SB 196—a new law passed in state legislature last month—is the latest tool to bring more affordable housing to the market. The main feature of the bill gives a property tax exemption to community land trust affordable housing developments, but there are several built in benefits to the bill that will aid in bringing and keeping affordable housing in the market.
The new bill protects affordable housing by separating for-sale and for-rent product to protect low-income families in each group. "We bifurcated the bill on rental properties to limit the exemption of the bill to a certain income level, but on for sale properties, it rises up to a higher income level," Mark Asturias, executive director of Irvine Community Land Trust, tells GlobeSt.com. "That allows us to help more working families at different incomes here. So, there are good trade offs here. We are trying to show and help the state understand that this is another tool in the toolbox for affordable housing. This is one more way to get it accomplished in the state of California."
The bill also addresses the property taxes of the future homeowners. "This bills set a way of assessing homes that are occupied by families that meet income-qualifying requirements," explains Asturias. "So, if the home is affordably priced and sold to a family that meets all of the income qualifying requirements, this bill provides a methodology to tax the home based on the purchase price. The home is taxed at one value, and it is the affordable value, not at the market rate value. We found that very important because all of our homebuyers agree to buy these homes with resale restrictions so that it stays affordable in perpetuity."
This is one of several new incentives federally and locally that are intended to spur housing growth. The opportunity zone model is a similar tool, which offers an exemption from capital gains tax. However, Asturias says there are limited opportunities to layer benefits. "Those are few and far between. There may be opportunities for that in some parts of the state, but for our particular land trust, there isn't an overlap that we can use," he explains. "So, again, because there aren't opportunity zone tools in this market that will give us other benefits, this is the limited benefit that we do have to move affordable housing forward for working families."
SB196 has a limited five-year term, but Asturias believes the benefits are real. His next goal is to illustrate those benefits to the state. "This bill is limited to a five-year term. We have to prove that this bill will produce housing that is affordable," says Asturias. "Our goal is to show how this bill allowed us to build these projects, and we are going to show that information to the state legislature. We are hoping that within that five years, if we are doing what this bill is setting out to accomplish, they will remove the sunset clause and allow this to be a permanent law."
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Kelsi Maree Borland
