BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1534


                                                                    Page  1





          Date of Hearing:  April 27, 2015





                     ASSEMBLY COMMITTEE ON REVENUE AND TAXATION


                                 Philip Ting, Chair





          AB 1534  
          (Committee on Revenue and Taxation) - As Introduced March 25,  
          2015


          


          Majority vote.  Fiscal committee.


          SUBJECT:  Assessment analyst:  certification


          SUMMARY:  Prohibits any state, county, or municipal employee  
          from making any decision regarding a "change in ownership" issue  
          or a property tax exemption without holding a valid assessment  
          analyst certificate issued by the State Board of Equalization  
          (BOE)  Specifically, this bill:  


          1)Includes the legislative findings and declarations stating  
            legislative intent to do all of the following:









                                                                    AB 1534


                                                                    Page  2





             a)   Protect the interests of taxpayers by ensuring that  
               decisions regarding eligibility of a property for exemption  
               or whether a transaction constitutes a "change in  
               ownership" (COI) be made by staff who is certified;

             b)   Ensure that education and certification requirements be  
               implemented in the most efficient and economical manner,  
               utilizing existing resources of California county assessors  
               with advice and counsel of the Board of Equalization;

             c)   Not impede assessors in managing their staff resources  
               in an efficient manner and in a way that allows  
               non-certificated staff to prepare and work with exemption  
               applications and COI documents, provided that the staff is  
               not making COI or exemption decisions; and,

             d)   Clarify that this act shall be construed as an act  
               necessary for the implementation of Article XIII A of the  
               California Constitution and, as such, is not a program or  
               higher level of service mandated by the state. 

          2)Prohibits a person, who is an employee of the state, a county,  
            or a city and county, from making decisions regarding changes  
            in ownership or a property tax exemption, other than a  
            homeowner's exemption, unless he/she is the holder of a valid  
            assessment analyst certificate issued by the BOE.

          3)Requires the BOE to provide for the examination of applicants  
            for an assessment analyst certificate and authorizes the BOE  
            to contract with the Department of Human Resources to give the  
            examinations. 

          4)Provides that the examinations must be prepared by the BOE,  
            with the advice and assistance of a committee of five  
            assessors selected by the California Assessors' Association  
            for this purpose. 

          5)Prohibits the issuance of a certificate to a person who has  
            not attained a passing grade in the examination or  








                                                                    AB 1534


                                                                    Page  3





            demonstrated that he/she is competent to make the change in  
            ownership (CIO) and exemption decisions, as specified. 

          6)Grants any applicant who is denied a certificate the right to  
            a review of that denial in accordance with the Administrative  
            Procedure Act [Chapter 5 (commencing with Section 11500) of  
            Part 1 of Division 3 of Title 2 of the Government Code (GC)]  
            ("APA"). 

          7)Does not apply to a person holding a valid appraiser's or  
            advanced appraiser's certificate issued by the BOE. 

          8)Prohibits the BOE from imposing any charge upon a county or  
            city and county or an applicant for an examination or  
            certification required by this bill or training conducted by  
            the BOE. 

          9)Requires the BOE to do both of the following:

             a)   Issue an advanced assessment analyst certificate for an  
               applicant that has held a valid assessment analyst  
               certificate for at least three years and has either  
               successfully completed an advanced study course or passed  
               an advanced level examination; and,

             b)   Prescribe an advanced course of study and prepare the  
               advanced level examination, with the advice and assistance  
               of five assessors selected by the California Assessors'  
               Association.

          10)Requires a certified assessment analyst, in order to retain a  
            valid certificate, to complete at least 24 hours of training  
            conducted or approved by the BOE in each one-year period.   
            Allows any training time in excess of the 24-hour minimum that  
            is accumulated in any one year to be carried over as credit  
            for future training requirements, with a limit of three years  
            in which the carryover time may be credited. 

          11)Requires an advanced assessment analyst to complete at least  








                                                                    AB 1534


                                                                    Page  4





            12 hours of training in each one-year period in order to  
            retain a valid certificate and allows any training time that  
            is in excess of the 12-hour minimum accumulated in any one  
            year to be carried over as a credit for future training  
            requirements, with a limit of two years in which the carryover  
            time may be credited. 

          12)Requires training for both regular and advanced assessment  
            analyst certificates to include new developments in applicable  
            case law, statutory law, and administrative rules.

          13)Specifies that failure to complete additional training, as  
            provided, shall constitute grounds for revocation of a  
            certificate.  A proceeding to revoke shall be conducted in  
            accordance with the APA. 



          14)Requires each applicant to disclose, at the time of  
            certification, on forms provided by the BOE, his or her  
            financial interest in any legal entity. 

          15)Provides that, if an applicant is required to annually file  
            with the Fair Political Practices Commission pursuant to  
            Article 3 (commencing with Section 87300) of Chapter 7 of  
            Title of the GC), a duplicate of that filing must meet the  
            requirements of this bill. 

          16)Allows the BOE to do both of the following:

             a)   Issue a temporary certificate to a person who is newly  
               employed by the state, a county, or a city and county in  
               order to afford the person the opportunity to apply for,  
               and take, an examination. 

             b)   Issue an interim certificate to a current employee of  
               the state, county, or a city and county, who is making CIO  
               or exemption decisions, in order to afford that person the  
               opportunity to apply for and take an exemption for a  








                                                                    AB 1534


                                                                    Page  5





               certificate. 

          17)Prohibits the BOE from issuing a temporary or interim  
            certificate if its duration exceeds one year or four years,  
            respectively, unless the person has been duly elected or  
            appointed to the office of assessor. 
          18)Prohibits the BOE from renewing either a temporary or an  
            interim certificate.


          19)Provides that this bill only applies to counties and cities  
            that adopt a resolution upon the recommendation of the  
            assessor to require a valid assessment analyst certification.


          EXISTING LAW:  


          1)Provides that all property is taxable, unless otherwise  
            provided by the California Constitution or federal laws.   
            [Section 1(a), Article XIII, California Constitution.]  Limits  
            ad valorem taxes on real property to 1% of the full cash value  
            of that property (Proposition 13).

          2)Requires real property to be reassessed to its current fair  
            market value whenever a "change in ownership" occurs.   
            [California Constitution, Article XIII A, Section 2; Revenue  
            and Taxation Code (R&TC) Sections 60 - 69.5.]  

          3)Provides that "change in ownership" includes a transfer of any  
            interest in real property between a corporation, partnership,  
            or other legal entity and a shareholder, partner or any other  
            person.  [R&TC Section 61(j).]   

          4)Specifies in RT&C Sections 60 through 69.5 what constitutes "a  
            change in ownership."  

          5)States that, generally, when real property is owned by a  
            homeowner, the purchase or transfer or ownership interests in  








                                                                    AB 1534


                                                                    Page  6





            that entity triggers a change in ownership of the property.   
            However, specific exemptions from reassessment are provided  
            for intra-family transfers, replacement residences of senior  
            citizens and disabled persons, and specific types of home  
            improvements.

          6)Provides a homeowners' exemption from property taxes equal to  
            $7,000 in assessed value (at a one percent property tax rate,  
            the exemption reduces property taxes by roughly $70) for  
            owner-occupied homes.  Once granted, homeowners' exemptions  
            are generally permanent.  However, an assessor may deny a  
            homeowner's exemption if the property becomes vacant or is  
            under construction as of the January 1st lien date


          FISCAL EFFECT:  According to the BOE, "[t]his bill has no impact  
          on property tax revenues."


          COMMENTS:  


           1)The Purpose of this Bill  .  Current law does not require any  
            certification or training for employees who make change in  
            ownership or exemption decisions.  Yet, their decisions can  
            potentially add or eliminate millions of dollars each year  
            from tax rolls statewide.  Both CIO and exemption decisions  
            have become highly complex, requiring a deep understanding of   
            many different legal documents and a variety of statutes,  
            regulations, court decisions.  This bill ensures that state  
            and local employees making CIO and property tax exemption  
            decisions are adequately trained and educated. 

           2)Arguments in Support  .  The California Assessor's Association  
            states, "Despite the extreme complexity of determining whether  
            a property has changed ownership, or is eligible for  
            exemption, and the millions of dollars in property tax value  
            impact such decisions have, no training is required for  
            [employees making those decisions]."  The California  








                                                                    AB 1534


                                                                    Page  7





            Assessor's Association emphasizes that it is time to  
            "recognize the need for these [employees] to be certified,"  
            especially in light of new legal and regulatory changes.   
            Current law already requires appraisers to be certified.  This  
            bill is needed to create similar certification procedures for  
            state and local government employees making decisions with  
            regard to property tax exemptions and CIO transactions. 

           3)Background:  Proposition 13 and "Change in Ownership"  .  The  
            property tax applies to all classes of property and is one of  
            the major general revenue sources for local governments in  
            California.  The property tax is imposed on the property  
            owners and is based on the value of the property.  Much of the  
            law pertaining to taxation of property is prescribed by the  
            California Constitution, Article XIII and Article XIII A.   
            Since the adoption of Proposition 13 in 1978, real property  
            has generally been taxed based on its value at the time of its  
            acquisition, with increases for inflation limited to 2% per  
            year.  The property is reassessed to its market value when the  
            ownership of property is changed.  While the requirement to  
            reassess property upon a change in ownership is contained in  
            the California Constitution, the phrase "change in ownership"  
            is not defined.  There have been hundreds of court cases  
            relating to interpretation of "change in ownership" and  
            exemption issues, and attorneys with years of training still  
            scrutinize statutory language and argue as to its meaning and  
            intended interpretation.  

           4)What Does this Bill Do  ?  This bill proposes to create a  
            training program required for any state, county, or municipal  
            employee who is involved in making decisions regarding a  
            "change in ownership" or property tax exemption, except for  
            homeowners' exemption claims.  The annual training program  
            will be administered by the BOE, which will provide for the  
            training and examination of applicants.  Once certified, an  
            employee will also have to complete additional training, in  
            order to retain a valid certificate.  Each year, a certified  
            employee will have to complete either 24 hours or 12 hours of  
            training, depending on whether he/she is an assessment analyst  








                                                                    AB 1534


                                                                    Page  8





            or an advanced assessment analyst.


           5)Addressing the Governor's Veto Message  :  This bill is  
            substantially similar to AB 2756 (Revenue and Taxation  
            Committee), of the 2013-14 Legislative Session.  AB 2756 was  
            vetoed.  The Governor provided the following in his veto  
            message:


               This measure requires employees in county Assessor offices  
               who decide change in ownership issues affecting the real  
               property tax to receive state provided training and  
               certification.


               This is something the Assessors can and should be doing  
               without a state mandate.


            In order to address the concerns of the Governor, this bill  
            creates an opt-in provision requiring the counties and cities  
            to first adopt a resolution upon the recommendation of the  
            assessor before any of the valid assessment analyst  
            certification requirements go into effect.  By requiring  
            counties and cities to opt in, this bill does not create a  
            state mandate. 


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Assessor's Association









                                                                    AB 1534


                                                                    Page  9








          Opposition


          None on file




          Analysis Prepared by:Carlos Anguiano / REV. & TAX. / (916)  
          319-2098