December 05, 2013
LAWT News Service
Jerome E. Horton, Chairman of the California State Board of Equalization (BOE), and his board colleagues, recently acted to help preserve some low-income housing projects across California. The Board approved legal annotation which clarifies that low-income housing properties subject to “payment in lieu of taxes” (PILOT) agreements may still be able to qualify for a property tax exemption. PILOT agreements are made between developers of low-income housing and local governments.
“Hundreds of low income developments were at risk of losing their finances and millions in back property taxes.” Chairman Horton said. “Without the welfare exemption, affordable housing would virtually be halted in California. Our action will preserve affordable housing for seniors and others who need the help the most.”
The Board concluded that the developers can enter into a PILOT agreement as long as the fees associated with the Pilot agreement serves to further the intended purpose of the affordable housing program. Chairman Horton added “If this fee is found to be a tax and not benefiting the Affordable Housing community and residents, the welfare exemption can be revoked.”
The Board of Equalization is responsible for determining if the nonprofit organization is eligible under one of the four qualifying purposes (religious, scientific, hospital, or charitable) to receive an Organizational Clearance Certificate. This certificate allows the nonprofit to apply for property tax exemption. Then, a county assessor decides if that organization’s property qualifies for the exemption based on the property’s specific use.
California is among the nation's most expensive, especially due to the high cost of housing, which trails only Hawaii and New York. While California's poverty rate was just 18th highest among the 50 states, poverty remains an issue. When extending poverty measures to take into account families and individuals that are not reflected in standard poverty rates, California had the nation's highest "supplemental poverty measure" from 2010 and 2012, at 23.8% versus 16% nationally, according to a recent report from the Census Bureau.
“Protecting low-income housing for qualified California’s residents is ultimately beneficial for all of us.” Horton concluded.