BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 681|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  AB 681
          Author:   Ting (D)
          Amended:  7/15/15 in Senate
          Vote:     21  

           SENATE GOVERNANCE & FIN. COMMITTEE:  7-0, 7/8/15
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,  

           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           ASSEMBLY FLOOR:  79-0, 6/2/15 - See last page for vote

           SUBJECT:   State Board of Equalization: surveys: assessments  
                     procedures and practices: county assessorState Board  
                     of Equalization: surveys: assessment procedures and  
                     practices: county assessor.

          SOURCE:    Author

          DIGEST:  This bill changes Board of Equalization's (BOE's)  
          process for surveying counties' assessment practices.  


          Existing law:

          1)Establishes BOE to equalize rates and assessment practices  
            among counties. 


                                                                     AB 681  
                                                                    Page  2

          2)Allows BOE to enact rules and regulations which generally bind  
            county assessors.

          3)Requires BOE to survey each county assessor to determine  
            whether a county's practices and procedures are adequate, as  
            well as its general performance, as part of this oversight  
            role, the results of which BOE publishes as public documents  
            known as "Assessment Practices Surveys."

          4)Requires Assessment Practices Surveys to include a review with  
            respect to the uniformity of treatment of all classes of  
            property to ensure that no class receives a systematic  
            overvaluation or undervaluation, and allows BOE to include a  
            sampling from assessment rolls, so long as it's of adequate  
            size and dispersion to determine adequate representation of  
            the several classes of property within the county.  BOE  
            assesses the property on its own, and then compares its value  
            to the assessor's.

          5)Allows BOE to access and make copies of any of the assessor's  
            records, or audit any book or record provided by a taxpayer in  
            the survey, but grants assessors a right to appeal BOE  
            appraisals within his or her county where differences haven't  
            been resolved before a field review.

          6)Directs BOE to complete survey reports as rapidly as possible,  
            but requires them of all counties every five years, and  
            additionally requires:

             a)   BOE to sample assessments when surveying the ten largest  
               counties or cities and counties in the state, plus samples  
               from three other counties selected at random.

             b)   BOE to sample assessments from a county if it finds that  


                                                                     AB 681  
                                                                    Page  3

               it has significant problems in its last survey.

          1)Establishes a process for BOE to interact with the assessor  
            regarding the survey prior to publishing:

             a)   BOE must send the survey report to the assessor once  
               complete, setting forth specific findings and  
               recommendations; however, before preparing the survey  
               report, BOE must meet with the assessor to discuss matters  
               included therein.

             b)   After receiving the survey report, the assessor may file  
               a written response with BOE within 30 days, unless the BOE  
               extends the period for good cause, which is included in the  
               final survey report.

             c)   Within a year after receiving the final survey report,  
               assessors must file a report with the Board of Supervisors  
               indicating the manner in which the assessor implemented,  
               intends to implement, or reasons for not implementing its  

             d)   The assessor's response must be sent to the Governor,  
               the Attorney General, BOE, the Senate, and the Assembly, as  
               well as any grand jury and assessment appeals board in the  

             e)   The survey report, the assessor's response, and any  
               additional BOE notes constitute the final report, which  
               must be completed within two years after BOE begins the  

          1)Allows assessors to direct auditors to allocate supplement  
            costs of assessment of 5% when BOE certifies that the county's  
            assessment ratio exceeds 95% based on the most recent survey,  


                                                                     AB 681 
                                                                    Page  4

            and allows BOE to continue to certify following a survey that  
            does not include sampling if the board finds in the survey  
            that there are no significant assessment problems.  

          This bill:

          1)Reforms the assessment practices survey county selection  
            process, effective January 1, 2016, by instead requiring BOE  

             a)   Survey and sample assessments from each of the ten  
               largest counties by assessed value once every five years,  
               instead of all counties every five years.

             b)   Survey one county ranking in size from 11th to 20th by  
               assessed value each year, and sample assessments from  
               another county from that group each year too.  

             c)   Survey three counties ranking in size from 21st to 58th  
               by assessed value each year, and sample assessments from  
               two others from that group too.  

             d)   Stratify and select counties at random within each  
               category in consultation with the California Assessors  

             e)   Sunsets these changes on January 1, 2021.

          1)Directs BOE to distinguish between surveys of former assessors  
            and current ones by requiring it to:

             a)   Notify the former assessor if the survey applies to that  
               former assessor's assessment practices.

             b)   Meet and confer on matters in the survey report at the  
               former assessor's request.

             c)   Allow an addendum to the final survey report to include  


                                                                     AB 681  
                                                                    Page  5

               a former assessor's written response, and the board's  
               comments, if any.

          1)Requires BOE to issue the final survey report within one year  
            of beginning the survey, except for:

             a)   Surveys BOE begins before July 1, 2016, which BOE must  
               complete in two years.

             b)   Surveys BOE begins after July 1, 2016, but before to  
               June 30, 2017, which BOE must complete in 15 months.

          Currently, BOE has 22 surveys in the pipeline, after which, the  
          timeline accelerates should AB 681 be enacted.  To compensate,  
          BOE will be surveying fewer counties (58 to 30 over five years),  
          but sampling the same (26 to 25), because the measure replaces  
          the requirement to survey all counties every five years with a  
          statutory schedule.  Under the schedule, BOE either samples or  
          surveys each of the 11th through 20th largest counties in a five  
          year period, and then survey three and samples two from the  
          remaining counties over that same time.  As such, BOE would only  
          survey 47 of 58 counties every five years, but would both survey  
          and sample the counties with the overwhelming share of the  
          state's value, and do either for most of the rest.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to Senate Appropriations, AB 681 has costs estimated  
          to be $629,000 in 2016-17 and $571,000 annually thereafter  
          (General Fund). The bill would not impact property tax revenues.

          SUPPORT:   (Verified8/28/15)

          Board of Equalization
          California Assessors Association


                                                                     AB 681  
                                                                    Page  6

          OPPOSITION:   (Verified8/28/15)

          None received

          According to the author, "AB 681 improves the efficiency of  
          performance audits conducted on every county assessor's office  
          throughout the State by allowing BOE to focus its energy on a  
          larger portion of the assessment roll in a shorter period of  
          time.  Under a new three-tiered system, the BOE will be able to  
          reduce the time needed to complete a survey report by 50% to a  
          full year.  Performance audits are further improved by providing  
          former assessors with an opportunity to address issues relating  
          to the former assessor's procedures and practices.  By reducing  
          the time needed to finalize a survey report and allowing former  
          assessors to address issues that may have occurred during their  
          term, AB 681 will ensure performance audits reveal meaningful  
          and timely information that can immediately be incorporated into  
          existing assessment practices."

          ASSEMBLY FLOOR:  79-0, 6/2/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Chávez

          Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
          8/31/15 15:46:32

                                   ****  END  ****


                                                                     AB 681  
                                                                    Page  7