Amended in Senate August 17, 2016

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 Bill No. 2818

Introduced by Assembly begin delete Member Chiu end delete begin insert Members Chiu and Thurmond end insert

begin delete

(Coauthor: Assembly Member Thurmond)

end delete

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, a contract that is a 99-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 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, to affordability restrictions, as defined.

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:

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 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.

(11)  begin insert (A) end insert begin insert   end insert A contract where the following apply:

begin delete

(A)

end delete

begin insert (i) end insert  The contract is a renewable 99-year ground lease between a
community land trust and the qualified owner of an owner-occupied
single-family dwelling or an owner-occupied unit in a multifamily
dwelling.

begin delete

(B)

end delete

begin insert (ii) end insert  The contract subjects a single-family dwelling or unit in a
multifamily dwelling, and the land on which the dwelling or unit
is situated that is leased to the qualified owner by a community
land trust for the convenient occupation and use of that dwelling
or unit, to affordability restrictions.

begin delete

(C)

end delete

begin insert (iii) end insert  One of the following public agencies or officials has made
a finding that the affordability restrictions in the contract serve the
public interest to create and preserve the affordability of residential
housing for persons and families of low or moderate income:

begin delete

(i)

end delete

begin insert (I) end insert  The director of the local housing authority or equivalent
agency.

begin delete

(ii)

end delete

begin insert (II) end insert  The county counsel.

begin delete

(iii)

end delete

begin insert (III) end insert  The director of a county housing department.

begin delete

(iv)

end delete

begin insert (IV) end insert  The city attorney.

begin delete

(v)

end delete

begin insert (V) end insert  The director of a city housing department.

begin delete

(D)

end delete

begin insert (iv) end insert  The begin delete recorded instrument end delete begin insert contract is recorded and end insert is
provided to the assessor.

begin delete

(E)

end delete

begin insert (B) end insert  For purposes of this begin delete section, end delete begin insert paragraph, end insert all of the following
definitions shall apply:

(i) “Affordability restrictions” mean that all of the following
conditions are met:

(I) The dwelling or unit can only be sold or resold to a qualified
owner to be occupied as a principal place of residence.

(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 qualified owners.

(III) 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 qualified owners.

(IV) The dwelling or unit is to remain affordable to qualified
owners by a renewable 99-year ground lease.

(ii) “Community land trust” means a nonprofit corporation
organized pursuant to Section 501(c)(3) of the Internal Revenue
Code that satisfies all of the following:

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

(II) All dwellings and units located on the land owned by the
nonprofit corporation are sold to a qualified owner to be occupied
as the qualified owner’s primary residence or rented to persons
and families of low or moderate income.

(III) The land owned by the nonprofit corporation, on which a
dwelling or unit sold to a qualified owner 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.

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

(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.

(v) “Qualified owner” means persons and families of low or
moderate income, including persons and families of low or
moderate income that own a dwelling or unit collectively as
member occupants or resident shareholders of a limited equity
housing cooperative.

(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.

SEC. 2.  

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.

SEC. 3.  

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. 4.  

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