SB 592: Property tax: change in ownership: residential rental property.

The California Constitution limits the maximum amount of any ad valorem tax on real property to 1% of the full cash value of the property, and defines full cash value for these purposes to mean the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred, as provided. Existing property tax law requires the reassessment of real property upon a change in ownership and specifies what transfers of property do and do not constitute a change in ownership and excludes from a change in ownership, and hence from reassessment, certain transfers. Among these excluded transfers, existing property tax law provides that certain transfers of mobilehome parks to a nonprofit corporation, stock cooperative corporation, limited equity stock cooperative, or other entity formed by the tenants of a mobilehome park if specified conditions are met, including that the individual tenants who were renting at least 51% of the spaces in the mobilehome park prior to the transfer participate in the transaction through the ownership of an aggregate of at least 51% of the voting stock of, or other ownership or membership interests in, the entity which acquires the park.

This bill would provide that a transfers transfer of a real property containing dwelling units occupied by tenants to a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or limited equity housing cooperative, limited-equity housing cooperative, as defined, formed by the tenants of the real property for the purpose of purchasing the real property at which they reside, provided that the individual tenants who were renting at least 51% of the units in the real property before the transfer participate in the transaction through the ownership of an aggregate of at least 51% of the voting shares or membership interests in the entity that acquires the real property, as specified, is not a change in ownership. The bill would also provide that a transfers transfer of a real property containing dwelling units occupied by tenants to a community land trust, provided that at least 51% of the tenants who resided at the property at the time of transfer have signed a petition or other statement expressing support for the purchase of the real property by the community land trust, as specified, is not a change in ownership. The bill would exempt the petition from public disclosure. The bill would require a community land trust utilizing the above-described exclusion to indicate that use on a preliminary change of ownership report or change in ownership statement filed with the county recorder. The bill would authorize the county counsel to require a limited-equity housing cooperative claiming the above-described exclusion to provide specified documentation, including the Articles of Incorporation of the limited-equity housing cooperative. By adding to the duties of local tax officials with respect to the determination of whether a change in ownership has occurred for purposes of taxing real property, the 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.