AB736 - Transfer taxes: limitation.

Amended IN Senate June 22, 2026 Amended IN Assembly April 10, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 736 Introduced by Assembly Members Wicks, Haney, and Quirk-Silva Mark González and Wicks and Senators Gonzalez and Grayson (Principal coauthor: Assembly Member Ransom) (Principal coauthors: Senators Arreguín, Becker, Blakespear, Cabaldon, and Wiener) (Coauthors: Assembly Members Alvarez, Ávila Farías, Bennett, Berman, Caloza, Connolly, Mark González, Harabedian, Jackson, Kalra, Krell, McKinnor, Muratsuchi, Nguyen, Schiavo, Schultz, Soria, Ward, Wilson, and Zbur) (Coauthors: Senators Ashby, Grayson, Pérez, and Umberg) February 18, 2025 An act to add Part 16.1 (commencing with Section 54050) to Division 31 of the Health and Safety Code, relating to housing, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds, and declaring the urgency thereof, to take effect immediately. An act to add Section 11911.5 to the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 736, as amended, Mark González. The Affordable Housing Bond Act of 2026. Transfer taxes: limitation. Existing law, the Documentary Transfer Tax Act, authorizes the imposition of a tax by a county or city and county, as provided, with respect to specified instruments that transfer specified interests in real property. This bill would, beginning January 1, 2027, prohibit a local jurisdiction, defined to include a city, including a charter city, county, or city and county, from collecting a transfer tax, as defined, levied on the sale or transfer of a real property interest conveyed if the combined transfer tax rate levied by the local jurisdiction exceeds 1.5% of the consideration paid for or value of the real property interest conveyed, except as otherwise provided. The bill would also prohibit a local jurisdiction from levying a transfer tax on the first sale of single-family housing property occurring within 5 years of one or more housing units on the real property being destroyed or made uninhabitable by a natural disaster, as defined. By imposing new duties upon local officials with respect to transfer taxes, this bill would impose a state-mandated local program. The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. Under existing law, there are programs providing assistance for, among other things, emergency housing, multifamily housing, farmworker housing, home ownership for very low and low-income households, and downpayment assistance for first-time home buyers. Existing law also authorizes the issuance of bonds in specified amounts pursuant to the State General Obligation Bond Law and requires that proceeds from the sale of these bonds be used to finance various existing housing programs, capital outlay related to infill development, brownfield cleanup that promotes infill development, and housing-related parks. This bill would enact the Affordable Housing Bond Act of 2026, which, if adopted, would authorize the issuance of bonds in the amount of $10,000,000,000 pursuant to the State General Obligation Bond Law. Proceeds from the sale of these bonds would be used to finance programs to fund affordable rental housing and home ownership programs, including, among others, the Multifamily Housing Program, the CalHome Program, and the Joe Serna, Jr. Farmworker Housing Grant Program. This bill would provide for submission of the bond act to the voters at the June 2, 2026, statewide primary election, in accordance with specified law. This bill would declare that it is to take effect immediately as an urgency statute. Digest Key Vote: TWO_THIRDS MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 11911.5 is added to the Revenue and Taxation Code, to read: 11911.5. (a) (1) Beginning January 1, 2027, and except as provided in subdivisions (b) and (c), a local jurisdiction shall not collect a transfer tax levied on the sale or transfer of a real property interest conveyed if the combined transfer tax rate levied by local jurisdictions exceeds 1.5 percent of the consideration paid for or value of the real property interest conveyed. (2) A local jurisdiction may collect a transfer tax levied on the sale or transfer of a real property interest conveyed if it stops collecting, reduces rates on, or eliminates transfer taxes so that the combined transfer tax rate levied is 1.5 percent or lower of the consideration paid for or value of the real property interest conveyed. The local jurisdiction shall first reduce or stop collecting the rates for all transfer taxes that are not general taxes. (b) (1) Beginning on or after January 1, 2027, and except as provided in paragraph (2), if the combined transfer tax rate levied by a local jurisdiction includes a combined rate greater than 1.5 percent from general taxes that were in effect as of June, 30, 2026, the local jurisdiction shall not need to stop collecting a transfer tax, reduce rates, or eliminate transfer taxes to meet the limitations under subdivision (a) except for any transfer taxes that are not general taxes. (2) The combined transfer taxes described in paragraph (1) shall not exceed the lesser of the combined transfer tax rate for those taxes that are general taxes in effect as of June 30, 2026, or 3 percent. (3) Except as provided in subdivision (c), a local jurisdiction shall not collect any transfer taxes that are not general taxes if that would result in a combined transfer tax rate levied by local jurisdictions that exceeds 1.5 percent. (c) (1) Beginning on or after January 1, 2027, the limitations under subdivisions (a) and (b) shall not apply to any transfer taxes on a single-family housing property when the consideration or value of the interest or property conveyed is five million four hundred thousand dollars ($5,400,000) or higher. (2) The threshold in paragraph (1) shall be adjusted by inflation annually starting on June 30, 2028, using the California Consumer Price Index for all items as published by the Department of Industrial Relations. (d) (1) A local jurisdiction shall not levy a transfer tax on the first sale of single-family housing property occurring within five years of one or more housing units on the real property being destroyed or made uninhabitable by a natural disaster. (2) For the purposes of this subdivision, a property shall be deemed “single-family housing” if, immediately before being destroyed or becoming uninhabitable, the property was single-family housing. (e) For the purposes of this section: (1) “General tax” has the meaning defined in Section 1 of Article XIII C of the California Constitution. (2) “Local jurisdiction” means a city, including a charter city, county, including a charter county, or city and county. (3) “Natural disaster” means an earthquake, flood, fire, riot, storm, or other natural disaster that, on or after January 1, 2025, has been the subject of either a state of emergency proclamation issued by the Governor or a major disaster declaration approved by the President of the United States. (4) (A) “Single-family housing” means residential property that contains a separately owned parcel of real property containing a primary single-family dwelling, including a detached or attached single-family residence or a condominium unit within a common interest development, whether or not the property contains one or more accessory dwelling units or junior accessory dwelling units. (B) “Single-family housing” does not include multifamily rental property. (5) “Transfer tax” means a documentary transfer tax or real property transfer tax imposed on each deed, instrument, or writing by which any lands, tenements, or other realty sold within the local jurisdiction shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by that person’s or their direction. (f) This section shall not be construed to increase, or authorize the increase of, a transfer tax rate established pursuant to Section 11911. SEC. 2. The Legislature finds and declares that (1) the crisis of housing availability and affordability is a matter of statewide concern that requires a multifaceted, statewide approach, (2) studies have shown that high transfer taxes decrease real estate transfers and new development, as developers absorbing large transfer costs have less capital to purchase or construct new projects, (3) the effects of depressed real estate activity can have regional effects that extend beyond the borders of the imposing jurisdiction, reducing the supply of homes and reducing economic development and revenue generated for the state and localities, further underscoring why the growing use and impacts of transfer taxes are a matter of statewide concern, (4) transfer taxes have increased significantly in cities across California, and (5) addressing all of the foregoing is a matter of statewide concern and is not municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act adding Section 11911.5 to the Revenue and Taxation Code applies to any city, including a charter city. SEC. 3. If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. SECTION 1. Part 16.1 (commencing with Section 54050) is added to Division 31 of the Health and Safety Code , to read: 16.1. Affordable Housing Bond Act of 2026 1. General Provisions 54050. This part shall be known as the Affordable Housing Bond Act of 2026. 54051. This part shall only become operative upon adoption by the voters at the June 2, 2026, statewide primary election. 54052. For purposes of this part, “fund” means the Affordable Housing Bond Act Trust Fund of 2026 created pursuant to Section 54054. 2. Affordable Housing Bond Act Trust Fund of 2026 and Program 54054. (a) The Affordable Housing Bond Act Trust Fund of 2026 is hereby created within the State Treasury. It is the intent of the Legislature that the proceeds of bonds, exclusive of refunding bonds issued pursuant to Section 54076, be deposited in the fund and used to fund affordable rental housing and home ownership programs. (b) The proceeds of bonds issued and sold pursuant to this part for the purposes specified in this chapter shall be allocated in the following manner: (1) Five billion dollars ($5,000,000,000), to be deposited in the Housing Rehabilitation Loan Fund established pursuant to Section 50661 to be used for the Multifamily Housing Program authorized by Chapter 6.7 (commencing with Section 50675) of Part 2. At least 10 percent of assisted units in each development receiving these funds shall be affordable to extremely low income households. (2) One billion seven hundred million dollars ($1,700,000,000), to be deposited in the Housing Rehabilitation Loan Fund established pursuant to Section 50661 to be used for supportive housing, as described in Section 50675.14, pursuant to the Multifamily Housing Program authorized by Chapter 6.7 (commencing with Section 50675) of Part 2. The department shall offer capitalized operating subsidy reserves for supportive housing units in developments receiving these funds. (3) Eight hundred million dollars ($800,000,000), to be appropriated by the Legislature, to the program commonly known as the Portfolio Reinvestment Program established pursuant to Chapter 5.5 (commencing with Section 50606) of Part 2. (4) Five hundred million dollars ($500,000,000), to be appropriated by the Legislature, to a program, to be administered by the Department of Housing and Community Development, to fund the acquisition and rehabilitation of unrestricted housing units and attach long-term affordability restrictions on the housing units, while safeguarding against the displacement of current residents. It is the intent of the Legislature that the specific criteria establishing eligibility for, and use of, the funds shall be established in statute. (5) One billion dollars ($1,000,000,000), to be appropriated by the Legislature, to provide home ownership opportunities through the following programs: (A) The CalHome Program established pursuant to Chapter 6 (commencing with Section 50650) of Part 2. (B) The home purchase assistance program established pursuant to Chapter 6.8 (commencing with Section 51341) of Part 3. (6) Three hundred fifty million dollars ($350,000,000), to be appropriated by the Legislature, to the Joe Serna, Jr. Farmworker Housing Grant Program pursuant to Chapter 3.2 (commencing with Section 50515.2) of Part 2. (7) Two hundred fifty million dollars ($250,000,000), to be appropriated by the Legislature, to a dedicated, flexible, and comprehensive state program designed for, and in consultation with, tribes, that shall be administered by the Department of Housing and Community Development, to finance housing and housing-related activities that will enable tribes to rebuild and reconstitute their communities. It is the intent of the Legislature that the specific criteria establishing eligibility for and use of the funds shall be established in statute. (8) Four hundred million dollars ($400,000,000) for the Infill Infrastructure Grant Program of 2019 established pursuant to Section 53559 of the Health and Safety Code. 54056. (a) The Legislature may, from time to time, amend any law related to programs to which funds are, or have been, allocated pursuant to this chapter for the purposes of improving the efficiency and effectiveness of those programs or to further the goals of those programs. (b) The Legislature may amend this chapter in order to reallocate the proceeds of bonds issued and sold pursuant to this part among the programs to which funds are to be allocated pursuant to this chapter as necessary to effectively promote the development of affordable housing in this state. (c) The Department of Housing and Community Development may disburse any funds made available to housing development projects pursuant to this chapter durin [Text truncated for display. Full text available on Congress.gov.]