BILL ANALYSIS                                                                                                                                                                                                    


            Senator Lois Wolk, Chair

                                                             SB 1494- 

            Committee on Revenue and Taxation 
                                             Introduced: March 15, 2010


            Hearing: April 14, 2010                          Fiscal: No

            SUMMARY:  Makes Eight Changes to Property Tax Law


            I.  Renumbering Error

                 EXISTING LAW California Constitution) provides that  
            all property is taxable unless explicitly exempted by the  
            Constitution or federal law, and imposes property tax on  
            all taxable real and personal property. The Constitution  
            provides that taxation of "real" property (structures  
            affixed to the ground, etc.) is limited to the 1975  
            valuation adjusted for new construction plus an annual  
            inflation factor of no more than 2%. When a change in  
            ownership takes place, or the property is newly  
            constructed, assessors revalue real property at full market  
            value as of the year the transaction or construction takes  

                 EXISTING LAW provides that the creation, termination,  
            and transfer of certain leasehold interests with a term of  
            more than 35 years can be a change in ownership resulting  
            in reassessment.  

                 THIS BILL corrects a drafting error inadvertently  
            created by recent amendments made by Ch. 364, Stats. 2006  
            (AB 3076, Committee on Revenue and Taxation) by adding  


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            paragraph designations (R&T 61).

            II.  Allowing Trustees to Apply for and Inspect  
                      Parent-Child Transfers and Base Year Value  

                 EXISTING LAW (California Constitution) provides an  
            exception to "change of ownership" for property transfers  
            between spouses under specified circumstances, for  
            transfers between parents and children (Proposition 58,  
            1986), and for transfers between grandparents and  
            grandchildren (Proposition 193, 1996), subject to certain  

                 EXISTING LAW provides that a change of ownership has  
            not occurred when parents transfer the principal residence  
            and the first $1 million of full cash value of all other  
            real property to their children when a claim is filed.   
            Existing law defines "children" as:

                             Any child born of the parent or parents  
                      except a child adopted by another person.
                             Any stepchild of the parent or parents  
                      and the spouse of that stepchild while the  
                      relationship of stepparent and stepchild exists.

                             Any son or daughter-in-law of the  

                             Any child adopted by the parent or  
                      parents pursuant to statute.

                 Claims for the parent-child change in ownership must  
            be filed, signed, and may be inspected only by the persons  
            specified above.  Trustees are not expressly listed;  
            however, the State Board of Equalization (BOE) has opined  
            that trustees may file for parent-child transfers as part  
            of their fiduciary duty.


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                 THIS BILL adds a trustee of a trust to that list (R&T  

                 EXISTING LAW allows homeowners over the age of 55 and  
            disabled persons one opportunity to transfer their base  
            year values to homes of equal or lesser value within the  
            same county (Proposition 60, 1988), or to homes in counties  
            that adopt ordinances allowing the transfer (Proposition  
            90, 1990), under specified conditions.  Currently, Alameda,  
            Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and  
            Ventura Counties allow these out-of-county transfers.  Base  
            year transfers allow taxpayers to continue to pay property  
            taxes at the amount and rate of growth of their previous  
            home and prevent reassessments to the cash value of their  
            newly purchased home.  Coowners who are joint tenants, a  
            tenant in common, or a community property owner may claim a  
            base year value transfer.  BOE has opined that the present  
            beneficial owner of the trust, not the trustee, may claim  
            the base year value transfer. 

                 THIS BILL adds present beneficial trustees to the list  
            of eligible base year value claimants.

            III.  Relieving the Disaster of Disaster Relief

                 EXISTING LAW provides a homeowners' exemption from  
            property taxes equal to $7,000 in assessed value (at a one  
            percent property tax rate, the exemption reduces property  
            taxes by roughly $70) for owner-occupied homes.  Once  
            granted, homeowners' exemptions are generally permanent.   
            However, an Assessor may deny a homeowner's exemption if  
            the property becomes vacant or is under construction as of  
            the January 1st lien date.  The homeowners' exemption is  
            disallowed if, on the January 1 lien date, a home  
            previously receiving the exemption has been totally  
            destroyed and has not been rebuilt and reoccupied by its  
            owners.  However, when there is a Governor declared state  
            of emergency for a natural disaster, legislation is usually  
            enacted for each disaster to allow the exemption to remain  


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            - the Code now contains 22 separate protections for  
            taxpayers from the assessor revoking the homeowners'  
            exemption in such a case, occasionally referred to as "the  
            sadistic assessor provision."   

                 THIS BILL enacts general language precluding assessors  
            from revoking homeowners' exemptions for disaster-affected  
            property upon a declaration of disaster from the Governor,  
            thereby avoiding the need for special purpose legislation  
            for each individual disaster.

            IV.  Extending Sunset on Intercounty Pipeline Valuation  

                 EXISTING LAW requires that assessors value intercounty  
            pipeline rights-of-way according to a codified assessment  
            valuation methodology (AB 1286, Takasugi, 1996), codifying  
            an agreement between assessors and intercounty pipeline  
            right-of-way owners after litigation transferred the  
            assessment duty from BOE to assessors in 1993 (Southern  
            Pacific Pipe Lines, Inc. v. State Board of Equalization, 14  
            Cal.App.4th 42).  Essentially, assessors determine value  
            based on the density classification of the pipeline on a  
            per-mile basis, and that value is rebuttably presumed to be  
            correct.  The Legislature has once before extended the  
            methodology (AB 2612, Brewer, 2000).

                 THIS BILL extends this methodology for use to the  
            2015-16 fiscal year. 

            V.  Cleanup to Assessment Appeals Statutes 

                 EXISTING LAW provides that assessment appeals boards  
            must hear and decide appeal applications within two years  
            of the filing of the application.  If the two-year time  
            period is not met, then the taxpayer's opinion of value  


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            will be enrolled for the tax year covered by the appeal and  
            in some cases will remain in effect until the appeals board  
            makes a final determination.  

                 THIS BILL makes clarifying nonsubstantive amendments  
            identified by a working group of the Tax Section of the  
            California State Bar.

            VI.  Cleanup to AB 824, Assessment Appeals Board Conflict  
                      of Interest 

                 EXISTING LAW bars certain county officials and  
            employees from representing, for compensation, property  
            owners in assessment appeal hearings in the county where  
            they work.  Last year, the Legislature consolidated all  
            affected individuals into one section of law (AB 824,  
            Harkey, 2009).

                 THIS BILL repeals provisions in R&T 1624.3, 1636.2,  
            and 1636.5 rendered outdated and duplicative in AB 824.

            VII.  Cleanup to Roll Correction Statutes 

                 EXISTING LAW states that incorrect entries on the  
            assessment roll that has been completed by the county  
            assessor and delivered to the county auditor may be  
            corrected within certain time limits depending upon the  
            nature of the error or omission. 

                 THIS BILL makes clarifying nonsubstantive amendments  
            identified by a working group of the Tax Section of the  
            California State Bar.

            VIII.  Delete Erroneous Cross Reference 


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                 EXISTING LAW requires that property taxes paid must be  
            refunded if the assessment appeals board reduces an  
            assessed value after an appeal, under R&T 1613.  However,  
            R&T 1613 was repealed and its provisions imported into  
            R&T1610.8 (SB 1063, Committee on Revenue and Taxation,  

                 THIS BILL corrects the cross reference error.

            FISCAL EFFECT: 

                 BOE estimates that SB 1494 has no revenue impact.


            A.   Purpose of the Bill

                 SB 1494 consolidates eight items that make minor,  
            technical changes to property tax law sponsored by BOE.   
            The bill improves the administration of property tax laws  
            to help both taxpayers and tax administration agencies.   
            Consolidating the measures into a single bill negates the  
            need for individual bills to enact each change.   
            Additionally, the measure only contains items with  
            universal agreement; items that are controversial or  
            problematic will be removed from the bill

            Support and Opposition

                 Support:State Board of Equalization (Sponsor)

                 Oppose:None received


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            Consultant: Colin Grinnell