SB 1115: Property taxation: welfare exemption: low income housing.

The California Constitution authorizes the Legislature to exempt from taxation, in whole or in part, property that is used exclusively for religious, hospital, or charitable purposes, and is owned or held in trust by a nonprofit entity. Pursuant to this constitutional authority, existing law partially exempts from property taxation property used exclusively for rental housing and related facilities, if specified criteria are met, including, except in the case of a limited partnership in which the managing general partner is a nonprofit corporation eligible for the exemption, that 90% or more of the occupants of the property are lower income households whose rents do not exceed the rent limits prescribed by a specified law. Existing law limits the total exemption amount allowed to a taxpayer, with respect to a single property or multiple properties for any fiscal year on the sole basis of the application of this criterion, to $10,000,000 of tax.

This bill would increase the total exemption amount allowed from $10,000,000 to $20,000,000 in assessed value with respect to lien dates occurring on and after January 1, 2019. The bill would require any outstanding qualified ad valorem property tax in excess of the $10,000,000 limitation, and related interest or penalty, which was levied or imposed on and after January 1, 2017, and before January 1, 2019, with respect to qualified property for which a qualified claim was filed, to be canceled to the extent that the amount canceled does not result in a total assessed value exemption amount in excess of $20,000,000 being allowed to a qualified taxpayer with respect to a single property or multiple properties for any fiscal year. The bill would, on and after January 1, 2019, prohibit an escape assessment from being levied on qualified property if that amount would be subject to cancellation pursuant to this bill.

By adding to the duties of local tax officials, 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.