Assembly Standing Committee on Revenue and Taxation

Wanna say—wanna say good afternoon, and welcome to the hearing of assembly committee on revenue taxation. We will be operating as a subcommittee. Wanna go over a few, ground rules. I want to hope that everyone has had a great spring recess. First, I would like to remind advocates that the deadline for your position letter is one week prior to the hearing.

Please submit support or opposition letters through the legislative court to the, to the legislative portal. It's on the website. Also want to remind everyone that the committee has a suspense file. Surprise. You will find that information on our website for the rules will be, again, will be posted there.

In summary, bills will—with a revenue impact of more than 150,000, will not be eligible for a vote immediately after the, the presentation. Instead, will be referred to that suspense file. Accordingly, no bills on today's agenda will be eligible for a vote. So, all bills today will be eligible for the suspense file. So, we do not have a quorum as of yet, so we will hold off on that.

I'm establishing a quorum until one is reached, so we'll be acting as a subcommittee. And so, we will ask our first presenter. We noticed that we have Assemblymember Nguyen here, so we will proceed with Assembly Bill 1606. Ms. Nguyen, you may approach and please have a seat. Your witnesses are present.

We will remind the witnesses you have two minutes each. And Ms. Nguyen, you may present when ready.

Thank you, Mr. Chair and members. I'm proud to present 1606, an important bill that supports small businesses that are dealing with cleanup costs they didn't create and May.

If you can bring the microphone a little closer to you.

May is small business month. So, what a perfect time to present this bill. This bill creates a five-year tax credit from 2027 to 2032 of up to $20,000 per year to help cover cost tied to illegal dumping, encampments, and abandoned property. These are real costs. Business owners are spending thousands of dollars just to keep their properties clean, safe, and open.

Some of these expenses can be deducted today, but that doesn't go very far when the costs keep coming back. This bill provides more direct relief. The credit is targeted. It covers cleanup costs like waste removal, sanitation, and repairs from damages. It does not cover ongoing maintenance, wages, or permanent upgrades.

It is also capped and time limited. This builds on work we introduced last year with updates to make sure it is more focused and more workable. Mr. Chair and members, we are committed to continuing to work with the committee on any amendments needed to strengthen the bill and make sure it works as intended. At the end of the day, this is about helping businesses deal with costs they should not be carrying on their own. With me is Audrey here on behalf of California Business Property Association.

Thank you very much. You have two minutes.

Thank you. Good afternoon, mister chair and members. Audrey Retajczyk from Cruise Strategies on behalf of the California Business Properties Association, and we're the proud sponsors of AB 1606.

We thank you to the committee for your continued work on this issue, and we appreciate the appoints raised in the analysis and look forward to continuing to work through them as the bill moves forward. Recent court decisions have led to increased enforcement in public spaces, which has pushed encampments in illegal dumping into private commercial properties. As a result, businesses, particularly small businesses and small mom and pop property owners, are now routinely forced to cover their costs of cleanup, including waste removal, property damage, and ongoing security.

These are reoccurring costs that many simply cannot absorb. AB 1606 provides a five-year tax credit covering 100% of those cleanup expenses, and it's a targeted practical solution that helps keep property safe, support small operators, and stabilizes commercial corridors.

So, we respectfully ask for your aye vote. Thank you.

Thank you very much. Any witnesses in the room wishing to speak in support of Assembly Bill 1606? Please line up. Your name, your organization, and this is support only.

Amber Madison, California Apartment Association, in support.

Thank you.

Megan Shumway from Arden Arcade, in support.

Thank you. Hearing and seeing no one else wishing to lodge their support for Assembly Bill 1606, any primary opposition to 1606 in the room, we invite you to come up. Hearing and seeing none, wanna bring it back to the committee. Any questions from committee members? Hearing and seeing none, Ms. Nguyen, you may close if you wish.

Thank you, Mr. Chair and members. Really hope that we can continue to help small businesses during this time of small business month. As legislators, we need to do everything we can to assist them, especially now during these times. And when the time is appropriate, I hope that we can get this out and move this forward. Thank you, Mr. Chairman.

Thank you, members.

Madam—okay. Thank you very much. This bill is a suspense candidate and thank you very much for appearing. We'll move to file item number two, AB 1611, Haney. Don't see Mr. Haney.

File item number three, Mr. Tangipa, AB 1714. We will move to file item number six, AB 1971, Mr. Bennett. We understand Mr. Bennett is not here. Mr. Lee will be presenting on his behalf. Welcome.

Do you have any witnesses, Mr. Lee?

I do not think so.

Okay. You may proceed when ready.

Alright. So I will be I'll be presenting for assembly member Steve Bennett. This is AB 1971. California is at a tipping point, 14 of the 20 most destructive fires occurred within the last ten years. And last year's historic LA fires have shown us that property resilience is no longer optional, but is necessary.

AB 1971 directs the board equalization to clarify that home Harding retrofits are not accessible upgrades, meaning they won't result in higher property tax. Comprehensive home Harding, which includes installation of ember resistant siding, multi pane windows, and a fireproof roof, and more can cost upwards of a $100,000. This clarity from the department incentivizes Californians to take real steps to protect their home without fear their property tax will increase.

Respectfully, asked for IVA on behalf of Assembly member Steve Bennett.

Thank you very much. And you said you have no witnesses in support. Okay. Anyone in the room wishing to speak in support of Assembly Bureau nineteen seventy one, would you please line up? Need your name, organization, and this is support for Assembly Bureau nineteen seventy one.

Amber Madison, California Apartment Association in support.

Thank you.

Vanessa Chavez with the California Building Industry Association in support.

Thank you.

Maggie Chamois, Sacramento Three Fifty in support.

I'm sorry? Or any opposition to this measure in the room? Hearing and seeing none, bring it back to the committee.

Thank you very much. Seeing no one else wishing to speak in support of nineteen seventy one, any primary opposition to this measure?

Any members wishing to speak? Mister Lee, you may close on behalf of mister Bennett.

Respectfully ask that I vote when the time comes.

Thank you very much. This item will be referred to our suspense file. Thank you very much.

Mister chair, I do have a bill later in the file if I can present that one as well. My own bill.

You yourself?

Yeah. It's.

Are you presenting on behalf of someone else?

No. I have a bill that's for myself as well if I—if you don't have any other officer. It's AB 2394.

You may presume—you may presume your, on your on your own bill. AB 2394.

Alright. Thank you, Mr. Chair and colleagues. I understand that this bill is going to the committee's suspense file for consideration at your April 27 hearing. The, however, I wanna elaborate on this bill. This is a bill idea I had when I was a staffer over ten years ago.

When the idea that people have owned and lived in their homes for decades may be ready to downsize and move closer to their grandchildren or children, but they are reluctant to do so because of the capital gains tax that they would owe.

The analysis points out a number of valid concerns with the bill in print, and I will be submitting amendments while the bill is in suspense to address those concerns. The amendments would do the following: lower the homeowner age to 55 to be consistent with the Prop 19 Property Tax Transfer Law; require the owner to have lived in the home for at least two years of the of the prior five years; require the home to be sold to a natural person.

And we would keep the minimum twenty years of ownership and the five year sunset. We will also be adding Section 41 reporting language to have the number of homes sold using the exclus—exclusion—and the property tax assessment increases for the affected properties. The analysis notes that people sell their homes for all sorts of reasons, and it is unclear how the tax benefit in this bill would really impact that. It's a fair point.

However, I look at it this way, that for homes that have already been locked off the market for decades because people have raised their family but are ready to move on to their next phase of life, the bill provides an incentive for them to sell their home to the next owners who can raise and start new families.

To me, this—the estimated revenue loss is worth the benefit of opening up these locked up homes to re, to new owners and families. In, in short, this bill is about incentivizing older homeowners who perhaps need to move on, trade, trade downwards, or downsize so that new families can move in.

This is especially true in my district. We have population declines leading to school closures because there are not enough new families where it doesn't make financial sense for them to sell a home at $1,800,000 to buy a home at $2,000,000 right now. So, this is about alleviating working class families, trying to create more liquidity in the market, and try to also reset some of the property taxation clocks on some of the very old properties.

I will respectfully ask for your aye vote at the appropriate time in the next committee.

Thank you very much. Do you have any witnesses? No witnesses. Anyone in the room wishing to speak in support of AB 2394, would you please line up your name, your organization, and this is support?

Good afternoon. Amy Garrett with California Association of Realtors. Very much looking forward to supporting this bill once amended, as is proposed today, and thanking the author for early and ongoing discussion on the bill.

Thank you very much. Anyone else wishing to speak in support of 2394? Hearing none. Any primary opposition? Please have a seat, and you have two minutes.

Hi there. Danny Kando-Kaiser on behalf of the California Tax Reformers Association. I'll just be very brief. Sorry, if you can hear me over the noise. We will look at the amendments.

We, we just were seeing those today. We still think that there are many benefits to tax—to, to homeowners—and may still be opposed, but for now, remain opposed. Thank you.

Thank you very much. Anyone in the room wishing to speak in opposition to 2394, would you please step to the microphone, your name, organization, and this is opposition? Hearing and seeing none, bring it back to the to the dais. Mr. Lee, you may close.

Respectfully ask for an aye vote when the time comes, and a bill to try to increase liquidity and to devise families to have more home homeownership opportunities. Thank you.

And thank you very much. This bill will be referred, referred to our suspense file. Thank you, witnesses on both sides for appearing before this committee. Thank you very much. I'm gonna start with file item one. Sure.

Then I can read them.

Since we have a quorum that's established, we wanna start off by a vote. Oh, formally referring—formally referring to the committee to formally referring these bills to the suspense file. Starting off with file item number one, AB—AB 1606—went to the suspense file. File item number 2.

On that order. Okay. File item number 6, AB 1971, Bennett, presented by Lee, to the suspense file. File item 10, AB 2394, Lee, to the suspense file.

Alright.

Nope. We did that.

Okay. Alright. File item 3. Now we'll be hearing file item number 3, AB 1714, by Mr. Tangipa. And you may proceed when ready. Any witnesses?

Alright.

We've got a few bills, so I think a couple of our witnesses may be behind a little bit. So, I can just get started.

Okay.

You may proceed when ready. Your witnesses will catch up with you.

Perfect.

Well, thank you, Mister Chair and Members, and thank you to the committee staff who prepared the analysis for us and for their work on this. One thing prior to really getting into the bill, I just wanted to make thing one thing clear when I speak about CALHFA and to let everybody know what CALHFA actually is. It provides financing and down payment assistance to low to moderate income first time homebuyers in California.

Some of the key requirements include a minimum credit score of 660 to six eighty, meeting specific county income limits, taking a home buyer education course, and occupying the property as a primary residence. So when I'm speaking about CalHFA today and some of the credits on this bill, I want you to think about who this is going to specifically help.

My experience prior to coming here is I was a realtor, and my business was specifically focusing on helping first time homebuyers break generational poverty through home ownership. I grew up in low income housing. I targeted areas like North Highlands and the Central Valley because we could afford here. Most of my friends and other people and other colleagues that I have worked with qualify for CALHFA trying to break generational poverty simply through asset ownership.

So AB1714 creates a targeted personal income tax credit for sellers who complete repairs that are required to a first time buyer using CalHFA assistance.

This bill is not about cosmetic upgrades, optional remodeling, or rewarding ordinary home improvements. It is narrowly focused on repairs tied that create artificial scarcity for first time home buyers. A lot of people think when they see this built is that it's just a credit to sellers. But really, it's a negotiation tool to help people who are the most disadvantaged, qualify, and have a foot in the door. As a realtor who's helped so many qualify for this program, we were losing negotiations time and time again.

Because when a seller has multiple options to go with, they chose the easiest one for them. And when people are qualified for a CalHFA loan, you have to have requirements on certain repairs that need to happen. So the sellers would not even give us a chance. When that happens, the buyer loses the home. Not because they were unqualified, but because a required repair became the barrier to closing.

AB41714 helps keep those transactions together by offering a limited tax credit equal to 40% of the qualified rep qualified repair expenses capped at 25,000 per taxable year. This bill only applies to repairs that are required as a condition of financing. It excludes cosmetic repairs, renovations, landscapes, and aesthetic upgrades. It also includes a five year sunset on con and contains reporting language so the legislature can evaluate whether it is working.

This bill is about preserving access to homeownership for first time buyers who are already doing the right thing, working with approved financing, going through the escrow process, and trying to purchase a home they can afford.

If a seller is more willing to complete those required repairs and keep the transaction alive, that benefits the buyer in the most concrete way possible. The sale closes and the buyer, somebody who qualifies for one of the lowest income protection loans out there. The buyer gets to benefit from this type of repair. Lastly, I just want to quickly add that we have been working with the realtors on their concerns, and I look forward to continuing working with them.

Thank you very much. Do you have any witnesses speaking in support? I see a familiar face coming to speak in support. Do you wish to Thanks. Okay.

So you have no primary witnesses?

No. No. I think they're missing. Okay. They didn't make

any time. Anyone in the room wishing to speak in support of 1714, should please come to the microphones, state your name, your position, and this is support?

Thank you. My name is David Bullock. I'm representing the SMP Alliance, and I am in support, or we are in support. Thank you.

Thank you very much.

Good afternoon. Danielle Bautista, authorized on behalf of United Way of Fresno Madera Counties to share their support for AB1714. Thank you.

Thank you very much. Hearing

Thank you. Mister Chair and Members, Kobe Pizzotti, with the California Association of Realtors. We have concerns with the bill as it is in print because it has language addressing as a condition of closing or a part of the transaction. We've worked with the author and his staff, and we'd like to say thank you very much for working amendments out with us to take them while they're on while the bill's on suspense. And as soon as we see them print, we'll remove our concerns.

Thank you.

Okay. Thank you very much. Anyone in the room primary opposition to this bill, would you please come and take a seat so we won't get confused so we know exactly who's doing what? Thank you very much.

Good afternoon. Can you hear me? Okay. Good afternoon. Danny Kando-Kaisler on behalf of the California Tax Reform Association, nonprofit organization of labor, public health, education, and public interest groups, which advocates for fair taxes in the healthy public sector.

We must respectfully oppose the bill. We doubt whether the tax benefits proposed in the bill will provide real relief or improvement in first time home buyer buyers programs in this state. And it could have the disadvantage to those home buyers who, by obligating the buyer rather than the seller to make unnecessary repairs, which is usually part of a negotiated process. These home owners will have limited tax liability, which for working families with children is very low by design.

The DFA is a direct program of assistance, which is much more appropriate for funding for homebuyers' needs, including necessary repairs more so than a tax credit.

Thank you. We ask for a no vote.

Thank you very much. Anyone in the room wishing to express your opposition to this measure, would you please come to the microphone, name, your organization in opposition? Hearing and seeing none, wanna bring it back to the committee. Any members wishing to provide any comments to mister Tangipa? Hearing and seeing none, mister Tangipa, you may close if you wish.

Well, again, thank you, mister chair. And as an individual who's done over $20,000,000 in sales, helping those who are in the most disadvantaged, I know exactly who this would apply to. And this would give those who I started off by saying, a minimum credit score of 660, a home buying course, a specific first time home buyer who qualifies for CalHFA, the most disadvantaged loans that somebody can get to purchase a home.

This would give them the upper hand in negotiations when it comes to speaking to these sellers and give us the ability to really sell them to help break generational poverty. That is what this bill is.

It specifically is applied to CalHFA. And in my personal experience, I have seen plenty of first time homebuyers lose out on great homes simply due to the required repairs. And AB1714 is a simple way to get rid of the artificial scarcity in the home market for first time homebuyers, and I respectfully ask for your eye vote.