BILL ANALYSIS Ó AB 703 Page 1 Date of Hearing: May 27, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 703 (Gordon) - As Amended: May 24, 2011 Policy Committee: Revenue and Taxation Vote: 7-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill repeals the sunset date of the property tax welfare exemption that applies to certain specified nature resources and open-space lands. Specifically, this bill: 1)Repeals the January 1, 2012 inoperative date and the January 1, 2013 repeal date of the property tax welfare exemption for property that is used exclusively for the preservation of specified nature resources and open-space lands, thereby extending it indefinitely. 2)Establishes a new inoperative date of January 1, 2023. 3)States that no appropriation is made by this bill and that the state will not reimburse any local agency for any property tax revenues lost by it pursuant to this bill's provisions. 4)Takes effect immediately as a tax levy. FISCAL EFFECT The State Board of Equalization's (BOE) staff estimates that hundreds of properties throughout the state are currently exempt from property tax pursuant to R&TC Section 214.02. It is tentatively estimated that this bill will result in the annual property tax loss of $10 million or less once the current exemption expires and the assessments on the properties are revised. Because of these lost property taxes, the state would continue to incur General Fund expenditures of about $4 million to backfill property revenues that otherwise would go to AB 703 Page 2 schools. COMMENTS 1)Purpose . The author argues that open-spaces and parklands are vitally important to the quality of life in communities across California, whether for the protection of wildlife, for the outdoor education of urban youth, or for recreation. The author notes that many of these green spaces are owned and operated by charitable organizations for the public benefits they provide, which is why existing law has acknowledged the value of this charitable service since 1971, affording these lands an exemption from property taxes. 2)History of the Exemption. The exemption was enacted in 1971 in response to concerns that property taxes were preventing preservation of open space areas. The intent of the original legislation was to assist nonprofit organizations that purchased open-space and similar lands, held the lands temporarily, and then sold or donated the lands to public agencies for permanent use as park facilities. A sunset date was included in the original legislation to ensure that the charitable organizations sold or donated the lands rather than hold then indefinitely. Since that time, it appears that many charitable organizations may be the permanent owners of lands due, in part, to the limited ability of public agencies to acquire additional parklands." The original exemption expired after the lien date in 1982. It has been extended, in 10-year increments, three times. 3)There is no registered opposition to this bill. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081