Amended in Senate August 22, 2014

Amended in Senate June 11, 2014

Amended in Assembly May 28, 2014

Amended in Assembly May 14, 2014

Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1760

Introduced by Assembly Members Chau and Bocanegra

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(Principal coauthor: Senator Jackson)

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February 14, 2014

An act to begin delete amend Section 214 of end delete begin insert add Sections 214.06, 214.07, and 214.09 to end insert the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1760, as amended, Chau. Property taxation: welfare exemption: rental housing and related facilities: payment in lieu of taxes agreement.

Existing property tax law establishes a partial welfare exemption for property used exclusively for rental housing and related facilities that are owned and operated by either of any certain types of nonprofit entities or veterans’ organizations that meet specified exemption requirements, if either of certain qualifying criteria are met. begin insert Existing law requires the owner of the property, in order to be eligible for the exemption, to certify that the funds that would have been necessary to pay property taxes are used to maintain the affordability of, or reduce rents otherwise necessary for, the units occupied by lower income households. end insert

This bill would, on or after January 1, 2015, prohibit a local government from entering into a payment in lieu of taxes (PILOT) agreement with a property owner of a low-income housing project, and would make any PILOT agreement entered into in violation of this provision void and unenforceable. begin delete This bill would presume that any payments made under any PILOT agreement entered into before January 1, 2015, are used to maintain the affordability of, or reduce the rents otherwise necessary for, the units occupied by lower income households. This bill would require any outstanding ad valorem tax, interest, or penalty that was levied between January 1, 2012, and January 1, 2015, as a result of a PILOT agreement to be canceled, and would also require any tax, interest, or penalty, as so levied, that was paid prior to January 1, 2015, to be refunded. This end delete begin insert The bill would establish a conclusive presumption that any payments made under a PILOT agreement entered into before January 1, 2015, comply with the certification requirement described above and were or are used to maintain the affordability of, or reduce rents otherwise necessary for, the units occupied by lower income households. The end insert bill would define a PILOT agreement to mean any agreement entered into between a local government and a property owner of a low-income housing project that requires the owner of the low-income housing project to pay the local government a charge, as provided, and would define a “low-income housing project” to mean a low-income housing project that is eligible for the exemption described above.

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This bill would become operative only if SB 1203 of the 2013-14 Regular Session is enacted and takes effect on or before January 1, 2015.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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The Legislature finds and declares the following:

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(a) In Section 50001 of the Health and Safety Code, the
Legislature has long declared that the subject of housing is of vital
statewide importance to the health, safety, and welfare of the
residents of this state.

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(b) The lack of housing, and in particular the lack of decent,
safe, and sanitary housing that is affordable to low-income
households, is a critical problem that continues to threaten the
economic, environmental, and social quality of life in California.

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(c) The Legislature, in enacting subdivision (g) of Section 214
of the Revenue and Taxation Code in 1987, determined that the
funds that were being paid in property taxes could better be used
in furtherance of the goal of providing low-income housing and
that a property tax exemption was necessary to ensure that
low-income housing properties with restricted rents would be able
to provide the residents with a livable community and remain
financially feasible over the life of the deed restrictions, generally
55 years.

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(d) Payment in lieu of taxes agreements are an issue of statewide
concern because of the need to prevent arbitrary and
discriminatory financial barriers that prevent construction of
needed low-income housing in the state. Therefore, restricting
agreements with local governments as set forth in Section 214.06
of the Revenue and Taxation Code is a matter of statewide concern
and not a municipal affair as that term is used in Section 5 of
Article XI of the California Constitution.

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begin insert SEC. 2. end insert   

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begin insert Section 214.06 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 214.06. end insert   

(a) Notwithstanding any other law, on or after January
1, 2015, a local government shall not enter into a payment in lieu
of taxes (PILOT) agreement with a property owner of a low-income
housing project. Any PILOT agreement entered into in violation
of this subdivision shall be void and unenforceable.

(b) An inference shall not be drawn from the enactment of this
section with regard to whether the law, as it read prior to January
1, 2015, authorized a local government to enter into a PILOT
agreement.

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begin insert SEC. 3. end insert   

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begin insert Section 214.07 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 214.07. end insert   

(a) Notwithstanding any other law, it shall be
conclusively presumed that any payments made under any payment
in lieu of taxes (PILOT) agreement entered into before January
1, 2015, comply with the certification requirements of
subparagraph (B) of paragraph (2) of subdivision (g) of Section
214 and were or are used to maintain the affordability of, or reduce
rents otherwise necessary for, the units occupied by lower income
households.

(b) An inference shall not be drawn from the enactment of this
section with regard to whether the law, as it read prior to January
1, 2015, authorized a local government to enter into a PILOT
agreement.

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begin insert SEC. 4. end insert   

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begin insert Section 214.09 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 214.09. end insert   

For purposes of Sections 214.06, 214.07, and 214.08,
all of the following shall apply:

(a) “Local government” means any city, county, city and county,
housing authority, housing successor to a redevelopment agency,
or a joint powers agency that has approved land use entitlements
or building permits, provided land or financing, or approved the
issuance of tax-exempt bonds pursuant to the federal Tax Equity
and Fiscal Responsibility Act for the low-income housing project.

(b) “Low-income housing project” means a low-income housing
project that is eligible for the exemption provided by subdivision
(g) of Section 214.

(c) “Payment in lieu of taxes agreement” means any agreement
entered into between a local government and a property owner of
a low-income housing project that requires the owner of the
low-income housing project to pay the local government a charge
to compensate the local government for lost property tax revenues
resulting from the low-income housing project receiving an
exemption pursuant to subdivision (g) of Section 214.

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begin insert SEC. 5. end insert   

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begin insert This act shall become operative only if Senate Bill
1203 of the 2013-14 Regular Session is also enacted and takes
effect on or before January 1, 2015. end insert

All matter omitted in this version of the bill appears in the bill as amended in the Senate, June 11, 2014. (JR11)