House bill 2230 passes the state Legislature

Bill would ammend property tax exemptions for tribal owned properties.

House bill 2230 is on its way to the governor’s desk, having passed the state Legislature.

Its subject matter was a recent topic of heated discussion between city of Snoqualmie Mayor Matt Larson and Snoqualmie Tribal Council Chairman Robert de los Angeles. After Larson emailed remarks to state representatives, de los Angeles formally requested an apology. Larson remains unapologetic.

The bill would amend property tax exemptions for off-reservation tribal-owned properties used for economic development, removing a previous expiration date as well as the requirement for properties to have been purchased prior to March 1, 2014. Essentially, more properties could be eligible for property tax exemption, and the exemption could be permanent.

The Snoqualmie Tribe purchased the Salish Lodge & Spa and held-sacred land surrounding Snoqualmie Falls from the Muckleshoot Tribe for $125 million in fall 2019, saving the land from development. The Tribe also recently purchased Eighth Generation, a native lifestyle brand located in downtown Seattle.

Since both were acquired after 2014, they would only qualify for property tax exemption if the purchase date restriction was removed.

HB 2230 passed the House 83-13 on Feb. 13. It passed the Senate, with an amendment allowing cities to be part of negotiations between counties and tribes, 47-1 on March 5. The House concurred with the amendment and the bill passed final passage on March 9, 84-12.

Larson, in an emailed statement to the Record, said, “I am very disappointed. It is fundamentally unfair to all other taxpayers in my community.”

The Snoqualmie Tribe chose not to comment while the legislation is still pending the Governor’s signature.

On Feb. 27 there was a public hearing on HB 2230 in the Senate Committee on Ways and Means. Staff gave a brief overview of the bill and several people testified in support of it.

Property owned by federal, state or local governments is exempt from property tax under the state Constitution, including land held in trust by the federal government for tribes. In 2004, a law exempted tribal-owned land used for essential government services — such as police and fire — from having to pay property taxes.

In 2014, the state passed Engrossed Substitute House Bill 1287 (ESHB 1287). The bill expanded the types of tribal properties eligible for property tax exemption to include off-reservation land used for economic development, if it was already owned as of March 1, 2014.

The 2014 legislation also requires state and local leasehold excise tax if the exempt property is leased to a private entity. There was also a provision requiring a tribe and county to negotiate a payment in lieu of leasehold excise taxes (PILT) for exempt property used for economic development located outside of the tribe’s reservation without a lease to a private entity.

A tribe makes the PILT to the county in which the property resides, and some of those funds are redistributed to the city in which the property is located. Cities are not a part of those discussions.

The 2014 changes are set to expire Jan. 1, 2022. HB 2230 would eliminate the expiration date and the requirement that the property used for economic development must have been owned prior to March 1, 2014.

There could be a revenue reduction to the state of approximately $400,000 per year beginning in 2021. There is also a slight shift to other property owners, staff explained, because the currently exempt property that would otherwise get added back to the tax roll under current law would now stay off of the tax roll.

Therefore the tax rate for other property owners would go up by a fractional amount to offset that.

Donny Stevenson, vice chairman of the Muckleshoot Tribal Council, testified on behalf of the Muckleshoot Tribe, stating that they helped lead the effort on tribal property tax equity over the last 15 years.

“House bill 2230 can finally complete what was started in 2004, placing federally recognized Indian Tribal governments on the same level as state and local governments when it comes to property taxes and the essential governmental services of economic development,” he said. “Sovereign governments should not be treated differently from state and local governments when it comes to taxation.”

Stevenson said that tribes provide essential services just like other governments, and that the bill would remove uncertainty for tribes as they continue to provide services to their tribal members and their communities by removing the economic development exemption expiration date. He also said removing the March 2014 date restriction on ownership would allow more tribes to qualify for these property tax exemptions.

He noted that the legislation would still have the protections of the leasehold excise tax provisions and the PILT. He urged the support of the committee to complete what was started in 2004 – “actual equity and fairness for tribes and equal footing with the state and local property taxation.”

Dylan Doty, also on behalf of the Muckleshoot Tribe, also emphasized that 2014 policy would not be removed aside from the two date restrictions.

“This is not about trying to get away from supporting our local partners, it’s simply about the property tax fairness that underlies all of that,” he said.

He said the date restrictions created uncertainty and limited this exemption to three tribes in the state — the Puyallup, the Suquamish and the Muckleshoot.

“The three counties in which this has been utilizied … are all supportive of the bill,” he said. “We ask for your support to remove those date restrictions and allow us to move forward with certainty.”

Snoqualmie Tribal Council Vice Chair Michael Ross testified at the hearing. He thanked the Muckleshoot Tribe for their work on the matter.

“It’s really an honor to be in front of you, and I’m glad to be here supporting our cousins in the Muckleshoot Tribe and putting our efforts behind them,” he said. “It does benefit all tribes and not just the few that have been able to access it over this time.”

He explained how the Snoqualmie Tribe had recently purchased the Salish Lodge & Spa from the Muckleshoot Tribe, after 2014, so it is subject to taxation. He also mentioned the recent Eighth Generation purchase.

“Both of these things would help us out tremendously,” he said. “And we’d also like to thank the mayor of the city of Snoqualmie for putting this on our radar and allowing us to get in front of you today. We hope that it all passes smoothly, and we thank you for your time and effort.”

Ross was joined by Matthew Randazzo, state lobbyist for the Snoqualmie Indian Tribe and the Quinault Indian Nation. Since Ross had spoken on behalf of the Snoqualmie Tribe, he chose to limit his comments to representing the Quinault Nation.

“President Fawn Sharp of the Quinault Nation and National Congress of American Indians has asked me to stress that this is a fundamental equality issue and a matter of simple respect for tribal sovereignty and tribal equality,” he said. “We also wanted to acknowledge both the work of the legislature in moving this bill this year but also the incredible work of the Muckleshoot Indian Tribe for over a decade of working on this issue. We are really standing on the shoulders of giants and following in their footsteps.”

The amendment added to HB 2230 was to the section on PILT negotiations. The effect is that it will allow cities to participate with the counties in PILT negotiations with tribes.

A desire for cities to be part of these discussions was previously expressed as part of the argument of those opposing the bill during another hearing. Arguments against the bill also included unknown economic impacts, covert property tax shifts, and property tax revenue being a primary source of revenue for cities and counties.

Those who previously testified in support of the bill called it a tax equity issue and noted an expiration date creates uncertainty and difficulty in the planning of investments. They also emphasized the importance of economic development for their communities.

Larson’s original email on Jan. 7 was sent to state senators and representatives requesting they join the city in opposing the bill. He also copied members of the Snoqualmie Tribe on the email as well as various community members, city councilmembers, city staff, county representatives and regional officials.

Larson wrote that he had learned the Tribe lobbied for the legislation so the Salish Lodge & Spa could be eligible. He also said he was concerned about a covert tax burden shift onto his lower income residents, and that he feared “local sovereignty” was at risk.

He reminded everyone that the city previously challenged the law – now up for amendment – in 2014. They prevailed in King County Superior Court but then lost in Supreme Court at the state level. The 2014 legislation was upheld.

De los Angeles sent back a letter via email, formally requesting an apology for Larson’s message that he wrote was offensive, disrespectful, accusatory, sent without discussion and “filled with inaccuracies and fear-mongering that are damaging to the diplomatic civic discourse we would like to foster with our governmental partners.”

He said the Tribe had not advocated for the legislation, and that they actually had not previously heard of it. He took issue with some of Larson’s language choices, labeling it as offensive and parts of it cultural appropriation. He also wrote that the interaction was consistent with past interactions with the mayor’s office.

Larson responded that he stood by his comments, still had the same concerns, and found the letter to be lengthy hyperbole and an overreaction.