BILL ANALYSIS Ó
AB 703
Page 1
ASSEMBLY THIRD READING
AB 703 (Gordon)
As Amended May 24, 2011
Majority vote. Tax levy
REVENUE & TAXATION 7-0 APPROPRIATIONS 12-5
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|Ayes:|Perea, Beall, Charles |Ayes:|Fuentes, Blumenfield, |
| |Calderon, Fuentes, | |Bradford, Charles |
| |Gordon, Harkey, Nestande | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
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SUMMARY : Extends the sunset date of the property tax welfare
exemption that applies to certain specified nature resources and
open-space lands. Specifically, this bill :
1)Extends the sunset date of the property tax welfare exemption
for property that is used exclusively for the preservation of
specified nature resources and open-space lands from January
1, 2012, until January 1, 2022.
2)Extends the January 1, 2013, repeal date until 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 Revenue and
Taxation Code (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
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General Fund (GF) expenditures of about $4 million to backfill
property revenues that otherwise would go to schools.
COMMENTS :
Author's statement . The author states that, "As is true in my
district, open-spaces and parklands are vitally important to the
quality of life in communities across California. Each of us
benefits from these preserved green spaces, whether they are for
the protection of wildlife, for the outdoor education of our
urban youth, or for recreation by all who enjoy California's
open spaces.
"Many of these green spaces are owned and operated by charitable
organizations for the public benefits they provide. Existing
property tax law has acknowledged the value of this charitable
service since 1971, affording these lands with an exemption from
property taxes. This exemption has allowed non-profit
organizations to focus their limited funds on the long-term
stewardship of these important lands, and in many cases on
providing the public with educational programs not offered
anywhere else. Without extending the current 2012 sunset
provision associated with the exemption, these charitable
services will be threatened. AB 703 would eliminate this
sunset. By doing so, AB 703 would provide the same long-term
property tax assurances to these important green spaces that are
currently afforded to non-profit schools, hospitals, and
churches.
"AB 703 is vitally important not only to the dozens of
charitable conservation organizations that are dedicated to
protecting our open-spaces. It is vitally important to the
quality of life in each of our local communities."
Arguments in support . The proponents of this bill argue that AB
703 (Gordon) is essential for non-profit organizations to be
able to hold and manage lands for recreation, open space and
habitat purposes. It would "provide the same long-term property
tax assurances to important open-space lands that are currently
afforded to schools, hospitals, and churches operated by
non-profit organizations." They state that wildlife
sanctuaries, nature preserves, and other open-space lands
provide "high quality outdoor experiences for California
families and children at no cost to the state or local
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jurisdictions." Finally, they contend that, without the
benefits of AB 703, many of those programs that service local
communities will be reduced, further expansion of land-based
conservation investment will be deferred, and "nonprofits will
be forced to consider alternative ownership, including possible
abandonment and ? reversion to state ownership."
History of the welfare exemption for nature resources and
open-space lands . In 1970, the Assembly Revenue and Taxation
Committee held an interim hearing and conducted several studies
regarding alternative tax policies intended to encourage natural
lands preservation in the state. The staff report submitted to
the Committee indicated that local governments were reluctant to
preserve open space areas, recreational areas, and ecologically
valuable areas because they heavily relied on property tax
revenues. ÝThe Fiscal Implications of Environmental Control:
an Appendix to Final Report of the Assembly Committee on Revenue
and Taxation, Interim Activities (1970), pp. 90-92]. Moreover,
the assessment practices used by local county assessors to value
open space areas lacked uniformity and varied widely among
counties.
Subsequently, in 1971, R&TC Section 214.02 was enacted to extend
the application of the welfare property tax exemption to land in
its natural state. The application of the exemption was limited
to property acquired by nonprofit organizations that is used
exclusively for the preservation of native plants and animals or
of geographical formations of scientific or educational interest
or open space lands used solely for recreation and for the
enjoyment of scenic beauty. According to the staff at the BOE,
"ÝT]he intent of the original legislation enacting R&TC Section
214.01 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 as a result of a Senate Revenue and
Taxation Committee hearing to ensure that the charitable
organizations sold or donated the lands rather than hold them
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." When the original exemption expired after the lien
date in 1982, it has continuously been extended, first, until
1992, then, to 2002, and, most recently, to January 1, 2012.
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The extension of the sunset date . Under existing law, the
open-space property tax exemption referenced above is scheduled
to be repealed on January 1, 2013. The exemption is currently
claimed for hundreds of properties located in California.
Examples of exempted properties include those held by the Nature
Conservancy, Monterey Bay Aquarium Foundation, Yosemite
Foundation, Richardson Bay Audubon Center & Sanctuary, Peninsula
Open Space, East Bay Zoological Foundation, Sacramento Garden
and Arts Center, Save the Redwoods League, Sierra Club
foundation, and many others. If the exemption is not renewed,
those properties will be subject to tax. Potentially, without
the tax exemption, some non-profit groups would not be able to
afford to keep the land and continue the conservation projects.
The author believes that the loss of the welfare exemption for
open-space lands will be highly disruptive to state and local
conservation efforts and will potentially result in degradation
of our natural resources. Currently, the non-profit
organizations that hold exempt open-space land pay maintenance
costs on the land. While some of the property currently owned
by nonprofit organizations may be transferred to the State, if
the State were willing to accept ownership and maintenance, it
will place an additional burden on the State's GF. The
exemption that is the subject of this bill has been continuously
available since 1972. This bill is consistent with past
measures that extended the sunset date of the open-space
property tax welfare exemption.
Related legislation . SB 198 (Chesbro), Chapter 533, Statutes of
2001, extends the property tax exemption for nature resources
and open-space lands from January 1, 2002, to January 1, 2012.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0000928