Amended in Assembly May 31, 2016

Amended in Assembly May 16, 2016

Amended in Assembly May 2, 2016

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

LEGISLATIVE COUNSEL’S DIGEST

AB 2818, as amended, Chiu. Property taxation: community land trust.

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.

begin delete

This bill, for lien dates occurring on and after January 1, 2017, in assessing an owner-occupied single-family dwelling or owner-occupied unit in a multifamily dwelling, and the land on which the dwelling or unit is situated required for the convenient occupation and use of that dwelling or unit by persons and families of low or moderate income, would require the value of the dwelling or unit and the land to be presumed to be the purchase price of the dwelling or unit.

end delete begin delete

This bill, for lien dates occurring on and after January 1, 2017, in assessing a dwelling or unit owned by a limited equity housing cooperative or by a member-occupant or resident shareholder of the limited equity housing cooperative, and the land on which the dwelling or unit is situated required for the convenient occupation and use of the dwelling or unit by persons and families of low or moderate income, would also require the value of the dwelling or unit and the land to be presumed to be the purchase price of the share conveying an exclusive right to occupancy and possession of that dwelling or unit.

end delete begin delete

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.

end delete begin delete

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 has as one of its primary purposes the creating and maintaining of permanently affordable single-family or multifamily residences to which specified conditions apply. The 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. The bill would require the exemption to apply to a property for no more than 5 years from the date any of certain restrictions are recorded against the property.

end delete begin insert

This bill would require the county assessor to consider, when valuing real property for property taxation purposes, a recorded instrument that subjects a single-family dwelling or unit in a multifamily dwelling, and the land on which the dwelling or unit is situated that is required for the convenient occupation and use of that dwelling or unit by persons and families of low or moderate income, to affordability restrictions, including, among others, a purchase option for the dwelling or unit in favor of a community land trust, as defined, intended to preserve the dwelling or unit as affordable to persons and families of low or moderate income.

end insert

By begin delete imposing new duties upon local government officials, end delete begin insert changing the manner in which county assessors assess property for property taxation purposes, end insert this bill would impose a state-mandated local program.

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.

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.

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.

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.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

begin delete

SECTION 1.  

Section 401.21 is added to the Revenue and
Taxation Code, to read:

401.21.  

(a) In assessing an owner-occupied single-family
dwelling or owner-occupied unit in a multifamily dwelling, and
the land on which the dwelling or unit is situated that is required
for the convenient occupation and use of that dwelling or unit by
persons and families of low or moderate income, the value of the
dwelling or unit and the land shall be presumed to be the purchase
price of the dwelling or unit.

(b) In assessing a dwelling or unit owned by a limited equity
housing cooperative or by a member-occupant or resident
shareholder of the limited equity housing cooperative, and the land
on which the dwelling or unit is situated that is required for the
convenient occupation and use of the dwelling or unit by persons
and families of low or moderate income, the value of the dwelling
or unit and the land shall be presumed to be the purchase price of
the share conveying an exclusive right to occupancy and possession
of that dwelling or unit.

(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 rented, sold, or resold to
persons and families of low or moderate income to be occupied
as a principal place of residence.

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

(C) The rent collected from the dwelling or unit does not exceed
the maximum rent allowable to be collected from persons and
families of low or moderate income.

(D) There is a purchase option for the dwelling or unit in favor
of the community land trust intended to preserve the dwelling or
unit as affordable to persons and families of low or moderate
income.

(E) Any restriction that ensures the dwelling or unit is to remain
affordable to persons and families of low or moderate income by
recorded deed, deed restriction, ground lease, covenant,
memorandum, or other recorded instrument.

(F) Any restriction in a recorded instrument from which one of
the following public agencies or officials has made a finding that
the restriction serves the public interest to create and preserve the
affordability of residential housing for persons and families of low
or moderate income:

(i) The director of the local housing authority or equivalent
agency.

(ii) The county counsel.

(iii) The director of a county housing department.

(iv) The city attorney.

(v) The director of a city housing department.

(2) “Community land trust” means a nonprofit corporation,
otherwise qualifying for exemption under Section 214, that has as
one of its primary purposes the creation and maintenance of
permanently affordable single-family or multifamily residences
to which both of the following conditions apply:

(A) All residences on the land are sold to a qualified owner to
be occupied by persons and families of low or moderate income
as their primary residence, and the land on which the dwelling or
unit is situated is leased by the nonprofit corporation to the
qualified owner for the convenient occupation and use of that
dwelling or unit for a renewable term of 99 years.

(B) The dwelling or unit is subject to affordability restrictions.

(3) “Limited equity housing cooperative” has the same meaning
as that term is defined in Section 817 of the Civil Code.

(4) “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.

(5) “Qualified owner” means either of the following:

(A) A limited equity housing cooperative.

(B) Persons and families of low or moderate income.

(6) “Purchase price” means a price that does not exceed the sale
or resale formula that ensures the dwelling or unit has a purchase
price that is affordable to persons and families of low or moderate
income.

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

SEC. 2.  

Section 214.17 is added to the Revenue and Taxation
Code, to read:

214.17.  

(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 has as
one of its primary purposes the creation and maintenance of
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 by a
qualified owner to be occupied by persons and families of low or
moderate income as their primary residence, and the land on which
the residence is situated is leased by the nonprofit corporation to
the qualified owner for the convenient occupation and use of that
residence for a renewable term of 99 years.

(2) The residence is subject to affordability restrictions.

(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) The exemption authorized pursuant to this section shall apply
to a property for no more than five years from the date any
restriction described in subparagraph (E) or (F) of paragraph (1)
of subdivision (d) is recorded against the property.

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

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

(A) The residence can only be rented, sold, or resold to persons
and families of low or moderate income to be occupied as a
principal place of residence.

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

(C) The rent collected from the residence does not exceed the
maximum rent allowable to be collected from persons and families
of low or moderate income.

(D) There is a purchase option for the residence in favor of the
nonprofit organization intended to preserve the residence as
affordable to persons and families of low or moderate income.

(E) Any restriction that ensures the residence is to remain
affordable to persons and families of low or moderate income by
recorded deed, deed restriction, ground lease, covenant,
memorandum, or other recorded instrument.

(F) Any restriction in a recorded instrument from which one of
the following public agencies or officials has made a finding that
the restriction serves the public interest to create and preserve the
affordability of residential housing for persons and families of low
or moderate income:

(i) The director of the local housing authority or equivalent
agency.

(ii) The county counsel.

(iii) The director of a county housing department.

(iv) The city attorney.

(v) The director of a city housing department.

(2) “Limited equity housing cooperative” has the same meaning
as that term is defined in Section 817 of the Civil Code.

(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.

(4) “Qualified owner” means either of the following:

(A) A limited equity housing cooperative.

(B) Persons and families of low or moderate income.

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

end delete

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 402.1 of the end insert begin insert Revenue and Taxation Code end insert

begin insert is amended to read: end insert

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 shall 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.

begin insert

(11) A recorded instrument where the following apply:

end insert begin insert

(A) The recorded instrument subjects a single-family dwelling
or unit in a multifamily dwelling, and the land on which the
dwelling or unit is situated that is required for the convenient
occupation and use of that dwelling or unit by persons and families
of low or moderate income, to affordability restrictions.

end insert begin insert

(B) One of the following public agencies or officials has made
a finding that the restriction serves the public interest to create
and preserve the affordability of residential housing for persons
and families of low or moderate income:

end insert begin insert

(i) The director of the local housing authority or equivalent
agency.

end insert begin insert

(ii) The county counsel.

end insert begin insert

(iii) The director of a county housing department.

end insert begin insert

(iv) The city attorney.

end insert begin insert

(v) The director of a city housing department.

end insert begin insert

(C) The recorded instrument is provided to the assessor.

end insert begin insert

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

end insert begin insert

(i) “Affordability restrictions” include all of the following:

end insert begin insert

(I) The dwelling or unit can only be rented, sold, or resold to
persons and families of low or moderate income to be occupied
as a principal place of residence.

end insert begin insert

(II) The sale or resale price of the dwelling or unit is determined
by a formula that ensures the dwelling or unit has a purchase price
that is affordable to persons and families of low or moderate
income.

end insert begin insert

(III) The rent collected from the dwelling or unit, if applicable,
does not exceed the maximum rent allowable to be collected from
persons and families of low or moderate income.

end insert begin insert

(IV) There is a purchase option for the dwelling or unit in favor
of a community land trust intended to preserve the dwelling or
unit as affordable to persons and families of low or moderate
income.

end insert begin insert

(V) The dwelling or unit is to remain affordable to persons and
families of low or moderate income by recorded deed, deed
restriction, ground lease, covenant, memorandum, or other
recorded instrument.

end insert begin insert

(ii)  “Community land trust” means a nonprofit corporation,
otherwise qualifying for exemption under Section 214, that satisfies
both of the following:

end insert begin insert

(I) Has as one of its primary purposes the creation and
maintenance of permanently affordable single-family or multifamily
residences.

end insert begin insert

(II) All residences on the land are sold to a qualified owner to
be occupied by persons and families of low or moderate income
as their primary residence, and the land on which the dwelling or
unit is situated is leased by the nonprofit corporation to the
qualified owner for the convenient occupation and use of that
dwelling or unit for a renewable term of 99 years.

end insert begin insert

(iii) “Limited equity housing cooperative” has the same meaning
as that term is defined in Section 817 of the Civil Code.

end insert begin insert

(iv) “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.

end insert begin insert

(v) “Qualified owner” means either of the following:

end insert begin insert

(I) A limited equity housing cooperative.

end insert begin insert

(II) Persons and families of low or moderate income.

end insert

(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.

begin delete SEC. 3. end delete

begin insert SEC. 2. end 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.

begin delete SEC. 4. end delete

begin insert SEC. 3. end insert   

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.

begin delete SEC. 5. end delete

begin insert SEC. 4. end insert   

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