Amended in Senate June 22, 2016

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 BillNo. 2818


Introduced by Assembly Member Chiu

begin insert

(Coauthor: Assembly Member Thurmond)

end insert

February 19, 2016


An act to amend Section 402.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

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.

This bill would require the county assessor to consider, when valuing real property for property taxation purposes, abegin delete recorded instrument thatend deletebegin insert contract that is a 99end insertbegin insert-year ground lease between a community land trust, as defined, and the qualified owner, as defined, of an owner-occupied single-family dwelling or an owner-occupied unit in a multifamily dwelling and thatend insert 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 orbegin delete 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 deletebegin insert unit, to affordability restrictions, as defined.end insert

By changing the manner in which county assessors assess property for property taxation purposes, 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:

P2    1

SECTION 1.  

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

3

402.1.  

(a) In the assessment of land, the assessor shall consider
4the effect upon value of any enforceable restrictions to which the
5use of the land may be subjected. These restrictions shall include,
6but are not limited to, all of the following:

P3    1(1) Zoning.

2(2) Recorded contracts with governmental agencies other than
3those provided in Sections 422, 422.5, and 422.7.

4(3) Permit authority of, and permits issued by, governmental
5agencies exercising land use powers concurrently with local
6governments, including the California Coastal Commission and
7regional coastal commissions, the San Francisco Bay Conservation
8and Development Commission, and the Tahoe Regional Planning
9Agency.

10(4) Development controls of a local government in accordance
11with any local coastal program certified pursuant to Division 20
12(commencing with Section 30000) of the Public Resources Code.

13(5) Development controls of a local government in accordance
14with a local protection program, or any component thereof, certified
15pursuant to Division 19 (commencing with Section 29000) of the
16Public Resources Code.

17(6) Environmental constraints applied to the use of land pursuant
18to provisions of statutes.

19(7) Hazardous waste land use restriction pursuant to Section
2025226 of the Health and Safety Code.

21(8) (A) A recorded conservation, trail, or scenic easement, as
22described in Section 815.1 of the Civil Code, that is granted in
23favor of a public agency, or in favor of a nonprofit corporation
24organized pursuant to Section 501(c)(3) of the Internal Revenue
25Code that has as its primary purpose the preservation, protection,
26or enhancement of land in its natural, scenic, historical, agricultural,
27forested, or open-space condition or use.

28(B) A recorded greenway easement, as described in Section
29816.52 of the Civil Code, that is granted in favor of a public
30agency, or in favor of a nonprofit corporation organized pursuant
31to Section 501(c)(3) of the Internal Revenue Code that has as its
32primary purpose the developing and preserving of greenways.

33(9) A solar-use easement pursuant to Chapter 6.9 (commencing
34with Section 51190) of Part 1 of Division 1 of Title 5 of the
35Government Code.

36(10) A contract where the following apply:

37(A) The contract is with a nonprofit corporation organized
38pursuant to Section 501(c)(3) of the Internal Revenue Code that
39has received a welfare exemption under Section 214.15 for
P4    1properties intended to be sold to low-income families who
2participate in a special no-interest loan program.

3(B) The contract restricts the use of the land for at least 30 years
4to owner-occupied housing available at affordable housing cost in
5accordance with Section 50052.5 of the Health and Safety Code.

6(C) The contract includes a deed of trust on the property in favor
7of the nonprofit corporation to ensure compliance with the terms
8of the program, which has no value unless the owner fails to
9comply with the covenants and restrictions of the terms of the
10home sale.

11(D) The local housing authority or an equivalent agency, or, if
12none exists, the city attorney or county counsel, has made a finding
13that the long-term deed restrictions in the contract serve a public
14purpose.

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

16(11) Abegin delete recorded instrumentend deletebegin insert contractend insert where the following apply:

begin delete

17(A) The recorded instrument subjects a single-family dwelling
18or unit in a multifamily dwelling, and the land on which the
19dwelling or unit is situated that is required for the convenient
20occupation and use of that dwelling or unit by persons and families
21of low or moderate income, to affordability restrictions.

end delete

22
begin insert(A)end insertbegin insertend insertbegin insertThe contract is a renewable 99end insertbegin insert-year ground lease between
23a community land trust and the qualified owner of an
24owner-occupied single-family dwelling or an owner-occupied unit
25in a multifamily dwelling.end insert

begin insert

26
(B) The contract subjects a single-family dwelling or unit in a
27multifamily dwelling, and the land on which the dwelling or unit
28is situated that is leased to the qualified owner by a community
29land trust for the convenient occupation and use of that dwelling
30or unit, to affordability restrictions.

end insert
begin delete

31(B)

end delete

32begin insert(C)end insert One of the following public agencies or officials has made
33a finding that thebegin delete restriction servesend deletebegin insert affordability restrictions in the
34contract serveend insert
the public interest to create and preserve the
35affordability of residential housing for persons and families of low
36or moderate income:

37(i) The director of the local housing authority or equivalent
38agency.

39(ii) The county counsel.

40(iii) The director of a county housing department.

P5    1(iv) The city attorney.

2(v) The director of a city housing department.

begin delete

3(C)

end delete

4begin insert(D)end insert The recorded instrument is provided to the assessor.

begin delete

5(D)

end delete

6begin insert(E)end insert For purposes of this section, all of the following definitions
7shall apply:

8(i) “Affordability restrictions”begin delete include all of the following:end deletebegin insert mean
9that all of the following conditions are met:end insert

10(I) The dwelling or unit can only bebegin delete rented, sold,end deletebegin insert soldend insert or resold
11tobegin delete persons and families of low or moderate incomeend deletebegin insert a qualified
12ownerend insert
to be occupied as a principal place of residence.

13(II) The sale or resale price of the dwelling or unit is determined
14by a formula that ensures the dwelling or unit has a purchase price
15that is affordable tobegin delete persons and families of low or moderate
16income.end delete
begin insert qualified owners.end insert

begin delete

17(III) The rent collected from the dwelling or unit, if applicable,
18does not exceed the maximum rent allowable to be collected from
19persons and families of low or moderate income.

20(IV)

end delete

21begin insert(III)end insert There is a purchase option for the dwelling or unit in favor
22of a community land trust intended to preserve the dwelling or
23unit as affordable tobegin delete persons and families of low or moderate
24income.end delete
begin insert qualified owners.end insert

begin delete

25(V)

end delete

26begin insert(IV)end insert The dwelling or unit is to remain affordable tobegin delete persons and
27families of low or moderate income by recorded deed, deed
28restriction, ground lease, covenant, memorandum, or other recorded
29instrument.end delete
begin insert qualified owners by a renewable 99end insertbegin insert-year ground lease.end insert

30(ii)  “Community land trust” means a nonprofitbegin delete corporation,
31otherwise qualifying for exemption under Section 214,end delete
begin insert corporation
32organized pursuant to Section 501(c)(3) of the Internal Revenue
33Codeend insert
that satisfiesbegin delete bothend deletebegin insert allend insert of the following:

34(I) Has asbegin delete one ofend delete its primary purposes the creation and
35maintenance of permanently affordable single-family or
36multifamily residences.

37(II) Allbegin delete residencesend deletebegin insert dwellings and units locatedend insert on the landbegin insert owned
38by the nonprofit corporationend insert
are sold to a qualified owner to be
39occupiedbegin delete by persons and families of low or moderate income as
40their primary residence, and theend delete
begin insert as the qualified owner’s primary
P6    1residence or rented to persons and families of low or moderate
2income.end insert

3begin insert(III)end insertbegin insertend insertbegin insertTheend insert landbegin insert owned by the nonprofit corporation,end insert on which
4begin delete theend deletebegin insert aend insert dwelling or unitbegin insert sold to a qualified ownerend insert isbegin delete situatedend deletebegin insert situated,end insert
5 is leased by the nonprofit corporation to the qualified owner for
6the convenient occupation and use of that dwelling or unit for a
7renewable term of 99 years.

8(iii) “Limited equity housing cooperative” has the same meaning
9as that term is defined in Section 817 of the Civil Code.

10(iv) “Persons and families of low or moderate income” has the
11same meaning as that term is defined in Section 50093 of the
12Health and Safety Code.

13(v) “Qualified owner” meansbegin delete either of the following:end deletebegin insert persons
14and families of low or moderate income, including persons and
15families of low or moderate income that own a dwelling or unit
16collectively as member occupants or resident shareholders of a
17limited equity housing cooperative.end insert

begin delete

18(I) A limited equity housing cooperative.

end delete
begin delete

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

end delete

20(b) There is a rebuttable presumption that restrictions will not
21be removed or substantially modified in the predictable future and
22that they will substantially equate the value of the land to the value
23attributable to the legally permissible use or uses.

24(c) Grounds for rebutting the presumption may include, but are
25not necessarily limited to, the past history of like use restrictions
26in the jurisdiction in question and the similarity of sales prices for
27restricted and unrestricted land. The possible expiration of a
28restriction at a time certain shall not be conclusive evidence of the
29future removal or modification of the restriction unless there is no
30opportunity or likelihood of the continuation or renewal of the
31restriction, or unless a necessary party to the restriction has
32indicated an intent to permit its expiration at that time.

33(d) In assessing land with respect to which the presumption is
34unrebutted, the assessor shall not consider sales of otherwise
35comparable land not similarly restricted as to use as indicative of
36value of land under restriction, unless the restrictions have a
37demonstrably minimal effect upon value.

38(e) In assessing land under an enforceable use restriction wherein
39the presumption of no predictable removal or substantial
40modification of the restriction has been rebutted, but where the
P7    1restriction nevertheless retains some future life and has some effect
2on present value, the assessor may consider, in addition to all other
3legally permissible information, representative sales of comparable
4lands that are not under restriction but upon which natural
5limitations have substantially the same effect as restrictions.

6(f) For the purposes of this section the following definitions
7apply:

8(1) “Comparable lands” are lands that are similar to the land
9being valued in respect to legally permissible uses and physical
10attributes.

11(2) “Representative sales information” is information from sales
12of a sufficient number of comparable lands to give an accurate
13indication of the full cash value of the land being valued.

14(g) It is hereby declared that the purpose and intent of the
15Legislature in enacting this section is to provide for a method of
16determining whether a sufficient amount of representative sales
17information is available for land under use restriction to ensure
18the accurate assessment of that land. It is also hereby declared that
19the further purpose and intent of the Legislature in enacting this
20section and Section 1630 is to avoid an assessment policy which,
21in the absence of special circumstances, considers uses for land
22that legally are not available to the owner and not contemplated
23by government, and that these sections are necessary to implement
24the public policy of encouraging and maintaining effective land
25use planning. This statute shall not be construed as requiring the
26assessment of any land at a value less than as required by Section
27401 or as prohibiting the use of representative comparable sales
28information on land under similar restrictions when this information
29is available.

30

SEC. 2.  

If the Commission on State Mandates determines that
31this act contains costs mandated by the state, reimbursement to
32local agencies and school districts for those costs shall be made
33pursuant to Part 7 (commencing with Section 17500) of Division
344 of Title 2 of the Government Code.

35

SEC. 3.  

Notwithstanding Section 2229 of the Revenue and
36Taxation Code, no appropriation is made by this act and the state
37shall not reimburse any local agency for any property tax revenues
38lost by it pursuant to this act.

P8    1

SEC. 4.  

This act provides for a tax levy within the meaning of
2Article IV of the Constitution and shall go into immediate effect.



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