Amended in Senate September 1, 2015

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.

begin insert

This bill would incorporate amendments to Section 402.1 of the Revenue and Taxation Code proposed by AB 1251, to be operative only if AB 1251 and this bill are both chaptered and become effective on or before January 1, 2016, and this bill is chaptered last.

end insert

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.

P3    1(3) Permit authority of, and permits issued by, governmental
2agencies exercising land use powers concurrently with local
3governments, including the California Coastal Commission and
4regional coastal commissions, the San Francisco Bay Conservation
5and Development Commission, and the Tahoe Regional Planning
6Agency.

7(4) Development controls of a local government in accordance
8with any local coastal program certified pursuant to Division 20
9(commencing with Section 30000) of the Public Resources Code.

10(5) Development controls of a local government in accordance
11with a local protection program, or any component thereof, certified
12pursuant to Division 19 (commencing with Section 29000) of the
13Public Resources Code.

14(6) Environmental constraints applied to the use of land pursuant
15to provisions of statutes.

16(7) Hazardous waste land use restriction pursuant to Section
1725240 of the Health and Safety Code.

18(8) A recorded conservation, trail, or scenic easement, as
19described in Section 815.1 of the Civil Code, that is granted in
20favor of a public agency, or in favor of a nonprofit corporation
21organized pursuant to Section 501(c)(3) of the Internal Revenue
22Code that has as its primary purpose the preservation, protection,
23or enhancement of land in its natural, scenic, historical, agricultural,
24forested, or open-space condition or use.

25(9) A solar-use easement pursuant to Chapter 6.9 (commencing
26with Section 51190) of Part 1 of Division 1 of Title 5 of the
27Government Code.

28(10) A contract where the following apply:

29(A) The contract is with a nonprofit corporation organized
30pursuant to Section 501(c)(3) of the Internal Revenue Code that
31has received a welfare exemption under Section 214.15 for
32properties intended to be sold to low-income families who
33participate in a special no-interest loan program.

34(B) The contract restricts the use of the land for at least 30 years
35to owner-occupied housing available at affordable housing cost in
36accordance with Section 50052.5 of the Health and Safety Code.

37(C) The contract includes a deed of trust on the property in favor
38of the nonprofit corporation to ensure compliance with the terms
39of the program, which has no value unless the owner fails to
P4    1comply with the covenants and restrictions of the terms of the
2home sale.

3(D) The local housing authority or an equivalent agency, or, if
4none exists, the city attorney or county counsel, has made a finding
5that the long-term deed restrictions in the contract serve a public
6purpose.

7(E) The contract is recorded and provided to the assessor.

8(b) There is a rebuttable presumption that restrictions will not
9be removed or substantially modified in the predictable future and
10that they will substantially equate the value of the land to the value
11attributable to the legally permissible use or uses.

12(c) Grounds for rebutting the presumption may include, but are
13not necessarily limited to, the past history of like use restrictions
14in the jurisdiction in question and the similarity of sales prices for
15restricted and unrestricted land. The possible expiration of a
16restriction at a time certain shall not be conclusive evidence of the
17future removal or modification of the restriction unless there is no
18opportunity or likelihood of the continuation or renewal of the
19restriction, or unless a necessary party to the restriction has
20indicated an intent to permit its expiration at that time.

21(d) In assessing land with respect to which the presumption is
22unrebutted, the assessor shall not consider sales of otherwise
23comparable land not similarly restricted as to use as indicative of
24value of land under restriction, unless the restrictions have a
25demonstrably minimal effect upon value.

26(e) In assessing land under an enforceable use restriction wherein
27the presumption of no predictable removal or substantial
28modification of the restriction has been rebutted, but where the
29restriction nevertheless retains some future life and has some effect
30on present value, the assessor may consider, in addition to all other
31legally permissible information, representative sales of comparable
32lands that are not under restriction but upon which natural
33 limitations have substantially the same effect as restrictions.

34(f) For the purposes of this section the following definitions
35apply:

36(1) “Comparable lands” are lands that are similar to the land
37being valued in respect to legally permissible uses and physical
38attributes.

P5    1(2) “Representative sales information” is information from sales
2of a sufficient number of comparable lands to give an accurate
3indication of the full cash value of the land being valued.

4(g) It is hereby declared that the purpose and intent of the
5Legislature in enacting this section is to provide for a method of
6determining whether a sufficient amount of representative sales
7information is available for land under use restriction in order to
8ensure the accurate assessment of that land. It is also hereby
9declared that the further purpose and intent of the Legislature in
10enacting this section and Section 1630 is to avoid an assessment
11policy which, in the absence of special circumstances, considers
12uses for land that legally are not available to the owner and not
13contemplated by government, and that these sections are necessary
14to implement the public policy of encouraging and maintaining
15effective land use planning. This statute shall not be construed as
16requiring the assessment of any land at a value less than as required
17by Section 401 or as prohibiting the use of representative
18comparable sales information on land under similar restrictions
19when this information is available.

20begin insert

begin insertSEC. 1.5.end insert  

end insert

begin insertSection 402.1 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
21amended to read:end insert

22

402.1.  

(a) In the assessment of land, the assessor shall consider
23the effect upon value of any enforceable restrictions to which the
24use of the land may be subjected. These restrictions shall include,
25but are not limited to, all of the following:

26(1) Zoning.

27(2) Recorded contracts with governmental agencies other than
28those provided in Sections 422, 422.5, and 422.7.

29(3) Permit authority of, and permits issued by, governmental
30agencies exercising land use powers concurrently with local
31governments, including the California Coastal Commission and
32regional coastal commissions, the San Francisco Bay Conservation
33and Development Commission, and the Tahoe Regional Planning
34Agency.

35(4) Development controls of a local government in accordance
36with any local coastal program certified pursuant to Division 20
37(commencing with Section 30000) of the Public Resources Code.

38(5) Development controls of a local government in accordance
39with a local protection program, or any component thereof, certified
P6    1pursuant to Division 19 (commencing with Section 29000) of the
2Public Resources Code.

3(6) Environmental constraints applied to the use of land pursuant
4to provisions of statutes.

5(7) Hazardous waste land use restriction pursuant to Section
6begin delete 25240end deletebegin insert 25226end insert of the Health and Safety Code.

7(8) begin insert(A)end insertbegin insertend insert A recorded conservation, trail, or scenic easement, as
8described in Section 815.1 of the Civil Code, that is granted in
9favor of a public agency, or in favor of a nonprofit corporation
10organized pursuant to Section 501(c)(3) of the Internal Revenue
11Code that has as its primary purpose the preservation, protection,
12or enhancement of land in its natural, scenic, historical, agricultural,
13forested, or open-space condition or use.

begin insert

14(B) A recorded greenway easement, as described in Section
15816.52 of the Civil Code, that is granted in favor of a public
16agency, or in favor of a nonprofit corporation organized pursuant
17to Section 501(c)(3) of the Internal Revenue Code that has as its
18primary purpose the developing and preserving of greenways.

end insert

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.

begin insert

22(10) A contract where the following apply:

end insert
begin insert

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.

end insert
begin insert

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

end insert
begin insert

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

end insert
begin insert

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.

end insert
begin insert

40(E) The contract is recorded and provided to the assessor.

end insert

P7    1(b) There is a rebuttable presumption that restrictions will not
2be removed or substantially modified in the predictable future and
3that they will substantially equate the value of the land to the value
4attributable to the legally permissible use or uses.

5(c) Grounds for rebutting the presumption may include, but are
6not necessarily limited to, the past history of like use restrictions
7in the jurisdiction in question and the similarity of sales prices for
8restricted and unrestricted land. The possible expiration of a
9restriction at a time certain shall not be conclusive evidence of the
10future removal or modification of the restriction unless there is no
11opportunity or likelihood of the continuation or renewal of the
12restriction, or unless a necessary party to the restriction has
13indicated an intent to permit its expiration at that time.

14(d) In assessing land with respect to which the presumption is
15unrebutted, the assessor shall not consider sales of otherwise
16comparable land not similarly restricted as to use as indicative of
17value of land under restriction, unless the restrictions have a
18demonstrably minimal effect upon value.

19(e) In assessing land under an enforceable use restriction wherein
20the presumption of no predictable removal or substantial
21modification of the restriction has been rebutted, but where the
22restriction nevertheless retains some future life and has some effect
23on present value, the assessor may consider, in addition to all other
24legally permissible information, representative sales of comparable
25lands that are not under restriction but upon which natural
26limitations have substantially the same effect as restrictions.

27(f) For the purposes of this section the following definitions
28apply:

29(1) “Comparable lands” are lands that are similar to the land
30being valued in respect to legally permissible uses and physical
31attributes.

32(2) “Representative sales information” is information from sales
33of a sufficient number of comparable lands to give an accurate
34indication of the full cash value of the land being valued.

35(g) It is hereby declared that the purpose and intent of the
36Legislature in enacting this section is to provide for a method of
37determining whether a sufficient amount of representative sales
38information is available for land under use restrictionbegin delete in orderend delete to
39ensure the accurate assessment of that land. It is also hereby
40declared that the further purpose and intent of the Legislature in
P8    1enacting this section and Section 1630 is to avoid an assessment
2policy which, in the absence of special circumstances, considers
3uses for land that legally are not available to the owner and not
4contemplated by government, and that these sections are necessary
5to implement the public policy of encouraging and maintaining
6effective land use planning. This statute shall not be construed as
7requiring the assessment of any land at a value less than as required
8by Section 401 or as prohibiting the use of representative
9comparable sales information on land under similar restrictions
10when this information is available.

11begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

Section 1.5 of this bill incorporates amendments to
12Section 402.1 of the Revenue and Taxation Code proposed by both
13this bill and Assembly Bill 1251. It shall only become operative if
14(1) both bills are enacted and become effective on or before
15January 1, 2016, (2) each bill amends Section 402.1 of the Revenue
16and Taxation Code, and (3) this bill is enacted after Assembly Bill
171251, in which case Section 1 of this bill shall not become
18operative.

end insert
19

begin deleteSEC. 2.end delete
20begin insertSEC. 3. end insert  

If the Commission on State Mandates determines that
21this act contains costs mandated by the state, reimbursement to
22local agencies and school districts for those costs shall be made
23pursuant to Part 7 (commencing with Section 17500) of Division
244 of Title 2 of the Government Code.



O

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