BILL ANALYSIS Ó
SB 947
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Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
SB 947 (Committee on Governance and Finance) - As Amended:
June 29, 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)Extends from 30 days to 6 months the period within which a
homeowner, who is transferring a base year value from his/her
principal residence to a newly purchased replacement home,
must notify the county assessor of the completion of new
construction on the replacement home.
4)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.
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
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apply for the disabled veterans' property tax exemption to
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)Replaces obsolete statutory references to the "Civil
Aeronautics Board of the United States" (which no longer
exists) with the phrase the "Federal Aviation Administration"
and deletes the obsolete statutory references to the
"California Public Utilities Commission" in the definitions of
"certificated aircraft," "air taxi," and "aircraft."
11)Clarifies the period within which a person filing an
affidavit of interest must apply to the tax collector to have
a parcel separately valued on the current roll for the purpose
of paying property taxes.
12)Allows floating homes and manufactured homes to receive a
decline in value after the roll has closed.
13)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.
14)Corrects erroneous cross-references and makes other
clarifying, technical changes.
15)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.
16)Requires, if the Commission on State Mandates determines that
this bill's provisions contain other costs mandated by the
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state, reimbursement to local agencies and school districts
for those costs.
17)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
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)Allows property owners over 55 years of age or disabled
persons once-in-a-lifetime opportunity to transfer the base
year value of their principle residence, within two years from
the sale of the original residence, to a
replacement home of equal or lesser value within the same
county (Proposition 60, 1988), or to a replacement home in
counties that have adopted ordinances allowing the
transfer (Proposition 90, 1990), provided certain conditions
are met and the county assessor is properly notified.
Currently, Alameda, Los Angeles, Orange, San Diego, San Mateo,
Santa Clara, and Ventura Counties allow these out-of-county
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transfers. Base year transfers allow taxpayers to continue to
pay property taxes at the amount and rate of growth of their
previous home and prevent reassessments of their newly
purchased homes to full market value.
4)Allows a homeowner, who has been granted a base year value
transfer from his/her original residence to a replacement
dwelling, to perform new construction on the replacement
property subsequent to the transfer and exempts the new
construction from assessment. The new construction must be
completed within two years of the sale of the original
property and its value may not exceed the sales price of the
original property. Requires homeowners to notify the assessor
in writing of the completion of new construction within 30
days in order for the new construction to be eligible for the
property tax relief.
5)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].
6)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.
7)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.
8)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.
9)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
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January 1st of the calendar year for any property acquired
after the lien date.
10)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.
11)Requires county BOEs or assessment appeals boards to
adjudicate property tax appeals and issue penalties for
failure to file specified information.
12)Provides that a county assessor may re-number or re-letter
parcels or prepare new map pages to show combinations or
divisions of parcels. (R&TC Section 327). Allows any person
filing an affidavit of interest to apply to the tax collector
to have any parcel separately valued for the purpose of paying
property taxes (R&TC Section 2821) and requires the assessor
to determine the separate valuation of that individual
interest in the parcel (R&TC Section 2823).
13)Requires that applications requesting separate assessment for
the purpose of paying property taxes be made during the
current fiscal year - from July 1 until June 30; however, it
authorizes a county board of supervisors to prohibit these
applications during the 10 working days preceding each tax
installment delinquency - December 10th and April 10th - and
during the 10 working days preceding June 30 of each year.
14)Prohibits separate valuations after the lien date (January 1)
immediately preceding the current fiscal year when the parcel
is covered by a subdivision map filed for recordation with the
county recorder. Allows a waiver of this prohibition,
however, with respect to requests for separate valuation of
new subdivision lots created after the lien date.
15)Provides that any subdivision of property for the purpose of
sale, lease, or finance is subject to the Subdivision Map Act.
Subdivisions into five or more parcels require local
government approval of both a tentative subdivision map, which
is discretionary, and a final subdivision map, which is
ministerial once all of the conditions of the tentative map
have been fulfilled. Subdivisions into four or fewer parcels
require local government approval of a parcel map, which is
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discretionary. In either case, once a map is approved by the
local government, the clerk of the council or board of
supervisors must transmit the map to the county recorder for
recordation. The county recorder has 10 days to accept or
reject the map for recordation.
16)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.
17)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.
18)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
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)Extension of Time to Notify the Assessor . Under existing law,
homeowners who do not file a "base year value transfer" claim
to notify the assessor within 30 days of completing the new
construction are barred from receiving the full benefit of a
base year value transfer to which they are otherwise entitled.
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This bill would amend R&TC Section 69.5(h)(4)(A) to increase
from 30 days to 6 months the time that the property owner has
to notify the assessor when the additional construction is
completed. Thus, this bill gives homeowners more time to
include, under the initial base year value transfer, the value
of new construction improvement made to the replacement home.
The value of the improved replacement home still may not
exceed the market value of the original property sold, as
determined in the original claim for a base year value
transfer. As noted by the BOE staff, the assessor already
receives copies of all building permits issued in the county,
and thus, this amendment would allow the assessor to extend
automatically "the benefit of the base year value transfer to
the new construction, when applicable, without any further
action or paperwork from the property owner."
3)Separate Assessment Requests . This bill would authorize a
board of supervisors to allow filing of applications for
requests for separate assessments only between July 1 and
March 31, which means that, in counties that approve this new
timeline, applications for separate parcel assessment would
not be accepted in the months of April, May, and June.
According to the sponsor, this amendment is a follow up on
legislation sponsored by the California Assessor's Association
in 2009 - ÝSB 822 (Committee on Revenue and Taxation), Chapter
204] - which allows assessors to create a separate valuation
of five or more lots created after the lien date. Splitting
parcels in five or more lots created after the lien date
requires a preparation of separate tax bills that must be
mailed by November 1. In order to allow enough time to
process an application for separate assessments - from initial
processing to the issuance of the tax bills - this bill
proposes an application deadline of April 1.
4)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.
REGISTERED SUPPORT / OPPOSITION :
Support
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State Board of Equalization
California Assessors' Association
California Taxpayers Association (Letter dated June 20, 2011)
Opposition
None on file
Analysis Prepared by : Jeremy Ghassemi/ Oksana Jaffe / REV. &
TAX. / (916) 319-2098