BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 563
                                                                  Page  1

          Date of Hearing:   May 27, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 563 (Furutani) - As Amended:  May 11, 2011 

          Policy Committee:                              Revenue and 
          Taxation     Vote:                            6-3

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              Yes

           SUMMARY  

          This bill authorizes city employees to obtain or access 
          otherwise confidential information from the county assessor when 
          the city is conducting an investigation to determine whether the 
          documentary transfer tax (DTT) is imposed.  Specifically, this 
          bill:  

          1)Requires a county assessor to disclose information, furnish 
            abstracts and permit access to all records in his/her office 
            to employees of a city that is conducting an investigation to 
            determine whether a DTT is to be imposed. 

          2)Imposes a state-mandated local program and states that, if the 
            Commission on State Mandates determines that this bill 
            contains mandates by the state, reimbursement to local 
            agencies and school districts for the costs shall be made 
            pursuant to the statutory provisions.  

           FISCAL EFFECT  

          Mandated state reimbursement is unlikely.  The records can be 
          made available at county offices during the normal course of 
          business for minimal cost.

           COMMENTS  

           1)Purpose.   The author states, "AB 563 would allow for 
            information sharing between County Assessor's Offices' and 
            cities to identify change of ownership legal entity transfers 
            and other real property transfers that may not be currently 
            captured.  Enactment of the proposed legislation is estimated 








                                                                  AB 563
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            to result in improved and increased collection of the 
            Documentary Transfer Tax at a time of fiscal crisis for local 
            governments."

           2)Arguments in support .  The City of Los Angeles, sponsor of AB 
            563, believes that "an information sharing program, modeled 
            after the AB 63/SB 1146 program that was initiated in the fall 
            of 2001 would prove successful in capturing tax owed to local 
            governments, while maintaining taxpayer confidentiality 
            protections."  The sponsor states that, "At a time of fiscal 
            crisis for local governments, this type of program would help 
            result in improved and increased collection of an existing 
            revenue source."

           3)Documentary transfer tax  .  The DTT law, enacted in 1967, 
            allows cities and counties to enact, by ordinance, taxes on 
            documents that serve to transfer real property.  The DTT 
            applies to deeds of transfer of realty within the jurisdiction 
            that imposes a DTT and is based on the value of the transfer.  
            The tax may be used for general or specific purposes, although 
            all DTTs levied thus far are general taxes.  The tax is 
            administered by county recorders who cannot, by law, record 
            the property transfer until the tax is paid.  Counties collect 
            the tax but remit the city tax to the appropriate city.   

            All of California's 58 counties impose the tax, and hundreds 
            of California cities also levy the tax, ranging from the 
            general law city rate of $.55 for each $500 of value up to 
            $7.50 in the City of Oakland.  Non-charter cities within a 
            county that imposes a DTT may impose its tax at half of the 
            rate of the county, which works as a credit against the county 
            rate.  Charter cities may impose a DTT at a higher rate, but 
            if they do set a higher rate, then the city DTT does not serve 
            as a credit against the county tax.  

           4)Access to records in the county assessor's office  .  Existing 
            law provides that any information and records in the county 
            assessor's office are not public documents and shall not be 
            open to public inspection, unless specifically exempted by 
            law.  Exemptions include sharing of information with law 
            enforcement agencies, county grand jury or the board of 
            supervisors.  In 2009, the list of enumerated exemptions was 
            expanded to allow a county recorder access to all records in 
            the assessor's office for purposes of determining whether a 
            DTT is due  .








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           5)Similar legislation.   SB 816 (Ducheny), Chapter 622, Statutes 
            of 2009, made changes in the DTT law relative to city 
            ordinances, assessor records, and change of ownership 
            statements, including allowing county recorders to assess the 
            county assessors' records when investigating if a DTT is due. 



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081