AB 2897: Property tax: welfare exemption: community land trusts.

(1)Existing property tax law, pursuant to constitutional authorization, 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. Existing law, for the 202223 fiscal year through the 202728 fiscal year, in the case of an owner of property that is a community land trust, as defined, requires that a unit continue to be treated as occupied by a lower income household for purposes of the welfare exemption if the occupants were lower income households on the lien date in the fiscal year in which their occupancy of the unit commenced and the unit continues to be rent restricted, notwithstanding an increase in the income of the occupants of the unit to 140% of area median income, adjusted for family size. Existing law requires that a lease between a community land trust and a lower income household satisfy specified requirements in order for these provisions to apply, including being a renewable 99-year ground lease.

This bill would eliminate specified requirements of a lease agreement between a lower income household and a community land trust in order for the unit to continue to be treated as occupied by a lower income household, as described above.

(2)Existing property tax law requires the assessor to consider in the assessment of land the effect of any enforceable restrictions to which the use of the land may be subjected, including, among others, a renewable 99-year ground lease between a community land trust and the qualified owner, as defined, of an owner-occupied single-family dwelling or an owner-occupied unit in a multifamily dwelling that meets certain other conditions. Existing property tax law defines the term community land trust for these and other purposes to mean a nonprofit corporation that satisfies specified requirements, including a requirement that all dwellings and units located on property owned by the nonprofit are either sold to a qualified owner, as defined, or leased to low- or moderate-income persons or families, and the land owned by the nonprofit corporation on which a dwelling or unit sold to a qualified owner is situated is leased by the nonprofit corporation to the qualified owner for the convenient occupation and use of that dwelling or unit for a renewable term of 99 years.

This bill would amend the definition of community land trust to extend these requirements to a wholly owned subsidiary of the trust that is solely directed and managed by the trust. The bill would recast the requirement that specified land owned by the nonprofit corporation be leased to the qualified owner for a term of 99 years, to instead require the land either be leased to the qualified owner for a term of 99 years, or sold to qualified owners for the convenient occupation and use of that dwelling or unit subject to affordability restrictions, as applicable. By expanding the duties of local tax officials, this bill would impose a state-mandated local program.

(3)This bill would make conforming changes relating to the definition of a community land trust for purposes of various housing-related programs.

(4)This bill would incorporate additional changes to Section 402.1 of the Revenue and Taxation Code proposed by AB 1868 to be operative only if this bill and AB 1868 are enacted and this bill is enacted last.

(5)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.