BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 711
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          ASSEMBLY THIRD READING
          AB 711 (Lara)
          As Introduced  February 17, 2011
          Majority vote 

           REVENUE & TAXATION  6-0                                         
           
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          |Ayes:|Perea, Beall, Charles     |     |                          |
          |     |Calderon, Cedillo,        |     |                          |
          |     |Fuentes, Gordon           |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           SUMMARY  :  Shifts the burden of proof from a county assessor to a 
          taxpayer in an assessment appeal hearing involving the 
          taxpayer's vacation or secondary home.  Specifically,  this bill  : 
           

          1)Revises, for purposes of Revenue and Taxation Code (RT&C) 
            Section 167, the definition of an "owner-occupied single 
            family dwelling" to mean a single-family dwelling that 
            satisfies both of the following:

             a)   The dwelling is the owner's principal place of 
               residence; and, 

             b)   The dwelling qualifies for a homeowners' property tax 
               exemption. 

          2)Shifts the burden of proof, by revising the definition of 
            "owner-occupied single-family dwelling," in favor of a county 
            assessor in any administrative hearing involving the 
            imposition of a property tax on, or the assessment of, a 
            taxpayer's or assessee's owner-occupied single-family dwelling 
            that is a vacation or a secondary home.

           EXISTING LAW  :

          1)Provides for a rebuttable presumption regarding the burden of 
            proof in favor of a taxpayer in an assessment appeal hearing 
            involving the imposition of a tax on, or the assessment of, an 
            owner-occupied single-family dwelling.  (R&TC Section 167). 









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          2)Specifies that the homeowner's exemption does not extend to 
            property that is a vacation or secondary home of the owner.  
            It also does not apply to a property that is vacant, rented, 
            or under construction on the lien date.  (R&TC Section 218). 

           FISCAL EFFECT  :  According to the State Board of Equalization 
          staff, this bill will have no impact on General Fund revenues. 

           COMMENTS  :   

          Author's Statement.  The author states that, "Section 167 of the 
          Revenue and Taxation Code provides that the assessor has the 
          burden of proof in any administrative hearing on an 
          owner-occupied single-family dwelling.  In 2010, a California 
          Court of Appeal overturned an interpretation by finding that an 
          owner of a vacation home should be given the benefit of the 
          presumption of correctness, and that the assessor had the burden 
          of proof.

          "AB 711 would provide that an owner-occupied single-family 
          dwelling means a single-family dwelling that is the owner's 
          principal place of residence and that qualifies for a 
          homeowners' property tax exemption.

          "By making this correction, no property owner is losing the 
          right to appeal a value.  In hearings, both the assessor and the 
          applicant will present evidence, and the board or hearing 
          officer will make a determination based on evidence presented.

          "AB 711 is not a new tax.  "Owner-occupied" was always intended 
          to protect hardworking Californians who own the home in which 
          they live and not intended to give those owning multiple 
          properties protection for every dwelling they own.

          "AB 711 corrects and clarifies the meaning of an 
          "owner-occupied" dwelling for Section 167 of the Revenue and 
          Taxation Code."

          The Argument in Support.  According to the sponsor of this bill, 
          this bill is needed to correct and clarify that the burden of 
          proof in favor of the taxpayer in an assessment appeal hearing 
          should be limited to principal places of residence and should 
          not apply to vacation homes.  The sponsor believes that this 
          bill is consistent with the original intent of R&TC Section 167 








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          and states that the traditional interpretation of the term 
          "owner-occupied single-family dwelling" has been limited to a 
          taxpayer's principal residence that qualifies for a homeowner's 
          or disabled veterans' exemption.  Finally, the sponsor argues 
          that this bill is intended "to correct an oversight in the 
          original language."

          Background.  A taxpayer may protest the assessments of his or 
          her property by appealing to a local assessment appeals board.  
          An assessor is generally entitled to the presumption affecting 
          the burden of proof that he or she has properly performed his or 
          her duty to assess all properties fairly and on equal basis.  
          ÝEvidence Code (EC) Section 664; Hunt-Wesson Foods, Inc. v. 
          County of Alameda (1974) 41 Cal.App.3d 163, 180].  In other 
          words, the taxpayer has the burden of proving the property was 
          improperly assessed.  ÝTexaco Producing v. County of Kern (1998) 
          66 Cal.App.4th 1029, 1046].  Thus, in a hearing before an 
          assessment appeals board, the taxpayer with the burden of proof 
          must present his or her evidence first.  ÝCal. Code Regs., Title 
          18, Section 313(c)].  However, a county assessor has a burden of 
          proof in certain types of assessment appeals hearings that 
          involve:  a) the value of owner-occupied single-family 
          dwellings;              b) penalty assessments; c) escape 
          assessments; d) non-enrollment of a purchase price; and,        
          e) when the county assessor intends to report a higher assessed 
          value than the one on the assessment roll.  In all of those five 
          types of assessment appeals hearings, the county assessor must 
          affirmatively establish, by a preponderance of evidence, the 
          correctness of his or her opinion of value or other assessment 
          action. 

          R&TC Section 167 is one of those statutory exceptions to the 
          normal burden of proof imposed on the taxpayer.  R&TC Section 
          167 provides that, once the taxpayer or assessee has supplied 
          all information as required by law to the assessor in an 
          administrative hearing involving an owner-occupied, 
          single-family dwelling, the burden of proof shifts to the 
          assessor.  In other words, it creates a rebuttable presumption 
          that the owner's valuation is correct and the burden is on the 
          county assessor to overcome the presumption.  The application of 
          this section is limited to assessment appeals involving the 
          imposition of a tax on, or the assessment of, an owner-occupied 
          single-family dwelling, or the appeal of an escape assessment.  









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          The Recent Development:  Farr v. County of Nevada.  Recently, 
          the California Court of Appeal reiterated that, under the 
          presumption affecting the burden of proof in favor of the 
          homeowner in a hearing before an assessment appeals board 
          involving an owner-occupied single-family home, the homeowner's 
          valuation is presumed correct and the burden is on the assessor 
          to overcome the presumption.  ÝFarr v. County of Nevada (2010) 
          187 Cal.App.4th 669].  The term "owner-occupied single-family 
          dwelling" is not defined in the statute but the court 
          interpreted that term to include an owner-occupied vacation or 
          second home, when it held that the Nevada County Assessment 
          Appeals Board failed to apply the statutory presumption 
          affecting the burden of proof in favor of the homeowner of a 
          vacation home. 

          Exclusion of Vacation and Secondary Homes.  The new definition 
          of the term "owner-occupied single-family dwelling" proposed by 
          this bill would exclude vacation and secondary homes and would 
          be limited only to principal residences that qualify for the 
          homeowners' property tax exemption.  If this bill were to become 
          law, then in an assessment appeal hearing involving the 
          assessment of a vacation or secondary home, the property owner 
          would have the burden of proof that the property was improperly 
          assessed and would have to present his or her evidence first. 

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


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