California Legislature—2015–16 Regular Session

Assembly Constitutional Amendment No. 6

Introduced by Assembly Member Brown

April 20, 2015

Assembly Constitutional Amendment No. 6—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Section 2 of Article XIII A thereof, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

ACA 6, as introduced, Brown. Property taxation: base year value transfers: persons with a severely disabled child.

The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. The California Constitution authorizes the Legislature to provide that persons over the age of 55 and persons who are severely disabled may transfer the base year value, as defined, of property to a replacement dwelling, if certain conditions are met.

This measure would additionally authorize the Legislature to provide for transfer of base year value of property to a replacement dwelling for persons who have a severely disabled child.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2015-16 commencing
on the first day of December 2014, two-thirds of the membership
of each house concurring, hereby proposes to the people of the
State of California, that the Constitution of the State be amended
as follows:

  

That Section 2 of Article XIII A thereof is amended to read:

SEC. 2.  

(a)  begin insert (1) end insert begin insert   end insert The “full cash value” means the county
assessor’s valuation of real property as shown on the 1975-76 tax
bill under “full cash value” or, thereafter, the appraised value of
real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment. All real property
not already assessed up to the 1975-76 full cash value may be
reassessed to reflect that valuation. For purposes of this section,
“newly constructed” does not include real property that is
reconstructed after a disaster, as declared by the Governor, where
the fair market value of the real property, as reconstructed, is
comparable to its fair market value prior to the disaster. For
purposes of this section, the term “newly constructed” does not
include that portion of an existing structure that consists of the
construction or reconstruction of seismic retrofitting components,
as defined by the Legislature.

begin delete

However,

end delete

begin insert (2) end insert begin insert   end insert begin insert However, end insert the Legislature may provide that, under appropriate
circumstances and pursuant to definitions and procedures
established by the Legislature, any person over the age of 55 years
who resides in property that is eligible for the homeowner’s
exemption under subdivision (k) of Section 3 of Article XIII and
any implementing legislation may transfer the base year value of
the property entitled to exemption, with the adjustments authorized
by subdivision (b), to any replacement dwelling of equal or lesser
value located within the same county and purchased or newly
constructed by that person as his or her principal residence within
two years of the sale of the original property. For purposes of this
section, “any person over the age of 55 years” includes a married
couple one member of which is over the age of 55 years. For
purposes of this section, “replacement dwelling” means a building,
structure, or other shelter constituting a place of abode, whether
real property or personal property, and any land on which it may
be situated. For purposes of this section, a two-dwelling unit shall
be considered as two separate single-family dwellings. This
paragraph shall apply to any replacement dwelling that was
purchased or newly constructed on or after November 5, 1986.

begin delete

In

end delete

begin insert (3) end insert begin insert   end insert begin insert In end insert addition, the Legislature may authorize each county board
of supervisors, after consultation with the local affected agencies
within the county’s boundaries, to adopt an ordinance making the
provisions of this subdivision relating to transfer of base year value
also applicable to situations in which the replacement dwellings
are located in that county and the original properties are located
in another county within this State. For purposes of this paragraph,
“local affected agency” means any city, special district, school
district, or community college district that receives an annual
property tax revenue allocation. This paragraph applies to any
replacement dwelling that was purchased or newly constructed on
or after the date the county adopted the provisions of this
subdivision relating to transfer of base year value, but does not
apply to any replacement dwelling that was purchased or newly
constructed before November 9, 1988.

begin delete

The

end delete

begin insert (4) end insert begin insert   end insert begin insert The end insert Legislature may extend the provisions of this subdivision
relating to the transfer of base year values from original properties
to replacement dwellings of homeowners over the age of 55 years
to begin delete severely end delete begin insert either of both of the following: end insert

begin insert (A) end insert begin insert   end insert begin insert Severely end insert disabled homeowners, but only with respect to
those replacement dwellings purchased or newly constructed on
or after begin delete the effective date of this paragraph. end delete begin insert June 6, 1990. end insert

begin insert

(B) Homeowners with a severely disabled child, but only with
respect to those replacement dwellings purchased or newly
constructed on or after the effective date of this paragraph.

end insert

(b) The full cash value base may reflect from year to year the
inflationary rate not to exceed 2 percent for any given year or
reduction as shown in the consumer price index or comparable
data for the area under taxing jurisdiction, or may be reduced to
reflect substantial damage, destruction, or other factors causing a
decline in value.

(c) For purposes of subdivision (a), the Legislature may provide
that the term “newly constructed” does not include any of the
following:

(1) The construction or addition of any active solar energy
system.

(2) The construction or installation of any fire sprinkler system,
other fire extinguishing system, fire detection system, or fire-related
egress improvement, as defined by the Legislature, that is
constructed or installed after the effective date of this paragraph.

(3) The construction, installation, or modification on or after
the effective date of this paragraph of any portion or structural
component of a single- or multiple-family dwelling that is eligible
for the homeowner’s exemption if the construction, installation,
or modification is for the purpose of making the dwelling more
accessible to a severely disabled person.

(4) The construction, installation, removal, or modification on
or after the effective date of this paragraph of any portion or
structural component of an existing building or structure if the
construction, installation, removal, or modification is for the
purpose of making the building more accessible to, or more usable
by, a disabled person.

(d) For purposes of this section, the term “change in ownership”
does not include the acquisition of real property as a replacement
for comparable property if the person acquiring the real property
has been displaced from the property replaced by eminent domain
proceedings, by acquisition by a public entity, or governmental
action that has resulted in a judgment of inverse condemnation.
The real property acquired shall be deemed comparable to the
property replaced if it is similar in size, utility, and function, or if
it conforms to state regulations defined by the Legislature
governing the relocation of persons displaced by governmental
actions. This subdivision applies to any property acquired after
March 1, 1975, but affects only those assessments of that property
that occur after the provisions of this subdivision take effect.

(e) (1) Notwithstanding any other provision of this section, the
Legislature shall provide that the base year value of property that
is substantially damaged or destroyed by a disaster, as declared
by the Governor, may be transferred to comparable property within
the same county that is acquired or newly constructed as a
replacement for the substantially damaged or destroyed property.

(2) Except as provided in paragraph (3), this subdivision applies
to any comparable replacement property acquired or newly
constructed on or after July 1, 1985, and to the determination of
base year values for the 1985-86 fiscal year and fiscal years
thereafter.

(3) In addition to the transfer of base year value of property
within the same county that is permitted by paragraph (1), the
Legislature may authorize each county board of supervisors to
adopt, after consultation with affected local agencies within the
county, an ordinance allowing the transfer of the base year value
of property that is located within another county in the State and
is substantially damaged or destroyed by a disaster, as declared
by the Governor, to comparable replacement property of equal or
lesser value that is located within the adopting county and is
acquired or newly constructed within three years of the substantial
damage or destruction of the original property as a replacement
for that property. The scope and amount of the benefit provided
to a property owner by the transfer of base year value of property
pursuant to this paragraph shall not exceed the scope and amount
of the benefit provided to a property owner by the transfer of base
year value of property pursuant to subdivision (a). For purposes
of this paragraph, “affected local agency” means any city, special
district, school district, or community college district that receives
an annual allocation of ad valorem property tax revenues. This
paragraph applies to any comparable replacement property that is
acquired or newly constructed as a replacement for property
substantially damaged or destroyed by a disaster, as declared by
the Governor, occurring on or after October 20, 1991, and to the
determination of base year values for the 1991-92 fiscal year and
fiscal years thereafter.

(f) For the purposes of subdivision (e):

(1) Property is substantially damaged or destroyed if it sustains
physical damage amounting to more than 50 percent of its value
immediately before the disaster. Damage includes a diminution in
the value of property as a result of restricted access caused by the
disaster.

(2) Replacement property is comparable to the property
substantially damaged or destroyed if it is similar in size, utility,
and function to the property that it replaces, and if the fair market
value of the acquired property is comparable to the fair market
value of the replaced property prior to the disaster.

(g) For purposes of subdivision (a), the terms “purchased” and
“change in ownership” do not include the purchase or transfer of
real property between spouses since March 1, 1975, including, but
not limited to, all of the following:

(1) Transfers to a trustee for the beneficial use of a spouse, or
the surviving spouse of a deceased transferor, or by a trustee of
such a trust to the spouse of the trustor.

(2) Transfers to a spouse that take effect upon the death of a
spouse.

(3) Transfers to a spouse or former spouse in connection with
a property settlement agreement or decree of dissolution of a
marriage or legal separation.

(4) The creation, transfer, or termination, solely between
spouses, of any coowner’s interest.

(5) The distribution of a legal entity’s property to a spouse or
former spouse in exchange for the interest of the spouse in the
legal entity in connection with a property settlement agreement or
a decree of dissolution of a marriage or legal separation.

(h) (1) For purposes of subdivision (a), the terms “purchased”
and “change in ownership” do not include the purchase or transfer
of the principal residence of the transferor in the case of a purchase
or transfer between parents and their children, as defined by the
Legislature, and the purchase or transfer of the first one million
dollars ($1,000,000) of the full cash value of all other real property
between parents and their children, as defined by the Legislature.
This subdivision applies to both voluntary transfers and transfers
resulting from a court order or judicial decree.

(2) (A) Subject to subparagraph (B), commencing with
purchases or transfers that occur on or after the date upon which
the measure adding this paragraph becomes effective, the exclusion
established by paragraph (1) also applies to a purchase or transfer
of real property between grandparents and their grandchild or
grandchildren, as defined by the Legislature, that otherwise
qualifies under paragraph (1), if all of the parents of that grandchild
or those grandchildren, who qualify as the children of the
grandparents, are deceased as of the date of the purchase or transfer.

(B) A purchase or transfer of a principal residence shall not be
excluded pursuant to subparagraph (A) if the transferee grandchild
or grandchildren also received a principal residence, or interest
therein, through another purchase or transfer that was excludable
pursuant to paragraph (1). The full cash value of any real property,
other than a principal residence, that was transferred to the
grandchild or grandchildren pursuant to a purchase or transfer that
was excludable pursuant to paragraph (1), and the full cash value
of a principal residence that fails to qualify for exclusion as a result
of the preceding sentence, shall be included in applying, for
purposes of subparagraph (A), the one-million-dollar ($1,000,000)
full cash value limit specified in paragraph (1).

(i) (1) Notwithstanding any other provision of this section, the
Legislature shall provide with respect to a qualified contaminated
property, as defined in paragraph (2), that either, but not both, of
the following apply:

(A) (i) Subject to the limitation of clause (ii), the base year
value of the qualified contaminated property, as adjusted as
authorized by subdivision (b), may be transferred to a replacement
property that is acquired or newly constructed as a replacement
for the qualified contaminated property, if the replacement real
property has a fair market value that is equal to or less than the
fair market value of the qualified contaminated property if that
property were not contaminated and, except as otherwise provided
by this clause, is located within the same county. The base year
value of the qualified contaminated property may be transferred
to a replacement real property located within another county if the
board of supervisors of that other county has, after consultation
with the affected local agencies within that county, adopted a
resolution authorizing an intercounty transfer of base year value
as so described.

(ii) This subparagraph applies only to replacement property that
is acquired or newly constructed within five years after ownership
in the qualified contaminated property is sold or otherwise
transferred.

(B) In the case in which the remediation of the environmental
problems on the qualified contaminated property requires the
destruction of, or results in substantial damage to, a structure
located on that property, the term “new construction” does not
include the repair of a substantially damaged structure, or the
construction of a structure replacing a destroyed structure on the
qualified contaminated property, performed after the remediation
of the environmental problems on that property, provided that the
repaired or replacement structure is similar in size, utility, and
function to the original structure.

(2) For purposes of this subdivision, “qualified contaminated
property” means residential or nonresidential real property that is
all of the following:

(A) In the case of residential real property, rendered
uninhabitable, and in the case of nonresidential real property,
rendered unusable, as the result of either environmental problems,
in the nature of and including, but not limited to, the presence of
toxic or hazardous materials, or the remediation of those
environmental problems, except where the existence of the
environmental problems was known to the owner, or to a related
individual or entity as described in paragraph (3), at the time the
real property was acquired or constructed. For purposes of this
subparagraph, residential real property is “uninhabitable” if that
property, as a result of health hazards caused by or associated with
the environmental problems, is unfit for human habitation, and
nonresidential real property is “unusable” if that property, as a
result of health hazards caused by or associated with the
environmental problems, is unhealthy and unsuitable for
occupancy.

(B) Located on a site that has been designated as a toxic or
environmental hazard or as an environmental cleanup site by an
agency of the State of California or the federal government.

(C) Real property that contains a structure or structures thereon
prior to the completion of environmental cleanup activities, and
that structure or structures are substantially damaged or destroyed
as a result of those environmental cleanup activities.

(D) Stipulated by the lead governmental agency, with respect
to the environmental problems or environmental cleanup of the
real property, not to have been rendered uninhabitable or unusable,
as applicable, as described in subparagraph (A), by any act or
omission in which an owner of that real property participated or
acquiesced.

(3) It shall be rebuttably presumed that an owner of the real
property participated or acquiesced in any act or omission that
rendered the real property uninhabitable or unusable, as applicable,
if that owner is related to any individual or entity that committed
that act or omission in any of the following ways:

(A) Is a spouse, parent, child, grandparent, grandchild, or sibling
of that individual.

(B) Is a corporate parent, subsidiary, or affiliate of that entity.

(C) Is an owner of, or has control of, that entity.

(D) Is owned or controlled by that entity.

If this presumption is not overcome, the owner shall not receive
the relief provided for in subparagraph (A) or (B) of paragraph
(1). The presumption may be overcome by presentation of
satisfactory evidence to the assessor, who shall not be bound by
the findings of the lead governmental agency in determining
whether the presumption has been overcome.

(4) This subdivision applies only to replacement property that
is acquired or constructed on or after January 1, 1995, and to
property repairs performed on or after that date.

(j) Unless specifically provided otherwise, amendments to this
section adopted prior to November 1, 1988, are effective for
changes in ownership that occur, and new construction that is
completed, after the effective date of the amendment. Unless
specifically provided otherwise, amendments to this section
adopted after November 1, 1988, are effective for changes in
ownership that occur, and new construction that is completed, on
or after the effective date of the amendment.