion of the Mullis Community Senior Center remains taxable per written advice from your group on March 15, 2001. The taxable portion of the property is limited to the meeting room, lounge, and a proportionate amount of parking space. The meeting room and lounge are the only two areas that are permitted to be used as rentals by groups who do not meet the criteria of RCW. 84.36.030.
As your group is deciding whether to continue renting to disqualifying groups, you may want to consider these options available to you.
- Retain your partial exemption as it now stands. the community center could be rented to disqualifying individuals if they are confirmed to the taxable portions of the facility. You would need to develop a written policy that disqualifying users would agree to, restricting the areas they are allowed to occupy. You would need to provide a copy of this policy to the Department of Revenue for our records. The rates charged to disqualifying users in the taxable portions of the building are not required to remain at operations costs only. You are allowed to make a profit in the taxable portion of the building. If you rent a portion of the facility for a wedding and reception, the likelihood of the group using only the meeting room and lounge room would be questionable. This type of rental should be given serious consideration. Also, if the taxable portion of the facility exceeds 50 percent, the entire property would lose exempt status and become subject to rollback.
- Return all property to exempt status. Your group would need to cease all rentals or loans of the facility to private individuals for gatherings and/or for commercial activities. You may continue to rent or loan to other non-profit groups such as Boy Scouts, Girl Scouts, 4-H, schools and churches. However, the rental amount must be reasonable and designed to cover operational costs only. Should you decide to return all property to exempt status, you would have to reapply for this exemption.
- Forfeit your exemption and pay property taxes. If the entire facility were to become taxable, your group would no longer need to follow the exempt property guidelines. You would have the flexibility to rent to any groups, and to collect rental fees in the amount you choose. You would want to make sure that there would be enough rental income business to cover the expense of property taxes and the cost of operating the facility. In this scenario, you would be subject to rollback of taxes (RCW 84.36.810), in which the county treasurer would collect the property taxes that have been exempted over the life of the exemption (limited to the past three years) beginning with the current year in which the exemption is lost.
The Mullis Community Senior Center is exempt as a social service organization under RCW 84.36.030. The primary purpose of this non-profit organization is to provide a home for the senior services program. Your articles of incorporation confirm the purpose of this non-profit group. This organization does not appear to be a candidate for exemption under any other statutes.
I have enclosed copies of important laws and rules regarding property tax exemption as a community service organization. Please review them carefully. If you have any further questions, please call me.
Joyce Marciel
Auditor
Property Tax Division
Mullis Center's tax bill
may be bigger than expected
By Sharon Kivisto
posted 07/20/01
Mullis Center's operating expenses may be higher than the advisory committee expects. According to state Department of Revenue (DOR) staff, any part of the center that is rented out to other than non-profit groups is subject to property tax. That includes wedding receptions.
Currently the center has a property tax exemption for all but the meeting room and the lounge. Those rooms total 1,277 sq. feet. According to the DOR, those are the only parts of the center which can be used by groups which are neither non-profit or government entities.
The center's brochure and a flyer promoting the facility mention the availability of the entire 6,500 square foot facility:
Just a few blocks from the ferry terminal in Friday Harbor, the 6,500 square foot building has a large meeting room (3,000 sq. feet) which can be divided into three rooms. The full service commercial kitchen is available to caterers, and two of the rooms have separate sidebars and small refrigerators. The building is available to the public on Tuesdays, Wednesdays and Fridays during the day, and all evenings and weekends.
In a memo former facility manager Susan Schirmer wrote: My understanding upon accepting the position of facility manager ... I was to be responsible for marketing use of the facility as a space being available to the community as well as the senior programs. The facility manager was responsible for the operation of the building, and the coordination of rental space for the Senior Services programs, as well as to outside civic groups, various businesses, and promotion of use by off-island seminars, etc."
The center could be rented out for wedding receptions without a tax liability if the center was granted status as a public assembly hall. According to Perry Maxie of the DOR, no one from the center has asked for that status and the center may not fit the criteria.
The current tax status is the result of conversations Schirmer had with DOR. " It was under the direction of Ed Smith (advisory committee member) and was discussed with Andy Hengsteg." she said in a phone interview July 18.
Other committee members were unaware of the move to place the lounge and meeting room on the tax rolls. In an interview July 12, committee member Pam Starr said she was unaware of the change in tax status. (See story below).
Schirmer was hired in January at a salary of $36,000 a year to promote the center. She resigned effective July 15 citing the conflicts occurring at the center regarding its use. "There were two different directions going on," she said. "Some seniors could use it for free, some had to pay."
"They just really need to reevaluate how the bills will be paid," she said Wednesday. " The issues need to be balanced out. Certain promises were made."
The center was originally envisioned as a senior center. It became a Community/Senior Center towards the end of the 15-year fundraising campaign. " They need to take in consideration of the whole picture," Schirmer said. "They went to the community to complete it. How they decide to pay for it effects the use... They made promises mid-way through... Certain people who donated had certain expectations it would be a community center."
Schirmer has no intention of returning to the center as manager. She thinks the advisory committee should wait to hire her replacement until they have a clear plan."They need to go forward with a unified direction, " she said. "They need goals and plans."
The advisory committee did not always follow the correct procedure she said. "It was a big learning curve for a lot of people. I've learned proper procedure protects people," she said. "Things were not followed due to ignorance. They were not done maliciously."
Mullis Center not completely tax-exempt
07/13/01
Just under 20 percent of the Mullis Center went back on the property tax rolls April 1, 2001. San Juan Senior Center Advisory Committee member Pam Starr said Thursday, July 12 she wasn't aware property taxes will be assessed on the center. She believed, "The center is exempt from property taxes."
According to a determination dated April 27, 2001 from the state Department of Revenue: "1,277 square feet (lounge and meeting room) of the center together with a proportionate amount of land is taxable as of April 1, 2001. These areas are to be used for non-exempt rentals."
The rest of the 6,500 square-foot building and land was determined to be exempt from property taxes under RCW.84.36.030. Exceptions to taxation are listed in RCW.84.36.805.
The determination could have been appealed to the state Board of Tax Appeals within 30 days of receipt.
When asked about the tax-exempt status in a phone interview Friday, July 6, advisory committee chair Andy Hengesteg said he knew about it but would not discuss it.
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