Amended in Assembly April 9, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1229

Introduced by Assembly Member Campos

February 27, 2015

An act to begin delete amend Section 214 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end delete begin insert add and repeal Section 1954.532 of the Civil Code, and to add and repeal Section 17503 of the Revenue and Taxation Code, relating to rent control. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1229, as amended, Campos. begin delete Property taxation: welfare exemption: rental housing and related facilities. end delete begin insert Senior Citizen Rent Increase Exemption Program. end insert

Existing begin delete property tax law establishes a partial welfare exemption for property used exclusively for rental housing and related facilities, as defined, 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. Existing law requires the partial exemption to be equal to that percentage of the value of the property that is equal to the percentage that the number of units serving lower income households represents of the total number of residential units in any year. For purposes of the exemption, existing law defines “related facilities” to, among other things, exclude any portions of the overall development that are nonexempt commercial space. end delete begin insert law authorizes local jurisdictions to establish controls on the price of residential units that may be offered for rent. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. end insert

This begin delete bill would specify that “related facilities” does not include any portions of the overall development that are occupied commercial space. end delete begin insert bill, until January 1, 2019, would enact the Senior Citizen Rent Increase Exemption Program (SCRIE program), a demonstration project to be implemented in the County of Alameda, the City and County of San Francisco, the County of Ventura, and the County of Santa Clara. The program would permit an eligible head of household in a rent-controlled property to apply to be exempt from rent increases for a 12-month period, with the associated loss of rent to be offset by a tax credit to be claimed by the landlord, as provided. The bill would define an eligible head of household as having certain characteristics, including being 62 years of age or older, and having a combined annual household income of $50,000 or less, more than end insert begin insert 1⁄3 end insert begin insert of which is spent on rent. The bill would require the Department of Housing and Community Development to provide advisory guidance to local rent control boards regarding the implementation and administration of the SCRIE program, to publicize the SCRIE program to senior citizens in rent-controlled properties in the jurisdictions to which the program applies, and to apply for federal funding for the program. end insert

begin insert

This bill would permit an eligible head of household, on and after April 1, 2016, to apply annually to the appropriate local rent control board, to be defined as a supervising agency, for a rent increase exemption order and, if the relevant criteria are met, would require the agency to issue the order to the head of household, with a copy to his or her landlord along with information on the right to claim a related tax credit. By increasing the duties of local officials, the bill would impose a state-mandated local program.

end insert begin insert

The Personal Income Tax Law allows various credits against the tax imposed by that law.

end insert begin insert

This bill would allow a credit against those taxes, for taxable years beginning on or after January 1, 2016, and before January 1, 2020, for an amount equivalent to the rent a landlord does not receive as a result of a tenant’s participation in the SCRIE program. The bill would prescribe the conditions pursuant to which the landlord could claim the tax credit, including the requirement that the credit be allowed only for the taxable year in which the taxpayer incurred the loss of the rent resulting from the increase exemption order. The bill would require the Department of Housing and Community Development to make a specified report to the Legislature on the program, which would include the feasability of establishing the program statewide. The bill would make a statement of legislative findings.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

end insert begin delete

Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

end delete begin delete

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

end delete begin delete

This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

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

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

(a) The Legislature finds and declares all of the
following:

end insert begin insert

(1) According to a Kaiser Family Foundation study, California’s
seniors have the nation’s highest poverty rate.

end insert begin insert

(2) Twenty percent of California adults over 65 years of age
live below the poverty threshold of about $16,000, when the higher
cost of housing and health care are taken into account.

end insert begin insert

(3) Nationally, homelessness among seniors is projected to rise
by 33 percent between 2010 and 2020, and by 100 percent between
2010 and 2050, according to a 2010 report from the Homelessness
Research Institute.

end insert begin insert

(4) The Los Angeles Homeless Services Authority reports that
from 2011 to 2013, inclusive, Los Angeles County had a 29.1
percent increase in the number of homeless people 62 years of age
and older.

end insert begin insert

(5) According to a March 2013 report of the National Low
Income Housing Coalition, California is the second least affordable
state behind Hawaii.

end insert begin insert

(6) According to the federal Department of Housing and Urban
Development, fair market rent in California for a two-bedroom
apartment is $1,341 a month. In order to afford this level of rent
and utilities, without paying more than 30 percent of income on
housing, a household needs to earn $4,470 monthly or $53,640
annually.

end insert begin insert

(7) Three out of the 10 most expensive metropolitan areas and
six out of the 10 most expensive counties nationally are in
California.

end insert begin insert

(8) In order to slow the growing numbers of homeless senior
citizens being priced out of their homes, California must begin to
explore practical means to slow this disaster.

end insert begin insert

(b) The Legislature hereby enacts the Senior Citizen Rent
Increase Exemption Program to test whether the program is a
viable method to help California seniors remain in their homes.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1954.532 is added to the end insert begin insert Civil Code end insert begin insert , to read: end insert

begin insert

begin insert 1954.532. end insert   

(a) This section establishes the Senior Citizen Rent
Increase Exemption Program, a demonstration project to be
implemented in the County of Alameda, the City and County of
San Francisco, the County of Ventura, and the County of Santa
Clara in order to permit an eligible head of household in a
rent-controlled property to apply for an exemption from rent
increases and to provide his or her landlord a tax credit in an
amount equivalent to the rent increase that the landlord otherwise
would have received if not for that exemption.

(b) For the purposes of this section:

(1) “Department” means the Department of Housing and
Community Development.

(2) “Eligible head of household” means a person with all of
the following characteristics:

(A) He or she is 62 years of age or older.

(B) He or she rents a property as his or her primary residence
that is rent controlled and he or she is named on the lease for that
property.

(C) His or her combined annual household income is fifty
thousand dollars ($50,000) or less, more than one third of which
is spent on rent.

(3) “Qualifying residence” means a property that is subject to
rent control, not sublet, in compliance with the local rent control
ordinance, and rent for which is not paid with a federal housing
choice voucher, commonly referred to as a Section 8 voucher.

(4) “Rent increase exemption order” is an order issued by a
supervising agency that exempts an eligible head of household
renting a qualifying residence from increases in rent for a period
of 12 months and entitles the landlord to a tax credit in an amount
equivalent to the rent not received.

(5) “SCRIE program” means the Senior Citizen Rent Increase
Exemption Program established by this section.

(6) “Supervising agency” means the local rent control board
or other local entity that administrates a rent control program
with jurisdiction over a potentially qualifying residence.

(c) The department shall provide advisory guidance to
supervising agencies regarding the implementation and
administration of the SCRIE program and is authorized to
promulgate the necessary rules and regulations to carry out this
section. The department shall publicize the SCRIE program to
senior citizens in rent-controlled properties in the jurisdictions to
which the program applies.

(d) On and after April 1, 2016, an eligible head of household
renting a qualifying residence may apply to a supervising agency
for a rent increase exemption order pursuant to the SCRIE
program. The supervising agency shall review the application and,
upon confirming that the applicant is an eligible head of household
and that the property is a qualifying residence, shall issue to the
applicant a rent increase exemption order. The supervising agency
shall issue a copy of the order to the landlord of the qualifying
residence and shall notify the landlord of his or her right to make
a claim for a tax credit under Section 17053 of the Revenue and
Taxation Code for rent not received pursuant to the order. The
rent increase exemption order shall be in effect for a 12-month
period commencing the month following its issuance. A rent
increase exemption order shall not renew automatically and an
eligible head of household shall be required to reapply to the
supervising agency and make the appropriate demonstrations in
order to qualify for a subsequent order. A rent increase exemption
order validly issued before the repeal of this section shall remain
effective for its full 12-month term.

(e) The department shall seek federal funding to support the
SCRIE program.

(f) (1) On or before July 1, 2017, the department shall report
to the Legislature regarding the effectiveness of the SCRIE
program. The report shall address, but not be limited to, the
following:

(A) The number of eligible heads of household participating in
the SCRIE program, their combined household incomes, and the
rent increases actually exempted.

(B) The extent to which the SCRIE program significantly
decreases the rental burden on eligible heads of household.

(C) The household and community impact of the rent increase
exemption for eligible heads of household and the rent increase
exemption tax credit for affected landlords.

(D) The feasability of implementing the SCRIE program
throughout the state.

(2) The report required by paragraph (1) shall be made in
compliance with Section 9795 of the Government Code.

(g) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 17053 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 17053. end insert   

(a) For each taxable year beginning on or after
January 1, 2016, and before January 1, 2020, there shall be
allowed as a credit against the “net tax,” as defined in Section
17039, an amount equal to the amount of rent not received for that
taxable year by a taxpayer, who is a landlord, as a consequence
of a tenant receiving a rent increase exemption order under the
Senior Citizen Rent Increase Exemption Program established
pursuant to Section 1954.532 of the Civil Code.

(b) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and succeeding seven years if necessary,
until the total credit is exhausted.

(c) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

Pursuant to Section 41 of the Revenue and Taxation
Code, the following applies to Section 17053 of the Revenue and
Taxation Code:

end insert begin insert

(a) The specific goal, purpose, and objective of Section 17053
of the Revenue and Taxation Code is to provide a landlord a means
by which the landlord may recoup the loss in rent incurred as a
result of the participation of a tenant in the Senior Citizen Rent
Increase Exemption Program (SCRIE program) established
pursuant to Section 1954.532 of the Civil Code, thus making the
program function equitably for both landlords and tenants. The
fundamental goal, purpose, and objective of the SCRIE program
is to provide financial relief to tenants in specified counties who
are heads of household 62 years of age or older, with combined
household incomes of $50,000 or less, more than one-third of
which is spent on rent.

end insert begin insert

(b) The performance indicator for Section 17053 of Revenue
and Taxation Code will be the actual savings in rent by senior
citizen tenants participating in the SCRIE program, particularly
as it reflects a percentage of their combined household incomes.
This amount will be reflected, if imperfectly, in the amounts of the
tax credits allowed.

end insert begin insert

(c) In order to determine the relative success of the SCRIE
program in meeting its goal, and the economic success of the tax
credit provided by Section 17053 of the Revenue and Taxation
Code, it is necessary to establish the number of participants in the
SCRIE program, their combined household incomes, and the
amount of rent increases that were exempted pursuant to the
program. Information on participating senior citizen tenants, their
combined household incomes, and the amount of rent increases
that were exempted will be available from the Department of
Housing and Community Development in its report to the
Legislature pursuant to subdivision (f) of Section 1954.532 of the
Civil Code and from the local rent control boards implementing
the SCRIE program.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert begin insert

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

end insert

begin delete

SECTION 1.  

Section 214 of the Revenue and Taxation Code
is amended to read:

214.  

(a) Property used exclusively for religious, hospital,
scientific, or charitable purposes owned and operated by
community chests, funds, foundations, limited liability companies,
or corporations organized and operated for religious, hospital,
scientific, or charitable purposes is exempt from taxation, including
ad valorem taxes to pay the interest and redemption charges on
any indebtedness approved by the voters prior to July 1, 1978, or
any bonded indebtedness for the acquisition or improvement of
real property approved on or after July 1, 1978, by two-thirds of
the votes cast by the voters voting on the proposition, if:

(1) The owner is not organized or operated for profit. However,
in the case of hospitals, the organization shall not be deemed to
be organized or operated for profit if, during the immediately
preceding fiscal year, operating revenues, exclusive of gifts,
endowments and grants-in-aid, did not exceed operating expenses
by an amount equivalent to 10 percent of those operating expenses.
As used herein, operating expenses include depreciation based on
cost of replacement and amortization of, and interest on,
indebtedness.

(2) No part of the net earnings of the owner inures to the benefit
of any private shareholder or individual.

(3) The property is used for the actual operation of the exempt
activity, and does not exceed an amount of property reasonably
necessary to the accomplishment of the exempt purpose.

(A) For the purposes of determining whether the property is
used for the actual operation of the exempt activity, consideration
shall not be given to use of the property for either or both of the
following described activities if that use is occasional:

(i) The owner conducts fundraising activities on the property
and the proceeds derived from those activities are not unrelated
business taxable income, as defined in Section 512 of the Internal
Revenue Code, of the owner and are used to further the exempt
activity of the owner.

(ii) The owner permits any other organization that meets all of
the requirements of this subdivision, other than ownership of the
property, to conduct fundraising activities on the property and the
proceeds derived from those activities are not unrelated business
taxable income, as defined in Section 512 of the Internal Revenue
Code, of the organization, are not subject to the tax on unrelated
business taxable income that is imposed by Section 511 of the
Internal Revenue Code, and are used to further the exempt activity
of the organization.

(B) For purposes of subparagraph (A):

(i) “Occasional use” means use of the property on an irregular
or intermittent basis by the qualifying owner or any other qualifying
organization described in clause (ii) of subparagraph (A) that is
incidental to the primary activities of the owner or the other
organization.

(ii) “Fundraising activities” means both activities involving the
direct solicitation of money or other property and the anticipated
exchange of goods or services for money between the soliciting
organization and the organization or person solicited.

(C) Subparagraph (A) shall have no application in determining
whether paragraph (3) has been satisfied unless the owner of the
property and any other organization using the property as provided
in subparagraph (A) have filed with the assessor a valid
organizational clearance certificate issued pursuant to Section
254.6.

(D) For the purposes of determining whether the property is
used for the actual operation of the exempt activity, consideration
shall not be given to the use of the property for meetings conducted
by any other organization if the meetings are incidental to the other
organization’s primary activities, are not fundraising meetings or
activities as defined in subparagraph (B), are held no more than
once per week, and the other organization and its use of the
property meet all other requirements of paragraphs (1) to (5),
inclusive, of this subdivision. The owner or the other organization
also shall file with the assessor a copy of a valid, unrevoked letter
or ruling from the Internal Revenue Service or the Franchise Tax
Board stating that the other organization, or the national
organization of which it is a local chapter or affiliate, qualifies as
an exempt organization under Section 501(c)(3) or 501(c)(4) of
the Internal Revenue Code or Section 23701d, 23701f, or 23701w.

(E) Nothing in subparagraph (A), (B), (C), or (D) shall be
construed to either enlarge or restrict the exemption provided for
in subdivision (b) of Section 4 and Section 5 of Article XIII of the
California Constitution and this section.

(4) The property is not used or operated by the owner or by any
other person so as to benefit any officer, trustee, director,
shareholder, member, employee, contributor, or bondholder of the
owner or operator, or any other person, through the distribution
of profits, payment of excessive charges or compensations, or the
more advantageous pursuit of their business or profession.

(5) The property is not used by the owner or members thereof
for fraternal or lodge purposes, or for social club purposes except
where that use is clearly incidental to a primary religious, hospital,
scientific, or charitable purpose.

(6) The property is irrevocably dedicated to religious, charitable,
scientific, or hospital purposes and upon the liquidation,
dissolution, or abandonment of the owner will not inure to the
benefit of any private person except a fund, foundation, or
corporation organized and operated for religious, hospital,
scientific, or charitable purposes.

(7) The property, if used exclusively for scientific purposes, is
used by a foundation or institution that, in addition to complying
with the foregoing requirements for the exemption of charitable
organizations in general, has been chartered by the Congress of
the United States (except that this requirement shall not apply
when the scientific purposes are medical research), and whose
objects are the encouragement or conduct of scientific
investigation, research, and discovery for the benefit of the
community at large.

The exemption provided for herein shall be known as the
“welfare exemption.” This exemption shall be in addition to any
other exemption now provided by law, and the existence of the
exemption provision in paragraph (2) of subdivision (a) of Section
202 shall not preclude the exemption under this section for museum
or library property. Except as provided in subdivision (e), this
section shall not be construed to enlarge the college exemption.

(b) Property used exclusively for school purposes of less than
collegiate grade and owned and operated by religious, hospital, or
charitable funds, foundations, limited liability companies, or
corporations, which property and funds, foundations, limited
liability companies, or corporations meet all of the requirements
of subdivision (a), shall be deemed to be within the exemption
provided for in subdivision (b) of Section 4 and Section 5 of Article
XIII of the California Constitution and this section.

(c) Property used exclusively for nursery school purposes and
owned and operated by religious, hospital, or charitable funds,
foundations, limited liability companies, or corporations, which
property and funds, foundations, limited liability companies, or
corporations meet all the requirements of subdivision (a), shall be
deemed to be within the exemption provided for in subdivision
(b) of Section 4 and Section 5 of Article XIII of the California
Constitution and this section.

(d) Property used exclusively for a noncommercial educational
FM broadcast station or an educational television station, and
owned and operated by religious, hospital, scientific, or charitable
funds, foundations, limited liability companies, or corporations
meeting all of the requirements of subdivision (a), shall be deemed
to be within the exemption provided for in subdivision (b) of
Section 4 and Section 5 of Article XIII of the California
Constitution and this section.

(e) Property used exclusively for religious, charitable, scientific,
or hospital purposes and owned and operated by religious, hospital,
scientific, or charitable funds, foundations, limited liability
companies, or corporations or educational institutions of collegiate
grade, as defined in Section 203, which property and funds,
foundations, limited liability companies, corporations, or
educational institutions meet all of the requirements of subdivision
(a), shall be deemed to be within the exemption provided for in
subdivision (b) of Section 4 and Section 5 of Article XIII of the
California Constitution and this section. As to educational
institutions of collegiate grade, as defined in Section 203, the
requirements of paragraph (6) of subdivision (a) shall be deemed
to be met if both of the following are met:

(1) The property of the educational institution is irrevocably
dedicated in its articles of incorporation to charitable and
educational purposes, to religious and educational purposes, or to
educational purposes.

(2) The articles of incorporation of the educational institution
provide for distribution of its property upon its liquidation,
dissolution, or abandonment to a fund, foundation, or corporation
organized and operated for religious, hospital, scientific, charitable,
or educational purposes meeting the requirements for exemption
provided by Section 203 or this section.

(f) Property used exclusively for housing and related facilities
for elderly or handicapped families and financed by, including,
but not limited to, the federal government pursuant to Section 202
of Public Law 86-372 (12 U.S.C. Sec. 1701q), as amended, Section
231 of Public Law 73-479 (12 U.S.C. Sec. 1715v), Section 236 of
Public Law 90-448 (12 U.S.C. Sec. 1715z), or Section 811 of
Public Law 101-625 (42 U.S.C. Sec. 8013), and owned and
operated by religious, hospital, scientific, or charitable funds,
foundations, limited liability companies, or corporations meeting
all of the requirements of this section shall be deemed to be within
the exemption provided for in subdivision (b) of Section 4 and
Section 5 of Article XIII of the California Constitution and this
section.

The amendment of this paragraph made by Chapter 1102 of the
Statutes of 1984 does not constitute a change in, but is declaratory
of, existing law. However, no refund of property taxes shall be
required as a result of this amendment for any fiscal year prior to
the fiscal year in which the amendment takes effect.

Property used exclusively for housing and related facilities for
elderly or handicapped families at which supplemental care or
services designed to meet the special needs of elderly or
handicapped residents are not provided, or that is not financed by
the federal government pursuant to Section 202 of Public Law
86-372 (12 U.S.C. Sec. 1701q), as amended, Section 231 of Public
Law 73-479 (12 U.S.C. Sec. 1715v), Section 236 of Public Law
90-448 (12 U.S.C. Sec. 1715z), or Section 811 of Public Law
101-625 (42 U.S.C. Sec. 8013), shall not be entitled to exemption
pursuant to this subdivision unless the property is used for housing
and related facilities for low- and moderate-income elderly or
handicapped families. Property that would otherwise be exempt
pursuant to this subdivision, except that it includes some housing
and related facilities for other than low- or moderate-income elderly
or handicapped families, shall be entitled to a partial exemption.
The partial exemption shall be equal to that percentage of the value
of the property that is equal to the percentage that the number of
low- and moderate-income elderly and handicapped families
represents of the total number of families occupying the property.

As used in this subdivision, “low and moderate income” has the
same meaning as the term “persons and families of low or moderate
income” as defined by Section 50093 of the Health and Safety
Code.

(g) (1) Property used exclusively for rental housing and related
facilities and owned and operated by religious, hospital, scientific,
or charitable funds, foundations, limited liability companies, or
corporations, including limited partnerships in which the managing
general partner is an eligible nonprofit corporation or eligible
limited liability company, meeting all of the requirements of this
section, or by veterans’ organizations, as described in Section
215.1, meeting all the requirements of paragraphs (1) to (7),
inclusive, of subdivision (a), shall be deemed to be within the
exemption provided for in subdivision (b) of Section 4 and Section
5 of Article XIII of the California Constitution and this section
and shall be entitled to a partial exemption equal to that percentage
of the value of the property that is equal to the percentage that the
number of units serving lower income households represents of
the total number of residential units in any year in which any of
the following criteria applies:

(A) The acquisition, rehabilitation, development, or operation
of the property, or any combination of these factors, is financed
with tax-exempt mortgage revenue bonds or general obligation
bonds, or is financed by local, state, or federal loans or grants and
the rents of the occupants who are lower income households do
not exceed those prescribed by deed restrictions or regulatory
agreements pursuant to the terms of the financing or financial
assistance.

(B) The owner of the property is eligible for and receives
low-income housing tax credits pursuant to Section 42 of the
Internal Revenue Code of 1986, as added by Public Law 99-514.

(C) In the case of a claim, other than a claim with respect to
property owned by a limited partnership in which the managing
general partner is an eligible nonprofit corporation, that is filed
for the 2000-01 fiscal year or any fiscal year thereafter, 90 percent
or more of the occupants of the property are lower income
households whose rent does not exceed the rent prescribed by
Section 50053 of the Health and Safety Code. The total exemption
amount allowed under this subdivision to a taxpayer, with respect
to a single property or multiple properties for any fiscal year on
the sole basis of the application of this subparagraph, may not
exceed twenty thousand dollars ($20,000) of tax.

(D) (i) The property was previously purchased and owned by
the Department of Transportation pursuant to a consent decree
requiring housing mitigation measures relating to the construction
of a freeway and is now solely owned by an organization that
qualifies as an exempt organization under Section 501(c)(3) of the
Internal Revenue Code.

(ii) This subparagraph shall not apply to property owned by a
limited partnership in which the managing partner is an eligible
nonprofit corporation.

(2) In order to be eligible for the exemption provided by this
subdivision, the owner of the property shall do both of the
following:

(A) (i) For any claim filed for the 2000-01 fiscal year or any
fiscal year thereafter, certify and ensure, subject to the limitation
in clause (ii), that there is an enforceable and verifiable agreement
with a public agency, a recorded deed restriction, or other legal
document that restricts the project’s usage and that provides that
the units designated for use by lower income households are
continuously available to or occupied by lower income households
at rents that do not exceed those prescribed by Section 50053 of
the Health and Safety Code, or, to the extent that the terms of
federal, state, or local financing or financial assistance conflicts
with Section 50053, rents that do not exceed those prescribed by
the terms of the financing or financial assistance.

(ii) In the case of a limited partnership in which the managing
general partner is an eligible nonprofit corporation, the restriction
and provision specified in clause (i) shall be contained in an
enforceable and verifiable agreement with a public agency, or in
a recorded deed restriction to which the limited partnership
certifies.

(B) 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.

(3) As used in this subdivision:

(A) “Lower income households” has the same meaning as the
term “lower income households” as defined by Section 50079.5
of the Health and Safety Code.

(B) “Related facilities” means any manager’s units and any and
all common area spaces that are included within the physical
boundaries of the rental housing development, including, but not
limited to, common area space, walkways, balconies, patios,
clubhouse space, meeting rooms, laundry facilities and parking
areas, except any portions of the overall development that are
occupied commercial space.

(C) “Units serving lower income households” shall mean units
that are occupied by lower income households at an affordable
rent, as defined in Section 50053 of the Health and Safety Code
or, to the extent that the terms of federal, state, or local financing
or financial assistance conflicts with Section 50053, rents that do
not exceed those prescribed by the terms of the financing or
financial assistance. Units reserved for lower income households
at an affordable rent that are temporarily vacant due to tenant
turnover or repairs shall be counted as occupied.

(h) Property used exclusively for an emergency or temporary
shelter and related facilities for homeless persons and families and
owned and operated by religious, hospital, scientific, or charitable
funds, foundations, limited liability companies, or corporations
meeting all of the requirements of this section shall be deemed to
be within the exemption provided for in subdivision (b) of Section
4 and Section 5 of Article XIII of the California Constitution and
this section. Property that otherwise would be exempt pursuant to
this subdivision, except that it includes housing and related
facilities for other than an emergency or temporary shelter, shall
be entitled to a partial exemption.

As used in this subdivision, “emergency or temporary shelter”
means a facility that would be eligible for funding pursuant to
Chapter 11.5 (commencing with Section 50800) of Part 2 of
Division 31 of the Health and Safety Code.

(i) Property used exclusively for housing and related facilities
for employees of religious, charitable, scientific, or hospital
organizations that meet all the requirements of subdivision (a) and
owned and operated by funds, foundations, limited liability
companies, or corporations that meet all the requirements of
subdivision (a) shall be deemed to be within the exemption
provided for in subdivision (b) of Section 4 and Section 5 of Article
XIII of the California Constitution and this section to the extent
the residential use of the property is institutionally necessary for
the operation of the organization.

(j) For purposes of this section, charitable purposes include
educational purposes. For purposes of this subdivision,
“educational purposes” means those educational purposes and
activities for the benefit of the community as a whole or an
unascertainable and indefinite portion thereof, and do not include
those educational purposes and activities that are primarily for the
benefit of an organization’s shareholders. Educational activities
include the study of relevant information, the dissemination of that
information to interested members of the general public, and the
participation of interested members of the general public.

(k) In the case of property used exclusively for the exempt
purposes specified in this section, owned and operated by limited
liability companies that are organized and operated for those
purposes, the State Board of Equalization shall adopt regulations
to specify the ownership, organizational, and operational
requirements for those companies to qualify for the exemption
provided by this section.

(l) The amendments made by Chapter 354 of the Statutes of
2004 shall apply with respect to lien dates occurring on and after
January 1, 2005.

SEC. 2.  

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

SEC. 3.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end delete