BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1760| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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." CONTINUED AB 1760 Page 2 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 CONTINUED AB 1760 Page 3 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 CONTINUED AB 1760 Page 4 AB:nl 6/20/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED