With the year’s legislative session starting anew, Bay Area lawmakers are proposing laws designed to raise funding for local agencies joining the fight against California’s affordable housing crisis, or other areas of community interest.
With legislation just proposed, state Sen. Jerry Hill, D-San Mateo, is seeking to close a tax loophole which he claims property heirs are exploiting to the detriment of city and county budgets, while Assemblyman David Chiu, D- San Francisco, resurrected an effort to bring back redevelopment agencies.
Hill claimed his proposed Senate Constitutional Amendment 3 is necessary to prevent those who rent inherited properties from enjoying the lower tax rate passed down with the land. His legislation would give heirs a choice to live in the homes and pay a reduced tax bill, or rent the land and be required to pay a higher amount reassessed to the market rate.
“It is a common sense solution to a problem of unintended consequences,” said Hill, who was inspired to propose the bill after reading a newspaper article detailing the frequency with which heirs were renting properties with antiquated tax rates.
His proposal, which would require supermajority support from legislators and a majority vote of the electorate on the 2020 ballot, is designed to assure everyone is paying their fair share in taxes, Hill said. The legislation would only affect property transfers which take place following the new law’s approval.
“It is not going to take anything away from those who have already benefited,” said Hill.
Should it ultimately receive the signature of governor-elect Gavin Newsom, Hill suggested his proposal could be a boon for local agencies such as cities and counties potentially standing to receive a windfall of new tax dollars.
“I think we need to close that loophole that was created and protect local governments,” said Hill.
Looking ahead, Hill said discussions over earmarking the funds generated will likely develop as the bill takes shape through the new year’s legislative session. And while he believed the money could be an asset in addressing the housing affordability crunch plaguing the Bay Area and many parts of the state, he also suggested local agencies should enjoy the final say in allocating the revenue generated.
“Needs differ and I think it is better to have it go into the normal property tax allocation and allow cities and counties to decide how to spend that money,” he said.
Alternatively, revenue generated through the proposed re-establishment of local redevelopment agencies would be set aside for specific purpose, as Chiu’s initiative is intended to catalyze affordable housing development.
“Our bill is very focused only on building affordable housing,” said Chiu.
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Assembly Bill 11 is proposed to allow counties and cities to again create redevelopment agencies, which were taken away by outgoing Gov. Jerry Brown to bolster the state budget amidst the Great Recession.
Under the new legislation, which is similar to another unsuccessful proposal from Chiu last year, the agencies would be limited in their ability to allocate the funds raised to affordable housing construction. Chiu said the restrictions are designed partially to avoid some of the poor spending habits shown by redevelopment agencies before their dissolution.
And despite some of the abuses of the previous system, Chiu said California has not seen such a potent mechanism for financing construction since redevelopment agencies were abolished.
“While there have been recent efforts by the state to bring some funding back, none of those efforts have been robust as the significant funding that redevelopment gave in the past,” he said.
He noted the resurrected version of his bill also differs from its predecessor by allowing smaller jurisdictions to share revenue between agencies in an effort to incentivize partnerships and projects which may be too difficult for single city or county to finance.
Considering the amendments to make it more palatable for previous opponents, and with an incoming governor who has signaled a willingness to discuss again allowing redevelopment agencies, Chiu said he optimistic the measure will be successful.
“I feel this is the right time to move this conversation forward,” he said.
Assemblyman Kevin Mullin, D-South San Francisco, shared in an email a similar sentiment for the effort which he has steadfastly backed since its introduction as a means of battling the housing crisis.
“AB 11, includes a robust housing and infrastructure component and also creates numerous safeguards to prevent the misuse of funds. Local governments need as many tools as they can access to address the issue. I believe that re-designed redevelopment agencies can be an essential tool in addressing this crisis going forward. I look forward to working with my colleagues and governor-elect Newsom to find as many solutions as we can.”
Looks like SOMEBODY needs to step up for Jerry Hill. I guess it's me. In our SSF neighborhood, a grouping of single-family homes in a 1950's neighborhood, we have lots of homes on our one-block portion of Serra Highlands that are exactly as Jerry Hill describes: Homes that were left to the children of our deceased neighbors who now rent them out to the highest bidder. Only one, that I know of, is inhabited by an heir. The others are inhabited by multiple renters who take up all of our parking spaces and have no commitment to our block whatsoever. A very sad situation for our neighborhood, but I'm sure the heir/landlords are jumping for joy every month as their rent checks roll in. I think it's time for the remaining homeowners up and down the Peninsula to stand up with Jerry Hill and say: NO MORE!
Put it up for a vote and let only property owners who are affected vote. These families have been paying property taxes on these homes for 60+ years. What about that fact. Our politicians are just looking for more and more money to pay for their failing policies. Now you know why your the only one standing up for Jerry.
Civilized? Hardly! Laws aren't enforced around here; we have more crime in this country than anywhere. Been to San Fransico lately? Have you seen the human and trash filth and crime there? It is the toilet bowl of the country...
This is a terrible idea, the taxes will be passed through to renters and make housing less affordable. This will most likely lead to the end of mom and pop landlords. The only landlords will be the large REITs (Essex, Avalon, etc.). REITs need to go after valuations, so are willing to have empty apartments. So adjust Costa Hawkins to allow local governments to pass vacancy ordinances and charge fines for empty units owed and/or managed by the large REITS (exclude mom and pops, 5 or less units ). We need more competition not less.
Perhaps a better solution would be to find a way to tax the debt in excess of the original construction debt (refinancing at a lower rate, improvements that specific property, OK), since most of the debt at this point is to pay investors or make acquisition, and not part of providing housing.
Why should private investors be punished for taking risks and earning money? It's not a crime to have a profit motive - well, maybe in today's Caifornia.
While it would be a challenge to drum up sympathy for the beneficiaries of SCA 3 it is another step, along with the split assessment roll being pushed in Sacramento, to dismantle the protections property owners receive under Prop 13. My guess is that within the coming decade we have a strong push to eliminate Prop 13 in its entirety.
Property owners would be well advised to pay close attention to the momentum building up in Sacramento or soon we will not only have some of the highest income taxes and sales taxes in the country but also the highest property taxes.
way to go Jerry- looking for ways to tax your constituents. I was wondering when you would join the fray of your socialistic comrades against long term families and residents. Please remember this next time Mr. Hill runs for anything in our area. We will remember this when we don't vote for you next time Jerry, you have turned into one of these despicable politicians looking for more and more money.
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(10) comments
Looks like SOMEBODY needs to step up for Jerry Hill. I guess it's me.
In our SSF neighborhood, a grouping of single-family homes in a 1950's neighborhood, we have lots of homes on our one-block portion of Serra Highlands that are exactly as Jerry Hill describes: Homes that were left to the children of our deceased neighbors who now rent them out to the highest bidder. Only one, that I know of, is inhabited by an heir. The others are inhabited by multiple renters who take up all of our parking spaces and have no commitment to our block whatsoever. A very sad situation for our neighborhood, but I'm sure the heir/landlords are jumping for joy every month as their rent checks roll in.
I think it's time for the remaining homeowners up and down the Peninsula to stand up with Jerry Hill and say: NO MORE!
Put it up for a vote and let only property owners who are affected vote. These families have been paying property taxes on these homes for 60+ years. What about that fact. Our politicians are just looking for more and more money to pay for their failing policies. Now you know why your the only one standing up for Jerry.
Taxation isn't "revenue" - it's theft.
You Libertarians are a riot. Taxation isn't theft, it's the price we pay to live in a civilized society.
Civilized? Hardly! Laws aren't enforced around here; we have more crime in this country than anywhere. Been to San Fransico lately? Have you seen the human and trash filth and crime there? It is the toilet bowl of the country...
This is a terrible idea, the taxes will be passed through to renters and make housing less affordable. This will most likely lead to the end of mom and pop landlords. The only landlords will be the large REITs (Essex, Avalon, etc.). REITs need to go after valuations, so are willing to have empty apartments. So adjust Costa Hawkins to allow local governments to pass vacancy ordinances and charge fines for empty units owed and/or managed by the large REITS (exclude mom and pops, 5 or less units ). We need more competition not less.
Perhaps a better solution would be to find a way to tax the debt in excess of the original construction debt (refinancing at a lower rate, improvements that specific property, OK), since most of the debt at this point is to pay investors or make acquisition, and not part of providing housing.
Why should private investors be punished for taking risks and earning money? It's not a crime to have a profit motive - well, maybe in today's Caifornia.
Debt is not profit.
While it would be a challenge to drum up sympathy for the beneficiaries of SCA 3 it is another step, along with the split assessment roll being pushed in Sacramento, to dismantle the protections property owners receive under Prop 13. My guess is that within the coming decade we have a strong push to eliminate Prop 13 in its entirety.
Property owners would be well advised to pay close attention to the momentum building up in Sacramento or soon we will not only have some of the highest income taxes and sales taxes in the country but also the highest property taxes.
way to go Jerry- looking for ways to tax your constituents. I was wondering when you would join the fray of your socialistic comrades against long term families and residents. Please remember this next time Mr. Hill runs for anything in our area. We will remember this when we don't vote for you next time Jerry, you have turned into one of these despicable politicians looking for more and more money.
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