BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 1760
Author: Chau (D) and Bocanegra (D), et al.
Amended: 8/22/14 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.
Senate Floor Amendments of 8/22/14 (1) add legislative findings
and declarations identical to SB 1203 (Jackson), (2) move
statutory additions from the existing foundational section of
the welfare exemption from the property tax to a separate
section, (3) clarify that the measure's presumption that
payments made under PILOT agreements is conclusive, and (4) make
the bill's enactment contingent upon SB 1203 also being enacted.
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AB 1760
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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."
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
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establishes a conclusive presumption that payments made were
used to maintain the affordability, or reduce rents for, units
occupied by low-income persons.
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
based in whole or in part on the fact that the development is
subsidized, financed, insured, or otherwise assisted.
This bill is contingent upon the enactment of SB 1203 (Jackson).
This bill makes legislative findings and declarations to support
its purpose.
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 8/25/14)
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,
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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
AB:nl 8/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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