Assembly Standing Committee on Revenue and Taxation

Wanna say good afternoon and welcome to the hearing on the Assembly Committee on Revenue and Taxation. I have my little gavel. Okay. Pursuant to Assembly Rules 77.2, we are hearing bills that are that are substantially have been amended by the Senate. We have three items before us on our agenda today.

Those bills are as follows. File item number 1, AB 672, Colosa. File item number 2, AB 760, ta. File item number 3, AB 1519 by Gibson. Madam secretary, I think we have oh, I guess I can

do before we

do we do now?

The announcement about Mister Giselle.

Miss McKenna is not what she's absent today. So filling in for, miss McKenna will be, Mister Mark Gonzales. And we wanna say thank you very much for being here and welcome. Thank you. With that, madam secretary, please call the road to establish a quorum.

Gibson?

Here.

Gibson here. Sanchez? Hello. Carrillo? Here.

Carrillo here. DeMio? Mark oh, Mark McKinner? I mean, Mark Gonzales. Mark Gonzales here.

Court Silva. Michelle Rodriguez. Michelle Rodriguez here. We have a quorum. Oh, Mister DeMio here.

Yes, sir.

A quorum have been established. With that being said, our first item before us, again, is File Item number 1: AB 672 by Ms. Caloza. Please have a seat at the desk, and your witnesses are free to join you. Want to let your primary witnesses know you have two minutes each for your testimony. And Ms. Caloza, you may begin when ready. Thank you.

Thank you so much, Mr. Chair and members. AB 672 is a simple, straightforward bill that extends a much-needed tax exemption to assist in the making or refurbishing of low-income housing. Habitat for Humanity benefits from a similar exemption that supports the construction of affordable homeownership, and the exemption in AB 672 provides similar support for Community Land Trust projects, both rental and homeownership, that cannot be supported by the traditional tax exemption.

The existing statute provides that if a Community Land Trust granted this exemption, must repay the exempted taxes if the property was not developed or rehabilitated or if the development or rehabilitation is not in the course of construction within five years. As such, the county only forgoes property taxes when the CLT delivers on the promise of creating new affordable housing or preserving existing affordable housing. The cost to counties varies directly in proportion to the benefit provided.

Since the introduction of this exemption, CLTs have been able to build or refurbish 101 units of low-income housing, only costing the state less than $400,000 over the last five years in tax exemptions. While the total number of units supported are modest, the tax savings have a significant impact on the viability of CLT projects given the overall limited financing available to support these CLT projects.

Recent conversations show that both CLTs and assessors need continued education to understand the availability and use of this exemption, and the more to use, the easier it will be to use in the future, and hopefully, this impact will grow. With that, I'm gonna introduce our witness, Dani Kaiser, who represents Community Land Trust.

Thank you very much. You have two minutes.

Thank you, Assembly Member. Hello, Chair and members. Dani Kando-Kaiser, on behalf of the California Community Land Trust Network, the sponsors of AB 672, which will extend the sunset of a successful existing policy which supports CLTs to provide much-needed affordable housing. CLTs are community-controlled nonprofit organizations that steward land to provide permanently affordable housing and community facilities, housing thousands of low-income Californians. Today, there are 50 emerging and established CLTs in California in all regions of the state.

CLTs put affordable homeownership and rental opportunities in reach of low and moderate-income households. While other forms of affordable housing place income restrictions on their properties which expire after some period of time, CLTs keep properties permanently affordable. AB 672 will extend the sunset of an existing policy that exempts CLTs from property taxes while those properties are undergoing or pending construction or rehabilitation for up to five years before they become habitable as affordable homes.

This is the only pathway available to CLTs constructing or rehabilitating new affordable homeownership units and it's essential to our ability to expand homeownership opportunities. This policy was initially passed in 2019 under Senator Beall, and it was extended in 2022 with Assembly Member Petrie-Norris.

Both of those bills faced no opposition and had bipartisan support. Since the original law went into effect in 2020, the policy has proven to be an invaluable tool, as Assembly Member Caloza stated. Without legislative action, this policy will sunset on January 1st of this coming year, increasing housing costs and making more-- some projects financially infeasible. We ask for your aye vote. Thank you.

Thank you very much. Anyone in the room wishing to speak in support of this measures, please come to the microphone; your name, organization, and this is support. Hearing and seeing no one approaching, primary opposition to this measure, you have the same right to come and speak and-- okay. Seeing no one, wanna bring it back to the dais. It's been moved and properly moved. It's been moved by Ms. Rodriguez. Second by Mr. Gonzalez. Thank you very much. You may close, Ms. Caloza.

Thank you, Mr. Chair. Respectfully ask for your aye vote. Thank you.

Thank you very much. Madam Secretary, please call the roll.

The motion is recommend concurrence in Senate amendments. [Roll call]. That's five. One, two, three, four--five/zero. Passes.

That bill is-- that bill is out, five/zero. Thank you very much. Next, we have File Item Number 2: AB 760. Mr. Ta, how are you? Good to see you, former vice chair. You may begin when ready.

ThankSo much. Good morning, Chair and members. As many of you know, last May, a few months ago, my district was nearly devastated by a chemical leak that forced more than 50,000 resident from their homes. AB 760 was amended in the Senate to provide tax exclusion for settlement from this incident.

California has provide this exclusion for declared emergencies in the past. I'd like to introduce my witness, Nicole Wortleman with appreciation advocacy, who represent Orange County Board Supervisor.

Thank you very much. To your witness, you have two minutes. You may begin ready.

Okeydoke. Nicole Wortleman on behalf of the Orange County Board of Supervisors here in strong support of AB 760. On May 21, a chemical incident at the GKN Aerospace Facility in Garden Grove created the threat of a of a catastrophic explosion and ultimately forced the evacuation of more than 50,000 Orange County residents. Families were displaced from their homes, businesses forced to close, and communities throughout Garden Grove, Stanton, Westminster, and surrounding areas were significantly disrupted.

For many residents and businesses, the evacuation also resulted in very real financial losses, including temporary housing expenses, lost wages, transportation costs, business interruptions, and other costs associated with being forced from their homes and workplaces.

AB 760 provides a straightforward and important form of relief. The bill ensures that settlement payments intended to comp to compensate those affected by this emergency are not treated as taxable income by California. These settlements are intended to help residents and businesses recover their losses and restore some measure of financial stability following an extraordinary events. Taxing those payments would reduce the resources available for that recovery and undermine the basic purpose of the compensation.

California has recognized this principle following other declared disasters by excluding qualifying settlement payments from taxable income.

A B 760 appropriately extends that same treatment to Orange County residents and businesses impacted by the Garden Grove chemical incidents. The Orange County Board of Supervisors believes individuals receiving compensation for losses associated with this emergency should be able to retain the maximum practical benefit of those funds for their recovery. We thank Assembly member Ta for bringing this measure, and we would urge an iPhone.

Thank you very much. Anyone in the room wishing to speak and support you, please come to the microphone, your name, organization, seeing none. Primary opposition, hearing and seeing none on this measure. I'm gonna bring it back to the dias.

It's been

moved by Mister De Maio. It's been seconded by miss Sanchez, madam secretary. Oh, please forgive me. Mister Todd, you have the, right to close, so please

go for it. The Chair and the committee staff, that you are amazing. You worked with my office early on, this bill and all that all the detail that really help, help my bill is very strong. And so, this is really important, to me and everyone in my district, and I respectfully ask you for the echo.

Thank you very much. It's already been properly moved moved and seconded. The motion is is to recommend a concurrence in the Senate amendments. Madam secretary, please call the row.

The motion is recommend concurrence in Senate amendments. Gibson?

Aye.

Gibson, aye. Sanchez? Aye. Sanchez, aye. Carrillo?

Aye. Carrillo, aye. Demile. Demile, aye. Mark Gonzalez?

Mark Gonzalez, aye. Quirk Silva? Michelle Rodriguez. Michelle Rodriguez, Aye. That is 60.

That bill is out six zero. Thank you very much. We have our last and final bill, and I will be presenting. And I'll turn the gavel over to vice Chair Sanchez.

She's got it. She's got it.

Assemblymember, please begin when you're ready.

Thank you very much. Thank you very much, vice Chair Sanchez, for taking the gavel while I present Assembly bill 1519. While the tax administration can be complicated, the concept of the statute of limitation is simple. For many years, no statute of limitations exist on the collections of an income or franchise, tax delinquents at the state level. However, beginning in 2006, a statute of limitations on the FTB collections actions went into effect despite the twenty year statute of limitations being codified in statute.

The clock is reset reset anytime the f t FTB imposes a fee or penalties or interest. This, undercuts the whole point of having a statute of limitations. Assembly bill 1519 provides that once the underlying tax liability becomes due and payable, the let the limitations period begins to run. And subsequently, the fees and charges do not re restart the clock. Putting it simple, this bill would create an actual twenty year statute of limitations, not one that the FTB can extend.

However, whenever a new fees or penalties are imposed, this bill will not result in any significant revenue loss, to the state because these amounts are not actually collectible in this particular case. I wanna say, thank you for your consideration and urge, support on AB 1519. Here with me to provide supporting testimonies, well capable individuals representing the California Society of Enrolled Agents, they will both self introduce, madam Chair. Your

witnesses may proceed.

Jennifer Tannehill with Erin Reed and Associates on behalf of the California Society of Enrolled Agents. CSEA is pleased that the legislature, FTB, and stakeholders worked on this solution to provide certainty to taxpayers while continuing to allow an extended window for FTB to collect. There's just two things I wanna make note of. The definition of tax in the bill relates only to specifically the sections in the bill and does not affect the definition of tax elsewhere.

And then also of note, the IRS is allowed ten years to collect tax liabilities where California affords the FTB twenty years to collect.

So we think this is a reasonable bill, and we ask for your aye vote. Thank you.

Good afternoon, madam Chair. Missy Johnson on behalf of the California Society for Certified Public Accountants. AB 1519 addresses ambiguity and current law that creates challenges for current tax practitioners, helping taxpayers resolve their liabilities, and moving them into compliance. It's that simple, and that's why we're happy to support.

Thank you.

Is there any one additional press support? Okay. Are there any additional people in the room that would like to express opposition? Questions or comments from the committee?

Second.

Okay. Chair Gibson, would you like to close?

Yes. We respectfully ask when I vote. Thank you very much.

Perfect. Motion by Rodriguez, second by Carrillo.

The motion is to recommend concurrence in Senate amendments. Gibson? Aye. Gibson, aye. Sanchez?

Aye. Sanchez, aye. Carrillo?

Carrillo, aye. DeMile? Thank you. DeMayo, Aye. Mark Gonzalez.

Aye.

Mark Gonzalez, Aye. Quirk Silva, Michelle Rodriguez. Michelle Rodriguez, Aye. That vote is six zero. Bill's out.

Thank

you, DeMayo.

Yes. I know. Maybe what? The vote is six.

The vote is six o. That bill is out.

we're gonna go back and catch you.

And then

What do you mean?

That's what miss Diana does.

We're gonna madam secretary, please open the row for absent members and

On a b

On a b k. Six seventy two, please.

Sanchez. Sanchez, Aye, Quirk Silva. Okay. Unless you wanna wait for miss Quirk Silva.

We'll keep the roll over for five more minutes for absent members. Madam secretary, please call please open the a row for the absent members. Item number 0. Item number 1, a B672. Colosa.

Quirk Silva? Aye. Quirk Silva, Aye.

Item number 2, AB760 ta.

Quirk Silva. Quirk Silva, Aye.

Item number 3AB1519Gibson.

Quirk Silva. Aye. Quirk Silva, aye.

Thank you very much, miss Quirk Silva. So that completes all the items best before the revenue taxation committee. We stand adjourned.