Showdown at the CA Board of Equalization
We're still sorting out a recent kerfuffle over property tax exemptions at the California Board of Equalization.
At issue, at least in part, was whether or how much to tighten the standards that developers' limited partnerships must meet to receive a "welfare exemption" from property tax under Cal. Rev. & Tax. Code Sec. 214(g). This state tax law section lifts the tax for low-income housing properties owned by limited partnerships that have nonprofits as managing general partners. Some of the recently debated regulatory language defines the extent to which a nonprofit must show "material participation" in a development's literal management process to qualify formally as a "managing general partner," as well as the extent to which tenants must continue to receive benefits at a property that receives a long-term continuing exemption.
We'll have the issue better parsed, with more on the taking of sides, in an upcoming Affordable Housing Finance, probably February's issue -- but it sounds like, in one corner, some county assessors, nonprofits, and others were contending that nonprofits should be more strictly prevented from lending their names to partnerships without considerable "material participation" -- while in another corner, a coalition of nonprofit and for-profit entities were defending an approach closer to the status quo.
The big moment was at the Board of Equalization meeting of Dec. 13, 2005, where the Board approved publication of new Rules 140, 140.1, 140.2, and 143 (no, that's not a typo for 140.3; the numbering is irregular). If we understand correctly, these imposed somewhat stricter limits, but not what the assessors' side would have preferred. [CLARIFICATION: We now understand that the assessors did find the Board-approved rules to be an acceptable compromise, though some other members of their coalition held out for stricter language.] The full Dec. 13 minutes have yet to appear on the BOE meeting records page, but Page 17 of the "Board Action" summary says the "authorization to publish" the four regulations was approved, on a staff recommendation, by a vote of 4-1 with member Bill Leonard dissenting. A further hearing on the matter was set for March 28, 2006.
An extensive procedural history of this rule dispute, including many prior drafts and texts of organizations' comment letters, has its very own page on the BOE site.
At issue, at least in part, was whether or how much to tighten the standards that developers' limited partnerships must meet to receive a "welfare exemption" from property tax under Cal. Rev. & Tax. Code Sec. 214(g). This state tax law section lifts the tax for low-income housing properties owned by limited partnerships that have nonprofits as managing general partners. Some of the recently debated regulatory language defines the extent to which a nonprofit must show "material participation" in a development's literal management process to qualify formally as a "managing general partner," as well as the extent to which tenants must continue to receive benefits at a property that receives a long-term continuing exemption.
We'll have the issue better parsed, with more on the taking of sides, in an upcoming Affordable Housing Finance, probably February's issue -- but it sounds like, in one corner, some county assessors, nonprofits, and others were contending that nonprofits should be more strictly prevented from lending their names to partnerships without considerable "material participation" -- while in another corner, a coalition of nonprofit and for-profit entities were defending an approach closer to the status quo.
The big moment was at the Board of Equalization meeting of Dec. 13, 2005, where the Board approved publication of new Rules 140, 140.1, 140.2, and 143 (no, that's not a typo for 140.3; the numbering is irregular). If we understand correctly, these imposed somewhat stricter limits, but not what the assessors' side would have preferred. [CLARIFICATION: We now understand that the assessors did find the Board-approved rules to be an acceptable compromise, though some other members of their coalition held out for stricter language.] The full Dec. 13 minutes have yet to appear on the BOE meeting records page, but Page 17 of the "Board Action" summary says the "authorization to publish" the four regulations was approved, on a staff recommendation, by a vote of 4-1 with member Bill Leonard dissenting. A further hearing on the matter was set for March 28, 2006.
An extensive procedural history of this rule dispute, including many prior drafts and texts of organizations' comment letters, has its very own page on the BOE site.
posted by Martha Bridegam at 3:36 PM
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