Don’t Miss the Upcoming California Deadline
California’s property tax appeal deadlines are underway, and the final November 30 deadline is rapidly approaching across several counties in the state. Commercial real estate assessments have been seeing significant increases across the state of California this year, and property owners should be prepared to file an appeal on time.
Representing more than $400 billion in assessed value throughout California, Ryan’s Property Tax team has extensive experience navigating the property tax process in every county across the state.
California Extends Property Tax Break for Solar Energy Systems
Scott Donald, Principal 949.556.9001 | scott.donald@ryan.com
A property tax exclusion for newly constructed solar energy systems will remain available longer in California. Governor Gavin Newsom signed Senate Bill 1340 into law, which extends the existing tax break until 2027. There are supporters and opponents of the extension.
Support
“Governor Newsom’s signature on this extended tax exclusion will help ensure solar and storage projects continue providing clean, reliable power to California at a time of unprecedented stress on the state’s electric grid,” said Rick Umoff, senior director and counsel for California at the Solar Energy Industries Association. “California’s solar market is expected to nearly double in size over the next five years to 61.5 gigawatts of electricity generation capacity. This growth requires tens of thousands of workers and billions of dollars of private investment, and companies now have near-term tax certainty to ensure these investments are made in the California communities that rely on a robust clean energy economy.”
Opposition
The bill faced opposition from Kern County as it passed through the Legislature. Local officials said the solar tax exclusion has cost the county $110 million in lost property tax revenue over the last 10 years.
“The fiscal inequity created by the solar tax exclusion for large-scale commercial solar continues to divert resources from Kern’s General Fund and limits the essential services that can be provided for residents,” the county wrote in an opposition statement.
Governor Newsom acknowledged local government concerns in a signing letter, writing that the policy “has a direct impact on property tax revenues that support essential services at the local level.”
“I believe this two-year, temporary extension strikes an appropriate balance between ensuring that these delayed solar projects are brought online quickly, while recognizing the impacts to local governments,” the Governor wrote. If lawmakers bring forth another policy extension, Newsom urged them to “consider the impacts to local agencies” before bringing it forward.
New California Law Unlocks Commercial Real Estate for Residential Use
Scott Donald, Principal 949.556.9001 | scott.donald@ryan.com
California Governor Gavin Newsom has signed the Middle-Class Housing Act into law. The measure combines AB 2011 and SB 6, allowing new housing units to be built in underused commercial sites currently zoned for retail, office, and parking uses. AB 2011 and SB 6 are among the first statewide laws in the nation aimed at replacing underused or vacant commercial properties near public transit and city centers with high-density affordable housing.
Housing Crisis
California is in the midst of a housing crisis. The median price of a single-family home exceeds $800,000, and over half of all renters are paying more than 30% of their income toward housing.
The 2022 Statewide Housing Plan estimates that California needs to build approximately 2.5 million units of housing over the next eight years, including over one million units affordable to lower income households.
Government officials say there are many reasons why housing production has not kept up with demand. These include an insufficient amount of land zoned for multifamily housing, a local entitlement process that can be extremely long, risky, and expensive, and the lack of an ongoing source of funding dedicated to solving California’s housing and homelessness crisis. Additionally, the state has an acute shortage of construction workers, with tight labor markets in nearly every region and a workforce training pipeline that has not kept pace with rising demand.
How It Works
AB 2011 allows for ministerial, by-right approval for affordable housing on commercially zoned lands, and also allows such approvals for mixed-income housing along commercial corridors, as long as the projects meet specified affordability, labor, and environmental criteria.
SB 6 allows residential use on commercially zoned property without requiring a rezoning. Applicants must commit to prevailing wages for workers and requirements for a skilled and trained workforce.
A Game Changer
Under the new law, between 1.6 million and 2.4 million new housing units could be developed on commercial properties, according to data from California UrbanFootprint.
“This is a game changer for housing in our state,” California YIMBY CEO Brian Hanlon said in a statement. “California has a huge amount of underutilized and abandoned commercial properties that could see rapid development of subsidized affordable housing under this legislation.”