Amended in Assembly March 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2818

Introduced by Assembly Member Chiu

February 19, 2016

An act to begin delete amend Section 402.1 of end delete begin insert add Sections 401.21 and 214.17 to end insert the Revenue and Taxation Code, relating to begin delete taxation. end delete begin insert taxation, to take effect immediately, tax levy. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2818, as amended, Chiu. begin delete Property taxation: assessment. end delete begin insert Property taxation: community land trust. end insert

Existing law requires the county assessor to consider, when valuing real property for property taxation purposes, the effect of any enforceable restrictions to which the use of the land may be subjected, including, but not limited to, zoning, recorded contracts with governmental agencies, and various other restrictions imposed by governments.

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This bill would make a nonsubstantive change to that provision.

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This bill would prohibit the county assessor, when valuing an owner-occupied single-family dwelling or owner-occupied unit in a multifamily dwelling and the land on which it is situated that is required for the convenient occupation and use of that dwelling or unit, if the dwelling or unit is on land leased to the owner by a community land trust, as defined, from valuing the dwelling or unit and the land at any value greater than the purchase price for that dwelling or unit. The bill would apply this prohibition only to a dwelling or unit and land that is owned and occupied by persons and families of low or moderate income, as defined.

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Existing property tax law, in accordance with the California Constitution, provides for a “welfare exemption” for property used exclusively for religious, hospital, scientific, or charitable purposes and that is owned or operated by certain types of nonprofit entities, if certain qualifying criteria are met.

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This bill, on and after January 1, 2017, would provide that property is within the welfare exemption if that property is owned and operated by a nonprofit corporation, otherwise qualifying for the welfare exemption, that is organized for the specific and primary purpose of creating and maintaining permanently affordable single-family or multifamily residences to which specified conditions apply. This bill, in the case of property not previously designated as open space, would prohibit this exemption from being denied on the basis that the subject property does not currently include a single-family or multifamily residence as so described or a single-family or multifamily residence as so described that is in the course of construction.

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By imposing new duties upon local government officials, this bill would impose a state-mandated local program.

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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.

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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.

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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.

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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.

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This bill would take effect immediately as a tax levy.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . 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:

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begin insert SECTION 1. end insert   

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begin insert Section 401.21 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 401.21. end insert   

(a) When valuing an owner-occupied single-family
dwelling or owner-occupied unit in a multifamily dwelling and the
land on which it is situated that is required for the convenient
occupation and use of that dwelling or unit, if the dwelling or unit
is on land leased to the owner by a community land trust, the
assessor shall not value the dwelling or unit and the land at any
value greater than the purchase price for that dwelling or unit.

(b) This section shall only apply to a dwelling or unit and land
that is owned and occupied by persons and families of low or
moderate income.

(c) For purposes of this section, all of the following definitions
shall apply:

(1) “Affordability restrictions” include, but are not limited to,
any of the following:

(A) The dwelling or unit can only be sold or resold to persons
and families of low or moderate income to be occupied by the
owner as his or her principal place of residence.

(B) The resale price of the dwelling or unit is determined by a
formula that ensures affordability to persons and families of low
or moderate income.

(C) There is a purchase option in favor of the community land
trust.

(2) “Community land trust” means a nonprofit corporation,
otherwise qualifying for exemption under Section 214, that is
organized for the specific and primary purpose of creating and
maintaining permanently affordable single-family or multifamily
residences to which both of the following conditions apply:

(A) All residences on the land are sold to, and occupied by,
persons and families of low or moderate income, and the land on
which it is situated that is required for the convenient occupation
and use of that dwelling or unit is leased to those owners by the
nonprofit corporation for a term of 99 years, including renewal
option.

(B) The leasehold interest is limited by affordability restrictions
recorded on the land lease or other similar recorded instrument.

(3) “Persons and families of low or moderate income” has the
same meaning as that term is defined in Section 50093 of the
Health and Safety Code.

(d) This section shall apply to lien dates occurring on and after
January 1, 2017.

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begin insert SEC. 2. end insert   

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begin insert Section 214.17 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 214.17. end insert   

(a) Property is within the exemption provided by
Sections 4 and 5 of Article XIII of the California Constitution if
that property is owned and operated by a nonprofit corporation,
otherwise qualifying for exemption under Section 214, that is
organized for the specific and primary purpose of creating and
maintaining permanently affordable single-family or multifamily
residences in which both of the following conditions apply:

(1) All residences on the land are intended for ownership and
occupancy as a primary residence by persons and families of low
or moderate income, and the land on which it is situated that is
required for the convenient occupation and use of that residence
is leased to those owners by the nonprofit corporation for a term
of 99 years, including renewal options.

(2) The leasehold interest is limited by affordability restrictions
recorded on the land lease or other similar recorded instrument.

(b) In the case of property not previously designated as open
space, the exemption provided by subdivision (a) may not be denied
to a property on the basis that the property does not currently
include a single-family or multifamily residence, as described in
subdivision (a), or a single-family or multifamily residence, as
described in subdivision (a), that is in the course of construction.

(c) For purposes of this section, both of the following shall
apply:

(1) “Affordability restrictions” include, but are not limited to,
any of the following:

(A) The residence can only be sold or resold to persons and
families of low or moderate income to be occupied by the owner
as his or her principal place of residence.

(B) The resale price of the residence is determined by a formula
that ensures affordability to persons and families of low or
moderate income.

(C) There is a purchase option in favor of the community land
trust.

(2) “Persons and families of low or moderate income” has the
same meaning as that term is defined in Section 50093 of the
Health and Safety Code.

(d) This section shall apply to lien dates occurring on and after
January 1, 2017.

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begin insert SEC. 3. end insert   

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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.

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begin insert SEC. 4. end insert   

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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.

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begin insert SEC. 5. end insert   

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

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SECTION 1.  

Section 402.1 of the Revenue and Taxation Code
is amended to read:

402.1.  

(a) In the assessment of land, the assessor shall consider
the effect upon value of any enforceable restrictions to which the
use of the land may be subjected. These restrictions include, but
are not limited to, all of the following:

(1) Zoning.

(2) Recorded contracts with governmental agencies other than
those provided in Sections 422, 422.5, and 422.7.

(3) Permit authority of, and permits issued by, governmental
agencies exercising land use powers concurrently with local
governments, including the California Coastal Commission and
regional coastal commissions, the San Francisco Bay Conservation
and Development Commission, and the Tahoe Regional Planning
Agency.

(4) Development controls of a local government in accordance
with any local coastal program certified pursuant to Division 20
(commencing with Section 30000) of the Public Resources Code.

(5) Development controls of a local government in accordance
with a local protection program, or any component thereof, certified
pursuant to Division 19 (commencing with Section 29000) of the
Public Resources Code.

(6) Environmental constraints applied to the use of land pursuant
to provisions of statutes.

(7) Hazardous waste land use restriction pursuant to Section
25226 of the Health and Safety Code.

(8) (A) A recorded conservation, trail, or scenic easement, as
described in Section 815.1 of the Civil Code, that is granted in
favor of a public agency, or in favor of a nonprofit corporation
organized pursuant to Section 501(c)(3) of the Internal Revenue
Code that has as its primary purpose the preservation, protection,
or enhancement of land in its natural, scenic, historical, agricultural,
forested, or open-space condition or use.

(B) A recorded greenway easement, as described in Section
816.52 of the Civil Code, that is granted in favor of a public
agency, or in favor of a nonprofit corporation organized pursuant
to Section 501(c)(3) of the Internal Revenue Code that has as its
primary purpose the developing and preserving of greenways.

(9) A solar-use easement pursuant to Chapter 6.9 (commencing
with Section 51190) of Part 1 of Division 1 of Title 5 of the
Government Code.

(10) A contract where the following apply:

(A) The contract is with a nonprofit corporation organized
pursuant to Section 501(c)(3) of the Internal Revenue Code that
has received a welfare exemption under Section 214.15 for
properties intended to be sold to low-income families who
participate in a special no-interest loan program.

(B) The contract restricts the use of the land for at least 30 years
to owner-occupied housing available at affordable housing cost in
accordance with Section 50052.5 of the Health and Safety Code.

(C) The contract includes a deed of trust on the property in favor
of the nonprofit corporation to ensure compliance with the terms
of the program, which has no value unless the owner fails to
comply with the covenants and restrictions of the terms of the
home sale.

(D) The local housing authority or an equivalent agency, or, if
none exists, the city attorney or county counsel, has made a finding
that the long-term deed restrictions in the contract serve a public
purpose.

(E) The contract is recorded and provided to the assessor.

(b) There is a rebuttable presumption that restrictions will not
be removed or substantially modified in the predictable future and
that they will substantially equate the value of the land to the value
attributable to the legally permissible use or uses.

(c) Grounds for rebutting the presumption may include, but are
not necessarily limited to, the past history of like use restrictions
in the jurisdiction in question and the similarity of sales prices for
restricted and unrestricted land. The possible expiration of a
restriction at a time certain shall not be conclusive evidence of the
future removal or modification of the restriction unless there is no
opportunity or likelihood of the continuation or renewal of the
restriction, or unless a necessary party to the restriction has
indicated an intent to permit its expiration at that time.

(d) In assessing land with respect to which the presumption is
unrebutted, the assessor shall not consider sales of otherwise
comparable land not similarly restricted as to use as indicative of
value of land under restriction, unless the restrictions have a
demonstrably minimal effect upon value.

(e) In assessing land under an enforceable use restriction wherein
the presumption of no predictable removal or substantial
modification of the restriction has been rebutted, but where the
restriction nevertheless retains some future life and has some effect
on present value, the assessor may consider, in addition to all other
legally permissible information, representative sales of comparable
lands that are not under restriction but upon which natural
limitations have substantially the same effect as restrictions.

(f) For the purposes of this section the following definitions
apply:

(1) “Comparable lands” are lands that are similar to the land
being valued in respect to legally permissible uses and physical
attributes.

(2) “Representative sales information” is information from sales
of a sufficient number of comparable lands to give an accurate
indication of the full cash value of the land being valued.

(g) It is hereby declared that the purpose and intent of the
Legislature in enacting this section is to provide for a method of
determining whether a sufficient amount of representative sales
information is available for land under use restriction to ensure
the accurate assessment of that land. It is also hereby declared that
the further purpose and intent of the Legislature in enacting this
section and Section 1630 is to avoid an assessment policy which,
in the absence of special circumstances, considers uses for land
that legally are not available to the owner and not contemplated
by government, and that these sections are necessary to implement
the public policy of encouraging and maintaining effective land
use planning. This statute shall not be construed as requiring the
assessment of any land at a value less than as required by Section
401 or as prohibiting the use of representative comparable sales
information on land under similar restrictions when this information
is available.

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