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 that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements is exempt from taxation. Existing law also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. Existing law makes that provision operative up to, and including, the lien date in 2027 and repeals that provision on January 1, 2028.

This bill would extend the above-described operative date up to, and including, the lien date in 2032 and would extend the corresponding repeal date to January 1, 2033. By imposing additional duties upon local tax officials, this bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

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.

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 that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements is exempt from taxation. Existing law also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. Existing law makes that provision operative up to, and including, the lien date in 2027 and repeals that provision on January 1, 2028.

This bill would extend the above-described operative date up to, and including, the lien date in 2032 and would extend the corresponding repeal date to January 1, 2033. By imposing additional duties upon local tax officials, this bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

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.

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 that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements is exempt from taxation. Existing law also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. Existing law makes that provision operative up to, and including, the lien date in 2027 and repeals that provision on January 1, 2028.

This bill would extend the above-described operative date up to, and including, the lien date in 2032 and would extend the corresponding repeal date to January 1, 2033. By imposing additional duties upon local tax officials, this bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would state that it is the intent of the Legislature to apply those requirements to the bill and would set forth specified information relating to those requirements.

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.

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 that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements is exempt from taxation. Existing law also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. Existing law makes that provision operative up to, and including, the lien date in 2027 and repeals that provision on January 1, 2028.

This bill would extend the above-described operative date up to, and including, the lien date in 2032 and would extend the corresponding repeal date to January 1, 2033. By imposing additional duties upon 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.

This bill would take effect immediately as a tax levy.

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 that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements is exempt from taxation. Existing law also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. Existing law makes that provision operative up to, and including, the lien date in 2027 and repeals that provision on January 1, 2028.

This bill would extend the above-described operative date up to, and including, the lien date in 2032 and would extend the corresponding repeal date to January 1, 2033. By imposing additional duties upon 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.

This bill would take effect immediately as a tax levy.

 THIRD READING  

Bill No: AB 1668

Author: Pellerin (D)

Amended: 5/22/26 in Assembly

Vote: 21

SENATE REVENUE AND TAXATION COMMITTEE: 5-0, 6/10/26

AYES: McNerney, Alvarado-Gil, Ashby, Becker, Grayson

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/13/26

AYES: Cervantes, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab

ASSEMBLY FLOOR: 77-0, 5/26/26 - See last page for vote

SUBJECT: Property tax: welfare exemption

SOURCE: California Council of Land Trusts;

Shasta Land Trust;

Sonoma Land Trust

DIGEST:

This bill extends the sunset for five years on the welfare exemption from property tax for open space lands owned by non-profit charitable organizations.

ANALYSIS:

Existing law:

1. Provides that all property is taxable unless explicitly exempted by the Constitution or federal law (California Constitution, Article XIII, Section One.)
2. Limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, plus any locally-authorized bonded indebtedness, and caps a property’s annual inflationary increase in taxable value to 2%. Provides that assessors reappraise property whenever it is purchased, newly constructed, or when ownership changes (California Constitution, Article XIIIA, as added by Proposition 13, 1978).
3. Sets, generally, a property’s value as its sales price when purchased or, when there is no sales price, at its fair market value when ownership changes.
4. Allows the Legislature to exempt property used exclusively for charitable purposes, so long as it is owned by non-profit corporations or other entities organized and operated for charitable purposes, such as universities, hospitals, and libraries, commonly known as the “welfare exemption” (California Constitution, Article XIII, Section Four).
5. Applies the welfare exemption to property used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty. The land must be open to the public subject to reasonable restrictions, and the exemption cannot apply to property that is reserved for future development. In 2022, the Legislature extended the exemption until the 2027 lien date (SB 825, Committee on Governance & Finance, Chapter 433, Statutes of 2022).

This bill:

1. Extends the welfare exemption on property used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty by extending the lien date for property tax years in which the exemption applies from January 1, 2027, to January 1, 2032, and its repeal date from January 1, 2028, to January 1, 2033.
2. Makes legislative findings and declarations to comply with Section 41 of the Revenue and Taxation Code.

Background.

Open Space Exemption. Implementing a recommendation from a 1970 Assembly Revenue & Taxation Committee report to encourage preservation of ecologically valuable areas, current law has since 1971 exempted property that is used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty. The land must be open to the public, subject to reasonable restrictions, and the exemption cannot apply to property that is reserved for future development. The Legislature extended the exemption six times, most recently in 2022, but it is set to expire on January 1, 2027, unless extended.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• The State Board of Equalization indicates that this bill would result in an annual property tax revenue loss of $6.5 million. Reductions in local property tax revenues, in turn, can increase General Fund Proposition 98 spending by up to roughly 50 percent (the exact amount depends on the specific amount of the annual Proposition 98 guarantee, which in turns depends upon a variety of economic, demographic and budgetary factors).
• By changing the manner in which assessors value real property, this bill creates a state-mandated local program. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, local agencies could claim reimbursement of those costs (General Fund). The magnitude of these costs is unknown.

SUPPORT: (Verified 8/14/26)

California Council of Land Trusts (Co-Source)
Shasta Land Trust (Co-Source)
Sonoma Land Trust (Co-Source)
Ag Land Trust
Arroyos & Foothills Conservancy
California Desert Land Conservancy, dba Mojave Desert Land Trust
California State Board of Equalization
Center for Natural Lands Management
Elkhorn Slough Foundation
Feather River Land Trust
John Muir Land Trust
Kings River Land Trust
Land Conservancy of San Luis Obispo
Land Trust for Santa Barbara County
Land Trust of Napa County
Land Trust of Santa Cruz County
Mendocino Land Trust
Ojai Valley Land Conservancy
Placer Land Trust
Redwood Coast Land Conservancy
Rivers & Lands Conservancy
Sempervirens Fund
Sequoia Riverlands Trust
Sierra Consortium
Siskiyou Land Trust
Solano Land Trust
The Nature Conservancy
The Trust for Public Land
Western Alliance for Nature
Wildlife Heritage Foundation

OPPOSITION: (Verified 8/14/26)

California Teachers Association

ARGUMENTS IN SUPPORT: According to the author, “For more than 40 years, the welfare property tax exemption has proven an important tool in protecting habitat for some of California’s unique flora and fauna and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.”

ARGUMENTS IN OPPOSITION: According to the California Teachers Association, “In fiscal year 2025-26, the Department of Finance estimated a $94 billion dollar loss in general fund revenue due to existing tax expenditures. This is revenue that would have otherwise gone to the General Fund, of which approximately 40% would have gone toward the Proposition 98 minimum guarantee. Once tax credits are passed with a simple majority, it takes a two-thirds vote of the Legislature to repeal them. While we understand the intent of the bill, CTA does not support this approach, as it would reduce overall funding for education. CTA believes Proposition 98 should be protected from reductions through the creation of new or expanding existing tax expenditures.”

ASSEMBLY FLOOR: 77-0, 5/26/26

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: Gallagher, Muratsuchi, Celeste Rodriguez

Prepared by: Colin Grinnell / REV. & TAX. / (916) 651-4117

8/15/26 11:42:50

**** END ****

SENATE COMMITTEE ON

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

AB 1668 (Pellerin) - Property tax: welfare exemption

Bill Summary:

AB 1668 would extend for five years the welfare exemption for open space lands owned by non-profit charitable organizations.

Fiscal Impact:

• BOE indicates that this bill would result in an annual property tax revenue loss of $6.5 million. Reductions in local property tax revenues, in turn, can increase General Fund Proposition 98 spending by up to roughly 50 percent (the exact amount depends on the specific amount of the annual Proposition 98 guarantee, which in turns depends upon a variety of economic, demographic and budgetary factors).
• By changing the manner in which assessors value real property, this bill creates a state-mandated local program. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, local agencies could claim reimbursement of those costs (General Fund). The magnitude of these costs is unknown.

Background:

Article XIII of the California Constitution provides that all property is subject to taxation unless expressly exempted by the Constitution or federal law. Proposition 13 established the state's modern property tax framework by limiting the ad valorem tax rate on real property to 1 percent of assessed value, plus voter-approved indebtedness, and restricting annual increases in assessed value to no more than 2 percent absent a change in ownership or new construction. County assessors reassess property when ownership changes, new construction occurs, or other constitutionally defined reassessment events take place.

Article XIII also authorizes the Legislature to exempt property used exclusively for charitable purposes when it is owned and operated by nonprofit entities organized for charitable objectives. Pursuant to this authority, the Legislature established the welfare exemption, which reflects the longstanding public policy that charitable organizations should be permitted to devote their resources to public-serving activities rather than property tax payments.

Consistent with this policy, California law since 1971 has provided a property tax exemption for land used exclusively to preserve native plants and animals, biotic communities, geological or geographical features of scientific or educational significance, and qualifying open-space lands maintained for public recreation and scenic enjoyment. To qualify, the property generally must be accessible to the public, subject to reasonable restrictions, and may not be held for future development. The Legislature has extended the exemption on six occasions, most recently through the January 1, 2027 lien date.

Proposed Law:

This bill, among other things, would extend the welfare exemption on property used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty, to January 1, 2032.

Related Legislation: SB 825 (Committee on Governance and Finance, Chapter 433, Statutes of 2022) extended the exemption through the January 1, 2027 lien date.

Staff Comments: The BOE’s estimate is derived from a 2010 analysis that identified $304 million in exempt assessed value associated with qualified properties. Adjusting this amount for annual assessed value growth of 2 percent, consistent with Proposition 13, yields an estimated current assessed value of approximately $647 million. At the one percent basic property tax rate, the resulting annual property tax revenue loss would be $6.5 million.

BOE notes that these amounts may be understated as they are based on organizations qualifying for an organizational clearance certificate in 2010.

-- END --

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Jerry McNerney, Chair

2025 - 2026 Regular

Property tax: welfare exemption

Extends the welfare exemption for open space lands owned by non-profit charitable organizations for five years.

Background

Property Taxation. Section One of Article XIII of the California Constitution provides that all property is taxable unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, plus any locally-authorized bonded indebtedness, and caps a property’s annual inflationary increase in taxable value to 2%. Assessors reappraise property whenever it is purchased, newly constructed, or when ownership changes. The Constitution and statute define those terms.

Section Four of Article XIII allows the Legislature to exempt property used exclusively for charitable purposes, so long as it is owned by non-profit corporations or other entities organized and operated for charitable purposes, such as universities, hospitals, and libraries. Commonly known as the “welfare exemption,” it has a similar policy rationale to tax-exempt status for charitable groups: Revenues paid in tax to the government divert needed resources away from the organization’s good works.

Implementing a recommendation from a 1970 Assembly Revenue & Taxation Committee report to encourage preservation of ecologically valuable areas, current law has since 1971 exempted property that is used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty. The land must be open to the public, subject to reasonable restrictions, and the exemption cannot apply to property that is reserved for future development. The Legislature extended the exemption six times, most recently in 2022, until the January 1, 2027 lien date (SB 825, Committee on Governance & Finance).

With the exemption due to sunset on January 1, 2027, the California Council of Land Trusts would like to extend it another five years.

Proposed Law

Assembly Bill 1668 extends the welfare exemption on property used exclusively for the preservation of native plants and animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty. Specifically, the measure extends the lien date for property tax years in which the exemption applies from January 1, 2027, to January 1, 2032, and its repeal date from January 1, 2028, to January 1, 2033. The bill also makes legislative findings and declarations to comply with Section 41 of the Revenue and Taxation Code.

State Revenue Impact

According to the Board of Equalization (BOE), the “total exempt value [of property qualifying for this exemption] is estimated to be $647 million. Annual revenue loss (foregone by the exemption) at the basic 1% property tax rate amounts to an estimated $6.5 million (1% × $647 million exemption value).” BOE adds that these amounts may be understated as they are based on organizations qualifying for an organizational clearance certificate in 2010.

Comments

1. Purpose of the bill. According to the author, “For more than 40 years, the welfare property tax exemption has proven an important tool in protecting habitat for some of California’s unique flora and fauna and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.”

2. Section 41. Section 41 of the Revenue and Taxation Code requires any bill enacting a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve and detailed performance indicators, along with data collection and reporting requirements (SB 1335, Leno, 2014). While previous extensions did not include similar findings, to comply with Section 41, AB 1668:

• States that its goal, purpose, and objective is to reduce financial barriers that inhibit nonprofit land conservation organizations from preserving California’s natural resources, and promote environmental preservation by enabling nonprofit organizations to hold and maintain land in its natural state without incurring additional tax burdens.
• Identifies as its performance indicators the total number of properties, the total assessed value, and the total acreage of land that qualify for the exemption.
• Directs BOE to report the above data to the relevant committees of the Legislature.

3. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 1668 changes the way assessors value real property by extending a welfare exemption from property tax, Legislative Counsel says that this bill imposes a new state mandate. The measure provides that the state shall not reimburse local agencies for property tax revenue losses, instead stating that, should the Commission on State Mandates determine that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.

Assembly Actions

Assembly Revenue & Taxation Committee: 7-0
Assembly Appropriations Committee: 15-0
Assembly Floor: 77-0

Support and Opposition

(6/5/26)

Support: California Council of Land Trusts (Sponsor)
California Legislative Central Coast Caucus

California State Board of Equalization

Ag Land Trust
Arroyos & Foothills Conservancy
California Desert Land Conservancy, dba Mojave Desert Land Trust
Center for Natural Lands Management
Elkhorn Slough Foundation
Feather River Land Trust
John Muir Land Trust
Kings River Land Trust
Land Conservancy of San Luis Obispo
Land Trust for Santa Barbara County
Land Trust of Napa County
Land Trust of Santa Cruz County
Mendocino Land Trust
Nature Conservancy
Ojai Valley Land Conservancy
Placer Land Trust
Redwood Coast Land Conservancy
Rivers & Lands Conservancy
Sempervirens Fund
Sequoia Riverlands Trust

Shasta Land Trust
Sierra Consortium
Siskiyou Land Trust
Solano Land Trust

Sonoma Land Trust
Trust for Public Land
Western Alliance for Nature
Wildlife Heritage Foundation

Opposition: California Teachers Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1668

Author:(Pellerin)

As Amended Ver:May 22, 2026

Majority vote. Tax Levy

SUMMARY

Extends the sunset date of the welfare property tax exemption for property used exclusively for the preservation of specified natural resources and open-space lands by five years.

Major Provisions

1. Extends the January 1, 2027 inoperative date, and the January 1, 2028 repeal date, of the welfare property tax exemption for property that is used exclusively for the preservation of specified natural resources and open-space lands by five years to January 1, 2032, and January 1, 2033, respectively.
2. Provides that it is the intent of the Legislature to apply the requirements of Revenue and Taxation Code (R&TC) Section 41 to this bill's provisions. As such, this bill finds and declares that this bill's specific goals, purposes, and objectives are to reduce financial barriers that inhibit nonprofit land conservation organizations from preserving California's natural resources, and to promote environmental preservation by enabling nonprofit organizations to hold and maintain land in its natural state without incurring additional tax burdens.
3. Provides that the detailed performance indicators for the Legislature to use in determining whether this bill meets its stated goals purposes and objectives are the total number of properties that qualify for this bill's exemption, the total assessed value of properties qualifying for this bill, and the total acreage of land on properties that qualify for this bill.
4. Requires the State Board of Equalization (BOE) to, on or before January 1 of each year prior to January 1, 2034, publish and submit to the relevant committees of the Legislature a summary of the annual total acreage and annual total assessed value of the properties exempt pursuant to this bill, to the extent that data are available.
5. Takes immediate effect as a tax levy.

COMMENTS

Preserving legislative history: The natural resources and open-space lands welfare property tax exemption was enacted by the Legislature in 1971. Specifically, the enactment of this exemption arose from a report issued by this Committee in 1970. According to the opinion issued by the appellate court in the case of Santa Catalina Island Conservancy v. County of Los Angeles (1981):

The legislative history behind the enactment of [R&TC] Section 214.02 is clear. In 1970, the Assembly Committee on Revenue and Taxation held hearings and conducted studies to investigate alternative tax policies which would have a positive environmental influence on the future of the state. The staff report to the committee concluded that, due to an over-reliance on property tax revenues, local governments were reluctant to preserve open space areas, recreational areas, and ecologically valuable areas. […] Among the conclusions reached in the staff report was the following: "The property tax exemption provided under existing welfare exemption should be broadened to include environmentally oriented nonprofit organizations that are preserving ecologically valuable areas."^[1]

The exemption was limited to non-profit organizations engaged in eligible conservation activities. An analysis by this Committee of AB 703 (Gordon), Chapter 575, Statutes of 2011, states that according to staff at the BOE:

[T]he intent of the original legislation enacting R&TC Section 214.02 was to assist nonprofit organizations that purchased open-space and similar lands, held the lands temporarily, and then sold or donated the lands to public agencies for permanent use as park facilities. A sunset date was included in the original legislation as a result of a Senate Revenue and Taxation Committee hearing to ensure that the charitable organizations sold or donated the lands rather than hold them indefinitely. Since that time, it appears that many charitable organizations may be the permanent owners of lands due, in part, to the limited ability of public agencies to acquire additional parklands.

This exemption has been extended numerous times over the course of its 50 years in operation, with the latest extension occurring in 2021 to the current inoperative date of January 1, 2027.

This bill: As currently drafted, this bill would simply extend the existing inoperative and repeal dates for the natural resources and open-space lands welfare property tax exemption by five years, to January 1, 2032 and January 1, 2033, respectively. There are no other proposed changes to existing law in this bill.

According to the Author

For more than 40 years, the welfare tax exemption has proven an important tool in protecting habitat for some of California's unique flora and fauna, and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.

Arguments in Support

The California Council of Land Trusts (CCLT), writing in support of this bill, states, in part:

Open-spaces and parklands are vitally important to the quality of life in communities across California. All Californians benefit from these preserved natural spaces, whether they are for the protection of wildlife, the outdoor education of our urban youth, or for outdoor recreation. Many of these natural lands are owned and operated by charitable organizations, such as CCLT's member land trusts, for the public benefits they provide. Existing property tax law has acknowledged the value of this charitable service since 1971, affording these lands with an exemption from property taxes. This exemption has allowed non-profit organizations to focus their limited funds on the long-term stewardship of these important lands, and in many cases on providing the public with educational programs not offered anywhere else. Without extending the current 2028 sunset provision associated with the exemption, and extending the 2027 operative provisions of the exemption, these charitable services will be threatened and put increase cost pressures on the state to protect environmental and open space lands and increase cost pressures on the state to protect environmentally important and open space lands. AB 1668 would resolve these issues by extending the sunset and operative provision for an additional five years.

Arguments in Opposition

FISCAL COMMENTS

The Assembly Committee on Appropriations, in its analysis of this bill, estimates the following fiscal impact:

1. Annual property tax revenue loss of approximately $6.5 million by extending the welfare exemption for preserved lands. A 2010 BOE analysis estimated the exempt value of identified qualified properties at $304 million, which would reach $647 million under the annual inflation factor of 2%. Although property tax is a local government revenue source and this bill prohibits the state from reimbursing local agencies for lost property tax revenues, reductions in property tax revenues, in turn, increase General Fund (GF) Proposition 98 spending by up to roughly 50% (the exact amount depends on the operative test of the annual Proposition 98 guarantee).
2. One-time costs of approximately $3,000 to the BOE to update related guidance and produce eight annual reports (GF).
3. Likely minor and absorbable costs across 58 county assessors to continue administering the exemption. If the Commission on State Mandates determines the provisions of this bill create a new program or impose a higher level of service for which the state must reimburse local costs, counties could claim reimbursement from the state.

The Legislative Analyst's Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.

VOTES

ASM REVENUE AND TAXATION: 7-0-0

YES: Gipson, Sanchez, Carrillo, DeMaio, McKinnor, Quirk-Silva, Michelle Rodriguez

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Hoover, Aguiar-Curry, Calderon, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta, Tangipa

UPDATED

VERSION: May 22, 2026

CONSULTANT: Harrison Bowlby / REV. & TAX. / (916) 319-2098 FN: 0003125

1. Santa Catalina Island Conservancy v. Cty. of L.A., 126 Cal. App. 3d 221, (1981), 237-238. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 1668

Author:(Pellerin)

As Amended Ver:April 20, 2026

Majority vote

SUMMARY

Extends the sunset date of the welfare property tax exemption for property used exclusively for the preservation of specified natural resources and open-space lands by five years.

Major Provisions

1. Extends the January 1, 2027 inoperative date, and the January 1, 2028 repeal date, of the welfare property tax exemption for property that is used exclusively for the preservation of specified natural resources and open-space lands by five years to January 1, 2032, and January 1, 2033, respectively.
2. Provides that it is the intent of the Legislature to apply the requirements of Revenue and Taxation Code (R&TC) Section 41 to this bill's provisions. As such, this bill finds and declares that this bill's specific goals, purposes, and objectives are to eliminate financial barriers that inhibit nonprofit land conservation organizations from preserving California's natural resources, and to promote environmental preservation by enabling nonprofit organizations to hold and maintain land in its natural state without incurring additional tax burdens.
3. Provides that the detailed performance indicators for the Legislature to use in determining whether this bill meets its stated goals purposes and objectives are the total number of properties that qualify for this bill's exemption, the total assessed value of properties qualifying for this bill which are preserved by nonprofit land conservation organizations, the total acreage of land on properties that qualify for this bill which are preserved by nonprofit land conservation organizations, and the rate of the year-over-year growth in the total acreage of land on properties that qualify for this bill which are preserved by nonprofit land conservation organizations.
4. Requires the State Board of Equalization (BOE) to, on or before January 1 of each year prior to January 1, 2034, publish and submit to the relevant committees of the Legislature a summary of the annual total acreage and annual total assessed value of the properties exempt pursuant to this bill, to the extent that data are available.
5. Takes immediate effect as a tax levy.

COMMENTS

Preserving legislative history: The natural resources and open-space lands welfare property tax exemption was enacted by the Legislature in 1971. Specifically, the enactment of this exemption arose from a report issued by this Committee in 1970. According to the opinion issued by the appellate court in the case of Santa Catalina Island Conservancy v. County of Los Angeles (1981):

The legislative history behind the enactment of [R&TC] Section 214.02 is clear. In 1970, the Assembly Committee on Revenue and Taxation held hearings and conducted studies to investigate alternative tax policies which would have a positive environmental influence on the future of the state. The staff report to the committee concluded that, due to an over-reliance on property tax revenues, local governments were reluctant to preserve open space areas, recreational areas, and ecologically valuable areas. […] Among the conclusions reached in the staff report was the following: "The property tax exemption provided under existing welfare exemption should be broadened to include environmentally oriented nonprofit organizations that are preserving ecologically valuable areas."^[1]

The exemption was limited to non-profit organizations engaged in eligible conservation activities. An analysis by this Committee of AB 703 (Gordon), Chapter 575, Statutes of 2011, states that according to staff at the BOE:

[T]he intent of the original legislation enacting R&TC Section 214.02 was to assist nonprofit organizations that purchased open-space and similar lands, held the lands temporarily, and then sold or donated the lands to public agencies for permanent use as park facilities. A sunset date was included in the original legislation as a result of a Senate Revenue and Taxation Committee hearing to ensure that the charitable organizations sold or donated the lands rather than hold them indefinitely. Since that time, it appears that many charitable organizations may be the permanent owners of lands due, in part, to the limited ability of public agencies to acquire additional parklands.

This exemption has been extended numerous times over the course of its 50 years in operation, with the latest extension occurring in 2021 to the current inoperative date of January 1, 2027.

This bill: As currently drafted, this bill would simply extend the existing inoperative and repeal dates for the natural resources and open-space lands welfare property tax exemption by five years, to January 1, 2032 and January 1, 2033, respectively. There are no other proposed changes to existing law in this bill.

According to the Author

For more than 40 years, the welfare tax exemption has proven an important tool in protecting habitat for some of California's unique flora and fauna, and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.

Arguments in Support

The California Council of Land Trusts (CCLT), writing in support of this bill, states, in part:

Open-spaces and parklands are vitally important to the quality of life in communities

across California. All Californians benefit from these preserved natural spaces, whether

they are for the protection of wildlife, the outdoor education of our urban youth, or for

outdoor recreation. Many of these natural lands are owned and operated by charitable

organizations, such as CCLT's member land trusts, for the public benefits they provide.

Existing property tax law has acknowledged the value of this charitable service since 1971,

affording these lands with an exemption from property taxes. This exemption has allowed

non-profit organizations to focus their limited funds on the long-term stewardship of these

important lands, and in many cases on providing the public with educational programs not offered anywhere else. Without extending the current 2028 sunset provision associated with the exemption, and extending the 2027 operative provisions of the exemption, these charitable services will be threatened and put increase cost pressures on the state to protect environmental and open space lands and increase cost pressures on the state to protect environmentally important and open space lands. AB 1668 would resolve these issues by extending the sunset and operative provision for an additional five years.

Arguments in Opposition

The California Teachers Association (CTA), writing in opposition to a series of bills that would cause estimated revenue losses, states, in part:

In fiscal year [(FY)] 2025-26, the Department of Finance estimated a $94 billion dollar loss in general fund revenue due to existing tax expenditures. This is revenue that would have otherwise gone to the General Fund, of which approximately 40% would have gone toward the Proposition 98 minimum guarantee. Once tax credits are passed with a simple majority, it takes a two-thirds vote of the Legislature to repeal them.

While we understand that some of these bills are well intended, CTA does not support this approach, as it would reduce overall funding for education. CTA believes Proposition 98 should be protected from reductions through the creation of new or expanding existing tax expenditures.

FISCAL COMMENTS

The Assembly Committee on Appropriations, in its analysis of this bill, estimates the following fiscal impact:

1. Annual property tax revenue loss of approximately $6.5 million by extending the welfare exemption for preserved lands. A 2010 BOE analysis estimated the exempt value of identified qualified properties at $304 million, which would reach $647 million under the annual inflation factor of 2%. Although property tax is a local government revenue source and this bill prohibits the state from reimbursing local agencies for lost property tax revenues, reductions in property tax revenues, in turn, increase General Fund (GF) Proposition 98 spending by up to roughly 50% (the exact amount depends on the operative test of the annual Proposition 98 guarantee).
2. One-time costs of approximately $3,000 to BOE to update related guidance and produce eight annual reports (GF).
3. Likely minor and absorbable costs across 58 county assessors to continue administering the exemption. If the Commission on State Mandates determines the provisions of this bill create a new program or impose a higher level of service for which the state must reimburse local costs, counties could claim reimbursement from the state.

The Legislative Analyst's Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.

VOTES

ASM REVENUE AND TAXATION: 7-0-0

YES: Gipson, Sanchez, Carrillo, DeMaio, McKinnor, Quirk-Silva, Michelle Rodriguez

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Hoover, Aguiar-Curry, Calderon, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta, Tangipa

UPDATED

VERSION: April 20, 2026

CONSULTANT: Harrison Bowlby / REV. & TAX. / (916) 319-2098 FN: 0002765

1. Santa Catalina Island Conservancy v. Cty. of L.A., 126 Cal. App. 3d 221, (1981), 237-238. ↑

Date of Hearing: May 13, 2026

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 1668

Author:(Pellerin) – As Amended Ver:April 20, 2026

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill extends the sunset date of the welfare property tax exemption for property used exclusively for the preservation of certain natural resources and open-space lands.

Specifically, this bill:

1. Extends the sunset date for the exemption up to, and including, the lien date in 2032 and extends the corresponding repeal date to January 1, 2033.
2. Declares the goals and related performance indicators of continuing the exemption and requires the State Board of Equalization (BOE) to publish an annual report to the Legislature with certain data provided by counties.

FISCAL EFFECT:

1. Annual property tax revenue loss of approximately $6.5 million by extending the welfare exemption for preserved lands. A 2010 BOE analysis estimated the exempt value of identified qualified properties at $304 million, which would reach $647 million under the annual inflation factor of 2%. Although property tax is a local government revenue source and this bill prohibits the state from reimbursing local agencies for lost property tax revenues, reductions in property tax revenues, in turn, increase General Fund (GF) Proposition 98 spending by up to roughly 50% (the exact amount depends on the operative test of the annual Proposition 98 guarantee).
2. One-time costs of approximately $3,000 to BOE to update related guidance and produce eight annual reports (GF).
3. Likely minor and absorbable costs across 58 county assessors to continue administering the exemption. If the Commission on State Mandates determines the provisions of this bill create a new program or impose a higher level of service for which the state must reimburse local costs, counties could claim reimbursement from the state.

The Legislative Analyst’s Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.

COMMENTS:

1. Purpose. According to the author:

For more than 40 years, the welfare tax exemption has proven an important tool in protecting habitat for some of California’s unique flora and fauna, and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.

1. Welfare Exemption. Existing law allows a property tax welfare exemption for property used exclusively for charitable, hospital or religious purposes and owned by a non-profit organization operating for those purposes. Through the 2027 lien date, allowable exempt property includes land used for preservation of native plants or animals, biotic communities, geological or geographical formations or open-space lands used solely for recreation. The exemption has been extended numerous times since its enactment in 1971. This bill extends the exemption until the 2032 lien date.
2. Support and Opposition. This bill is supported by a coalition of land trusts and environmental groups, with The Nature Conservancy (TNC) arguing the “exemption has allowed TNC to protect endangered habitats and species across California, providing extensive public benefits such as flood protection, groundwater recharge, wildfire risk reduction, and public education and access.”

This bill is opposed by the California Teachers Association (CTA), which argues that while the policy may be well intended, “CTA does not support this approach, as it would reduce overall funding for education. CTA believes Proposition 98 should be protected from reductions through the creation of new or expanding existing tax expenditures.”

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 27, 2026

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Mike Gipson, Chair

ABPCA Bill Id:AB 1668 (

Author:Pellerin) – As Amended Ver:April 20, 2026

SUSPENSE

Majority vote. Tax levy. Fiscal committee.

SUBJECT: Property tax: welfare exemption

SUMMARY: Extends the sunset date of the welfare property tax exemption for property used exclusively for the preservation of specified natural resources and open-space lands by five years. Specifically, this bill:

1. Extends the January 1, 2027 inoperative date, and the January 1, 2028 repeal date, of the welfare property tax exemption for property that is used exclusively for the preservation of specified natural resources and open-space lands by five years to January 1, 2032, and January 1, 2033, respectively.
2. Provides that it is the intent of the Legislature to apply the requirements of Revenue and Taxation Code (R&TC) Section 41 to this bill's provisions. As such, this bill finds and declares that this bill's specific goals, purposes, and objectives are to eliminate financial barriers that inhibit nonprofit land conservation organizations from preserving California's natural resources, and to promote environmental preservation by enabling nonprofit organizations to hold and maintain land in its natural state without incurring additional tax burdens.
3. Provides that the detailed performance indicators for the Legislature to use in determining whether this bill meets its stated goals purposes and objectives are the total number of properties that qualify for this bill's exemption, the total assessed value of properties qualifying for this bill which are preserved by nonprofit land conservation organizations, the total acreage of land on properties that qualify for this bill which are preserved by nonprofit land conservation organizations, and the rate of the year-over-year growth in the total acreage of land on properties that qualify for this bill which are preserved by nonprofit land conservation organizations.
4. Requires the State Board of Equalization (BOE) to, on or before January 1 of each year prior to January 1, 2034, publish and submit to the relevant committees of the Legislature a summary of the annual total acreage and annual total assessed value of the properties exempt pursuant to this bill, to the extent that data are available.
5. Takes immediate effect as a tax levy.

EXISTING FEDERAL LAW defines an organization that is organized and operated exclusively for certain purposes, and not for the benefit of private interests, where no part of the organization's net earnings inure to the benefit of any private shareholder or individual, as exempt from taxation. These tax-exempt organizations are commonly referred to as "non-profit organizations," and are generally taxed on business income unrelated to their exempt activities. (Internal Revenue Code Section 501.)

EXISTING STATE LAW:

1. Provides that all property is taxable unless otherwise provided by the California Constitution or federal law. (California Constitution, Article XIII, Section 1.)
2. Authorizes the Legislature to exempt from taxation certain property that is irrevocably dedicated to religious, hospital, scientific, or charitable purposes, if the property is used for the actual operation of the exempt activity and is owned by a qualified nonprofit organization. (California Constitution, Article XIII, Section 4.)
3. Exempts property that is used exclusively for the preservation of native plants or animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty that are open to the general public subject to reasonable restrictions concerning the needs of the land. Property used for an eligible purpose that is owned and operated by a scientific or charitable fund, foundation, limited liability company, or corporation with the primary interest of preserving those natural areas and that complies with general requirements of the welfare exemption is deemed exempt. The exemption does not apply to property reserved for future development, and to a non-profit organization that owns more than 30,000 acres in a single county, if that nonprofit is not fully independent from the owner of adjacent taxable lands. This exemption is commonly referred to as the "natural resources and open-space lands welfare property tax exemption." (R&TC Section 214.02.)

FISCAL EFFECT: The BOE estimates a property tax revenue loss of approximately $6.5 million.

COMMENTS:

1. The author has submitted the following statement in support of this bill:

For more than 40 years, the welfare tax exemption has proven an important tool in protecting habitat for some of California's unique flora and fauna, and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.

1. A collection of land trusts and environmental advocacy groups, writing in support of this bill, state, in part:

Existing property tax law has acknowledged the value of this charitable service since 1971, affording these lands with an exemption from property taxes. This exemption has allowed non-profit organizations to focus their limited funds on the long-term stewardship of these important lands, and in many cases on providing the public with educational programs not offered anywhere else.

1. Committee Staff Comments:
   1. Preserving legislative history: The natural resources and open-space lands welfare property tax exemption was enacted by the Legislature in 1971. Specifically, the enactment of this exemption arose from a report issued by this Committee in 1970. According to the opinion issued by the appellate court in the case of Santa Catalina Island Conservancy v. County of Los Angeles (1981):

The legislative history behind the enactment of [R&TC] Section 214.02 is clear. In 1970, the Assembly Committee on Revenue and Taxation held hearings and conducted studies to investigate alternative tax policies which would have a positive environmental influence on the future of the state. The staff report to the committee concluded that, due to an over-reliance on property tax revenues, local governments were reluctant to preserve open space areas, recreational areas, and ecologically valuable areas. […] Among the conclusions reached in the staff report was the following: "The property tax exemption provided under existing welfare exemption should be broadened to include environmentally oriented nonprofit organizations that are preserving ecologically valuable areas."^[1]

The exemption was limited to non-profit organizations engaged in eligible conservation activities. An analysis by this Committee of AB 703 (Gordon), Chapter 575, Statutes of 2011, states that according to staff at the BOE:

[T]he intent of the original legislation enacting R&TC Section 214.02 was to assist nonprofit organizations that purchased open-space and similar lands, held the lands temporarily, and then sold or donated the lands to public agencies for permanent use as park facilities. A sunset date was included in the original legislation as a result of a Senate Revenue and Taxation Committee hearing to ensure that the charitable organizations sold or donated the lands rather than hold them indefinitely. Since that time, it appears that many charitable organizations may be the permanent owners of lands due, in part, to the limited ability of public agencies to acquire additional parklands.

This exemption has been extended numerous times over the course of its 50 years in operation, with the latest extension occurring in 2021 to the current inoperative date of January 1, 2027.

• 1. This bill: As currently drafted, this bill would simply extend the existing inoperative and repeal dates for the natural resources and open-space lands welfare property tax exemption by five years, to January 1, 2032 and January 1, 2033, respectively. There are no other proposed changes to existing law in this bill.
  2. Drafting error: This bill should be amended such that on Page 5, lines 22-23, the cross-reference "paragraph (2)" reads "paragraph (3)," and on Page 5, line 26, the cross-reference "paragraph (1)" reads "paragraph (2)."
  3. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, United States Treasury officials began arguing that these features of the tax law should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each of them (in the form of forgone revenues). This bill would extend an existing property tax expenditure under the welfare exemption, thereby constituting a tax expenditure.
  4. Committee's tax expenditure policy: SB 1335 (Leno), Chapter 845, Statutes of 2014, added R&TC Section 41, which recognized that the Legislature should apply the same level of review used for government spending programs to tax credits introduced on or after January 1, 2015. AB 263 (Burke), Chapter 743, Statutes of 2019, extended the requirements in R&TC Section 41 to all tax expenditure measures under the Personal Income Tax Law, the Corporation Tax Law, and the Sales and Use Tax Law introduced on or after January 1, 2020. This Committee's policy is to treat all tax expenditures similarly, and requires that all proposed property tax expenditures likewise comply with R&TC Section 41.

A tax expenditure proposal must outline specific goals, purposes, and objectives that the tax expenditure will achieve, along with detailed performance indicators for the Legislature to use when measuring whether the tax expenditure meets those stated goals, purposes, and objectives. In addition to the R&TC Section 41 requirements, this Committee's policy also requires that all tax expenditure proposals contain an appropriate sunset provision to be eligible for a vote^[2]. Sunsets are required because eliminating a tax expenditure generally requires a 2/3^rd vote. These requirements must be satisfied before a bill can receive a vote in this Committee. This bill contains a five-year sunset and complies with the requirements of R&TC Section 41.

• 1. Prior legislation:
     1. SB 825 (Committee on Governance and Finance), Chapter 433, Statutes of 2021, extended the natural resources and open-space lands welfare property tax exemption by five years to the existing inoperative date of January 1, 2027, and repeal date of January 1, 2028.
     2. AB 703 (Gordon), Chapter 575, Statutes of 2011, extended the natural resources and open-space lands welfare property tax exemption by ten years.

REGISTERED SUPPORT / OPPOSITION:

Support

California Council of Land Trusts

Center for Natural Lands Management

Feather River Land Trust

Land Trust for Santa Barbara County

Mendocino Land Trust

Placer Land Trust

Redwood Coast Land Conservancy

Siskiyou Land Trust

The Trust for Public Land

Western Alliance for Nature

Opposition

None on file

Analysis Prepared by: Harrison Bowlby / REV. & TAX. / (916) 319-2098

1. Santa Catalina Island Conservancy v. Cty. of L.A., 126 Cal. App. 3d 221, (1981), 237-238. ↑

2. An "appropriate sunset provision" shall mean five years, except in the case of a tax expenditure measure providing relief to California veterans, in which case "appropriate sunset provision" shall mean 10 years. ↑

Date of Hearing: March 16, 2026

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Mike Gipson, Chair

ABPCA Bill Id:AB 1668 (

Author:Pellerin) – As Introduced Ver:January 29, 2026

Majority vote. Tax levy. Fiscal committee.

SUBJECT: Property tax: welfare exemption

SUMMARY: Extends the sunset date of the welfare property tax exemption for property used exclusively for the preservation of specified natural resources and open-space lands by five years. Specifically, this bill:

1. Extends the January 1, 2027 inoperative date, and the January 1, 2028 repeal date, of the welfare property tax exemption for property that is used exclusively for the preservation of specified natural resources and open-space lands by five years to January 1, 2032, and January 1, 2033, respectively.
2. Takes immediate effect as a tax levy.

EXISTING FEDERAL LAW defines an organization that is organized and operated exclusively for certain purposes, and not for the benefit of private interests, where no part of the organization's net earnings inure to the benefit of any private shareholder or individual, as exempt from taxation. These tax-exempt organizations are commonly referred to as "non-profit organizations," and are generally taxed on business income unrelated to their exempt activities. (Internal Revenue Code Section 501.)

EXISTING STATE LAW:

1. Provides that all property is taxable unless otherwise provided by the California Constitution or federal law. (California Constitution, Article XIII, Section 1.)
2. Authorizes the Legislature to exempt from taxation certain property that is irrevocably dedicated to religious, hospital, scientific, or charitable purposes, if the property is used for the actual operation of the exempt activity and is owned by a qualified nonprofit organization. (California Constitution, Article XIII, Section 4.)
3. Exempts property that is used exclusively for the preservation of native plants or animals, biotic communities, geological or geographical formations of scientific or educational interest, or open-space lands used solely for recreation and for the enjoyment of scenic beauty that are open to the general public subject to reasonable restrictions concerning the needs of the land. Property used for an eligible purpose that is owned and operated by a scientific or charitable fund, foundation, limited liability company, or corporation with the primary interest of preserving those natural areas and that complies with general requirements of the welfare exemption is deemed exempt. The exemption does not apply to property reserved for future development, and to a non-profit organization that owns more than 30,000 acres in a single county, if that nonprofit is not fully independent from the owner of adjacent taxable lands. This exemption is commonly referred to as the "natural resources and open-space lands welfare property tax exemption." (Revenue and Taxation Code (R&TC) Section 214.02.)

FISCAL EFFECT: The State Board of Equalization (BOE) estimates a property tax revenue loss of approximately $6.5 million.

COMMENTS:

1. The author has submitted the following statement in support of this bill:

For more than 40 years, the welfare tax exemption has proven an important tool in protecting habitat for some of California's unique flora and fauna, and for providing recreational opportunities and natural beauty to Californians. AB 1668 extends the property tax exemption for open lands from 2027 to 2033 so that land trusts can continue doing the important work of preserving and maintaining open space.

1. A collection of land trusts and environmental advocacy groups, writing in support of this bill, state, in part:

Existing property tax law has acknowledged the value of this charitable service since 1971, affording these lands with an exemption from property taxes. This exemption has allowed non-profit organizations to focus their limited funds on the long-term stewardship of these important lands, and in many cases on providing the public with educational programs not offered anywhere else.

1. Committee Staff Comments:
   1. Preserving legislative history: The natural resources and open-space lands welfare property tax exemption was enacted by the Legislature in 1971. Specifically, the enactment of this exemption arose from a report issued by this Committee in 1970. According to the opinion issued by the appellate court in the case of Santa Catalina Island Conservancy v. County of Los Angeles (1981):

The legislative history behind the enactment of [R&TC] Section 214.02 is clear. In 1970, the Assembly Committee on Revenue and Taxation held hearings and conducted studies to investigate alternative tax policies which would have a positive environmental influence on the future of the state. The staff report to the committee concluded that, due to an over-reliance on property tax revenues, local governments were reluctant to preserve open space areas, recreational areas, and ecologically valuable areas. […] Among the conclusions reached in the staff report was the following: "The property tax exemption provided under existing welfare exemption should be broadened to include environmentally oriented nonprofit organizations that are preserving ecologically valuable areas."^[1]

The exemption was limited to non-profit organizations engaged in eligible conservation activities. An analysis by this Committee of AB 703 (Gordon), Chapter 575, Statutes of 2011, states that according to staff at the BOE:

[T]he intent of the original legislation enacting R&TC Section 214.02 was to assist nonprofit organizations that purchased open-space and similar lands, held the lands temporarily, and then sold or donated the lands to public agencies for permanent use as park facilities. A sunset date was included in the original legislation as a result of a Senate Revenue and Taxation Committee hearing to ensure that the charitable organizations sold or donated the lands rather than hold them indefinitely. Since that time, it appears that many charitable organizations may be the permanent owners of lands due, in part, to the limited ability of public agencies to acquire additional parklands.

This exemption has been extended numerous times over the course of its 50 years in operation, with the latest extension occurring in 2021 to the current inoperative date of January 1, 2027.

• 1. This bill: As currently drafted, this bill would simply extend the existing inoperative and repeal dates for the natural resources and open-space lands welfare property tax exemption by five years, to January 1, 2032 and January 1, 2033, respectively. There are no other proposed changes to existing law in this bill.
  2. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, United States Treasury officials began arguing that these features of the tax law should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each of them (in the form of forgone revenues). This bill would extend an existing property tax expenditure under the welfare exemption, thereby constituting a tax expenditure.
  3. Committee's tax expenditure policy: SB 1335 (Leno), Chapter 845, Statutes of 2014, added R&TC Section 41, which recognized that the Legislature should apply the same level of review used for government spending programs to tax credits introduced on or after January 1, 2015. AB 263 (Burke), Chapter 743, Statutes of 2019, extended the requirements in R&TC Section 41 to all tax expenditure measures under the Personal Income Tax Law, the Corporation Tax Law, and the Sales and Use Tax Law introduced on or after January 1, 2020. This Committee's policy is to treat all tax expenditures similarly, and requires that all proposed property tax expenditures likewise comply with R&TC Section 41.

A tax expenditure proposal must outline specific goals, purposes, and objectives that the tax expenditure will achieve, along with detailed performance indicators for the Legislature to use when measuring whether the tax expenditure meets those stated goals, purposes, and objectives. In addition to the R&TC Section 41 requirements, this Committee's policy also requires that all tax expenditure proposals contain an appropriate sunset provision to be eligible for a vote^[2]. Sunsets are required because eliminating a tax expenditure generally requires a 2/3^rd vote. These requirements must be satisfied before a bill can receive a vote in this Committee. This bill contains a five-year sunset, but does not comply with the requirements of R&TC Section 41.

• 1. Prior legislation:
     1. SB 825 (Committee on Governance and Finance), Chapter 433, Statutes of 2021, extended the natural resources and open-space lands welfare property tax exemption by five years to the existing inoperative date of January 1, 2027, and repeal date of January 1, 2028.
     2. AB 703 (Gordon), Chapter 575, Statutes of 2011, extended the natural resources and open-space lands welfare property tax exemption by ten years.

REGISTERED SUPPORT / OPPOSITION:

Support

California Council of Land Trusts

Center for Natural Lands Management

Feather River Land Trust

Land Trust for Santa Barbara County

Mendocino Land Trust

Placer Land Trust

Redwood Coast Land Conservancy

Siskiyou Land Trust

The Trust for Public Land

Western Alliance for Nature

Opposition

None on file

Analysis Prepared by: Harrison Bowlby / REV. & TAX. / (916) 319-2098

1. Santa Catalina Island Conservancy v. Cty. of L.A., 126 Cal. App. 3d 221, (1981), 237-238. ↑

2. An "appropriate sunset provision" shall mean five years, except in the case of a tax expenditure measure providing relief to California veterans, in which case "appropriate sunset provision" shall mean 10 years. ↑