BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 1760
          Author:   Chau (D) and Bocanegra (D)
          Amended:  6/11/14 in Senate
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  5-2, 6/18/14
          AYES:  Wolk, Beall, DeSaulnier, Hernandez, Liu
          NOES:  Knight, Walters
           
          ASSEMBLY FLOOR  :  55-20, 5/29/14 - See last page for vote


           SUBJECT  :    Property taxes:  payment in lieu of taxes agreements

           SOURCE  :     LeadingAge California


           DIGEST  :    This bill prohibits a local government, as defined,  
          from entering into a payment in lieu of tax (PILOT) agreement  
          with a property owner of a low-income housing project eligible  
          for the welfare exemption from property tax on or after January  
          1, 2015.  This bill provides that any such agreement entered  
          into in violation of this bill is void and unenforceable.  

           ANALYSIS  :    Existing law provides that all property is taxable  
          unless explicitly exempted by the California Constitution or  
          federal law, but also allows the Legislature to exempt property  
          used for charitable purposes owned by nonprofit entities  
          organized and operated for charitable purposes, such as  
          universities, hospitals, and libraries.  The Legislature enacted  
          this exemption, commonly known as the "welfare exemption."  

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          Some local agencies impose PILOT agreements to compensate for  
          services the agency provides the property, but isn't paid for in  
          taxes due to the exemption.  Local agencies generally calculate  
          PILOTs to equal the share of countywide property tax revenues  
          that agency would have received from the property.  While no  
          general authority for local agencies to impose PILOTs exists,  
          specific statutes allow:

           City or county housing authorities, or tribes or tribally  
            designated housing authorities, to make payments to local  
            agencies for services, improvements, or facilities the local  
            agency provides the housing project owned by the authority,

           The state to pay counties amounts equal to county property  
            taxes for state wildlife management areas, including benefit  
            assessments.  However, the state has not paid these amounts in  
            more than a decade.

          This bill prohibits a local government, as defined, from  
          entering into a PILOT agreement with a property owner of a  
          low-income housing project eligible for the welfare exemption  
          from property tax on or after January 1, 2015.  This bill  
          provides that any such agreement entered into in violation of  
          this bill is void and unenforceable.  

          This bill defines a PILOT as "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, including, but not  
          limited to, any charge designed to compensate the local  
          government for lost property tax revenues resulting from the  
          low-income housing project receiving an exemption pursuant to  
          this subdivision."

          For PILOTs entered into before January 1, 2015, this bill  
          presumes that payments made were used to maintain the  
          affordability, or reduce rents for, units occupied by low-income  
          persons.  This bill cancels any tax, interest, or penalty levied  
          between January 1, 2012 and January 1, 2015 due to a PILOT, and  
          requires counties to refund any such amounts.  

          This bill additionally provides that local governments can  
          charge property owners of low-income housing projects a fee  
          pursuant to development agreements, so long as the charge is not  

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          based in whole or in part on the fact that the development is  
          subsidized, financed, insured, or otherwise assisted.

           Related Legislation  

          SB 1203 (Jackson) also addresses the issue of PILOTs and the  
          welfare exemption from property tax for low-income housing  
          projects.  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  6/20/14)

          LeadingAge California (source) 
          BRIDGE Housing
          California Coalition for Rural Housing
          California Housing Consortium
          California Infill Builders Federation

           ARGUMENTS IN SUPPORT  :    According to the author, "To protect  
          low-income housing developments subject to existing PILOT  
          agreements, this bill presumes that payments made under PILOT  
          agreements created before January 1, 2015 support the project's  
          affordability.  Local governments, however, would not be  
          permitted to enter into any future PILOT agreements after  
          January 1, 2015."

           ASSEMBLY FLOOR  :  55-20, 5/29/14
          AYES:  Ammiano, Bloom, Bocanegra, Bonilla, Bonta, Bradford,  
            Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley,  
            Dababneh, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia,  
            Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Hall, Roger  
            Hernández, Holden, Jones-Sawyer, Levine, Lowenthal, Medina,  
            Mullin, Muratsuchi, Nazarian, Pan, Perea, John A. Pérez, V.  
            Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Skinner, Stone, Ting, Weber, Wieckowski,  
            Williams, Yamada, Atkins
          NOES:  Alejo, Allen, Bigelow, Chávez, Conway, Dahle, Donnelly,  
            Beth Gaines, Grove, Hagman, Harkey, Jones, Logue, Maienschein,  
            Mansoor, Melendez, Olsen, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Achadjian, Linder, Nestande, Patterson,  
            Vacancy


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          AB:nl  6/20/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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