Summary

California offers essential property tax relief for nonprofits and religious organizations through three exemptions: the Welfare Exemption (§ 214), the Religious Exemption (§ 207), and the Church Exemption (§ 206).  Recognizing these benefits can help organizations feel appreciated and motivated to utilize these programs effectively.

SB4 (Gov. Code § 65913.16; effective 1 January 2024; sunsets 1 January 2036) simplifies zoning and permitting for 100% affordable housing on land owned by faith-based and higher-education nonprofits, creating a sense of opportunity and progress for developers and officials committed to affordable housing.

1) Overview of California Property Tax Exemptions for Nonprofits & Religious Organizations

1.1 Welfare Exemption (RTC § 214)

• Purpose: Exempts property used exclusively for religious, hospital, scientific, or charitable purposes by qualifying nonprofits.
• Key criteria:

·         Owner not organized/operated for profit.

·         No net earnings inure to private individuals.

·         Property is used for the actual operation of the exempt activity and is reasonably necessary for that purpose.

• Administration: Co-administered by California BOE (organizational eligibility via OCC) and County Assessors (property use eligibility via Assessor claims).
• Filing cadence: Annual with the Assessor; OCC validity is ongoing, subject to verification.
• Required forms & sequence

• OCC (Board of Equalization):
• BOE‑277 (nonprofits) / BOE‑277‑LLC (LLCs).
• Assessor’s filings:
• BOE‑267 (first filing per property/location);
• BOE‑267‑A (annual continuation);
• BOE‑267‑H (elderly/disabled housing, if applicable);
• BOE‑267‑L (low-income housing, § 214[g]).
  
  

1.2 Religious Exemption (RTC § 207)

• Purpose: Exempts property owned by a religious organization used exclusively for religious worship and specific school purposes (preschool to less than collegiate grade; can include collegiate grade when combined with lower grades).
• Filing: One-time claim with BOE‑267‑S; remains in effect unless use changes; deadline 15 February for full credit.
  
  

1.3 Church Exemption (RTC § 206)

• Purpose: Exempts owned, leased, or rented property used exclusively for religious worship services and necessary/required parking.
• Filing: Annual BOE‑262‑AH (Church Exemption).  For leased property, the lessor may file BOE 263, and the tax savings must inure to the church (RTC § 206.2).
• Deadline: 15 February; partial relief available for late claims (RTC § 270).
  
  

2) § 214(g): Welfare Exemption for Low‑Income Housing — Detailed Rules

Core concept: Properties owned/operated by qualifying nonprofits, eligible LLCs, or limited partnerships (with nonprofit/eligible LLC managing general partner) and used exclusively for low-income rental housing may receive the Welfare Exemption. 

2.1 Eligibility & Financing Conditions

• Occupancy: Generally, ≥ 90% of units must be made continuously available to or occupied by lower-income households at rents not exceeding Health & Safety Code § 50053 limits.
• Financing/LIHTC: Qualification strengthened where property receives government financing or LIHTC; in the absence of these, there is a statewide $20M assessed value cap per nonprofit/eligible LLC.
• Limited partnerships: Must secure a Supplemental Clearance Certificate (SCC) (BOE‑277‑L1) in addition to the OCC.
  
  

2.2 Income Definitions & “Over‑Income” Rule

• Lower income households: As defined in HSC § 50079.5; rent restrictions per HSC § 50053.
• Over‑income retention: Units remain eligible when initially qualifying tenants’ income rises but stays ≤ 140% AMI (applies to LIHTC properties and certain CLT leases).
• Documentation: Tenant households complete BOE‑267‑L‑A to certify income level and household size (retained by owner/Manager for audit).
  ,

2.3 Required Filings

• With BOE:
• OCC: BOE‑277 / BOE‑277‑LLC;
• SCC: BOE‑277‑L1 (each LP property).
• With Assessor (annual):
• BOE‑267 / BOE‑267‑A plus BOE‑267‑L (low-income affidavit); supplemental affidavits (BOE‑267‑H, where applicable).
  
  

3) AMI (Area Median Income) & Lemon Grove/San Diego Thresholds (2025)

AMI definition: The median income for a metropolitan area, adjusted for household size, published annually by HUD.  AMI anchors income categories (30%, 50%, 60%, 80%, etc.) for affordable housing and California property tax exemption compliance.

3.1 San Diego County (incl. Lemon Grove) — FY 2025

• 100% AMI (Median Family Income): $130,800.
• HUD income limits (effective 16 April 2025) for 80%, 50%, 30% AMI by household size:
• 80% AMI (Low): 1‑person $92,700; 4‑person $132,400 (full table below).
• 50% AMI (Very Low): 1‑person $57,900; 4‑people $82,700.
• 30% AMI (Extremely Low): 1‑person $34,750; 4‑person $49,600.
  
  

Selected FY 2025 San Diego County Income Limits

3.2 The 140% AMI Rule (Retention)

For § 214(g), tenants initially eligible at ≤ 80% AMI may remain qualified if their income later rises but stays ≤ 140% AMI.  For San Diego (2025), 140% AMI = 1.4 × 80% AMI:

Note: Owners should keep tenant certifications (BOE 267 L A) up to date to ensure audit readiness. 

4) BOE‑267‑L‑A: Usage & Compliance

Purpose: Tenant income reporting worksheet to substantiate eligibility under § 214(g). Tenants certify their household size and prior-year income relative to the lower-income and 140% AMI thresholds (where applicable).

Workflow:

·         Collect documentation (pay stubs, tax returns, benefits).

·         Compare to HUD limits (county/household size).

·         Apply 140% AMI retention for previously qualifying tenants.

·         Tenant signs under penalty of perjury; owner/Manager retains the form.

·         Summarize compliance on BOE‑267‑L for the Assessor (do not submit individual affidavits unless requested).

5) How SB‑4 Interacts with the Welfare Exemption

SB‑4 allows use‑by‑proper (ministerial) approval for 100% affordable housing on land owned by religious institutions or independent higher‑education institutions, subject to objective standards, labor requirements, location screens, and long-term affordability covenants (55 years for rentals).  Projects may still qualify for density bonuses, and parking can be reduced near high-quality transit. 

Correlation with property tax exemptions: SB 4 reduces development friction (zoning/CEQA), while the Welfare Exemption reduces operating expenses (property taxes).  Many SB‑4 projects will be nonprofit-led or include nonprofits as managing general partners—precisely the organizational structure that facilitates the Welfare Exemption (§ 214[g]).  Together, they improve feasibility and long-term affordability. 

6) Nonprofit Benefits: Side‑by‑Side

7) Roadmap: How a Nonprofit Qualifies for Both Programs

Step‑by‑Step

•   Confirm Organizational Eligibility
• Ensuring nonprofit purpose, tax-exempt status, and governing documents contain irrevocable dedication & dissolution clauses (Property Tax Rule 143 references in BOE Pub 149).
  
  
•   Identify Eligible Property
•   For SB‑4, the site must be owned by a qualifying religious/independent higher‑ed institution as of 1 January 2024 and meet location/compatibility screens (urbanized area/cluster, environmental constraints, no recent tenant displacement, industrial-adjacency limits).
  
  
•   Structure the Ownership/Development
•   If using an LP, place the nonprofit (or eligible LLC) as the managing general partner (required for § 214[g]); draft affordability covenants consistent with SB‑4 (55-year) and Welfare Exemption compliance (HSC § 50053 rents; AMI limits).
  
  
•   File for SB‑4 Ministerial Approval
•   Submit plans that meet objective standards, labor requirements (prevailing wage/apprenticeship), parking/transit conditions, and affordability covenants (55-year rental).
  
  
•   Obtain BOE Organizational Clearance Certificate (OCC)
•   File BOE‑277 (or BOE‑277‑LLC), including IRS/FTB letters, articles/bylaws, and program materials.
  
  
•   (If LP) Obtain BOE Supplemental Clearance Certificate (SCC)
• File BOE‑277‑L1 per property to validate LP eligibility for low-income housing.
  
  
•   File Welfare Exemption with the County Assessor (Annual)
• First filing: BOE‑267; subsequent annual: BOE‑267‑A.
• Include BOE‑267‑L (low‑income affidavit), BOE‑267‑L‑A tenant worksheets on file, and BOE‑267‑H if elderly/disabled housing.
• Deadline: 15 February for full exemption credit.
  
  
•   Operate & Document Compliance
•   Maintain tenant income certifications (≤ 80% AMI), apply 140% AMI retention, enforce rent caps (HSC § 50053), and preserve covenants (SB‑4’s 55-year rental affordability).
   

8) Filing Deadlines & Late Claim Relief

• Church Exemption & Religious Exemption, & Welfare Exemption Assessor filings: 15 February of the claim year for full exemption.
• Late Church claims: Partial reductions (85–90%) if filed before the next lien date (RTC § 270).
  
  

9) Practical Tips & Common Pitfalls

• Coordinate early between landowner (religious/educational nonprofit), developer, and tax counsel to align SB‑4 eligibility and § 214(g) structure.
• Document income thoroughly (retain BOE‑267‑L‑A annually; keep source documents).
• Watch use creep: Ensure non-qualifying uses (commercial, market‑rate leasing) don’t jeopardize “exclusivity” and occupancy thresholds.
• Monitor AMI updates: HUD limits change annually; update rent schedules and compliance forms.
   

Appendices

A. Forms Index (Selected)

• BOE‑277 / BOE‑277‑LLC — Claim for Organizational Clearance Certificate (Welfare Exemption).
• BOE‑277‑L1 — Supplemental Clearance Certificate (LP low-income property).
• BOE‑267 / BOE‑267‑A — Welfare Exemption Assessor claims (initial/annual).
• BOE‑267‑L — Supplemental Affidavit, Housing—Lower Income Households.
• BOE‑267‑H — Supplemental Affidavit, Housing—Elderly or Handicapped Families.
• BOE‑267‑S — Religious Exemption (one-time claim).
• BOE‑262‑AH — Church Exemption (annual).
• BOE‑263 — Lessor’s Church Exemption (leased property).
  
  

B. Key References

• RTC § 214 (Welfare Exemption): organizational & use tests; implementation via BOE Pub 149   [capropeforms.org], [sandiego.gov]
• RTC § 207 (Religious Exemption): one-time filing for worship/school uses.  [sccassessor.org]
• RTC § 206/206.1/206.2 (Church Exemption): worship/parking; leased property benefit to church.  [arcc.marincounty.gov], [ocassessor.gov]
• Title 18 CCR § 140 (Low‑Income Housing Regulation): definitions for LIHTC, financing, and occupancy. [templateroller.com]
• SB‑4 (Gov. Code § 65913.16): use‑by‑proper approval on faith/higher‑ed lands; affordability & labor conditions; location screens; 55-year rental covenant.  [solanocounty.gov]
• San Diego County 2025 AMI & limits: $130,800 median; detailed tables   [zillionforms.com], [boe.ca.gov]

Next Steps (Actionable)

·         Identify target site(s) on faith/educational land (verify SB‑4 eligibility).

·         Engage legal/tax counsel to set ownership (nonprofit MGP for LP) and draft affordability covenants.

·         Begin SB‑4 ministerial process (objective standards + labor requirements).

·         File BOE‑277 (OCC); if LP, BOE‑277‑L1 (SCC) per property.

·         Prepare Assessor package (BOE‑267 initial + BOE‑267‑L; set up annual renewals/tenant affidavits).

·         Implement compliance systems (annual HUD updates, 140% AMI tracking, recordkeeping).

Closing Statement

California’s approach to affordable housing and nonprofit property tax relief is not just a regulatory framework—it is a strategic opportunity.  By leveraging the Welfare Exemption under § 214 and the streamlined development provisions of SB‑4, nonprofits and faith-based organizations can transform underutilized land into long-term community assets.  These programs work in tandem: SB‑4 removes zoning and permitting barriers, while the Welfare Exemption eliminates property tax burdens, ensuring financial sustainability for decades. 

For mission-driven organizations, this synergy represents a powerful pathway to address housing shortages, stabilize operating costs, and fulfill their social purpose with measurable Impact.  The time to act is now—align your organizational structure, secure eligibility, and leverage these tools to create housing solutions that endure.