BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: SB 825 HEARING: 5/1/13 AUTHOR: Committee on Governance & Finance FISCAL: Yes VERSION: 3/20/13 TAX LEVY: No CONSULTANT: Grinnell GOVERNMENT FINANCE Enacts five technical changes to property tax collection law. Background, Existing Law, and Proposed Law Each year, the former Revenue and Taxation Committee authored a measure to enact several changes to Property Tax Law sponsored by the California Assessors' Association and the California Association of County Treasurer-Tax Collectors, who administer the property tax. Many of these measures are technical in nature, and enacting them in separate measures isn't warranted. Although omnibus bills like this one may not be germane under a strict interpretation of the single-subject and germaneness rules presented in Californians for an Open Primary v. McPherson (2006), it implements important and necessary changes to property tax laws. I. Property Tax Bills. Current law requires the County Tax Collector to include specified information as part of the property tax bill, including the taxpayer's right to request an informal review of the assessor's valuation of the property, and to apply to the assessment appeals board for a reduction in valuation if the taxpayer doesn't agree with the valuation after the informal review. Last year, AB 2643 (Ma) clarified the law to provide that penalty relief is limited solely to the difference between the assessor's initial valuation and the value that results from the appeal or from informal review, ensuring that taxpayers cannot escape penalties from failing to pay tax. SB 825 requires the penalty relief limitation information to appear on the property tax bill. II. Tax sale reporting. Existing law requires the County Tax Collector to report the sale of a tax-defaulted SB 825 - 3/20/13 -- Page 2 property to the assessor within ten days of the sale. SB 825 extends this deadline from ten to 30 days. III. Code conformity. The Revenue and Taxation Code specifies the forms of payment county tax collectors can accept. However, the Government Code doesn't include all the forms of payment specified in the Revenue and Taxation Code. SB 825 conforms the list of acceptable forms of payment in the two codes, and extends the authority for a County Tax Collectors to charge a fee equal to their reasonable costs whenever payment is offered, but returned without payment. The bill also requires the charge to become an underlying obligation, but not a lien on real property, and allows the tax collector to prescribe a different form of payment in the future. IV. Builder's Exclusion. Generally, an assessor only values a property for tax purposes based on its degree of completion on the lien date of January 1st, and the assessor issues a supplemental assessment based on its value when completed later in the year. The builder's exclusion additionally relieves builders of supplemental assessments on properties constructed for sale that the builder does not intend to occupy or use. Builders must file apply with the Assessor for the exclusion within 30 days of commencing construction, and additionally notify the Assessor within 45 days of renting, selling, or using the property. When the owner fails to notify the assessor that he or she does not intend to occupy or use the property within 30 days of beginning construction, the exclusion does not apply, and the Assessor issues the supplemental assessment. However, the owner does not need to notify the assessor, and is rebuttably presumed not to intend to occupy or use the property, if the property has been subdivided into more than five parcels in accordance with the subdivision Map Act, the map describing the parcels has been recorded, and zoning regulations require the parcels be used for single-family residences. The law explicitly requires builders who have notified the Assessor to provide the second notification within 45 days of renting, selling, or using the property, but doesn't explicitly require the notification of builders who rely on the rebuttable presumption. SB 825 explicitly requires builders relying on the rebuttable presumption to inform the Assessor within 45 days of renting, selling, or using the property, and would also apply the existing penalty for SB 825 - 3/20/13 -- Page 3 failing to notify the Assessor of the change for affected builders failing to notify the Assessor. V. Contiguous parcels. Local agencies impose the property tax to all non-exempt properties within its jurisdiction. However, Assessors occasionally assess a single property that is situated in more than one "revenue district," where one agency's boundaries encompass part of the property, but not all of it. In such a case, each property must be separately assessed unless the full value of any parcel is less than $25,000, in which case the parcel may be combined with the contiguous one with the highest value. The smallest parcel in a tracts of land used for single-family residences of less than 15,000 square feet may also be combined with the largest contiguous parcel. SB 825 increases the amount from $25,000 to $50,000. State Revenue Impact No estimate. Comments 1. Purpose of the bill . SB 825 consolidates five items that make minor, technical changes to property tax law sponsored by the California Association of County Treasurer-Tax Collectors and the California Assessors Association. The bill improves the administration of property tax laws to help both taxpayers and counties. Consolidating the measures into a single bill negates the need for individual bills to enact each change. Additionally, the measure only contains items with universal agreement; the Committee will remove items should anyone object to one. Support and Opposition (4/25/13) Support : California Assessors Association; California Association of County Treasurer-Tax Collectors Opposition : None received. SB 825 - 3/20/13 -- Page 4