Real property tax: welfare exemption: moderate-income housing.

Senator Wiener's property tax legislation extends California's welfare exemption to residential properties serving moderate-income households, creating a partial tax exemption for qualifying rental developments constructed after January 2026.

The bill establishes a proportional tax reduction based on the percentage of units designated for low- and moderate-income residents. To qualify, property owners must maintain these units at below-market rents for at least 55 years and certify that tax savings directly support affordability. Units remain eligible if tenant incomes increase up to 200% of area median income after initial occupancy.

Property owners must document compliance through market studies conducted every five years and restrict rent increases for continuing tenants to the annual change in area median income. The exemption applies only to new construction and commercial-to-residential conversions completed after January 2026. Local agencies will not receive state reimbursement for resulting revenue reductions.

The measure includes provisions ensuring continued eligibility when tenant incomes rise moderately and requires that tax savings directly maintain affordability. A severability clause protects the overall policy if individual provisions face legal challenges.