BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1494
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          SB 1494 ( Revenue & Taxation Committee)
          As Amended  August 16, 2010
          Majority vote 

           SENATE VOTE  :33-0  
           REVENUE & TAXATION       9-0    APPROPRIATIONS      17-0         
          |Ayes:|Portantino, DeVore,       |Ayes:|Fuentes, Conway,          |
          |     |Beall,                    |     |Bradford,                 |
          |     |Charles Calderon, Coto,   |     |Huffman, Coto, Davis, De  |
          |     |Fuentes, Gatto, Harkey,   |     |Leon, Gatto, Hall,        |
          |     |Nestande                  |     |Harkey, Miller, Nielsen,  |
          |     |                          |     |Norby, Skinner, Solorio,  |
          |     |                          |     |Torlakson, Torrico        |
          |     |                          |     |                          |
           SUMMARY  :  Makes several changes to the property tax law, repeals  
          duplicative provisions, and corrects erroneous cross-references.    
          Specifically,  this bill  :   

          1)Corrects a drafting error inadvertently created by recent  
            amendments made by AB 3076, (Committee on Revenue and Taxation),  
            Chapter 634, Statutes of 2006 to Revenue and Taxation Code  
            (R&TC) Section 61, relating to change in ownership provisions  
            for certain leasehold interests. 

          2)Adds a trustee to the list of persons who can file claims for  
            the parent-child and grandparent-grandchild "change in  
            ownership" exclusion claims on behalf of eligible transferors  
            and transferees.

          3)Authorizes a trustee to inspect otherwise confidential claims  
            for the exclusion previously filed.  

          4)Provides that, for purposes of the "base year value" transfer,  
            the definition of "person" includes an individual who is the  
            present beneficiary of a trust.

          5)Establishes a general provision to preclude 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  


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            individual disaster. 

          6)Extends the use of the existing assessment valuation methodology  
            for inter-county pipeline rights-of-way that is otherwise  
            scheduled to sunset on January 1, 2011.  

          7)Clarifies that in the case of assessment appeals that have not  
            been decided yet, the two-year period before a property owner's  
            opinion of value becomes controlling applies to supplemental and  
            escape assessment appeals. 

          8)Repeals provisions of R&TC Sections 1624.3, 1636.2, and 1636.5,  
            relating to assessment appeals board members and hearing  
            officers, that are duplicative of R&TC Sections 1612.5 and  

          9)Recasts R&TC Section 4831 to clarify provisions relating to the  
            statute of limitations on assessment roll corrections. 

          10)Corrects the cross-reference error in R&TC Section 5096,  
            relating to property tax refunds resulting from an assessment  

          11)Amends both the Public Resources Code (PRC) and the R&TC to  
            reflect recent changes in the state government's organizational  

          12)Includes double-jointing language to avoid chaptering out with  
            AB 2408 (Torlakson), introduced in the current legislative  
            session and pending on the Senate Floor. 

           FISCAL EFFECT  :  The State Board of Equalization's (BOE) staff  
          estimates that this bill will have no direct impact on state  

           COMMENTS  :  The purpose of this bill.  This bill, sponsored by the  
          BOE, is intended to improve the administration of property tax  
          laws to help both taxpayers and tax administration agencies and to  
          codify BOE's existing administrative practice and procedures  
          related to the transfer of real property from parents to children  
          and to the base year value transfers.  

          Leasehold Interests.  Under existing law, the creation,  
          termination, and transfer of certain leasehold interests with a  
          term of 35 years or more may be a change in ownership resulting in  


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          reassessment.  AB 3076 (Committee on Revenue and Taxation),  
          Chapter 364, Statutes of 2006, amended R&TC Section 61(c) to  
          codify the county assessor practice of reassessing only the  
          floating home, and not the berth, when a floating home undergoes a  
          change of ownership.  However, the amendments also mistakenly  
          deleted the "(1)" at the beginning of the first sentence of  
          subdivision (c).  This bill corrects that drafting error by adding  
          paragraph and subparagraph designations to the previously  
          undesignated text to make complete sentences for each provision. 

          Parent-child exclusion.  Existing law provides that a transfer of  
          real property between parents and children through the medium of a  
          trust is eligible for the exclusion from reassessment [R&TC  
          Section 63.1(9)]; however, it does not expressly list a trustee as  
          the person who may file and sign the claim for the exclusion.  In  
          its Letter to Assessors 2008/018, BOE has advised assessors that a  
          trustee can sign a claim form requesting a parent-child exclusion  
          from reassessment.  The BOE reasoned that, since the trustee has  
          the fiduciary responsibility to carry out the terms of the trust  
          and can sign legal documents on behalf of the trust, it follows  
          that he/she/it is authorized to sign the parent-child exclusion  
          claim.  Nonetheless, many practitioners and some property owners  
          are concerned that R&TC Section 63.1(d), which lists persons who  
          may sign the claim, does not expressly include trustees.  

          Base Year Value Transfer.  A person over the age of 55, or a  
          disabled person of any age, may sell his/her principal residence  
          and transfer its base year value to a replacement principal  
          residence within the same county or another county that accepts  
          inter-county transfers.  In its Letter to Assessors 2006/010, BOE  
          has advised that the individual who has the present beneficial  
          interest in a trust is considered a claimant for purposes of the  
          base year value transfer, if all of otherwise applicable  
          requirements are met.  However, existing law - R&TC Section 69.5 -  
          does not expressly address trusts and, therefore, causes  
          uncertainty and confusion among property owners and practitioners.  
           Hence, this bill is necessary to clarify existing law and to  
          eliminate that uncertainty and confusion. 

          Disaster Relief - Homeowners' Exemption.  Existing law provides a  
          homeowners' exemption from property taxes equal to $7,000 in  
          assessed value for owner-occupied homes.  An assessor may deny  
          this exemption if the property becomes vacant or is under  
          construction as of the January 1st lien date.  For example, a home  
          destroyed on or before January 1, 2010 is not eligible for the  


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          exemption for the 2010-11 year.  When a Governor has declared a  
          state of emergency for a natural disaster, legislation is usually  
          enacted to allow the exemption to apply to homes that are damaged  
          or destroyed in the disaster.  This bill would establish a general  
          rule precluding assessors from revoking the homeowner's exemption  
          for disaster-affected property upon a Governor's declaration of  
          disaster, thus avoiding the need for special purpose legislation  
          for each individual disaster.  Specifically, this bill addresses  
          eligibility for the exemption under three different scenarios.  A  
          dwelling that has been partially destroyed or damaged in a  
          disaster would continue to be eligible for the exemption if the  
          owner's absence is temporary and the owner intends to return to  
          the home.  Similarly, a dwelling that has suffered total  
          destruction in a Governor-declared disaster would continue to be  
          eligible for the exemption.  However, a dwelling that was  
          previously eligible for the exemption but no longer exists on the  
          lien date because it was totally destroyed in a disaster that was  
          not a Governor-declared disaster would not be eligible for the  
          exemption until the structure is replaced and occupied. 

          According to the sponsor, this provision codifies current BOE  
          guidance and administrative practices and is consistent with  
          legislation enacted in 2008 for the disabled veterans' exemption.   
          Furthermore, this bill improves efficiency and saves on  
          legislative bill printing costs by avoiding the need for double-  
          and triple-joining language in years with multiple disasters.  

          Inter-county Pipeline Rights-of-Way.  The valuation methodology  
          for inter-county pipeline rights-of-way was first established in  
          1996 by AB 1286 (Takasugi), Chapter 801, Statutes of 1996.  It  
          codified an agreement reached between county assessors and  
          inter-county pipeline rights-of-way owners after litigation had  
          transferred the assessment duty from the BOE to local county  
          assessors.  (Southern Pacific Pipe Lines, Inc. v. State Board of  
          Equalization, 14 Cal.App.4th 42).  The use of the methodology was  
          extended by AB 2612 (Brewer), Chapter 607, Statutes of 2000, until  
          January 1, 2011, and this bill is intended to do the same through  
          the 2015-16 fiscal years.   The BOE sponsored the extension of the  
          existing methodology at the request of both the California  
          Assessors' Association and taxpayer representatives.  

          State Government's Organizational Structure.  This bill would  
          correct responsible state agency references in the Emergency  
          Telephone Users Surcharge Act (R&TC Section 41001 et seq.) to  
          conform to the Governor's Reorganization Plan No. 1 of 2009, which  


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          transferred duties of the Division of Telecommunications in the  
          Department of General Services to the Office of the State Chief  
          Information Officer.  It would also correct responsible state  
          agency references in the Integrated Waste Management Fee Law (R&TC  
          Section 45001 et seq.) to conform to SB 63 (Strickland), Chapter  
          21, Statutes of 2009, which abolished the California Integrated  
          Waste Management Board and transferred its duties to the  
          Department of Resources Recycling and Recovery within the  
          California Natural Resources Agency.  Finally, SB 1494 would  
          delete the obsolete definition of "board" contained in the  
          Electronic Waste Recycling Act of 2003 (PRC Section 42460 et  

           Analysis Prepared by  :  Oksana Jaffe / REV. & TAX. / (916) 319-2098  
                                                            FN: 0005902