Last week on Sept. 22, California enacted S.B. 1115, doubling the state’s existing cap on property tax exemptions for non-publicly financed low-income housing.
The bill provides that effective Jan. 1, 2019, property tax owed on the first $20 million of assessed value will be exempt. In order to qualify, however, the property must be owned and operated by a nonprofit organization where low-income households occupy 90 percent or more of the property.
Conversely, the property tax exemption for publicly-financed housing is unlimited and remains unaffected by S.B. 1115. This category generally includes property backed by government grants, bonds, and credits. Though both housing types are intended to service low-income residents, non-publicly financed affordable housing is subject to more requirements. For example, the nonprofit owners must certify that any savings resulting from application of the exemption is used to keep their housing affordable or reduce the rent charged to their tenants. Further, these non-publicly financed housing owners must submit a claim disclosing: the actual household income of their occupants; the maximum rent that may be charged to the occupant; and the actual rent charged to the occupant.
Text from the bill’s Assembly Floor Analysis identifies a likely reason for the higher standard on non-publicly financed housing—asserting that publicly-financed housing would “at least be subject to some level of government oversight,” perhaps suggesting less potential for exploitation or maintenance abuse.
S.B. 1115 notably cites California’s “serious shortage of affordable, decent, safe, and sanitary housing for persons and families of low income” as the impetus for its property tax exemption expansion; a conviction echoed by its author, Sen. Jerry Hill (D), whose constituents reside in the costly and densely populated Bay Area. Should this plan to encourage more housing find success, state legislators have not ruled out revisiting the cap once again.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Do you think California’s exemption expansion has the potential to encourage nonprofits to build more affordable housing?
Get a free trial to Bloomberg Tax: State, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)