California bill would deny the charity property tax exemption to detention facilities, a break an ICE center's nonprofit owner has received
Senate Bill 420 has been on Gov. Gavin Newsom's desk since Sept. 4. If he neither signs nor vetoes it by Sept. 30, it becomes law without his signature and takes effect Jan. 1.
Sacramento. Property used as a jail or detention center would not qualify as charitable under California's welfare exemption from property tax, under a bill awaiting Gov. Gavin Newsom's decision. Under the state constitution, it becomes law unless he vetoes it by Sept. 30.
Senate Bill 420, by Sen. Steve Padilla, a Democrat from San Diego, passed the Assembly 62 to 10 on Aug. 25, and the Senate agreed to the Assembly's version 32 to 0 on Aug. 28. As of Sept. 29 the Legislature's bill history showed no action on it, and the governor's lists of signed and vetoed bills did not name it.
What the bill says
The welfare exemption frees from property tax the property of nonprofit organizations used exclusively for religious, hospital, scientific or charitable purposes. The State Board of Equalization first certifies that an organization qualifies; the county assessor then judges each property's use.
SB 420 adds a section to the Revenue and Taxation Code saying those purposes do not include property, or any portion of it, operated as a detention facility. It borrows the Penal Code's definition: any facility where people are incarcerated or involuntarily confined to serve a court's sentence or while awaiting a trial, hearing or other judicial or administrative proceeding. The text does not limit it to privately run facilities. It declares itself a statement of existing law, not a change. If enacted, it takes effect Jan. 1.
The case behind it
Legislative analyses trace the bill to a May 13 KPBS investigation of the Imperial Regional Detention Facility near Calexico, one of eight immigration detention centers ICE uses in California. The Brawley Community Foundation, a nonprofit, owns the building and, through a subsidiary, the land beneath it. The Imperial County assessor has granted the subsidiary the exemption every year since 2016, worth an estimated $6 million so far, according to the Senate Revenue and Taxation Committee's analysis.
The board issued its clearance in 2015, reasoning that running a prison lessens a burden of government. At a June 22 board hearing, the assessor said the facility still qualified and that the owner pays some property tax because not all of the parcel is used for detention. KPBS reported, citing state tax officials, that it is the only immigration detention center in California with the exemption. The board estimates the bill would add about $721,000 a year in property tax.
The Senate floor analysis lists 16 supporters, among them the California Association of Nonprofits, the California Community Foundation, the California Assessors' Association and the Board of Equalization itself, and records no opposition.
“Protecting the integrity of California's tax system requires ensuring that charitable tax exemptions truly serve the public good.”
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