BILL ANALYSIS                                                                                                                                                                                                    



                                                                           
           AB 157
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 157 (Anderson)
          As Amended  August 17, 2010
          Majority vote.  Tax levy
           
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          |ASSEMBLY:  |76-0 |(June 2, 2009)  |SENATE: |36-0 |(August 23,    |
          |           |     |                |        |     |2010)          |
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           Original Committee Reference:    REV. & TAX.

          SUMMARY  :  Allows the County of San Diego to extend, by two  
          years, the time period for transferring the base year value of  
          property substantially damaged or destroyed by the Cedar Fire  
          that began in October 2003 (Cedar Fire).    

           The Senate amendments  :
           
           1)Delete the general provision that increased from five years to  
            seven years the amount of time a property owner has to acquire  
            or construct property to replace property substantially  
            damaged or destroyed by any state-declared disaster and remain  
            eligible to receive a base year value transfer.

          2)Allow the County of San Diego Board of Supervisors to extend  
            the time period for transferring the base year value of  
            property substantially damaged or destroyed by the Cedar Fire  
            to comparable property within the same county by two years.  

          3)Apply to the determination of base year values for fiscal year  
            (FY) 2003-04 and FYs thereafter.  

          4)Provide that, notwithstanding Revenue and Taxation Code  
            Section 2229, the state shall not reimburse any local agency  
            for property tax revenues lost as a result of this bill.  

           EXISTING LAW  :

          1)Values property at its 1975 fair market value, with annual  
            increases thereafter limited to the amount of inflation or 2%,  
            whichever is less, until the property changes ownership or new  
            construction occurs.  Once a "reassessable" event occurs, the  
            value of the property for tax purposes is re-determined based  








                                                                           
           AB 157
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            on its market value.  The value initially established, or  
            re-determined where appropriate, is referred to as the "base  
            year value."

          2)Provides for various situations where the base year value of a  
            property is either retained (notwithstanding new construction  
            or a change of ownership), or transferred to another property.  
             These special situations are provided under various  
            constitutional amendments modifying the original Proposition  
            13 framework and serve to avoid the otherwise required  
            reassessment of a property to its current market value.   

          3)Provides that persons who own property substantially damaged  
            or destroyed in a state-declared disaster may transfer the  
            base year value of that property to a property acquired or  
            constructed as a replacement if it is acquired within five  
            years of the disaster.  

           AS PASSED BY THE ASSEMBLY  , this bill:

          1)Increased, from five years to seven years, the amount of time  
            a property owner has to acquire or construct property to  
            replace property substantially damaged or destroyed by a  
            state-declared disaster and remain eligible to receive a base  
            year value transfer.  

          2)Applied to any comparable replacement property acquired or  
            constructed as a replacement for property substantially  
            damaged or destroyed by a disaster occurring on or after  
            October 1, 2007, and to the determination of base year values  
            for FY 2007-08 and FYs thereafter.  Applied, in addition, to  
            any comparable replacement property acquired or constructed to  
            replace property substantially damaged or destroyed by the  
            Cedar Fire, and to the determination of base year values for  
            FY 2003-04 and FYs thereafter.  

          3)Contained legislative findings and declarations regarding the  
            need for special legislation.  Specifically, the findings  
            noted that many homeowners were still struggling to replace  
            homes lost in the wildfires that occurred in San Diego County  
            in October of 2003.  

          4)Takes immediate effect as a tax levy.  









                                                                           
           AB 157
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           FISCAL EFFECT  :  The Board of Equalization (BOE) estimates  
          property tax losses of less than $10,000 per year.  

           COMMENTS  :  The author states, "Assembly Bill 157 is a disaster  
          relief bill that would extend the timeframe for survivors of the  
          devastating 2003 Cedar Fire to replace their fire-destroyed  
          properties."  The author goes on to state, "Nothing will ever be  
          the same again for survivors of these catastrophic fire events,  
          but we can help.  The time it takes to rebuild homes and lives  
          cannot be underestimated, and for many, restoration is an  
          ongoing challenge.  Even now, property owners struggle to  
          resolve the necessary but time-consuming issues surrounding the  
          replacement of their [homes].  I introduced Assembly Bill 157 as  
          a simple way to ensure a realistic timetable for addressing the  
          losses that survivors have suffered."

          BOE states:

          1)Base year value transfers provide tax relief to disaster  
            victims.  "Permitting persons to 'transfer' their base year  
            value from one property to another provides tax relief by  
            allowing property owners to continue paying taxes on the  
            replacement property equivalent to that paid on the property  
            from which they were displaced.  Without a base year value  
            transfer, the taxes on the new property would likely be  
            significantly more because, under the general change in  
            ownership laws, the taxes would be based on the property's  
            current fair market value.  The rationale for providing a base  
            year value transfer is that the tax laws should not further  
            afflict disaster victims by imposing upon them higher property  
            taxes.  If the disaster had not occurred, those individuals  
            would not have been compelled to relocate and thereby forfeit  
            their Proposition 13 protected base year values."  

          2)Five years might not be enough time.  "While most property  
            owners will likely fit into the existing five-year period, the  
            financial impact to the individual property owner that doesn't  
            can be significant.  Delays occur for a variety of reasons:  
            unsettled insurance claims, uninsured or underinsured property  
            owners, limited supply of replacement properties available for  
            purchase, and lack of construction workers.  This is  
            especially true where the disaster creates mass destruction in  
            a localized area.  And in present times, there are added  
            reasons for delays, such as difficulties in obtaining  








                                                                           
           AB 157
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            financing or purchasers that are experiencing unprecedented  
            delays in completing the purchase of a bank owned home." 

          Committee Staff Notes:  Under existing law, victims of the Cedar  
          Fire had until October of 2008 to acquire replacement property  
          eligible for a base year value transfer.  Property purchased  
          after this date would, generally, be assessed at its fair market  
          value.  Under this bill, a victim of the Cedar Fire who  
          purchased comparable replacement property after October of 2008  
          would be entitled to retroactive application of a base year  
          value transfer, assuming enactment of an appropriate ordinance  
          by the San Diego County Board of Supervisors.

           
          Analysis Prepared by  :  M. David Ruff / REV. & TAX. / (916)  
          319-2098 


          FN:  
          0006245