AB 613 directs assessors to account for a broad set of enforceable use restrictions when valuing land, explicitly enumerating conservation and solar easements, long‑term affordability contracts, renewable 99‑year community land trust (CLT) ground leases, and certain nonprofit commercial leases that preserve below‑market rents for community‑serving businesses. The bill also establishes presumptions about the persistence of restrictions and adds definitions and procedural steps aimed at making assessments of restricted land more consistent.
The measure matters for jurisdictions, assessors, community land trusts, nonprofit property owners, and small businesses: it clarifies how long‑term affordability mechanisms should affect assessed values, creates evidentiary rules and definitions that can lower taxable value, and compels the State Board of Equalization to report annually on the amount of assessed value affected by the commercial affordability exemption.
At a Glance
What It Does
The bill requires assessors to consider a specified list of enforceable use restrictions when determining land value and creates a rebuttable presumption that such restrictions will not be removed in the predictable future. It defines eligibility rules for affordable‑housing contracts, renewable 99‑year CLT ground leases, and nonprofit‑owned commercial leases and mandates annual BOE reporting on the commercial exemption.
Who It Affects
Local assessors and county offices of economic development (for determinations), community land trusts and nonprofit property owners, developers using long‑term affordability covenants, and community‑serving small businesses that lease below‑market commercial space.
Why It Matters
By spelling out which restrictions count and how to treat them, the bill reduces valuation ambiguity for permanently affordable models (CLTs, deed‑restricted sales, nonprofit commercial ownership), potentially lowering assessed values for qualifying properties and changing tax outcomes for local governments and nonprofit housing/commercial sponsors.
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What This Bill Actually Does
The bill expands the catalog of enforceable use restrictions an assessor must consider when valuing land and supplies concrete statutory definitions and procedures for several affordability models that have been hard to place in the assessment framework. It groups familiar land‑use controls (zoning, coastal permits, conservation easements, solar easements, statutory environmental constraints) with three affordability‑focused constructs: (1) recorded low‑income sale contracts enforced by a nonprofit with a deed of trust; (2) renewable 99‑year ground leases issued by community land trusts that impose resale price formulas and occupancy requirements; and (3) renewable commercial leases held by nonprofit community ownership entities that reserve a large share of commercial space for community‑serving small businesses at below‑market rents.
For each affordability construct the bill sets threshold conditions: contracts must be recorded and accompanied by local public‑interest findings; CLT ground leases must include specified resale and occupancy rules and be recorded; nonprofit commercial ownership requires that at least 70 percent of the owner’s commercial square footage be leased to qualifying small businesses or nonprofits and that the entity meet nonprofit organizational tests. The bill also provides operational definitions — for example, what counts as a 'qualified owner,' what constitutes 'affordability restrictions,' and how a 'commercial community ownership entity' is structured — to limit interpretive variation across counties.On valuation mechanics, AB 613 creates a rebuttable presumption that enforceable restrictions will persist, which shifts the default away from treating restricted land like unrestricted comparable sales.
Where the presumption is unrebutted, assessors must disregard sales of unrestricted comparable land as indicative of value unless the restriction has minimal effect. The statute also allows assessors to consider representative sales of nonrestricted lands only in narrow circumstances when restrictions have some remaining future life but comparable natural limitations exist.
Finally, the bill requires the State Board of Equalization to collect county data and report annually on the assessed value exempted under the commercial affordability paragraph — a transparency measure designed to let the Legislature and stakeholders track the fiscal footprint of the new treatment.
The Five Things You Need to Know
The bill creates a rebuttable presumption that enforceable use restrictions will not be removed or substantially modified in the predictable future, shifting the baseline for assessing restricted land.
It establishes a rebuttable presumption that the deed of trust used by a nonprofit in certain low‑income home sale programs has no value at purchase for assessment purposes, provided the contract meets detailed recording and public‑purpose findings.
Renewable 99‑year ground leases between community land trusts (or their wholly owned subsidiaries) and qualified owners are defined as affordable instruments; sales prices of units subject to these leases are presumptively treated as including the leased land unless the assessor rebuts that presumption with evidence.
A commercial affordability exemption applies where a nonprofit 'commercial community ownership entity' leases at least 70% of its commercial square footage to qualifying community‑serving small businesses or nonprofits at below‑market rents; the BOE must report annually (by June 1, starting 2027) on assessed value affected by that exemption.
If the presumption that a restriction persists is rebutted but the restriction still affects present value, assessors may selectively use representative sales of unrestricted lands only when natural limitations on those comparables produce substantially similar effects as the restriction.
Section-by-Section Breakdown
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Enumerated list of use restrictions to consider
This subpart expands and clarifies the types of enforceable restrictions assessors must consider when valuing land: zoning, recorded governmental contracts (with certain statutory exceptions), permits issued by overlapping regional land‑use bodies (e.g., Coastal Commission), local coastal and protection program controls, statutory environmental constraints, hazardous‑waste restrictions, recorded conservation/trail/scenic and greenway easements, and solar‑use easements. Practically, these items anchor the assessor’s analysis by tying statutory examples to the general rule that legally enforceable limits on use can depress land value.
Low‑income sale contracts with nonprofit sponsor
This provision covers contracts where a 501(c)(3) nonprofit deploys a welfare‑exempt model to sell to low‑income buyers under a no‑interest program with at least a 30‑year restriction and a deed of trust that secures compliance. The contract must be recorded and supported by a local finding of public purpose. The bill creates a rebuttable presumption that at purchase the assessor shall not include the value of that deed of trust — reducing the portion of the transaction treated as taxable land value unless the presumption is overcome.
Community land trust ground leases and definitions
This section defines renewable 99‑year ground leases from CLTs (or wholly owned CLT subsidiaries) as qualifying affordability mechanisms, sets out the resale‑price formula and occupancy restrictions that constitute 'affordability restrictions,' and supplies definitions for 'community land trust,' 'qualified owner,' and related terms. It also establishes a legal presumption that sale prices include both the dwelling and leased land unless the assessor shows by a preponderance of evidence that leased‑land value is not reflected. The provision instructs that corrections to base‑year values and declines in value to address the effect of such restrictions apply retroactively to lien dates after September 27, 2016.
Nonprofit commercial ownership entity and commercial affordability leases
This paragraph creates a route for commercial property under nonprofit ownership to be treated as restricted where a renewable lease (three years or more) subjects units to affordability restrictions and at least 70% of the owner’s commercial square footage is leased to qualifying community‑serving small businesses or nonprofits. It prescribes who may make the public‑interest determination (county counsel, economic development director, city attorney, etc.), defines eligible entities and tenants, and directs the State Board of Equalization to collect and report data annually so the Legislature can measure the fiscal impact.
Presumptions, rebuttal standards, and valuation mechanics
These sections set the evidentiary framework: a default presumption that restraints persist, examples of what can rebut that presumption (past local practice, similarity of restricted and unrestricted sales), a bar on using unrestricted comparable sales when the presumption is unrebutted, and narrow circumstances where representative sales of unrestricted land may be considered when restrictions retain some future life. The bill also defines 'comparable lands' and 'representative sales information' and states legislative intent to avoid valuing land based on legally unavailable uses while allowing representative‑sale methods where appropriate.
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Explore Housing in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Community land trusts and their wholly owned subsidiaries — the bill gives statutory clarity and presumptions that make it easier to secure lower assessed values for CLT ground‑lease models, supporting long‑term affordability.
- Low‑ and moderate‑income homebuyers participating in recorded, deed‑restricted sale programs — the deed‑of‑trust presumption reduces the portion of a purchase that assessors treat as taxable land value, potentially lowering tax burdens tied to initial assessments.
- Community‑serving small businesses and nonprofits leasing below‑market commercial space — eligibility criteria for the commercial affordability treatment make below‑market nonprofit‑owned commercial leases more viable by recognizing their impact on assessed value.
- Nonprofit sponsors and developers of permanent affordability models — clearer statutory definitions and evidentiary presumptions reduce valuation uncertainty and litigation risk when structuring long‑term affordability strategies.
Who Bears the Cost
- County assessors and assessment offices — they must apply new evidentiary standards, evaluate recording and public‑purpose findings, rebut or accept presumptions, and potentially perform more complex analyses to separate land value from bundled sale prices.
- Local taxing agencies (cities, counties, special districts, school districts) — broader use of valuation treatments that lower assessed value will reduce property tax bases for affected parcels, with fiscal implications for local budgets.
- State Board of Equalization and county recorders — BOE must collect annual data from counties and report to the Legislature, creating an administrative reporting burden and coordination requirements for assessors.
- Private property owners and investors in restricted properties — restrictions that lower assessed value can reduce resale proceeds and complicate market comparability, affecting investment returns and financing structures.
Key Issues
The Core Tension
The central dilemma is balancing the public policy goal of preserving permanently affordable housing and commercial space — by treating enforceable restrictions as value‑reducing for tax purposes — against the fiscal and administrative need for consistent, market‑based property valuations; promoting affordability risks eroding local tax bases and invites valuation complexity and potential gaming, while strict valuation rules can undercut the viability of nonprofit affordability models.
The bill trades a clearer pathway for recognizing permanent affordability mechanisms against increased valuation complexity and the risk of inconsistent application across counties. The rebuttable‑presumption approach reduces uncertainty for CLTs and nonprofit programs that can show recorded restrictions and local public‑interest findings, but it also shifts the evidentiary burden to parties and assessors to prove when restrictions are likely to be temporary.
That invites litigation over whether a restriction is 'predictably' permanent and over the adequacy of recorded documents and local findings.
Another practical tension is the bundle problem: when sale prices reflect both improvements and long‑term leased land value, the statute presumes the sale price includes the leased land for CLT scenarios unless the assessor rebuts it. Assessors will therefore need robust methods to separate land value from dwelling value and landlord‑style interests; lacking standard appraisal protocols, counties may diverge in outcomes.
The BOE reporting requirement improves transparency but depends on county‑level data collection practices that may not be standardized, limiting comparability and the Legislature’s ability to assess fiscal impacts reliably.
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