Legislative updates to the qualification requirements for a property tax exemption as a community center

Intended audience: County assessors, Nonprofit Community Center Organizations, Businesses, and Members of the Community.

The 2025 Legislature passed Substitute Senate Bill 5516 (SSB 5516), which modifies the definition of a community center for purposes of a property tax exemption. The bill is effective July 25, 2025.

What the bill does

This bill expands the property tax exemption for community centers by including surplus property acquired from a university exempt from property taxes under RCW 84.36.050.

Eligibility requirements and exemption period

The following properties are exemption from property taxes when used for community services:

• Property (including buildings) determined to be surplus by a local school board and purchased or acquired by a nonprofit organization to convert into community facilities is exempt for 40 years from the date of acquisition.
• For tax years 2026 through 2035, property, (including buildings) determined to be surplus to the needs of a university under RCW 84.36.050 and purchased or acquired by a nonprofit organization to convert into community facilities is also exempt.

Community center use

• Used as a community facility for the delivery of nonresidential coordinated services for community members.
• The community center may make space available to businesses, individuals, or other parties through the loan or rental of space in or on the property.

Definitions

• Community center means property, including a building or buildings, determined to be surplus to the needs of a district by a local school board, and purchased or acquired by a nonprofit organization for the purposes of converting the property into community facilities for the delivery of nonresidential coordinated services for community members.
• For taxes levied for collection in 2026 through 2035, community center includes property, including buildings, determined to be surplus to the needs of a university exempt from property taxes under RCW 84.36.050 and purchased or acquired by a nonprofit organization for the purposes of converting the property into community facilities for the delivery of nonresidential coordinated services for community members.

Question & Answer (Q&A)

Q. My nonprofit organization purchased property determined to be surplus to the needs of a property tax exempt university for purposes of converting the property into a community center. How do we apply for the property tax exemption authorized in SSB 5516?

A. You can apply for the property tax exemption by completing an initial Application for Property Tax Exemption. You may submit the completed application along with any additional required documents in one of the following ways:

• Scan and email the application to DORNonprofitApplication@DOR.WA.GOV or
• Mail the application to:
  • Department of Revenue
    Property Tax Division/Exempt Property
    PO Box 47471
    Olympia WA 98504-7471

Q. My nonprofit organization operates a community center and plans to loan or rent our property to other businesses. Is the space in the community center used by businesses exempt from property tax?

A. While the property is exempt from property taxes, lessees of a community center are subject to leasehold excise tax, unless the lessee is a qualifying nonprofit organization conducting exempt activity under RCW 84.36. Qualifying nonprofit organizations leasing portions of the community center for exclusive use by the nonprofit must apply to receive an exemption from leasehold excise tax using the instructions above.

Q If property was purchased from a property tax exempt university prior to 2025, when does the exemption begin?

A. SSB 5516 is not retroactive. The earliest the exemption may begin is for taxes due in 2026.

Q. If property is purchased from a property tax exempt university in 2029, does the property receive a 10-year exemption from date of acquisition or does the exemption end on 12/31/35?

A. The exemption is only available until 2035. Community centers which acquire property determined to be surplus to the needs of a qualifying university may apply for exemption any time during the period of 2026-2035; however, the exemption will expire December 31, 2035.

Questions?

Please visit our property tax page or call 360-534-1400.