BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 402
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 402 (Ma)
          As Amended August 20, 2007
          Majority vote
           
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          |ASSEMBLY:  |45-31|(May 24, 2007)  |SENATE: |25-13|(September 7,  |
          |           |     |                |        |     |2007)          |
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           Original Committee Reference:    REV. & TAX.  

           SUMMARY  :  Makes various changes regarding change of ownership of  
          real property.  

           The Senate amendments  : 

          1)Clarify the circumstances wherein foster children may be  
            included in the definition of "children" for purposes of the  
            parent/child exclusion from change of ownership.

          2)Add double-jointing language to include changes made to a  
            statute amended in this bill also amended in SB 1045  
            (Committee on Revenue and Taxation).

          3)Create a new statute to enact the compliance requirements for  
            notices of change of ownership of interests in cooperative  
            housing corporations, etc., contained in this bill.

           EXISTING LAW  : 

          1)Requires reassessment of real property to fair market value  
            whenever there is a change of ownership.  Excludes from the  
            definition of change of ownership transfers between parents  
            and children of:  a) principle places of residence; and, b)  
            the first $1 million of real property other than principal  
            residences.  Defines "children" to include a natural child  
            (other than a natural child adopted by another), a stepchild  
            (until the marriage upon which the relationship exists is  
            terminated by divorce or, if by death, until remarriage of the  
            surviving stepparent), a son-in-law or daughter-in-law, and an  
            adopted child (other than one adopted after age 18).

          2)Requires a property owner to notify the county assessor  
            whenever there is a change of ownership.  However, there is no  








                                                                  AB 402
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            penalty for failing to file the change of ownership statement  
            unless the assessor requests the notice.  Assessors typically  
            are alerted to changes of ownership when transfer documents  
            (deeds) are filed with the county recorder's office.

           AS PASSED BY THE ASSEMBLY  , this bill:

          1)Amended the definition of "children" with respect to a change  
            of ownership exclusion to include foster children.  Identified  
            the information needed to be filed with the county assessor to  
            establish the right to the exclusion.

          2)Required owners to provide notice upon request by the county  
            assessor if a change of ownership interest occurred without  
            utilizing recorded deeds.

          3)Required reimbursement to local agencies and school districts  
            for costs that the Commission on State Mandates determined  
            were mandated by the state.

          4)Provided that no appropriation was made by this bill and the  
            state shall not reimburse any local agency for any property  
            tax assessment lost due to this bill.

           FISCAL EFFECT  :  The Board of Equalization estimates an annual  
          property tax loss related to the transfers between foster  
          parents and foster children of $173,000, resulting in a General  
          Fund revenue loss of approximately $57,000.

           COMMENTS  :  The author states, "AB 402 addresses two areas of  
          concern regarding change in ownership property tax laws under  
          Proposition 13 - It requires managers of cooperatives to report  
          the transfer of individual units in cooperative to county  
          assessors and expands Proposition 13's inter-familial tax  
          exemption to include foster children."  According to the author,  
          this bill is about assessment fairness, including foster  
          children under the inter-familial exclusion from change of  
          ownership and requiring notices for change of ownership  
          interests in housing cooperatives is just like requiring notices  
          for other changes of ownership in real property.

          Proponents state this bill, as amended, addresses concerns over  
          the administration of the exclusion for foster child/foster  
          parent transfers and the need for reporting requirements for  
          changes in ownership for stock cooperative developments.   








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          Further, the incorporation of required documentation for foster  
          child/foster parent transfers will improve administration of the  
          exclusion and minimize abuse.  Proponents believe a penalty  
          should be imposed for the failure to report transfers of  
          interest in the co-op association consistent with other  
          transfers to improve reporting compliance, which is a real  
          problem.

          Revenue and Taxation Committee staff note that the ability for  
          one form of property ownership to escape reassessments on  
          transfer creates unfairness and uncertainty within property  
          taxation.  It also undermines the general tenets of Proposition  
          13, which provide that a change of ownership causes a  
          reassessment to current fair market value.
           

          Analysis Prepared by  :    Kimberly Bott / REV. & TAX. / (916)  
          319-2098 


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