OFFICES AND OFFICERS ‑- COUNTY ‑- ASSESSOR ‑- TAXATION ‑- REAL PROPERTY ‑- APPLICABILITY OF RETIRED PERSONS' PROPERTY TAX EXEMPTION TO CERTAIN LEASEHOLD INTERESTS
Neither Article VII, § 10 of the Washington Constitution nor such implementing legislation as is contained in RCW 84.36.381 et seq., qualify an individual for a property tax exemption with respect to a ". . . residence occupied by a share owner under a cooperative housing association agreement [which] is not owned by the association, but is leased by the association from a third party pursuant to a long term lease."
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June 7, 1979
Honorable George Walk
State Rep., 25th District
11607 87th Avenue E.
Puyallup, Washington 98371 Cite as: AGLO 1979 No. 24
By recent letter you requested our opinion on the following question:
"May a county assessor deny the property tax exemption authorized under Article VII, Section 10 of the Washington Constitution, and the legislation implementing such section, where the sole reason for the denial is that the residence occupied by a share owner under a cooperative housing association agreement is not owned by the association, but is leased by the association from a third party pursuant to a long term lease?"
We answer the foregoing question in the manner set forth in our analysis.
[[Orig. Op. Page 2]]
At the outset it should be noted that a county assessor has no discretion insofar as the granting or denial of a property tax exemption under Article VII, § 10 of the state constitution and implementing legislation is concerned.1/ Either a particular individual is constitutionally and statutorily entitled to the exemption being claimed or he is not. Thus, in reality, the issue raised by your question is strictly one of constitutional and statutory construction. Does Article VII, § 10 of the constitution, together with the implementing legislation contained in RCW 84.26.381, qualify an individual for a property tax exemption with respect to a ". . . residence occupied by a share owner under a cooperative housing association agreement [which] is not owned by the association, but is leased by the association from a third party pursuant to a long term lease?"
We begin our response by noting the language of the applicable constitutional provision, Article VII, § 10 (Amendment 47) which, as approved by the voters at the November 8, 1966, state general election, reads as follows:
"Notwithstanding the provisions of Article 7, section 1 (Amendment 14) and Article 7, section 2 (Amendment 17), the following tax exemption shall be allowed as to real property:
"The legislature shall have the power, by appropriate legislation, to grant toretired property owners relief from the property tax on the real property occupied as a residence by those owners. The legislature may place such restrictions and conditions upon the granting of such relief as it shall deem proper. Such restrictions and conditions may include, but are not limited to, the limiting of the relief to those property owners below a specific level of income and those fulfilling certain minimum residential requirements." (Emphasis supplied)
[[Orig. Op. Page 3]]
This constitutional provision, in turn, has been implemented by the legislature in RCW 84.36.381 through 84.36.389. Before examining that legislation, however, let us focus on the language we have underscored above. That constitutional language imposes a significant restriction on the legislature's power to grant property tax relief to retired persons. The retired person mustown the property which he or she occupies as a residence. If someone else owns the residence, however, and the retired person is merely a renter, no property tax relief is authorized by this provision of the constitution.2/
With that proposition in mind we now turn to the implementing legislation. Of particular note are RCW 84.36.381 and 84.36.383, from which we here quote, in pertinent part, as follows:
"A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed in accordance with the following conditions:
"(1) The property taxes must have been imposed upon a residence which has been regularly occupied by the person claiming the exemption during the two calendar years preceding the year in which the exemption. . .
"(2)The person claiming the exemption must have owned, at the time of filing, in fee, or by contract purchase, the residence on which the property taxes have been imposed [[Orig. Op. Page 4]] orif the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, such person must own a share therein representing the unit or portion of the structure in which he or she resides. . . ." (Emphasis supplied)
"As used in this chapter, except where the context clearly indicates a different meaning:
"(1) The term 'residence' shall mean a single family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre. The term shall also include ashare ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides. . . ." (Emphasis supplied)
From the foregoing it is clear, as a general rule, that the legislature has extended the property tax exemption in question to persons residing in housing cooperatives in which they also have a corresponding share ownership. Although, as a technical legal matter, the fee ownership of the residences may be vested in the cooperative housing association, the share owners are to be considered as the owners of the fee itself (RCW 83.36.381, supra) if those owners can establish that their respective shares represent the specific unit or portion of the structure in which each such shareholder actually resides (RCW 83.36.383, supra). In short, ownership through a cooperative housing association is to be treated as a form of ownership for purposes of Amendment 47, supra.
But what if, as here, the cooperative housing association does not, itself, own the fee interest in the real property upon which the housing facility is situated? What if, instead, the cooperative housing association only has a leasehold interest in that property so that, in turn, its share owner‑-residents likewise only have a leasehold interest?
[[Orig. Op. Page 5]]
It is our considered opinion, as a matter of law, that the property tax exemption sanctioned by Article VII, § 10 (Amendment 47) and statutorily provided for by RCW 84.36.381,supra, does not and cannot now constitutionally apply under those circumstances. Once again, as we explained above, the provisions of that statute and its companions in RCW 84.36.383 through 84.36.389 must be construed in the light of the constitutional provision under which they were enacted. Therefore, it necessarily follows that those statutory provisions can only be read as granting tax relief to retired property owners. A person having only a leasehold interest in the property wherein he resides is not, however, a property owner within the meaning of the constitution.3/
We thus must conclude that a county assessor has no legal authority to allow a property tax exemption under Article VII, § 10 (Amendment 47) and RCW 84.36.381, supra, to such claimants as are contemplated by your question. It is hoped that the foregoing will be of assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
TIMOTHY R. MALONE
Assistant Attorney General
*** FOOTNOTES ***
1/As stated in Dore v. Kinnear, 79 Wn.2d 755, 758, 489 P.2d 898 (1971):
". . . We have repeatedly held that county authorities are totally dependent upon the legislature for any power which they may exercise in the assessing and levying of taxes. State ex rel. School Dist. 37 v. Clark County, 177 Wash. 314, 31 P.2d 897 (1934);Great Northern Ry. v. Stevens County, 108 Wash. 238, 183 P. 65 (1919)."
2/The potential inequity arising from this constitutional restriction is obvious. A retired person who is merely leasing his or her residence is probably paying, as a practical economic matter, the property taxes imposed upon that residence as a part of the rent. Yet the constitutional language allows no relief in that situation. For this reason, there was introduced in the recent legislative session HJR 23. This proposed constitutional amendment, which failed to obtain legislative approval during that session, would replace the present language of Amendment 47 with language which would allow the legislature to grant relief to renters and, thereby, remove the restriction and the potential inequity in the present language.
3/As the legislature itself has recognized by its qualifying language in RCW 84.36.381(2), supra, which speaks only of ownership in fee or by contract purchase.