BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1203|
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UNFINISHED BUSINESS
Bill No: SB 1203
Author: Jackson (D), et al.
Amended: 8/21/14
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-0, 4/24/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NO VOTE RECORDED: Knight, Walters
SENATE FLOOR : 33-0, 5/28/14
AYES: Anderson, Beall, Block, Cannella, Corbett, De Le�n,
DeSaulnier, Evans, Fuller, Gaines, Galgiani, Hancock,
Hernandez, Hill, Hueso, Huff, Jackson, Knight, Leno, Lieu,
Liu, Mitchell, Monning, Morrell, Nielsen, Padilla, Pavley,
Roth, Steinberg, Vidak, Walters, Wolk, Wyland
NO VOTE RECORDED: Berryhill, Calderon, Correa, Lara, Torres,
Wright, Yee
ASSEMBLY FLOOR : 75-0, 8/25/14 - See last page for vote
SUBJECT : Property taxation: welfare exemption: rental
housing and related facilities: payment in lieu of
taxes agreement
SOURCE : Author
DIGEST : This bill provides that, notwithstanding any other
law, on or after January 1, 2015, a local government shall not
enter into a payment in lieu of taxes (PILOT) agreement with a
property owner of a low-income housing project.
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Assembly Amendments remove the language that delete the
certification requirement for welfare exemption eligibility and
insert language that will, on or after January 1, 2015, prohibit
a local government from entering into a PILOT agreement, as
specified; make this bill's enactment contingent upon the
enactment of AB 1760 (Chau); and make other conforming changes.
ANALYSIS :
Existing law:
1.Authorizes the Legislature to exempt from taxation property
used exclusively for religious, hospital, or charitable
purposes, as specified. (California Constitution Article
XIII, Section 4(b).) The Legislature has implemented this
"welfare exemption" in Revenue and Taxation Code (R&TC)
Section 214.
2.Exempts low-income housing developments operated by non-profit
organizations, as specified.
3.Imposes a "certification requirement" on low-income housing
owners seeking the welfare exemption. Specifically, the law
requires a project's owner to "[c]ertify 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."
This bill:
1.Provides that any PILOT agreement entered into in violation of
this prohibition shall be void and unenforceable.
2.Provides that, notwithstanding any other law, any outstanding
ad valorem tax, interest, or penalty that was levied between
January 1, 2012, and January 1, 2015, as a result of a PILOT
agreement shall be cancelled, and any tax, interest, or
penalty, as so levied, that was paid prior to January 1, 2015,
shall be refunded.
3.Provides that, on or after January 1, 2015, an escape or
supplemental assessment shall not be levied on the basis that
payments made under a PILOT agreement were, or are being, used
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in a manner incompatible with the certification requirement
contained in R&TC Section 214(g)(2)(B).
4.Amends R&TC Section 214 (governing the welfare exemption) in
numerous respects, by:
A. Providing that, for purposes of the low-income housing
exemption, owners shall be entitled to a partial exemption
equal to that percentage of the property's value that is
equal to the percentage that the number of units serving
lower income households represents of the total number of
residential units;
B. Defining the term "related facilities" as 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 nonexempt
commercial space; and
C. Defining the term "units serving lower income
households" as units that are occupied by lower income
households at an affordable rent, as defined in Health and
Safety Code (HSC) Section 50053 or, to the extent that the
terms of federal, state, or local financing or financial
assistance conflicts with HSC 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.
5.Provides that this bill is contingent upon the enactment of AB
1760 (Chau).
Comments
According to the author, "As a condition of project approval,
some local governments have required affordable housing
developers to agree to annual PILOT payments, often equal to the
share of the jurisdiction's share of the property tax. Most
recently, some county assessors are threatening certain
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affordable housing projects that make PILOT payments with the
cancellation of their welfare exemption and the imposition of
back taxes for past years when PILOT payments were made. Back
taxes on PILOT agreements are often in the hundreds of thousands
of dollars. These assessments threaten to bankrupt the
affordable housing developments, which would result in the loss
of precious affordable housing. Affordable housing developments
provide critical opportunities for our low-income residents.
Often, these units can be their last resort before becoming
homeless. As confirmed by Legislative Counsel in 2012, there is
no legal authority to charge these PILOT fees. Affordable
housing developments should be protected by the welfare
exemption, not burdened by local governments requiring PILOT
fees."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/25/14)
Board of Equalization, 4th District
BRIDGE Housing Corporation
Cabrillo Economic Development Corporation
California Housing Consortium
California Infill Builders Federation
City of Sacramento
Housing Authority of County of Butte
Housing Authority of the City of San Buenaventura
LeadingAge California
Pacific Housing Inc.
Partners in Housing
The Arc of Ventura County
Ventura County Assessor
Western Center on Law and Poverty
OPPOSITION : (Verified 8/25/14)
City of San Marcos
ASSEMBLY FLOOR : 75-0, 8/25/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Ch�vez, Chesbro, Conway, Cooley, Dababneh,
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Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove,
Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, John A. P�rez, V. Manuel P�rez,
Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas,
Skinner, Stone, Ting, Wagner, Weber, Wieckowski, Wilk,
Williams, Yamada, Atkins
NO VOTE RECORDED: Bonilla, Beth Gaines, Mansoor, Waldron,
Vacancy
AB:k 8/26/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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