BILL ANALYSIS Ó
SB 1464
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Date of Hearing: June 25, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
SB 1464 (Committee on Governance and Finance) - As Introduced:
March 13, 2014
Majority vote.
SENATE VOTE : 35-0
SUBJECT : Property taxation
SUMMARY : Makes four technical changes to property tax law.
Specifically, this bill :
1)Corrects a cross-reference to Welfare and Institutions Code
Section 12304.
2)Allows a taxpayer to appeal the change in valuation resulting
from a disaster to the assessment appeals board or the county
board of equalization.
3)Deletes the term "nonprofit corporation" from Revenue and
Taxation Code (R&TC) Section 201.7 and replaces it with
"nonprofit organization".
4)Updates the name of the Federal Home Finance Agency in
statute.
EXISTING LAW :
1)Provides for a reassessment of property to its current fair
market value after the change in ownership has occurred.
(California Constitution, Article XIII A, Section 2.)
Provides that a change in ownership does not include the
transfer of a home from a parent to a child, or from a
guardian to a ward, whether by will, devise, or inheritance.
(R&TC Section 62(n).) The transfer must be from a parent to a
disabled child whose disability is defined in the Welfare and
Institutions Code.
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2)Requires each county to establish an independent board to hear
and decide disputes between county assessors and property
owners. The law allows a county to establish a "county board
of equalization," which is made up of the board of
supervisors, or an "assessment appeals board." (R&TC Section
1620.) A board of supervisors may enact a general ordinance
to provide property tax relief after any disaster, allowing an
assessor to reduce the assessed value of a property to reflect
the loss in value. Property owners that disagree with the
assessor's proposed reassessment may file an appeal. The
disaster relief law provides allows property owners to file an
appeal with the "local board of equalization."
3)Allows the California Department of Parks and Recreation to
enter into an operating agreement with qualified nonprofit
organizations to operate portions of the state park system.
The law, for property tax purposes, deems nonprofit
organizations that enter into such operating agreements to be
an agent of the state. This ensures that the nonprofit
organization's state park operation does not create a taxable
possessory interest. The R&TC uses both "nonprofit
corporation" and "nonprofit organization" to describe an
eligible entity. The Public Resources Code uses the term
"nonprofit organization" to define an eligible entity.
4)The Mills Act grants participating local governments the
authority to enter into contracts with a qualified historical
property owner to enforceably restrict the property's use. In
exchange for the restricted use, the property owner receives
property tax relief in the form of a reduced assessed value.
The law requires the assessor to value the properties using a
prescribed income capitalization method, and requires the
Board of Equalization (BOE) to determine and announce the
interest component of the capitalization rate. Effective July
30, 2008, the Housing and Economic Recovery Act of 2008
combined the office of Federal Housing Enterprise Oversight,
the Federal Housing Finance Board, and the Government
Sponsored Enterprise mission office at the Department of
Housing and Urban Development into the Federal Housing Finance
Agency.
FISCAL EFFECT : The BOE states that this bill has no impact on
ad valorem property tax revenues.
COMMENTS : This bill makes the following four technical changes
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to property tax law:
1)Cross-Reference . In general, when a change of ownership
occurs, the assessor reassesses property to its current fair
market value. However, the law also provides for certain
exemptions. Specifically, change in ownership does not
trigger a reassessment of a property when a parent or guardian
transfers property to a disabled child or ward by inheritance,
will, or devise. R&TC relies on the definition for
"disability" in Welfare and Institutions Code Section
12304(e); in 1991, the Legislature reletterered the section
and placed the definition under R&TC 12304(d). This bill
corrects the cross-reference in the R&TC.
2)Local Board of Equalization . Taxpayers can either file
property tax appeals with the "county board of equalization"
or the "assessment appeals board," depending on the appeal
process the county has decided to adopt. However, disaster
relief law does not specifically refer to either the "county
board of equalization" or an "assessment appeals board."
Instead, the disaster relief law provides that a taxpayer can
file an appeal with the "local board of equalization." This
bill clarifies that a taxpayer can file an appeal with both
the county board of equalization and the assessment appeals
board.
3)Redundant Terms . Current law allows the California Department
of Parks and Recreation to enter into an operating agreement
with qualified nonprofit organizations to operate portions of
the state park system. The Public Resources Code uses the
term "nonprofit organization" when referring to these
nonprofits, but the R&TC uses both "nonprofit organization"
and "nonprofit corporation" for purposes of exempting
nonprofits from a possessory interest tax. A nonprofit
corporation is a subset of the broader term nonprofit
organization. Additionally, a nonprofit does not need to
incorporate to qualify under the Public Resources Code. As
such, this bill changes the term "nonprofit corporation" to
"nonprofit organization."
4)Updating the name of the Federal Housing Finance Agency . The
Mills Act requires an assessor to value historical properties
using a prescribed income capitalization method, and requires
the BOE to determine and announce the interest component of
the capitalization rate. The BOE uses data published by the
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Federal Home Finance Board. However, effective 2008, the
Federal Home Finance Board became part of the Federal Home
Finance Agency. This bill updates the R&TC to reflect the
name of the new agency.
REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization (Sponsor)
Opposition
None on file
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098