Press Releases

SACRAMENTO — Governor Gavin Newsom has signed AB 2353 (Ward) into law. This measure addresses a critical inefficiency in the approval of the welfare property tax exemption. These inefficiencies were brought to light during a series of hearings Controller Cohen convened as Chair of the California State Board of Equalization to spur the development of affordable housing in California. Currently, property owners who apply for the exemption must pay taxes up front and seek reimbursement after approval, requiring them to borrow and float potentially hundreds of thousands of dollars in tax payments for as long as three years.

AB 2353 makes it possible for non-profit affordable housing developers to avoid making unnecessary property tax payments on properties eligible for the welfare exemption. Specifically, it allows these developers, for a property that has received a funding award from the Tax Credit Allocation Committee or the Department of Housing and Community Development and is under construction, to withhold tax payments and defer any interest or penalties imposed by the county tax collector until review of the exemption is complete. If the application is rejected, then the property tax comes due, along with accumulated interest and penalties. This change will avoid the cost to developers of floating tax payments for which they are ultimately reimbursed.

“As California’s Chief Fiscal Officer, and member of both the California Tax Credit Allocation Committee and California Debt Limit Allocation Committee, I am acutely aware of the challenges surrounding the financing of affordable housing, stated Controller Cohen. “Despite significant new investments made to address the housing crisis, housing costs are still the main driver of California’s rising cost of living. Reducing affordable housing development costs is critical to making use of state housing resources and maximizing production. I want to thank Governor Newsom and Assembly Member Ward for our continued partnership in addressing California’s housing crisis.”

“I’m pleased AB 2353 was signed into law to create a process for developers to receive the welfare exemption during construction of affordable housing,” said Assemblymember Chris Ward (D-San Diego). “This will bring down the overall costs for nonprofit affordable rental housing developments and ease the burden for developers who will no longer have to float unnecessary tax payments while applications are under review.”

“By creating a grace period in the property tax exemption process for affordable rental homes, AB 2353 will make approximately $60 million available to initiate new affordable home development that California so desperately needs,” said California Housing Partnership CEO Matt Schwartz.

As the chief fiscal officer of California, Controller Cohen is responsible for accountability and disbursement of the state’s financial resources. The Controller has independent auditing authority over government agencies that spend state funds. She is a member of numerous financing authorities, and fiscal and financial oversight entities including the Franchise Tax Board. She also serves on the boards for the nation’s two largest public pension funds. Follow the Controller on X at @CAController and on Facebook at California State Controller’s Office.

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