BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 483
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          Date of Hearing:  April 15, 2013

                     ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
                                Raul Bocanegra, Chair

                  AB 483 (Ting) - As Introduced:  February 19, 2013
           
           Majority vote.  

           SUBJECT  :  Property taxation:  valuing property:  comparable  
          sales

           SUMMARY  :  Makes a technical clarifying change to property tax  
          law.  Specifically,  this bill  replaces the term "lien date" with  
          "valuation date" for purposes of the comparable sales valuation  
          method.  

           EXISTING LAW  : 

          1)Defines "lien date" as either the date on which taxes on the  
            supplemental roll become a lien on the property resulting from  
            a change in ownership or, under the regular roll, the date on  
            which all tax liens attach annually on January 1. [Revenue and  
            Taxation Code (R&TC) Sections 75.54 and 2192].

          2)Provides that "near in time to the valuation date" does not  
            include any sale more than 90 days after a lien date.  (R&TC  
            Section 402.5).

           FISCAL EFFECT  :  None.

           COMMENTS  :   

          1)The author has provided the following statement in support of  
            this bill:

               AB 483 amends Revenue and Taxation Code [Section] 402.5,  
               replacing the term "lien date" with "valuation date."  This  
               creates conformity between state law and BOE rules and  
               eliminates potential confusion for taxpayers and taxpayer  
               agents.

          2)Proponents state:

               Currently, the Revenue and Taxation Code is written in a  








                                                                  AB 483
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               way that conflicts with California Board of Equalization's  
               (BOE) rules.  Assembly Bill 483 resolves a technical  
               discrepancy and changes comparable property assessment law  
               in the Revenue and Taxation Code by replacing the term  
               "lien date" with "valuation date."  This technical change  
               will bring state law into conformity with existing BOE  
               rules.

               BOE rules state that when making comparable sales, the  
               value of property must be assessed at the "valuation date"  
               instead of the "lien date."  These two terms are not  
               interchangeable and have caused confusion among county  
               assessors.  Assembly Bill 483 creates conformity between  
               state law and BOE rules, streamlining property assessment  
               throughout California.

           3)Background  .  Assessors, when valuing property, may use a  
            Comparative Sale Approach.  Under this approach, the  
            appraiser: 

             a)   Selects comparable properties based on their  
               similarities to the property being appraised;

             b)   Compares the selected properties to the subject  
               property; and,

             c)   Adjusts the sales prices of the comparable properties to  
               reflect significant differences between the subject and  
               comparable properties.  The comparable sales approach is  
               based on the principal of substitution, which states that  
               an informed participant would not pay more for the property  
               than the cost of acquiring a substitute property of equal  
               utility.  

            A comparable property must be sufficiently comparable in terms  
            of location, physical characteristics, and use.  Additionally,  
            sales of comparable property must have occurred "near in time  
            to the valuation date" of the subject property.  Specifically,  
            R&TC Section 402.5 provides that "'near in time to the  
            valuation date' does not include any sale more than 90 days  
            after the lien date."

           4)Construction of current law  .  A lien date is the day on which  
            taxes are levied against property.  R&TC Section 2192 defines  
            the regular roll "lien date" as all the tax liens that attach  








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            annually on January 1.  This attachment occurs during the  
            county assessor's annual assessment of all taxable property in  
            the county.  However, under the supplemental roll "lien date"  
            of R&TC Section 75.54, a lien may also attach to real property  
            on the day the property changes ownership or upon completion  
            of new construction.  This change in ownership has also been  
            referred to as the "event date" and "valuation date."  Despite  
            having two separate definitions, "lien date" is more commonly  
            associated with the annual assessment date of January 1st.  

            R&TC Section 402.5 provides that the phrase "near in time to  
            the valuation date" does not include any sale more than 90  
            days after the lien date.  This has caused confusion because  
            the lien date can either be the annual assessment date of  
            January 1st, or the date on which the property changes  
            ownership.  To makes things clear, the BOE has determined that  
            "lien date," for purposes of R&TC Section 402.5, is synonymous  
            with "valuation date," i.e., change of ownership date [BOE  
            Rule 342(d)].  Without this clarification, taxpayers may  
            attempt to eliminate the use of certain comparable properties  
            during an assessment appeals hearing by restricting properties  
            to those made no more than 90 days after January 1st.  The  
            BOE's interpretation also accomplishes the legislative intent  
            of using "near in time" comparable sales under R&TC Section  
            402.5.  For example, under the annual assessment definition of  
            "lien date," if a home is sold on August 1, 2012, the  
            selection of comparable sales would be limited to those made  
            before April 1st of that year.  This would prevent the use of  
            a comparable sale made on August 2, 2012, even though it  
            occurred a day after the sale of the subject property.  

            According to the California County Assessors' Association, the  
            method of property tax assessment in the State of California  
            changed substantially after the passage of Proposition 13.   
            Prior to its passage, the "lien date" of January 1st was the  
            date used for estimating the valuation of property.   
            Proposition 13 adopted an acquisition system of taxation,  
            utilizing the date of change in ownership or completion of  
            construction as the date of valuation.  In 1980, two years  
            after the passage of Proposition 13, the R&TC Section 402.5  
            was amended to replace the term "lien date" with "valuation  
            date" in two places but missed a third.  AB 483 will rectify  
            the problem by making an additional amendment to that section.  
              









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           5)Is there a change in law?   Current law provides that "near in  
            time to the valuation date" does not include any sale more  
            than 90 days after the lien date.  Since the BOE has  
            determined that "lien date" and "valuation date," for purposes  
            of R&TC Section 402.5, are synonymous, this bill would only  
            provide technical clarification to existing law.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Assessor's Association (Sponsor)
          American Federation of State, County and Municipal Employees

           Opposition 
           
          None on file
           
          Analysis Prepared by  :  Carlos Anguiano / REV. & TAX. / (916)  
          319-2098