Property tax: change in ownership: residential rental property.

Senator Smallwood-Cuevas's property tax reform legislation creates new exemptions from reassessment when residential rental properties transfer to tenant-controlled nonprofits or community land trusts. The measure adds provisions to California's Revenue and Taxation Code establishing conditions under which such transfers do not constitute a change in ownership for property tax purposes.

Under the bill's framework, properties may transfer to tenant-formed nonprofit corporations, mutual benefit corporations, or limited equity housing cooperatives without triggering reassessment if tenants maintain majority control through ownership of at least 51% of voting shares or membership interests. Organizations have 18 months to achieve this participation threshold. Similarly, transfers to community land trusts avoid reassessment when supported by a majority of existing tenants through signed petitions, which remain confidential under the law.

The legislation requires annual reporting from cooperatives that do not use recorded deeds, mandating disclosure of ownership details and unit assignments to county assessors. New owners must file change-in-ownership statements within 30 days. While the measure takes effect immediately upon enactment, it specifies that the state will not reimburse local agencies for any resulting property tax revenue reductions. County assessors may levy escape assessments if entities fail to maintain required tenant participation levels within specified timeframes.