BILL ANALYSIS Ó
SB 947
Page 1
Date of Hearing: June 27, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
SB 947 (Committee on Governance and Finance) - As Amended:
June 7, 2011
Majority vote. Fiscal committee.
SENATE VOTE : 39-0
SUBJECT : Property taxation.
SUMMARY : Makes several non-controversial changes to property
tax collection laws. Specifically, this bill :
1)Allows the parent-child exclusion for transfers of interests
in cooperative housing corporations in order to correct an
inequity in current law.
2)Clarifies the definition of "substantially damaged or
destroyed" for consistency with sections of the Revenue and
Taxation Code (R&TC). Specifies that, beginning with the
2012-13 fiscal year, "substantially damaged or destroyed
property" means physical damages to either the land or the
improvements amounting to more than 50% of either the land's
or the improvement's full cash value immediately prior to the
disaster.
3)Updates citations to the building codes for purposes of the
new construction exclusion for seismic safety to include
references to the current standards used by industry.
4)Amends several sections in the R&TC to ensure that an
unmarried surviving spouse that is receiving the disabled
veterans' exemption will continue to receive the exemption if
he/she is confined to a hospital or care facility.
5)Clarifies that property tax exemptions cease as of the date of
sale or transfer of the property for consistency among various
provisions of the R&TC.
6)Extends, in specified situations, the time a claimant may
apply for the disabled veterans' property tax exemption to
SB 947
Page 2
provide a reasonable time period to file a claim.
7)Clarifies that the disabled veterans' exemption notice must be
mailed annually, prior to the lien date, to claimants who
received the exemption in the immediately preceding year.
8)Specifies the local body through which an assessee must appeal
a penalty for failure to timely file a change in ownership
statement.
9)Expressly allows partial abatement for state assessee
penalties for failure to timely provide information.
10)Allows floating homes and manufactured homes to receive a
decline in value after the roll has closed.
11)Requires the Board of Equalization (BOE) to make available,
as a public record for 10 days, any refund in excess of
$50,000 related to private railroad car taxes, by raising the
existing threshold from $15,000 to $50,000, thus creating
consistency for private railroad car taxes with all other BOE
tax and fee programs.
12)Corrects erroneous cross-references and makes other
clarifying, technical changes.
13)Imposes a state-mandated local program, but states that no
reimbursement is required for costs that may be incurred by a
local agency or school district because of a specified reason.
14)Requires, if the Commission on State Mandates determines that
this bill's provisions contain other costs mandated by the
state, reimbursement to local agencies and school districts
for those costs.
15)States that no appropriation is made by this bill's
provisions and that the state shall not reimburse any local
agency for any property tax revenues lost pursuant to the
provisions.
EXISTING LAW :
1)Provides that all property is taxable, unless otherwise
provided by the California Constitution or federal laws,
ÝSection 1(a), Article XIII, California Constitution]. Limits
SB 947
Page 3
ad valorem taxes on real property to 1% of the full cash value
of that property (Proposition 13). Requires real property to
be reassessed to its current fair market value whenever a
"change in ownership" occurs. (California Constitution,
Article XIII A, Section 2; R&TC Sections 60 - 69.5). Excludes
from reassessment transfers of a principal residence and the
first $1 million of the value of other real property between
parents and their children. Provides that "real property"
does not include an interest in a legal entity and, thus,
precludes the application of this exclusion to transfers of
stock in a cooperatively-owned housing between parents and
their children.
2)Authorizes the base year value of property that is
"substantially damaged or destroyed" by a disaster, as
declared by the Governor, misfortune or calamity to be
transferred to comparable property within the same county, as
provided. Defines the phrase "substantially damaged or
destroyed" as physical damage amounting to more than 50% of
the property's fair market immediately prior to the disaster.
3)Provides a "new construction" exclusion for certain
improvements made for seismic safety purposes. Qualifying
improvements include the construction and reconstruction of
seismic retrofitting components, as defined. Defines "seismic
retrofitting" as those items referenced in Appendix Chapters 5
and 6 of the Uniform Code for Building Conservation of the
International Conference of Building Officials. ÝR&TC Section
74.5].
4)Excludes from the term "new construction certain construction
performed on an existing building to make the building more
accessible to, or usable by, a disabled person.
5)Specifies, with regard to a supplemental assessment, that
property tax exemptions do not apply to a property as of the
date of a change in ownership if the transferee did not
otherwise qualify for that exemption on the date of the change
in ownership.
6)Provides specified exemptions from property taxes, such as
disabled veterans' and non-profit entities. Specifies that
the disabled veterans' exemption is terminated once the
subject property is transferred to a third party that is not
eligible for the exemption.
SB 947
Page 4
7)Allows a disabled veteran to continue claiming the disabled
veterans' exemption from property tax even if the veteran is
confined to a hospital or other care facility.
8)Makes the disabled veterans' property tax exemption contingent
upon a claim being filed, as specified. Allows eligible
disabled veterans to apply for a property tax exemption before
January 1st of the calendar year for any property acquired
after the lien date.
9)Requires the assessor each year to mail an annual notice to
all disabled veterans who received the disabled veterans'
exemption in the immediately preceding year, setting forth the
eligibility requirements and the circumstances under which a
property becomes ineligible.
10)Requires county BOEs or assessment appeals boards to
adjudicate property tax appeals and issue penalties for
failure to file specified information.
11)Requires the BOE to assess the property, other than
franchises, of specified types of entities and provides for
the valuation, as a unit, of properties of a state assessee
that are operated as a unit as a primary function of that
assessee. Requires state assessees to provide annually
specific information to the BOE. Imposes penalties upon a
taxpayer's failure to timely file a required property
statement, as provided, but allows
BOE to abate penalties with a written application for abatement
by the applicant, as specified, if the failure to file was due
to reasonable cause.
12)Allows counties the authority to reduce assessed values, via
a roll correction, within one year after the assessment roll
is completed and delivered to the auditor. Allows assessors
to correct the property tax roll for up to four years after a
valuation if he/she makes a mistake.
13)Requires the BOE to make available as a public record for 10
days any refund in excess of $50,000 under all of its tax and
fee programs, except the Private Railroad Car Tax Law that
provides for a threshold of $15,000.
FISCAL EFFECT : The BOE staff states that this bill will have a
SB 947
Page 5
negligible impact on General Fund revenue.
COMMENTS :
1)Purpose of this Bill . SB 947 enacts several changes to
property tax law that is sponsored and approved unanimously by
the State BOE. This bill is intended to improve the
administration of property tax laws, and, according to the
author, contains only non-controversial items.
2)Double Referral . This bill was doubled-referred with the
Assembly Committee on Local Government, and passed out of that
Committee with a 9-0 vote on June 15, 2011. For additional
discussion of this bill, please refer to that Committee's
analysis.
3)Related Legislation .
AB 188 (Block), introduced in the current legislative session,
ensures that the disabled veterans' property tax exemption
received by a surviving spouse for a principle residence will
continue to be available for the spouse when he/she is
confined to a hospital or other care facility, provided that
the spouse has not remarried. AB 188 has passed the Assembly
Floor and is scheduled to be heard in the Senate Governance
and Finance Committee on June 29, 2011.
AB 946 (Butler), introduced in the current legislative
session, consolidates various provisions dealing with the
disabled veterans' property tax exemption and makes other
technical changes to improve the administration of this
exemption. AB 946 has passed the Assembly Floor and is
currently scheduled to be heard in the Senate Governance and
Finance Committee on June 29, 2011.
SB 507 (DeSaulnier), introduced in the current legislative
session, increases the penalty for new owners failing to file
a change in ownership statement upon request from the assessor
or the BOE from $2,500 to $5,000 for property eligible for the
homeowners' exemption, and from the $5,000 to $20,000 for
property not eligible for the homeowners' exemption. SB 507
has passed the Senate Floor and is scheduled be heard in this
Committee on June 27, 2011.
SB 947
Page 6
REGISTERED SUPPORT / OPPOSITION :
Support
State Board of Equalization (Sponsor)
California Taxpayers' Association
Opposition
None on file
Analysis Prepared by : Jeremy Ghassemi/ Oksana Jaffe / REV. &
TAX. / (916) 319-2098