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<ns0:Id>20250AB__207998AMD</ns0:Id>
<ns0:VersionNum>98</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-18</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureType>AB</ns0:MeasureType>
<ns0:MeasureNum>2079</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Elhawary</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
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<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Elhawary</ns0:Name>
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<ns0:Title>An act to amend Sections 51299.1, 51299.2, and 51299.3 of the Government Code, relating to housing.</ns0:Title>
<ns0:RelatingClause>housing</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Adaptive Reuse Investment Incentive Program.</ns0:Subject>
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<html:p>Existing law, the Office to Housing Conversion Act, starting July 1, 2026, deems an adaptive reuse project, as defined, a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process, if the project meets specified requirements. Existing law authorizes a local government to adopt an ordinance implementing the act and specifying the process and requirements applicable to adaptive reuse projects. If a local agency does not adopt an above-described ordinance, existing law requires the local agency to ministerially, without discretionary review, approve or disapprove applications for a permit to create or serve an adaptive reuse project, as specified.</html:p>
<html:p>Existing law, the authorizes a city or county, or city and county, commencing in the 2026–27 fiscal year, to establish an adaptive reuse investment incentive program. If a city or county, or city and county, establishes that program, existing law requires, upon approval of the governing body, the city or county, or city and county, to pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property, approved pursuant to the streamlined, ministerial process described above, to subsidize the affordable housing required under the Office to Housing Conversion Act, as specified. Existing law defines “qualified adaptive reuse project property” to mean an adaptive reuse project proposed pursuant to the Office to Housing Conversion Act that is located within the city or county.</html:p>
<html:p>This
bill would expand the definition of qualified adaptive reuse project property to include adaptive reuse projects that fall under the Office to Housing Conversion Act regardless of compliance with affordability criteria or labor standards specified in that Act, thereby expanding payment of adaptive reuse investment incentive funds to certain adaptive reuse projects that do not have the requisite affordability or labor standards as specified in the Act, as provided. The bill would also expand the requirement on those cities, counties, and cities and counties to pay adaptive reuse investment incentive funds to the proponent to, in addition to subsidizing affordable housing units, subsidize the project’s housing units.</html:p>
<html:p>Existing law authorizes a city or special district to pay to the city or county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from
the taxation of that portion of the total assessed value of that real property that is in excess of the property’s valuation at the time of the proponent’s initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to the Office to Housing Conversion Act.</html:p>
<html:p> This bill would expand the authorization for a city or special district to pay to the city or county, or city and county, as described above, for the purpose of subsidizing the project’s housing units.</html:p>
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<ns0:BudgetBill>NO</ns0:BudgetBill>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 51299.1 of the
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is amended to read:
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<ns0:Num>51299.1.</ns0:Num>
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<html:p>For purposes of this chapter:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Adaptive reuse investment incentive funds” means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
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<html:p>
(b)
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“Program” means an adaptive reuse investment incentive
program established pursuant to Section 51299.2.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
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“Proponent” means a party or parties that meet all of the following criteria:
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<html:p>
(A)
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The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
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<html:p>
(B)
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The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
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<html:p>
(2)
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If a proponent that is receiving adaptive reuse investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment
incentive funds shall also be considered a proponent for the purposes of this chapter.
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<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
“Qualified adaptive reuse project property” means an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
</html:p>
<html:p>
(2)
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“Qualified adaptive reuse project property” includes an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, notwithstanding the project’s compliance with affordability criteria under paragraph (3) of subdivision (b) of Section 65658.5 or labor standards under paragraph (1) of
subdivision (a) of Section 65658.6, and Sections 65658.12 to 65658.15, inclusive, that is located within the city or county.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 51299.2 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Num>51299.2.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Commencing in the 2026–27 fiscal year, the governing body of a city or county, or city and county, may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
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A city or county, or city and county, that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7,
or to subsidize the project’s housing units,
for up to 30 consecutive fiscal years. Nothing in this paragraph shall prohibit a city or county, or city and county, from paying adaptive reuse investment incentive funds to a proponent pursuant to this paragraph for a period of fewer than 30 years.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
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<html:p>
(c)
<html:span class="EnSpace"/>
After a city or county, or city and county, approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy. If the city or county, or city and county, does not issue certificates of occupancy,
the final inspection of the qualified adaptive reuse project property shall serve as the certificate of occupancy for purposes of this subdivision.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 51299.3 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Num>51299.3.</ns0:Num>
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<html:p>A city or special district may pay to the city or county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the property’s valuation at the time of the proponent’s initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, or for the purpose of subsidizing the project’s housing units.</html:p>
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