BILL ANALYSIS Ó
AB 2207
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Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2207 (Gordon) - As Amended: May 7, 2012
Policy Committee: Revenue and
Taxation Committee Vote: 8-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill clarifies the scope and application of the state's
property tax exemption for lands held by nonprofit organizations
for habitat, open space and recreational uses. Specifically,
this bill:
1)Provides that for purposes of determining whether the
nonprofit's property is qualified for the tax exemption,
activities or leases do not disqualify the property, if the
activities or leases further the conservation objectives of
the property as provided in a qualified conservation
management plan for the property, as defined.
2)States that, if the Commission on State Mandates determines
this bill contains costs mandated by the state, reimbursement
to local agencies and school districts for those costs will be
made pursuant to the procedures in the Government Code.
3)Provides that no appropriation is made by this act and the
state shall not reimburse any local agency for any property
tax revenues it loses because of this legislation.
4)Takes effect immediately as a tax levy.
FISCAL EFFECT
1)In the absence of this bill, approximately $300,000 of
property tax would be allocated to other units of local
government according to existing law on the distribution of
local property tax. To the extent this bill prevents these
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revenues from flowing to school districts, there would be a
corresponding cost to the GF as the property tax would
otherwise offset GF obligations to schools, pursuant to the
Proposition 98 minimum funding guarantee. Assuming
approximately 40% of local property tax revenue is allocated
to schools; this bill would have a cost to the GF of
approximately $120,000.
2)Mandates state reimbursements to county assessors of
approximately $50,000 for costs of administering the bill's
provisions.
COMMENTS
1)Author's Statement . The author states AB 2207 provides needed
clarifying language concerning the state's property tax
exemption for lands held by nonprofit organizations for
habitat, open space and recreational uses. The need for the
bill arises because a handful of counties have decided that
nonprofits who earn income from activities or leases
disqualifies the property from receiving the property tax
exemption in whole or part, even though these activities
further the purposes for which the exemption was created,
according to the author. The author notes AB 2207 directs
that such activities do not disqualify the nonprofit from the
exemption so long as the activity is consistent with the
management plan for the property.
2)Arguments in Support . The proponents of this bill, including
the California Council of Land Trusts, argue that existing law
provides ambiguous guidance to local governments for assessing
the eligibility of land for general welfare tax exemption when
the land generates revenue from management practices, such as
cattle grazing, hunting of invasive species or other
activities consistent with and that further property's
conservation objectives. The proponents argue that AB 2207
would improve the ability of the land conservation community
to protect and conserve California's open-space lands by
ensuring that all properties are treated similarly and the
benefits of grazing and similar activities for habitat and
open space lands in California can be realized.
3)Background . Assessors in five counties disallowed the welfare
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property tax exemption, in whole or part, for open-space lands
held by nonprofit organizations because those organizations
had received income on the property from grazing leases or
hunting fees. The issue was raised as to whether cattle
grazing or hunting for invasive species, among other
activities, qualify as allowable for purposes of the welfare
exemption for open-space lands. Existing law does not address
this issue, but there are conflicting court decisions and
individual opinions from the State BOE. Under R&TC Section
254.5, county assessors have full discretion in determining
whether the property is eligible for the welfare exemption.
4)Exemption background . Existing law provides a property tax
exemption for property irrevocably dedicated to religious,
hospital, scientific or charitable purposes, if the property
is used for the actual operation of the exempt activity and is
owned by a nonprofit entity qualified as an exempt
organization by the Internal Revenue Service, the Franchise
Tax Board, or both. This exemption is referred to the welfare
exemption and is contained in the state Constitution.
Property that is sued for conservation and open space and
meets the other welfare exemption requirements is eligible for
the exemption.
.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081