Habitat for Humanity urges continuation of nonprofit tax exemption and clearer reporting for low‑income homeownership developers

Michonne Preston, chief executive officer of Habitat for Humanity of Washington State, told the Citizens Commission that the state tax exemption for low‑income homeownership developers has advanced Habitat’s mission and helped sustain affiliates, but that financial reporting inconsistencies limit the ability to measure outcomes precisely.

Preston, representing 25 Washington-based Habitat affiliates (21 of which participated in the tax preference), said the nonprofit found audited financial data and IRS Form 990 filings were not reported consistently across affiliates. She told the commission this made it difficult to compare “homeownership dollars spent” with revenue in a given fiscal year and therefore complicated assessment of whether the tax preference produced measurable increases in homeownership units in the short term.

Preston said external factors during the review period affected results. “COVID happened and that impacted our supply chain. It impacted our donor cash infusions, and it impacted another key stream that provided for operations, which are many habitats that operate a retail store,” she said. She told commissioners some affiliates saw revenue dips in 2021–22 while others increased homeownership activity; three affiliates’ data were removed from the consolidated reporting because of mergers or a closure. She said the tax savings “helped advance the mission” and could have supported rural affiliates’ sustainability — citing Lake Chelan as an example — even if the dollars did not always translate into a higher count of completed homeownership transfers in that fiscal year.

In response to JLARC staff and commissioners’ questions, Preston confirmed the tax benefit accrues to the nonprofit developer and does not transfer to the homeowner, and she said Habitat was not advocating for the exemption to be given to buyers. Asked about the JLARC staff recommendation to shorten the eligibility/reporting period (the report references a seven‑year period and suggests considering shorter intervals including three years or annual renewal), Preston said shorter reporting windows could help with administrative follow-up because some affiliates experienced staff turnover and later did not realize they were enrolled in the exemption. She supported the idea that any imposed renewal period would be met by Habitat affiliates.

Commissioners pressed for clarity on accounting structures; Preston said most affiliates are independent legal entities with separate accounting systems and that statewide organization-level program tracking is maintained with Habitat International for program outputs (new homes, repairs) but not for the granular financial reporting JLARC requested. No formal commission action was taken during the meeting on the JLARC recommendation; commissioners will receive a web-based comment form and individually record endorsements, which the chair will consolidate ahead of the October meeting.