Report to Mayor and City Council
Tuesday, June 04, 2024
Consent
SUBJECT:
Title
CONSIDER TAKING A POSITION OF OPPOSITION AND SENDING A CORRESPONDING LETTER REGARDING SENATE BILL 1164, THE PROPERTY TAX EXCLUSION FOR NEWLY CONSTRUCTED ACCESSORY DWELLING UNITS (CITY COUNCIL)
Body
I. SUMMARY
This item transmits a request for City Council to consider taking a position of opposition and sending a corresponding letter regarding Senate Bill 1164. The proposed letter is included as Exhibit 1 and the Bill Analysis is included as Exhibit 2.
The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, "full cash value" is defined as the assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value" or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred.
This bill would exclude from classification as "newly constructed" and "new construction" the construction of an accessory dwelling unit, as defined, if construction on the unit is completed on or after January 1, 2025, and before January 1, 2030, until one of specified events occurs. The bill would require the property owner to, among other things, notify the assessor that the property owner intends to claim the exclusion for an accessory dwelling unit and submit an affidavit stating that the owner shall make a good faith effort to ensure the unit will be used as residential housing for the duration the owner receives the exclusion.
According to a coalition of local government organizations, "SB 1164 would negatively impact local government property tax revenue by exempting newly constructed accessory dwelling units (ADUs) from property tax assessment, if certain conditions are met. Since 2018, there have been year over year increases in the number of newly permitted and constructed ADUs throughout the state. Accord...
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