Property taxation: new construction exclusion: accessory dwelling units.
The implementation of SB 1164 will likely relieve property owners who build ADUs from increased tax burdens for a specified duration. However, it also introduces obligations for property owners, including the requirement to notify county assessors of their intent to claim the exclusion and to maintain residential use of the unit. Furthermore, local agencies will not receive reimbursement for property tax revenues lost due to this exclusion, which may lead to concerns over funding for local services. The bill aims to balance housing development incentives with the financial implications on local governance.
Senate Bill 1164, introduced by Senator Newman, seeks to amend the Revenue and Taxation Code to provide a property tax exclusion for newly constructed accessory dwelling units (ADUs) completed between January 1, 2025, and January 1, 2030. The bill aims to exempt such properties from classification as newly constructed, thereby impacting the ad valorem tax limitations that generally cap property taxes at 1% of the full cash value. This exclusion is intended to promote the establishment of additional housing options within California, as housing supply becomes a growing concern in the state. The duration of this exclusion will last until certain conditions are met, such as a change in ownership or conversion of the unit to non-residential use.
Discussion surrounding SB 1164 exhibits a mixture of support and concern. Proponents argue it will enhance housing availability and affordability by incentivizing the construction of ADUs, thus addressing significant housing shortages. Conversely, opponents raise issues regarding the implications for local revenue and governance, emphasizing the financial repercussions local agencies might experience without state reimbursement for tax revenues lost due to the bill's provisions. Ultimately, the sentiment remains polarized, reflecting broader tensions between housing development priorities and local financial autonomy.
Key points of contention arise primarily from the lack of reimbursement for lost property tax revenues for local agencies and school districts, contrasting with existing state mandates that require reimbursement for other types of cost increases. Critics argue the bill could place additional strain on local resources, while supporters emphasize the necessity of facilitating housing development in response to California's ongoing housing crisis. The bill's stipulation that the exclusion remains effective only until specific events occur also raises questions about its long-term viability and impact on local policy.