Amended in Senate June 25, 2015

Amended in Assembly May 5, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 668


Introduced by Assembly Member Gomez

February 25, 2015


An act to amend Section 402.1 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 668, as amended, Gomez. Property taxation: assessment: affordable housing.

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. Under existing law these restrictions include, but are not limited to, zoning, recorded contracts with governmental agencies, and various other restrictions imposed by governments.

Existing property tax law establishes a welfare exemption under which property is exempt from taxation if, among other things, that property is used exclusively for religious, hospital, scientific, or charitable purposes and is owned and operated by an entity, as provided, that is itself organized and operated for those purposes. Under existing property tax law, the welfare exemption applies to property that is owned and operated by a nonprofit corporation, otherwise qualifying for the welfare exemption, that is organized and operated for the purpose of building and rehabilitating single-family or multifamily residences for sale, as provided, at cost to low-income families.

This bill would require the county assessor to consider, when valuing real property for property taxation purposes, a recorded contract with a nonprofit corporation that meets prescribed requirements, including requirements that the nonprofit corporation has received a welfare exemption for properties intended to be sold to low-income families who participate in a special no-interest loan program, and that the contract includes a restriction on the use of the land for at least 30 years to owner-occupied housing available at affordable housing cost. 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.

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:

7(1) Zoning.

8(2) Recorded contracts with governmental agencies other than
9those provided in Sections 422, 422.5, and 422.7.

10(3) Permit authority of, and permits issued by, governmental
11agencies exercising land use powers concurrently with local
12governments, including the California Coastal Commission and
13regional coastal commissions, the San Francisco Bay Conservation
14and Development Commission, and the Tahoe Regional Planning
15Agency.

P3    1(4) Development controls of a local government in accordance
2with any local coastal program certified pursuant to Division 20
3(commencing with Section 30000) of the Public Resources Code.

4(5) Development controls of a local government in accordance
5with a local protection program, or any component thereof, certified
6pursuant to Division 19 (commencing with Section 29000) of the
7Public Resources Code.

8(6) Environmental constraints applied to the use of land pursuant
9to provisions of statutes.

10(7) Hazardous waste land use restriction pursuant to Section
1125240 of the Health and Safety Code.

12(8) A recorded conservation, trail, or scenic easement, as
13described in Section 815.1 of the Civil Code, that is granted in
14favor of a public agency, or in favor of a nonprofit corporation
15organized pursuant to Section 501(c)(3) of the Internal Revenue
16Code that has as its primary purpose the preservation, protection,
17or enhancement of land in its natural, scenic, historical, agricultural,
18forested, or open-space condition or use.

19(9) A solar-use easement pursuant to Chapter 6.9 (commencing
20with Section 51190) of Part 1 of Division 1 of Title 5 of the
21Government Code.

22(10) A contract where the following apply:

23(A) The contract is with a nonprofit corporation organized
24pursuant to Section 501(c)(3) of the Internal Revenue Code that
25has received a welfare exemption under Section 214.15 for
26properties intended to be sold to low-income families who
27participate in a special no-interest loan program.

28(B) The contract restricts the use of the land for at least 30 years
29to owner-occupied housing available at affordable housing cost in
30accordance with Section 50052.5 of the Health and Safety Code.

31(C) The contract includes a deed of trust on the property in favor
32of the nonprofit corporation to ensure compliance with the terms
33of the program, which has no value unless the owner fails to
34comply with the covenants and restrictions of the terms of the
35home sale.

36(D) The local housing authority or an equivalent agency, or, if
37none exists, the city attorney or county counsel, has made a finding
38that the long-term deed restrictions in the contract serve a public
39purpose.

P4    1(E) The contract isbegin delete recorded.end deletebegin insert recorded and provided to the
2assessor.end insert

3(b) There is a rebuttable presumption that restrictions will not
4be removed or substantially modified in the predictable future and
5that they will substantially equate the value of the land to the value
6attributable to the legally permissible use or uses.

7(c) Grounds for rebutting the presumption may include, but are
8not necessarily limited to, the past history of like use restrictions
9in the jurisdiction in question and the similarity of sales prices for
10restricted and unrestricted land. The possible expiration of a
11restriction at a time certain shall not be conclusive evidence of the
12future removal or modification of the restriction unless there is no
13opportunity or likelihood of the continuation or renewal of the
14restriction, or unless a necessary party to the restriction has
15indicated an intent to permit its expiration at that time.

16(d) In assessing land with respect to which the presumption is
17unrebutted, the assessor shall not consider sales of otherwise
18comparable land not similarly restricted as to use as indicative of
19value of land under restriction, unless the restrictions have a
20demonstrably minimal effect upon value.

21(e) In assessing land under an enforceable use restriction wherein
22the presumption of no predictable removal or substantial
23modification of the restriction has been rebutted, but where the
24restriction nevertheless retains some future life and has some effect
25on present value, the assessor may consider, in addition to all other
26legally permissible information, representative sales of comparable
27lands that are not under restriction but upon which natural
28 limitations have substantially the same effect as restrictions.

29(f) For the purposes of this section the following definitions
30apply:

31(1) “Comparable lands” are lands that are similar to the land
32being valued in respect to legally permissible uses and physical
33attributes.

34(2) “Representative sales information” is information from sales
35of a sufficient number of comparable lands to give an accurate
36indication of the full cash value of the land being valued.

37(g) It is hereby declared that the purpose and intent of the
38Legislature in enacting this section is to provide for a method of
39determining whether a sufficient amount of representative sales
40information is available for land under use restriction in order to
P5    1ensure the accurate assessment of that land. It is also hereby
2declared that the further purpose and intent of the Legislature in
3enacting this section and Section 1630 is to avoid an assessment
4policy which, in the absence of special circumstances, considers
5uses for land that legally are not available to the owner and not
6contemplated by government, and that these sections are necessary
7to implement the public policy of encouraging and maintaining
8effective land use planning. This statute shall not be construed as
9requiring the assessment of any land at a value less than as required
10by Section 401 or as prohibiting the use of representative
11comparable sales information on land under similar restrictions
12when this information is available.

13

SEC. 2.  

If the Commission on State Mandates determines that
14this act contains costs mandated by the state, reimbursement to
15local agencies and school districts for those costs shall be made
16pursuant to Part 7 (commencing with Section 17500) of Division
174 of Title 2 of the Government Code.



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