BILL ANALYSIS Ó
AB 1090
Page 1
ASSEMBLY THIRD READING
AB 1090 (Blumenfield)
As Amended May 31, 2011
Majority vote
REVENUE & TAXATION 5-2 APPROPRIATIONS 11-5
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|Ayes:|Perea, Charles Calderon, |Ayes:|Fuentes, Blumenfield, |
| |Cedillo, Alejo, Gordon | |Bradford, Charles |
| | | |Calderon, Davis, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly, Harkey |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Establishes the County Deferred Property Tax Program
for Senior Citizens and Disabled Citizens (County Deferred PTP)
and allows each county to elect to participate in the program.
Specifically, this bill :
1)Allows a treasurer, or other official responsible for the
funds of a local agency, upon the adoption of a resolution by
the governing body, and with the consent of the county
treasurer, to deposit excess funds in the county treasury for
the purpose of investing the funds in the newly created
Property Tax Deferral Fund (Fund).
2)Requires the county treasurer to follow certain rules and
procedures relating to the investments in the Fund.
3)Defines "claimant" as an owner of a residential dwelling, as
specified, who applies to a participating county for deferment
of property taxes, and meets all of the following
requirements:
a) Has a household income that does not exceed $35,500;
b) Has attained eligibility for full Social Security
benefits as of the last day of the filing period for that
fiscal year (FY), or is blind and disabled, as defined,
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except in the case of retroactive deferment, as specified,
in which the age of eligibility shall be 62 years old; and,
c) Has equity value of at least 20%, meaning the amount by
which the fair market value of a residence exceeds the
total amount of any liens or other obligations against the
property.
4)Allows a participating county to require a claimant to provide
an appraisal by a licensed or certified appraiser in support
of the application, and provide for an alternate appraisal
method in specified circumstances.
5)Provides that only one claimant per residential dwelling may
have property taxes deferred pursuant to the provisions of
this bill, at any one time.
6)Allows the treasurer or treasurer-tax collector to require a
claimant to furnish evidence of the claimant's ongoing
eligibility in order to continue participation in the program
in a subsequent year.
7)States that if the claimant fails or refuses to furnish any
information requested in writing by the county, or files a
fraudulent claim, the claimant's application shall be null and
void, and any record of a deferment payment on the tax roll
shall be canceled, the tax or assessment shall be a lien as
though no payment had been made, and the amount of the lien
shall be increased by any penalties and interest resulting
from property tax delinquency.
8)Authorizes a county to elect to participate in the County
Deferred PTP by adopting a resolution indicating the county's
intention to participate in and to administer the program, and
provides that a participating county may defer a claimant's
property taxes retroactively, for taxes due on or before
February 20, 2011, and prospectively, as provided by this
bill.
9)Requires a county treasurer or county tax collector to review
the claimant's application for program eligibility, upon
receipt of a claim for property tax deferment that is
submitted within the filing period.
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10)Allows the county treasurer or tax collector, if the claimant
is eligible to participate in the program, and if there are
sufficient funds within the county's Fund, to do all of the
following:
a) Defer the property taxes due on the claimant's
residential dwelling for that FY;
b) Issue a subvention payment equivalent to the amount of
the deferred property taxes, from the county's Fund to the
county to be processed in the same manner as all other
property tax payments;
c) Direct the county auditor to apportion the subvention
payment in the same manner as if the property taxes had
been paid; and,
d) Provide a letter or other written notice to the claimant
with the relevant FY of participation for use as written
confirmation of participation.
11)Specifies that if the claimant's property taxes are deferred,
the participating county shall not charge the claimant any
penalties, or undertake any collection actions with respect to
taxes deferred.
12)Requires that the amount of property taxes deferred, plus any
interest accrued thereon, be secured by a judgment lien
against the claimant's residential dwelling for which the
property taxes are deferred.
13)Requires the county recorder to index the lien according to
the names of each record owner and the county.
14)Provides that the filing period for a claimant to apply under
the program shall be from October 1 to December 10 of each
year, but allows a county to grant a reasonable extension for
filing a claim if it determines that good cause for the
extension exists. No extension may be granted beyond the
termination for the FY for which deferment is requested.
15)Provides for other specified requirements applicable to the
county treasurer, the county assessor, the county tax
collector and participating counties, in order to implement
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the provisions of the bill.
16)Specifies the circumstances under which all amounts owned by
the claimant become due immediately.
17)Authorizes a participating county to charge a claimant an
application fee upon that claimant's submission of an
application to participate in the program, and requires the
application fees derived from all claimants in a participating
county to offset that county's costs incurred in administering
the program.
18)Requires a participating county to charge claimants' interest
on the amount of property taxes deferred and sets the
effective annual interest rate at 7% or the rate of effective
annual yield earned in the prior FY by the Pooled Money
Investment plus 2%, whichever is higher, rounded to the
nearest full percent.
19)Prohibits a lender from requiring a borrower to maintain an
impound, trust, or other similar type of account with regard
to property taxes, once the borrower has deferred these taxes
pursuant to this bill, and has submitted to the lender
evidence of tax deferment, except in specified circumstances.
20)Forbids a lender or other person authorized to take sale on
real property to file a notice of default based solely on a
borrower's failure to pay property taxes, if the borrower
provides evidence of participation in the property tax
deferment program.
21)Defines the terms "household income," "income," "owner of a
residential dwelling," "participating county," "property
taxes," "residential dwelling," as specified.
22)Makes legislative findings and declaration regarding the
importance of the Senior Citizens and Disabled Citizens
Property Tax Postponement (PT Postponement) Law and its
suspension in February 2009.
FISCAL EFFECT : Unknown. Committee staff, however, estimates
that this bill may result in moderate costs to the GF due to the
provision allowing county tax collectors to cancel delinquent
penalties and interest.
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COMMENTS :
Author's statement . The author states that, "The Senior and
Disabled Citizens Property Tax Postponement Program was
suspended with no warning in 2009, leaving program participants
no time to find alternative funding to pay property taxes. AB
1090 will help elderly and disabled Californians stay in their
homes and grants previous program participants extra time to
find vital property tax financing by establishing a 5-year
moratorium on foreclosures and impound accounts. This mirrors
the existing county waiting period for tax sales. As a county
opt-in program, AB 1090 provides a way for counties to care for
their most vulnerable citizens."
The purpose of this bill . According to the author, as the
result of the PT Postponement program's suspension, many senior
and disabled homeowners are delinquent on their property taxes.
Many of those homeowners have mortgages on their houses and are
concerned that the lenders will start initiating foreclosure
proceedings. While the number of foreclosure proceedings is
unknown, a number of former PT Postponement participants are
currently being pushed out of their houses by their lenders. AB
1090 (Blumenfield) is intended to create a uniform County
Deferred PTP program that is modeled after the suspended state
program but with tighter eligibility requirements and a new
source of funding for the County Deferred PTP loans. It is
designed to help seniors and disabled individuals as well as to
alleviate the negative impact of the program suspension on local
government revenues.
The Proposed "County Deferred PTP" Program . The suspended PT
Postponement program was funded exclusively by General Fund (GF)
moneys. In contrast, the County Deferred PTP program, proposed
by AB 1090, would be self-financing and not reliant on an annual
GF appropriation. It would be funded by a participating county
through a fund to be established within its treasury. Upon
adoption of a resolution by the county's governing body, and
with the consent of the county treasurer, excess county funds
would be deposited in the fund for the purpose of providing PT
Postponement loans to qualified claimants. AB 1090 establishes
uniform statewide eligibility criteria for the claimants and
certain rules and guidelines for a County Deferred PTP program.
The counties are authorized to charge claimants a specified
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interest rate on the property tax loans and an application fee,
which will be used exclusively to cover the costs of
administering the program. Furthermore, counties are allowed to
grant retroactive relief for individuals who could not obtain
deferment when the Legislature de-funded the original PT
Postponement program in 2009.
Under the County Deferred PTP program, the property tax loans
(i.e., the amount of property taxes deferred, plus interest
accrued) would be secured by a judgment lien against the
underlying residential dwelling. In the case of a residential
dwelling that is taxed as part of a larger unit, the lien shall
be against the entire tax parcel. The county auditor would
continue to allocate the county revenue to other local agencies
- cities, special districts, and school districts - as if the
tax had been paid until the house is sold and the lien can be
satisfied.
The amount secured by the lien will be reduced by the amount of
any payment, and will be increased to reflect interest accrual
or subsequent deferral for the claimant. Payments shall be
applied to the oldest deferral amount in order of lien
recordation date. If the lien is paid in full, the county tax
collector will be required to record a release, evidencing the
satisfaction of all amounts secured by the lien, and remove
specified information from the secured roll and assessment
records required when property taxes are postponed. The
property taxes will be immediately due and payable if the
claimant a) ceases to own the building due to sale, conveyance,
or condemnation; b) ends his/her permanent residence dwelling;
c) experiences a fall in equity value below the program's
eligibility criterion; d) refinances existing loans on the
property; or, e) was erroneously granted deferment because
he/she did not meet eligibility criteria.
Finally, similarly to the suspended PT Postponement program, AB
1090 (Blumenfield) precludes lenders from requiring a borrower
to maintain an impound, trust, or other type of account with
regard to taxes established after 1978, if the borrower chooses
to postpone taxes, unless required by federal law or if the
prohibition would impair the express obligations of a loan
agreement. AB 1090 also prohibits a mortgagee, trustee, or
other person authorized to take sale on real property because of
the mortgagor or trustor's failure to pay property taxes from
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filing a notice of default, if the borrower shows evidence of
participation in the County Deferred PTP program.
In summary, this bill provides a county with an option to defer
property taxes for homeowners residing within the county, but
may leave many low-income homeowners without assistance in
counties that choose not to participate in the program.
Application fee . This bill requires a payment of an application
fee upon submission of the claim for property tax deferment.
Under the suspended PT Postponement program, the fee was paid
only upon approval of the claim. As pointed out in the State
Controller (SC)'s analysis, the homeowners applying for property
tax assistance are low-income, and requiring a payment of the
fee upon submission of the application may deter many needed
applicants from applying for deferment.
Related legislation . AB 1718 (Blumenfield) of 2009 was
identical to this bill. AB 1718 was vetoed by Governor
Schwarzenegger.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0001035