BISMARCK – The North Dakota State House passed a bill Wednesday that exempts public charities from being taxed on undeveloped properties they own.
Receiving a 10-2 Do Not Pass recommendation in its committee, House Bill 1438 would exempt public charities from paying taxes on their vacant properties of up to 50 acres and 10 years. The exemption would continue when construction of the charitable building begins.
Rep. Glenn Bosch, R-Dis. 30, Bismarck, said public charities are currently not taxed on their buildings as long as they follow a two-part test, which is that it must be a charitable organization and the building must be devoted to a charitable purpose. This only applies to buildings that are occupied.
“During testimony we learned that the two-part test is typically applied if the building is occupied,” said Bosch. “This allows a review to determine if the use test is satisfied. Exempting land after acquisition and during construction potentially opens the door for any limited liability corporation with a 501c3 designation to become developers of exempt land, which would shift the burden to other taxpayers.”
The sponsor of the bill, Rep. Larry Bellew, R-Dis. 38, Minot, said the bill only applies to land that is being developed for charitable use, and to tax that land is against the North Dakota Constitution.
“Most of you know that Trinity Hospital in Minot is building a new hospital,” said Bellew. “They are a public charity. My question to this body is why are they a public charity when they open their doors, but they’re not a public charity when they’re building their building? To date, Trinity Hospital has been charged over five million dollars in property taxes. If they open in 2024, it will be an additional seven million on top of that. I don’t believe as a legislator I’ve ever seen a clearer opportunity to uphold our oath of office and to right a wrong in our government.”
The bill passed by a vote of 55 to 38.
The House also passed Bellew’s companion bill Tuesday, House Bill 1439, which provides a similar exemption for churches.
Both bills will be sent to the Senate for consideration.