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SB-196 Property taxes: welfare exemption: community land trust.(2019-2020)



Current Version: 05/07/19 - Amended Senate        


SB196:v98#DOCUMENT

Amended  IN  Senate  May 07, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill No. 196


Introduced by Senator Beall
(Coauthors: Senators McGuire and Wieckowski)

January 31, 2019


An act to amend Section Sections 75.11 and 532 of, and to add Section 214.18 to, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 196, as amended, Beall. Property taxes: welfare exemption: community land trust.
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.
This bill, for lien dates occurring on and after January 1, 2020, would provide that property is within the welfare exemption if that property is owned by a community land trust, as defined, otherwise qualifying for the welfare exemption, and specified conditions are met, including that the property is being or will be developed or rehabilitated as housing, as specified. The bill would prohibit this exemption from being denied on the basis that the subject property does not currently contain specified property that is in the course of construction. The bill would require the community land trust to be liable for property tax for the years for which the property was exempt under these provisions if the property was not developed or rehabilitated for housing, or if the development or rehabilitation is not in the course of construction, within 5 years of the lien date following the acquisition of the property. The bill, in the case where property that is owned by a community land trust becomes subject to taxation as so described, would require any assessment made, as provided, to be made within 5 years of the lien date following the date on which the property becomes subject to taxation.
By imposing new duties upon local government officials with respect to the exemption provided by this bill, 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 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.

 The Legislature finds and declares all of the following:
(a) The availability of housing is of vital statewide importance, and the development of decent and secure housing for every Californian is a priority of the highest order.
(b) There is currently a severe housing crisis in California, especially impacting the ability of persons and families of low and moderate income to purchase and own or rent a home or unit.
(c) Community land trusts and limited equity housing cooperatives acquire, develop, rehabilitate, and own single-family dwelling units and multifamily housing unit projects for the specific purpose of providing, among other affordable housing options, limited equity home ownership and affordable rental housing to persons and families of low and moderate income.
(d) To facilitate the acquisition, development, rehabilitation, and financing of ownership and rental housing for persons and families of low and moderate income, community land trusts and limited equity housing cooperatives, when acquiring, developing, or rehabilitating property for persons and families of low and moderate income, the property must be exempt from property taxation upon acquisition to facilitate development and rehabilitation of restricted affordable dwellings and units. With regard to this exemption, the exempt activities of community land trusts and limited equity housing cooperatives that are working with community land trusts qualitatively differ from the exempt activities of other nonprofit entities that provide housing, in that the land is held in perpetuity for persons and families of low and moderate income. The holding of real property by community land trusts and limited equity housing cooperatives is central to those entities’ exempt purposes and activities. Thus, owning property constitutes the exclusive use of that property for a charitable purpose, within the meaning of subdivision (b) of Section 4 of Article XIII of the California Constitution. Moreover, in the case of homes sold to persons and families of low and moderate income, the underlying land will become taxable once the home is sold.

SEC. 2.

 Section 75.11 of the Revenue and Taxation Code is amended to read:

75.11.
 (a) If the change in ownership occurs or the new construction is completed on or after January 1 but on or before May 31, then there shall be two supplemental assessments placed on the supplemental roll. The first supplemental assessment shall be the difference between the new base year value and the taxable value on the current roll. In the case of a change in ownership of the full interest in the real property, the second supplemental assessment shall be the difference between the new base year value and the taxable value to be enrolled on the roll being prepared. If the change in ownership is of only a partial interest in the real property, the second supplemental assessment shall be the difference between the sum of the new base year value of the portion transferred plus the taxable value on the roll being prepared of the remainder of the property and the taxable value on the roll being prepared of the whole property. For new construction, the second supplemental assessment shall be the value change due to the new construction.
(b) If the change in ownership occurs or the new construction is completed on or after June 1 but before the succeeding January 1, then the supplemental assessment placed on the supplemental roll shall be the difference between the new base year value and the taxable value on the current roll.
(c) If there are multiple changes in ownership or multiple completions of new construction, or both, with respect to the same real property during the same assessment year, then there shall be a net supplemental assessment placed on the supplemental roll, in addition to the assessment pursuant to subdivision (a) or (b). The net supplemental assessment shall be the most recent new base year value less the sum of (1) the previous entry or entries placed on the supplemental roll computed pursuant to subdivision (a) or (b), and (2) the corresponding taxable value on the current roll or the taxable value to be entered on the roll being prepared, or both, depending on the date or dates the change of ownership occurs or new construction is completed as specified in subdivisions (a) and (b).
(d) No supplemental assessment authorized by this section shall be valid, or have any force or effect, unless it is placed on the supplemental roll on or before the applicable date specified in paragraph (1), (2), or (3), (3), or (4), as follows:
(1) The fourth July 1 following the July 1 of the assessment year in which the event giving rise to the supplemental assessment occurred.
(2) The eighth July 1 following the July 1 of the assessment year in which the event giving rise to the supplemental assessment occurred, if the penalty provided for in Section 504 is added to the assessment.
(3) The eighth July 1 following the July 1 of the assessment year in which the event giving rise to the supplemental assessment occurred, if the change in ownership was unrecorded and a change in ownership statement required by Section 480 or preliminary change in ownership report, as required by Section 480.3, was not timely filed.
(4) Notwithstanding any other law, in the case where property that is owned by a community land trust and was previously exempt pursuant to Section 214.18 becomes subject to taxation pursuant to subdivision (d) of that section, any assessment made in the amount of an exemption, or that portion of the exemption, previously allowed pursuant to Section 214.18 shall be made within five years of the lien date following the date on which the property becomes subject to taxation.

(4)

(5) Notwithstanding paragraphs (1), (2), and (3), (3), and (4), there shall be no limitation period on making a supplemental assessment, if the penalty provided for in Section 503 is added to the assessment.
For the purposes of this subdivision, “assessment year” means the period beginning annually as of 12:01 a.m. on the first day of January and ending immediately prior to the succeeding first day of January.
(e) If, before the expiration of the applicable period specified in subdivision (d) for making a supplemental assessment, the taxpayer and the assessor agree in writing to extend the period for making a supplemental assessment, correction, or claim for refund, a supplemental assessment may be made at any time prior to the expiration of that extended period. The extended period may be further extended by successive written agreements entered into prior to the expiration of the most recent extension.

SEC. 2.SEC. 3.

 Section 214.18 is added to the Revenue and Taxation Code, to read:

214.18.
 (a) Property is within the exemption provided by Sections 4 and 5 of Article XIII of the California Constitution if the property is owned by a community land trust, otherwise qualifying for exemption under Section 214, and all of the following conditions are met:
(1) The property is being or will be developed or rehabilitated as any of the following:
(A) An owner-occupied single-family dwelling.
(B) As an owner-occupied unit in a multifamily dwelling.
(C) As a member-occupied unit in a limited equity housing cooperative.
(D) As a rental housing development.
(2) Improvements on the property are or will be available for use and ownership or for rent by qualified persons.
(3) (A) A deed restriction or other instrument, requiring a contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units or on the affordability of rental units is recorded on or before the lien date following the acquisition of the property by the community land trust.
(B) For purposes of this section, “a contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units or on the affordability of rental units” means a contract described in paragraph (11) of subdivision (a) of Section 402.1.
(C) A copy of the deed restriction or other instrument shall be provided to the assessor.
(b) Subject to subdivision (d), the exemption provided by subdivision (a) shall not be denied to a property on the basis that the property does not currently contain a single-family dwelling, a unit in a multifamily dwelling, a unit in a limited equity housing cooperative, or a rental housing development that is in the course of construction.
(c) For purposes of this section, all of the following definitions shall apply:
(1) “Community land trust” has the same meaning as that term is defined in clause (ii) of subparagraph (B) paragraph (11) of subdivision (a) of Section 402.1.
(2) “Course of construction” has the same meaning as the term “facilities in the course of construction,” as used and defined in Sections 214.1 and 214.2.
(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 income” has the same meaning as the term “lower income households,” as defined in Section 50079.5 of the Health and Safety Code.
(5) “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.
(6) “Qualified persons” means the following:
(A) In the case of property developed for owner-occupied housing, as described in subparagraphs (A), (B), and (C) of paragraph (1) of subdivision (a), 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) In the case of property developed for rental housing, as described in subparagraph (D) of paragraph (1) of subdivision (a), persons and families of low income.
(7) “Rental housing development” means a rental housing development in which all of the residential units in the development, other than units provided to property managers, are required to be rented to, and occupied by, persons and families of low or moderate income, at rents that do not exceed an affordable rent as described in Section 50053 of the Health and Safety Code.
(d) Notwithstanding any other law, the community land trust shall be liable for property tax for the years for which the property was exempt from taxation pursuant to this section if the property was not developed or rehabilitated, or if the development or rehabilitation is not in the course of construction, in accordance with paragraph (1) of subdivision (a) within five years of the lien date following the acquisition of the property by the community land trust.
(e) This section shall apply to lien dates occurring on and after January 1, 2020.

SEC. 3.SEC. 4.

 Section 532 of the Revenue and Taxation Code is amended to read:

532.
 (a) Except as provided in subdivision (b), any assessment made pursuant to either Article 3 (commencing with Section 501) or this article shall be made within four years after July 1 of the assessment year in which the property escaped taxation or was underassessed.
(b) (1) Any assessment to which the penalty provided for in Section 504 must be added shall be made within eight years after July 1 of the assessment year in which the property escaped taxation or was underassessed.
(2) Any assessment resulting from an unrecorded change in ownership for which either a change in ownership statement, as required by Section 480 or a preliminary change in ownership report, as required by Section 480.3, is not timely filed with respect to the event giving rise to the escape assessment or underassessment shall be made within eight years after July 1 of the assessment year in which the property escaped taxation or was underassessed. For purposes of this paragraph, an “unrecorded change in ownership” means a deed or other document evidencing a change in ownership that was not filed with the county recorder’s office at the time the event took place.
(3) Notwithstanding paragraphs (1) and (2), in the case where property has escaped taxation, in whole or in part, or has been underassessed, following a change in ownership or change in control and either the penalty provided for in Section 503 must be added or a change in ownership statement, as required by Section 480.1 or 480.2 was not filed with respect to the event giving rise to the escape assessment or underassessment, an escape assessment shall be made for each year in which the property escaped taxation or was underassessed.
(4) Notwithstanding any other law, in the case where property that is owned by a community land trust and was previously exempt pursuant to Section 214.18 becomes subject to taxation pursuant to subdivision (d) of that section, any assessment made in the amount of an exemption, or that portion of the exemption, previously allowed pursuant to Section 214.18 shall be made within five years of the lien date following the date on which the property becomes subject to taxation.
(c) For purposes of this section, “assessment year” means the period defined in Section 118.

SEC. 4.SEC. 5.

 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. 5.SEC. 6.

 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. 6.SEC. 7.

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