2022 -- H 7956
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LC004984
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2022
____________
AN ACT
RELATING TO TAXATION -- PROPERTY SUBJECT TO TAXATION
Introduced By: Representatives Morales, Williams, Ranglin-Vassell, J Lombardi, Diaz,
Biah, Batista, and Perez
Date Introduced: March 07, 2022
Referred To: House Municipal Government & Housing
It is enacted by the General Assembly as follows:
1 SECTION 1. The general assembly finds as follows:
2 WHEREAS, In the 1900s, the general assembly enacted numerous charters incorporating
3 nonprofit colleges and universities for specific educational purposes set forth in the charters; and
4 WHEREAS, The corporate charters of colleges and universities exempted from taxation
5 property owned by said educational institutions, provided that the real estate "not used for the
6 corporate purposes shall not be so exempt;" and
7 WHEREAS, The state supreme court has further indicated that issues regarding statutory
8 tax exemptions for chartered and nonprofit organizations implicate public policy decisions to be
9 addressed by the general assembly; and
10 WHEREAS, The language of chartered colleges and universities has never been amended
11 to remove the tax exemptions provided by the legislation; and
12 WHEREAS, The real and personal property held by the chartered entities has increased
13 exponentially, far exceeding what the general assembly would have contemplated when the charters
14 were enacted over a century ago; and
15 WHEREAS, Chartered colleges, universities hold property for use by and for commercial,
16 for-profit ventures such as eating establishments, shopping centers, parking garages, and other
17 operations not directly related to the provision of education; and
18 WHEREAS, The tax exemptions afforded to all property owned by chartered nonprofit
19 colleges and universities, regardless of their uses, imposes a significant burden on the cities and
 1 towns in which they are located, and the taxpaying residents of such cities and towns; and
2 THEREFORE, The general assembly deems it appropriate to place limitations on the tax
3 exempt real and personal property a nonprofit college or university may hold.
4 SECTION 2. Section 44-3-3 of the General Laws in Chapter 44-3 entitled "Property
5 Subject to Taxation" is hereby amended to read as follows:
6 44-3-3. Property exempt. [Effective January 1, 2022.]
7 (a) The following property is exempt from taxation:
8 (1) Property belonging to the state, except as provided in § 44-4-4.1;
9 (2) Lands ceded or belonging to the United States;
10 (3) Bonds and other securities issued and exempted from taxation by the government of
11 the United States or of this state;
12 (4) Real estate, used exclusively for military purposes, owned by chartered or incorporated
13 organizations approved by the adjutant general and composed of members of the national guard,
14 the naval militia, or the independent, chartered-military organizations;
15 (5) Buildings for free public schools, buildings for religious worship, and the land upon
16 which they stand and immediately surrounding them, to an extent not exceeding five (5) acres so
17 far as the buildings and land are occupied and used exclusively for religious or educational
18 purposes;
19 (6) Dwellings houses and the land on which they stand, not exceeding one acre in size, or
20 the minimum lot size for zone in which the dwelling house is located, whichever is the greater,
21 owned by, or held in trust for, any religious organization and actually used by its officiating clergy;
22 provided, further, that in the town of Charlestown, where the property previously described in this
23 paragraph is exempt in total, along with dwelling houses and the land on which they stand in
24 Charlestown, not exceeding one acre in size, or the minimum lot size for zone in which the dwelling
25 house is located, whichever is the greater, owned by, or held in trust for, any religious organization
26 and actually used by its officiating clergy, or used as a convent, nunnery, or retreat center by its
27 religious order;
28 (7) Intangible personal property owned by, or held in trust for, any religious or charitable
29 organization, if the principal or income is used or appropriated for religious or charitable purposes;
30 (8) Buildings and personal estate owned by any corporation used for a school, academy, or
31 seminary of learning, except for a nonprofit institution of higher education and of any incorporated
32 public charitable institution, and the land upon which the buildings stand and immediately
33 surrounding them to an extent not exceeding one acre, so far as they are used exclusively for
34 educational purposes, but no property or estate whatever is hereafter exempt from taxation in any
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 1 case where any part of its income or profits, or of the business carried on there, is divided among
2 its owners or stockholders; provided, however, that unless any private nonprofit corporation
3 organized as a college or university located in the town of Smithfield reaches a memorandum of
4 agreement with the town of Smithfield, the town of Smithfield shall bill the actual costs for police,
5 fire, and rescue services supplied, unless otherwise reimbursed, to said corporation commencing
6 March 1, 2014;
7 (9) Estates, persons, and families of the president and professors for the time being of
8 Brown University for not more than ten thousand dollars ($10,000) for each officer, the officer's
9 estate, person, and family included, but only to the extent that any person had claimed and utilized
10 the exemption prior to, and for a period ending, either on or after December 31, 1996;
11 (10) Property especially exempt by charter unless the exemption has been waived in whole
12 or in part, and except as provided in subsection (c) of this section;
13 (11) Lots of land exclusively for burial grounds;
14 (12) Property, real and personal, held for, or by, an incorporated library, society, or any
15 free public library, or any free public library society, so far as the property is held exclusively for
16 library purposes, or for the aid or support of the aged poor, or poor friendless children, or the poor
17 generally, or for a nonprofit hospital for the sick or disabled;
18 (13) Real or personal estate belonging to, or held in trust for, the benefit of incorporated
19 organizations of veterans of any war in which the United States has been engaged, the parent body
20 of which has been incorporated by act of Congress, to the extent of four hundred thousand dollars
21 ($400,000) if actually used and occupied by the association; provided, that the city council of the
22 city of Cranston may by ordinance exempt the real or personal estate as previously described in
23 this subdivision located within the city of Cranston to the extent of five hundred thousand dollars
24 ($500,000);
25 (14) Property, real and personal, held for, or by, the fraternal corporation, association, or
26 body created to build and maintain a building or buildings for its meetings or the meetings of the
27 general assembly of its members, or subordinate bodies of the fraternity, and for the
28 accommodation of other fraternal bodies or associations, the entire net income of which real and
29 personal property is exclusively applied or to be used to build, furnish, and maintain an asylum or
30 asylums, a home or homes, a school or schools, for the free education or relief of the members of
31 the fraternity, or the relief, support, and care of worthy and indigent members of the fraternity, their
32 wives, widows, or orphans, and any fund given or held for the purpose of public education,
33 almshouses, and the land and buildings used in connection therewith;
34 (15) Real estate and personal property of any incorporated volunteer fire engine company
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 1 or incorporated volunteer ambulance or rescue corps in active service;
2 (16) The estate of any person who, in the judgment of the assessors, is unable from infirmity
3 or poverty to pay the tax; provided, that in the towns of Burrillville and West Greenwich, the tax
4 shall constitute a lien for five (5) years on the property where the owner is entitled to the exemption.
5 At the expiration of five (5) years, the lien shall be abated in full. Provided, if the property is sold
6 or conveyed, or if debt secured by the property is refinanced during the five-year (5) period, the
7 lien immediately becomes due and payable; any person claiming the exemption aggrieved by an
8 adverse decision of an assessor shall appeal the decision to the local board of tax review and
9 thereafter according to the provisions of § 44-5-26;
10 (17) Household furniture and family stores of a housekeeper in the whole, including
11 clothing, bedding, and other white goods, books, and all other tangible personal property items that
12 are common to the normal household;
13 (18) Improvements made to any real property to provide a shelter and fallout protection
14 from nuclear radiation, to the amount of one thousand five hundred dollars ($1,500); provided, that
15 the improvements meet applicable standards for shelter construction established, from time to time,
16 by the Rhode Island emergency management agency. The improvements are deemed to comply
17 with the provisions of any building code or ordinance with respect to the materials or the methods
18 of construction used and any shelter or its establishment is deemed to comply with the provisions
19 of any zoning code or ordinance;
20 (19) Aircraft for which the fee required by § 1-4-6 has been paid to the tax administrator;
21 (20) Manufacturer's inventory.
22 (i) For the purposes of §§ 44-4-10, 44-5-3, 44-5-20, and 44-5-38, a person is deemed to be
23 a manufacturer within a city or town within this state if that person uses any premises, room, or
24 place in it primarily for the purpose of transforming raw materials into a finished product for trade
25 through any or all of the following operations: adapting, altering, finishing, making, and
26 ornamenting; provided, that public utilities; non-regulated power producers commencing
27 commercial operation by selling electricity at retail or taking title to generating facilities on or after
28 July 1, 1997; building and construction contractors; warehousing operations, including distribution
29 bases or outlets of out-of-state manufacturers; and fabricating processes incidental to warehousing
30 or distribution of raw materials, such as alteration of stock for the convenience of a customer; are
31 excluded from this definition;
32 (ii) For the purposes of this section and §§ 44-4-10 and 44-5-38, the term "manufacturer's
33 inventory," or any similar term, means and includes the manufacturer's raw materials, the
34 manufacturer's work in process, and finished products manufactured by the manufacturer in this
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 1 state, and not sold, leased, or traded by the manufacturer or its title or right to possession divested;
2 provided, that the term does not include any finished products held by the manufacturer in any retail
3 store or other similar selling place operated by the manufacturer whether or not the retail
4 establishment is located in the same building in which the manufacturer operates the manufacturing
5 plant;
6 (iii) For the purpose of § 44-11-2, a "manufacturer" is a person whose principal business
7 in this state consists of transforming raw materials into a finished product for trade through any or
8 all of the operations described in paragraph (i) of this subdivision. A person will be deemed to be
9 principally engaged if the gross receipts that person derived from the manufacturing operations in
10 this state during the calendar year or fiscal year mentioned in § 44-11-1 amounted to more than
11 fifty percent (50%) of the total gross receipts that person derived from all the business activities in
12 which that person engaged in this state during the taxable year. For the purpose of computing the
13 percentage, gross receipts derived by a manufacturer from the sale, lease, or rental of finished
14 products manufactured by the manufacturer in this state, even though the manufacturer's store or
15 other selling place may be at a different location from the location of the manufacturer's
16 manufacturing plant in this state, are deemed to have been derived from manufacturing;
17 (iv) Within the meaning of the preceding paragraphs of this subdivision, the term
18 "manufacturer" also includes persons who are principally engaged in any of the general activities
19 coded and listed as establishments engaged in manufacturing in the Standard Industrial
20 Classification Manual prepared by the Technical Committee on Industrial Classification, Office of
21 Statistical Standards, Executive Office of the President, United States Bureau of the Budget, as
22 revised from time to time, but eliminating as manufacturers those persons, who, because of their
23 limited type of manufacturing activities, are classified in the manual as falling within the trade
24 rather than an industrial classification of manufacturers. Among those thus eliminated, and
25 accordingly also excluded as manufacturers within the meaning of this paragraph, are persons
26 primarily engaged in selling, to the general public, products produced on the premises from which
27 they are sold, such as neighborhood bakeries, candy stores, ice cream parlors, shade shops, and
28 custom tailors, except, that a person who manufactures bakery products for sale primarily for home
29 delivery, or through one or more non-baking retail outlets, and whether or not retail outlets are
30 operated by the person, is a manufacturer within the meaning of this paragraph;
31 (v) The term "Person" means and includes, as appropriate, a person, partnership, or
32 corporation; and
33 (vi) The department of revenue shall provide to the local assessors any assistance that is
34 necessary in determining the proper application of the definitions in this subdivision;
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 1 (21) Real and tangible personal property acquired to provide a treatment facility used
2 primarily to control the pollution or contamination of the waters or the air of the state, as defined
3 in chapter 12 of title 46 and chapter 25 of title 23, respectively, the facility having been constructed,
4 reconstructed, erected, installed, or acquired in furtherance of federal or state requirements or
5 standards for the control of water or air pollution or contamination, and certified as approved in an
6 order entered by the director of environmental management. The property is exempt as long as it is
7 operated properly in compliance with the order of approval of the director of environmental
8 management; provided, that any grant of the exemption by the director of environmental
9 management in excess of ten (10) years is approved by the city or town in which the property is
10 situated. This provision applies only to water and air pollution control properties and facilities
11 installed for the treatment of waste waters and air contaminants resulting from industrial
12 processing; furthermore, it applies only to water or air pollution control properties and facilities
13 placed in operation for the first time after April 13, 1970;
14 (22) Manufacturing machinery and equipment acquired or used by a manufacturer after
15 December 31, 1974. Manufacturing machinery and equipment is defined as:
16 (i) Machinery and equipment used exclusively in the actual manufacture or conversion of
17 raw materials or goods in the process of manufacture by a manufacturer, as defined in subdivision
18 (20), and machinery, fixtures, and equipment used exclusively by a manufacturer for research and
19 development or for quality assurance of its manufactured products;
20 (ii) Machinery and equipment that is partially used in the actual manufacture or conversion
21 of raw materials or goods in process of manufacture by a manufacturer, as defined in subdivision
22 (20), and machinery, fixtures, and equipment used by a manufacturer for research and development
23 or for quality assurance of its manufactured products, to the extent to which the machinery and
24 equipment is used for the manufacturing processes, research and development, or quality assurance.
25 In the instances where machinery and equipment is used in both manufacturing and/or research and
26 development and/or quality assurance activities and non-manufacturing activities, the assessment
27 on machinery and equipment is prorated by applying the percentage of usage of the equipment for
28 the manufacturing, research and development, and quality-assurance activity to the value of the
29 machinery and equipment for purposes of taxation, and the portion of the value used for
30 manufacturing, research and development, and quality assurance is exempt from taxation. The
31 burden of demonstrating this percentage usage of machinery and equipment for manufacturing and
32 for research and development and/or quality assurance of its manufactured products rests with the
33 manufacturer; and
34 (iii) Machinery and equipment described in §§ 44-18-30(7) and 44-18-30(22) that was
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