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AB-723 Low-income housing incentives: leased rental housing: Counties of Alameda and Contra Costa.(2019-2020)

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Date Published: 03/25/2019 09:00 PM
AB723:v98#DOCUMENT

Amended  IN  Assembly  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 723


Introduced by Assembly Members Wicks and Bonta

February 19, 2019


An act to amend Section 236 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. add Chapter 9 (commencing with Section 51299) to Part 1 of Division 1 of Title 5 of the Government Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 723, as amended, Wicks. Property taxation: exemption: Low-income housing incentives: leased rental housing. housing: Counties of Alameda and Contra Costa.
Existing property tax law, in accordance with authorization provided by the California Constitution, provides 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. Existing property tax law additionally exempts from taxation on the possessory and fee interest property that is leased for 35 years or more, if the lessor is not otherwise qualified for the welfare exemption and the property is used exclusively and solely for rental housing and related facilities for low-income tenants, as provided, and leased and operated by specified entities.

This bill, for lien dates occurring on and after January 1, 2020, would extend this latter exemption to property that otherwise meets the above-described requirements but is rented for no more than 30% of the income level of persons of low income, as defined, to tenants occupying the property at the initial application for tax exemption, regardless of the actual income of the tenants. The bill would require that each new tenant occupying the property after the initial application for exemption pursuant to these provisions meet the above-described income restrictions at the time of that tenant’s initial occupancy.

By adding to the duties of local tax officials, this bill would impose a state-mandated local program.

This bill would instead authorize the Counties of Alameda and Contra Costa to provide the lessor of an eligible property located within its territorial boundaries with a low-income rental housing incentive. The bill, among other requirements similar to those for the leased property exemption for rental housing described above, would require that an eligible property be used exclusively for rental housing that is rented for no more than 30 percent of the income level of persons of low income to tenants occupying the property at the commencement of the lease and that the lease commence on or after January 1, 2020, and before January 1, 2025. The bill would require that the amount of incentive payment be based on the amount of property taxes apportioned to the county and the city in which the eligible property is located. The bill would require a city to reimburse a county for a certain amount of the low-income rental housing incentive, thereby imposing a state-mandated local program.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Alameda and Contra Costa.
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 the statutory provisions noted above.

Existing law requires the state 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 those provisions, 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   Local Program: YES  

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


SECTION 1.

 Chapter 9 (commencing with Section 51299) is added to Part 1 of Division 1 of Title 5 of the Government Code, to read:
CHAPTER  9. Low-Income Rental Housing Incentives

51299.
 (a) For purposes of this section:
(1) “Eligible property” means a residential property that satisfies all of the following:
(A) The property is located in either the County of Alameda or the County of Contra Costa.
(B) The property is leased for a term of 35 years or more, or is transferred with a remaining term of 35 years or more.
(C) The lessor is not qualified for the exemption provided under Section 214 of the Revenue and Taxation Code.
(D) The property is used exclusively and solely for rental housing that is rented for no more than 30 percent of the income level of persons of low income, as defined in Section 50093 of the Health and Safety Code, to tenants occupying the property at the commencement of the lease, regardless of the actual income of those tenants.
(E) The property is leased and operated by religious, hospital, scientific, or charitable funds, foundations or corporations, public housing authorities, public agencies, or limited partnerships in which the managing general partner has received a determination that it is a charitable organization under Section 501(c)(3) of the Internal Revenue Code and is operating the property in accordance with its exempt purpose throughout the term of the lease.
(F) The commencement date of the lease occurs on or after January 1, 2020, and before January 1, 2024.
(2) “Property tax rate” means the ad valorem property tax rate limited by subdivision (a) of Section 1 of Article XIII A of the California Constitution. “Property tax rate” does not include any property tax rate approved by the voters pursuant to subdivision (b) of Section 1 of Article XIII A of the California Constitution and levied in addition to the property tax rate limited by subdivision (a) of Section 1 of Article XIII A of the California Constitution.
(b) (1) The County of Alameda or the County of Contra Costa may provide the lessor of an eligible property located within its territorial boundaries with a low-income rental housing incentive, in an amount determined pursuant to subdivision (c).
(2) Each new tenant occupying the eligible property after the initial commencement of the property lease shall meet the income restrictions specified in subparagraph (D) of paragraph (1) of subdivision (a) at the time of that tenant’s initial occupancy. Subsequent to the initial occupancy of each tenant, qualification of the eligible property for a low-income rental housing incentive under this section shall be based on the rents set in the amount specified in this section.
(c) (1) The county auditor shall calculate the amount of low-income rental housing incentive for an eligible housing by adding the following amounts:
(A) The portion of the amount of revenue derived from the imposition of the property tax rate to the eligible property that was apportioned to the county.
(B) The portion of the amount of revenue derived from the imposition of the property tax rate to the eligible property that was apportioned to the city in which the property is located. If the property is located in an unincorporated area of the county, the amount used for purposes of this subparagraph shall be zero.
(2) Upon the request of the county that provided the low-income rental housing incentive, the city in which the eligible property is located shall reimburse the county for that amount of the low-income rental housing incentive described in subparagraph (B) of paragraph (1).

SEC. 2.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances in the Counties of Alameda and Contra Costa relating to the provision of adequate rental housing in those counties.

SEC. 3.

 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.
SECTION 1.Section 236 of the Revenue and Taxation Code is amended to read:
236.

(a)Property leased for a term of 35 years or more or any transfer of property leased with a remaining term of 35 years or more where the lessor is not otherwise qualified for a tax exemption pursuant to Section 214, which is used exclusively and solely for rental housing and related facilities for tenants who are persons of low income (as defined in Section 50093 of the Health and Safety Code), or is restricted to certain rents as provided in subdivision (b), and is leased and operated by religious, hospital, scientific, or charitable funds, foundations or corporations, public housing authorities, public agencies, or limited partnerships in which the managing general partner has received a determination that it is a charitable organization under Section 501(c)(3) of the Internal Revenue Code and is operating the property in accordance with its exempt purpose is exempt from taxation on the possessory interest and the fee interest in the property throughout the term of the lease.

(b)For lien dates occurring on and after January 1, 2020, property that otherwise meets the requirements of subdivision (a) shall be eligible for the exemption provided by this section if it is rented for no more than 30 percent of the income level of persons of low income (as defined in Section 50093 of the Health and Safety Code) to tenants occupying the property at the initial application for tax exemption, regardless of the actual income of those tenants. Each new tenant occupying the property after the initial application for exemption pursuant to this subdivision shall meet the income restrictions specified in subdivision (a) at the time of that tenant’s initial occupancy. Subsequent to the initial occupancy of each tenant, qualification of the property for exemption under this subdivision shall be based on the rents set in the amount specified in this subdivision.

(c)As used in this section, “low- and moderate-income” has the same meaning as the term “persons and families of low- and moderate-income” as defined by Section 50093 of the Health and Safety Code.

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 California Constitution and shall go into immediate effect.