California AB 84: Welfare Exemption, Certificates, and Deadlines

California’s Assembly Bill 84 changed the property tax welfare exemption for affordable rental housing in two concrete ways: it made properties financed with qualified 501(c)(3) bonds eligible for the exemption, and it created a temporary rule that lets a tenant whose income rises after move-in keep the unit’s lower-income status for exemption purposes, so long as income stays at or below 100% of area median income and the unit remains rent-restricted under an enforceable agreement with a public agency. Both changes were written into Revenue and Taxation Code Section 214.¹

The Two Changes AB 84 Made

Before AB 84, qualifying financing for the low-income welfare exemption included tax-exempt mortgage revenue bonds, general obligation bonds, government loans or grants, and low-income housing tax credits. Qualified 501(c)(3) bonds, defined by Section 145 of the Internal Revenue Code and issued on behalf of charitable organizations, were not on that list. AB 84 added them.²

The second change addresses what happens when a qualifying tenant earns more over time. For properties subject to an enforceable agreement with a public agency, a unit keeps its lower-income classification if the tenant originally qualified at or below 80% of AMI, the unit remains rent-restricted, and the tenant’s income has not risen above 100% of AMI. Once income crosses 100% of AMI, the unit loses its exempt status. This over-income rule is temporary and runs from fiscal year 2024–25 through fiscal year 2028–29.³

Who Qualifies for the Exemption

The welfare exemption applies to property used exclusively for charitable purposes and owned by an organization that operates without private benefit. The owner needs a valid IRS determination letter confirming 501(c)(3) status or an equivalent letter from the California Franchise Tax Board under Revenue and Taxation Code Section 23701d. Founding documents must irrevocably dedicate the organization’s property to charitable purposes, so that on dissolution, assets pass to another charitable organization rather than to private individuals.²

The Organizational Clearance Certificate

Before any county assessor can approve a welfare exemption claim, the organization must hold a valid Organizational Clearance Certificate (OCC) from the California Board of Equalization. You apply on Form BOE-277, filed with the Board rather than the assessor. The Board reviews whether the organization meets the requirements of Section 214.⁴

The application requires certified copies of your articles of incorporation and any amendments, your IRS or Franchise Tax Board determination letter, certified financial statements for the year before the claim, and documentation describing your activities. If you file the exemption claim with the assessor by the February 15 deadline, it counts as timely even if the Board has not finished processing your OCC.⁴

Eligible limited liability companies can qualify as well and file for their own OCC on Form BOE-277-LLC.⁵

Limited Partnerships Need an Extra Certificate

Affordable housing is often held in limited partnerships, with private investors putting up capital and a nonprofit acting as managing general partner. The statute permits this, provided the managing general partner is an eligible nonprofit corporation or eligible LLC.²

On top of the managing general partner’s OCC, the partnership must obtain a Supplemental Clearance Certificate (SCC) for each low-income property it owns. The general partners must certify, under penalty of perjury, that the property is financed through qualifying sources, that an enforceable regulatory agreement or recorded deed restriction limits occupancy to lower-income households at restricted rents, and that savings from the exemption are used to maintain affordability or reduce rents.⁶

You cannot get an SCC without the managing general partner first holding a valid OCC, so limited partnerships should start the OCC process well ahead of any property-level filing.⁶

How the Exemption Applies to Units and Rents

The exemption is proportional. A property gets a partial exemption equal to the percentage of residential units serving lower-income households. If a 100-unit building has 60 qualifying units, the exemption covers 60% of the assessed value.²

Lower-income households are those earning no more than 80% of the area median income, adjusted for family size. HUD publishes updated AMI figures annually for every metropolitan area and county.⁷ Rents on qualifying units cannot exceed the limits set by the property’s deed restrictions, regulatory agreements, or financing terms. Where those documents don’t set rent limits, the default is the affordable rent standard in Health and Safety Code Section 50053.²

Deed restrictions and regulatory agreements run with the property, not the owner, so affordability requirements survive a sale. For limited partnerships applying for an SCC, a copy of the recorded restriction or agreement is a required attachment.⁸

Vacancies during lease-up or between tenants do not disqualify a unit. Units reserved for lower-income households at affordable rents that are temporarily vacant because of tenant turnover or repairs still count as occupied for exemption purposes.²

Filing the Annual Claim

Once your organization holds a valid OCC, and an SCC if you are a limited partnership, the annual property-level claim goes to the county assessor where the property sits. The base form is BOE-267, the Claim for Welfare Exemption, used for any first-time filing in a county or for a new property location.⁹

For low-income housing, you also file a supplemental affidavit reporting occupancy and income data. The form depends on ownership structure:

BOE-267-L for properties owned by a nonprofit corporation or eligible LLC housing lower-income households.¹⁰
BOE-267-L1 for low-income housing owned by limited partnerships.
BOE-267-L2, the tenant data worksheet that accompanies the L or L1 form.
BOE-267-L4 for reporting over-income tenants under the 100% AMI rule AB 84 created.

BOE-267-H, for housing elderly or handicapped families, is a different form for a different purpose and is not the supplement for general low-income housing claims.⁹

Have your IRS or Franchise Tax Board determination letter, certified financial statements, tenant income data for every qualifying unit, and rent rolls or lease agreements ready to submit. The assessor uses these records to verify each unit’s occupants fall below the income threshold and pay restricted rents. Tenant records are where claims most often get tripped up.

Deadlines and Late Filing

The welfare exemption claim must be filed with the county assessor by February 15 each year to receive the full exemption for the upcoming fiscal year.¹¹

Missing the deadline doesn’t disqualify a claim, but under Revenue and Taxation Code Section 270 it costs money:

Filed by the next January 1 lien date: 90% of the tax, penalty, or interest is canceled or refunded, and the owner absorbs the remaining 10%.
Filed after that date: 85% is canceled or refunded, leaving the owner responsible for 15%.

Section 270 also caps the exposure. Regardless of timing, any total tax, penalty, and interest amount exceeding $250 must be canceled or refunded, so the most a late filer pays on the claim is $250.¹²

1
California State Board of Equalization. Legislative Bill Analysis – Assembly Bill 84 (Ward)
2
California Legislative Information. California Code RTC 214 – Taxable and Exempt Property
3
LegiScan. Bill Text CA AB84 2023-2024 Regular Session Amended
4
California State Board of Equalization. Claim for Organizational Clearance Certificate – Welfare Exemption
5
California State Board of Equalization. Claim Forms for Organizational Clearance Certificate or Supplemental Clearance Certificate for Managing General Partner
6
Legal Information Institute. California Code of Regulations Title 18 Section 140.2 – Requirements for Supplemental Clearance Certificate
7
U.S. Department of Housing and Urban Development. Income Limits
8
California State Board of Equalization. Welfare Exemption for Low Income Rental Housing and Supplemental Clearance Certificate Requirements for Limited Partnerships
9
California State Board of Equalization. Welfare and Veterans Organization Exemptions Use Requirements and Exemption Claim Forms
10
California State Board of Equalization. Welfare Exemption Supplemental Affidavit Housing – Lower Income Households
11
California Department of Tax and Fee Administration. Property Tax Payment and Relief – Welfare or Veterans Organization Exemptions Frequently Asked Questions
12
Justia Law. California Revenue and Taxation Code Article 2.5 Late Exemption Claims