SB660: Bill Text

LRB-4622/1

JK:lmk:rs

2005 - 2006 LEGISLATURE

2005 Senate BILL 660

March 7, 2006 - Introduced by Senators Wirch, Jauch and Coggs, cosponsored by Representatives Gottlieb and Berceau. Referred to Committee on Job Creation, Economic Development and Consumer Affairs.

SB660,1,5 An Act to renumber and amend 70.11 (4); to amend 70.11 (intro.), 70.32 (1) and 70.44 (1); and to create 70.11 (4) (c), 70.11 (4) (d), 70.11 (4) (i) and 70.32 (1b) of the statutes; relating to: revision and elimination of the exemption from the property tax for certain property and the use of income from certain tax-exempt leased property.

Analysis by the Legislative Reference Bureau

Under current law, property owned and used exclusively by benevolent associations, including benevolent nursing homes and retirement homes for the aged, is exempt from the property tax, if the property is not used for profit. This bill modifies the property tax exemption under current law for property owned by benevolent associations, including benevolent nursing homes and retirement homes for the aged by setting forth the specific types of property owned by a benevolent association that are exempt from property taxes.

Under the bill, the types of property owned by a benevolent association that are exempt from the property tax are:

1. Nursing homes.

2. Community based residential facilities.

3. Adult family homes.

4. Residential care apartment complexes.

5. Domestic abuse shelters.

6. Shelters for the homeless, including transitional housing facilities.

7. Housing for low-income persons that is operated in compliance with income eligibility limits for federal low-income housing programs.

8. A residential facility that provides alcohol or other drug abuse (AODA) treatment services or housing for persons with or recovering from AODA problems.

9. Residential housing for persons with permanent disabilities.

10. Property that is not residential housing, but used exclusively for benevolent purposes.

11. Property that is used exclusively to provide housing for persons and families of low and moderate income, if the property is owned by an entity organized for the purpose of providing such housing.

Under the bill, property owned by a benevolent association that is residential housing is subject to the property tax if it does not fit within any of the categories described above.

Under current law, nonresidential property owned and used exclusively by a benevolent association is exempt from the property tax. Under the bill, nonresidential property owned by a church or religious association is exempt from the property tax.

Under current law, if property that is exempt from property taxes is leased, the property retains its tax exemption only if the owner uses all of the leasehold income for maintenance of the leased property or construction debt retirement of the leased property or both.

The bill provides that leasing property owned by benevolent associations and certain education associations as residential housing does not render the property taxable if the property owner uses all of the lease income to support its benevolent or educational activities, or in the case of a church or religious association, to support the activities of the church or association, and the activities are undertaken in the county where the tax exempt property is located. In addition, the bill provides that a property owner may not discriminate based on race.

Under the bill, with regard to determining the assessed value of residential property owned by a benevolent association, church, or religious association, if information on the sale of reasonably comparable property is not available to the assessor of taxation district where the property is located, the assessor must determine the value of the property based on the income that is or may be generated by the property, as specified in the Wisconsin Property Assessment Manual.

This bill will be referred to the Joint Survey Committee on Tax Exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB660, s. 1 Section 1. 70.11 (intro.) of the statutes is amended to read:

SB660,4,2 70.11 Property exempted from taxation. (intro.) The property described in this section is exempted from general property taxes if the property is exempt under sub. (1), (2), (18), (21), (27) or (30); if it was exempt for the previous year and its use, occupancy or ownership did not change in a way that makes it taxable; if the property was taxable for the previous year, the use, occupancy or ownership of the property changed in a way that makes it exempt and its owner, on or before March 1, files with the assessor of the taxation district where the property is located a form that the department of revenue prescribes or if the property did not exist in the previous year and its owner, on or before March 1, files with the assessor of the taxation district where the property is located a form that the department of revenue prescribes. Leasing a part of the property described in this section does not render it taxable if, except for property described in sub. (4), the lessor uses all of the leasehold income for maintenance of the leased property or construction debt retirement of the leased property, or both, and, except for residential housing, if the lessee would be exempt from taxation under this chapter if it owned the property. Leasing property described in sub. (4) as residential housing does not render it taxable if the property owner uses all of the leasehold income to support the benevolent or educational activities of the owner, or in the case of a church or religious association, to support the activities of the church or association, and the activities are undertaken in the county where the tax-exempt property is located. In addition, leasing property described in sub. (4) (c) 7. or (i) as residential housing does not render it taxable if the property owner uses all of the leasehold income to support the provision of similar housing anywhere in this state. Any lessor who claims that leased property is exempt from taxation under this chapter shall, upon request by the tax assessor, provide records relating to the lessor's use of the income from the leased property. Property exempted from general property taxes is:

SB660, s. 2 Section 2. 70.11 (4) of the statutes is renumbered 70.11 (4) (intro.) and amended to read:

SB660,4,19 70.11 (4) (intro.) Property owned and used exclusively by educational any of the entities described in this subsection while such property is used not for profit. Property that is exempt from taxation under this subsection and is leased remains exempt from taxation only if, in addition to the requirements specified in the introductory phrase of this section, the property owner and the lessee do not discriminate on the basis of race. The amount of land exempt under this subsection may not exceed 10 acres of land necessary for location and convenience of buildings, except as provided in par. (b). This subsection does not include property owned by an organization that is organized under s. 185.981 or ch. 611, 613, or 614 and that offers a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3) or by an organization that is issued a certificate of authority under ch. 618 and that offers a health maintenance organization or a limited service health organization or by any nonstock, nonprofit corporation which services guaranteed student loans for others or on its own account. The property of the following entities is exempt from taxation under this subsection.

SB660,4,22 (a) Educational institutions offering regular courses 6 months in the year; or by churches and educational associations, if the property is used exclusively for the purposes of the educational institution or association.

SB660,5,14 (b) Churches or religious, educational or benevolent associations, including benevolent nursing homes and retirement homes for the aged but not including an organization that is organized under s. 185.981 or ch. 611, 613 or 614 and that offers a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3) or an organization that is issued a certificate of authority under ch. 618 and that offers a health maintenance organization or a limited service health organization and not including property owned by any nonstock, nonprofit corporation which services guaranteed student loans for others or on its own account, and also if the property is used exclusively for church or religious purposes, including property owned and used for housing for pastors and their ordained assistants, members of religious orders and communities, and ordained teachers, whether or not contiguous to and a part of other property owned and used by such associations or churches; or by women's, but not other types of residential housing except for the property described in par. (c). Property owned by churches or religious associations necessary for location and convenience of buildings, used for educational purposes and not for profit, shall not be subject to the 10-acre limitation under this subsection but shall be subject to a 30-acre limitation.

SB660,5,16 (e) Women's clubs; or by domestic,, if the property is used exclusively for the purposes of the club.

SB660,5,18 (f) Domestic incorporated historical societies; or by domestic,, if the property is used exclusively for the purposes of the historical society.

SB660,5,20 (g) Domestic incorporated, free public library associations; or by fraternal, if the property is used exclusively for the purposes of the library association.

SB660,6,6 (h) Fraternal societies operating under the lodge system (except university, college and high school fraternities and sororities), but not exceeding 10 acres of land necessary for location and convenience of buildings while such property is not used for profit. Property owned by churches or religious associations necessary for location and convenience of buildings, used for educational purposes and not for profit, shall not be subject to the 10-acre limitation but shall be subject to a 30-acre limitation. Property that is exempt from taxation under this subsection and is leased remains exempt from taxation only if, in addition to the requirements specified in the introductory phrase of this section, the lessee does not discriminate on the basis of race, except university, college, and high school fraternities and sororities, if the property is used exclusively for the purposes of the fraternal society.

SB660, s. 3 Section 3. 70.11 (4) (c) of the statutes is created to read:

SB660,6,9 70.11 (4) (c) Benevolent associations, churches, or religious associations, if the property is used exclusively for benevolent purposes as any of the following:

SB660,6,10 1. A nursing home licensed under s. 50.03.

SB660,6,11 2. A community-based residential facility licensed under s. 50.03.

SB660,6,12 3. An adult family home certified under s. 50.032 or licensed under s. 50.033.

SB660,6,17 4. A residential care apartment complex registered or certified under s. 50.034 if at least 25 percent of the residents receive, on a daily basis, nursing services, as defined in s. HFS 89.13 (24), Wis. Adm. Code, or personal services, as defined in s. HFS 89.13 (25), Wis. Adm. Code, pursuant to a written service agreement between the resident and the residential care apartment complex.

SB660,6,18 5. A domestic abuse shelter.

SB660,6,19 6. A shelter for the homeless, including transitional housing facilities.

SB660,7,4 7. Housing for low-income persons that is operated in compliance with sections 3.01 and 3.02 (1), (2), and (3), or that is provided as part of a program described in section 4.02 (4) or 4.02 (9), of the Internal Revenue Service revenue procedure 96-32. In order to claim the exemption under this subdivision, the property owner shall provide the assessor an affidavit stating that the property meets the requirements under this subdivision. For the purposes of this subdivision, "project", as used in Internal Revenue Service revenue procedure 96-32, includes property located on more than one tax parcel, if the parcels are owned or operated by the same person and are adjacent, separated only by a street or other public right-of-way, or within the same condominium development.

SB660,7,7 8. A residential facility, the purpose of which is to provide alcohol or other drug abuse treatment or services or housing for persons with, or who are recovering from, alcohol or other drug abuse problems.

SB660,7,12 9. Residential housing in which at least 75 percent of the housing units are occupied by one or more persons with permanent disabilities, for whom evidence is available that demonstrates that these persons meet the medical definition of permanent disability used to determine eligibility for programs administered by the federal social security administration.