BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       AB 1952|
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                                   THIRD READING 


          Bill No:  AB 1952
          Author:   Gordon (D), et al.
          Amended:  8/17/16 in Senate
          Vote:     27 

           SENATE GOVERNANCE & FIN. COMMITTEE:  6-0, 6/22/16
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Moorlach, Pavley
           NO VOTE RECORDED:  Lara

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/11/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  78-0, 6/2/16 - See last page for vote

           SUBJECT:   Property tax postponement


          SOURCE:    State Controller Betty Yee


          DIGEST:  This bill allows the Director of Finance to authorize  
          expenditures to pay Property Tax Postponement (PTP) claims as  
          well as administrative costs under specified circumstances, and  
          makes other changes to the PTP program.


          Senate Floor Amendments of 8/17/16: (1) Delete provisions in  
          current law requiring the Controller to transfer property tax  
          postponement loan repayments above specified thresholds to the  
          General Fund, (2) Modify the bill's authorization for the  
          Director of Finance to pay certain costs if the Controller  
          notifies the Director that there are insufficient moneys in the  
          Fund, (3) Correct a reference, (4) Resolve conflicts with SB 909  
          (Beall), and (5) Make other technical and conforming changes.  









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          ANALYSIS:  


          Existing law:


          1)Establishes the Senior Citizens and Disabled Citizens Property  
            Tax Postponement Law (PTP), which allows the State Controller  
            to pay property taxes to county tax collectors on behalf of  
            individuals over the age of 62 or disabled persons with less  
            than $35,500 in income per year.  The Controller secures  
            repayment by recording a lien against the claimant's property,  
            which is satisfied when the home is sold or refinanced.


          2)Requires the Controller to shift revenues deposited in the  
            Senior Citizens and Disabled Citizens Property Tax  
            Postponement Fund, generally derived from PTP loan repayments,  
            to the General Fund when fund amounts exceed specified levels:  
            $20 million as of June 30, 2017, and $15 million for each June  
            30 thereafter


          3)Directs the Controller, when granting a PTP loan, to record a  
            lien against the applicant's property with the county recorder  
            in the county in which the PTP applicant lives, and requires  
            the county recorder to send a copy of the lien to the tax  
            collector.


          4)Provides that the Controller increases the lien amount to  
            reflect interest accumulation, and decreases it by the amount  
            of any repayments.


          This bill:


          1)Deletes the current requirement for the Controller to shift  
            revenues deposited in the Senior Citizens and Disabled  
            Citizens Property Tax Postponement Fund to the General Fund  








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            when fund amounts exceed specified levels: $20 million as of  
            June 30, 2017, and $15 million for each June 30 thereafter.


          2)Permits, instead, the Director of Finance to authorize  
            expenditures from the General Fund in an amount necessary to  
            pay additionally approved claims to postpone property taxes,  
            if:


             a)   The Controller determines that there are insufficient  
               moneys in the fund to pay all approved PTP claims for that  
               fiscal year, and


             b)   The Controller notifies the Director by April 1 of each  
               year of the deficiency.


          1)Limits the permission for the Director of Finance to authorize  
            expenditures to pay claims to a period of within 60 days of  
            receiving the notice of the deficiency from the Controller,  
            and not sooner than 30 days after providing written  
            notification of the necessity of authorizing those  
            expenditures to the chairpersons of the fiscal committees of  
            each house of the Legislature and the Chairperson of the Joint  
            Legislative Budget Committee.


          2)Deletes the requirement for the county recorder to send a copy  
            of the lien to the tax collector, instead directing the  
            Controller to do so, and additionally requiring her to also  
            send a copy of the lien to the assessor.


          3)Substitutes a reference to "an electronic funds transfer" with  
            "payment," in several sections to accommodate other forms of  
            payment.  


          4)Clarifies the accounting treatment of repayments to apply any  
            repayment first to interest due, next to principal, and lastly  








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            to administrative fees, to the extent a balance remains.


          5)Prohibits the Controller from granting a PTP loan to an  
            applicant owning a property subject to a Property Assessed  
            Clean Energy Bond, which are financing programs that allow  
            local governments to offer loans to private property owners to  
            cover the initial costs of renewable energy, energy  
            efficiency, water efficiency, and other improvements to  
            private property that offer public benefits.  Property owners  
            repay the loans through voluntary assessments or parcel taxes,  
            which are secured by priority liens and appear annually on  
            property tax bills until the loans are repaid.


          6)Contains contingent enactment provisions that resolve  
            conflicts with SB 909 (Beall).


          7)Corrects references, and makes other technical and conforming  
            changes to PTP law.  


          Background


          PTP allows the Controller to make loans on behalf of  
          income-eligible seniors and disabled persons, secured by a lien  
          that is satisfied when the property is sold or refinanced.  As  
          liens are repaid out of sales proceeds, revenue flows back to  
          the Controller, who in turn uses these funds to pay property  
          taxes for new applicants.   Loans do not become due and payable  
          if the claimant or the claimant's spouse continues to occupy the  
          home.  The program should be self-financing, as the state's  
          interest is safeguarded by a lien recorded against the property,  
          which is repaid, with interest, upon sale.  However, the  
          Controller's lien is only paid off when proceeds remain after  
          previously filed liens have been satisfied; liens filed by  
          county tax collectors for uncollected property taxes have "super  
          priority" status, and therefore must be satisfied before all  
          others regardless of when they're filed.









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          In 2009, due to budgetary constraints, and fewer funds flowing  
          back to the Controller as a result of diminishing sales prices,  
          the Legislature prohibited applicants from filing new claims for  
          property tax postponement, and the Controller from accepting  
          applications (SBx3 8, Ducheny, Chapter 4, Statues of the 2009-10  
          Third Extraordinary Session).  However, the Legislature  
          resuscitated the program in 2014 by removing SBx3 8's  
          prohibition, albeit with tightened eligibility criteria, and a  
          requirement for the Controller to transfer to the General Fund  
          repayments received above specified amounts (AB 2231, Gordon,  
          Chapter 703, Statutes of 2014).  The Controller will soon begin  
          accepting applications for PTP, enabling low-income property  
          owners to apply for loans which will pay for their property  
          taxes, which if granted, eliminate the chance the taxpayer will  
          fall into default, delinquency, or be subject to a tax sale.   
          Prior to suspension, the Controller granted about $12 million  
          annually in claims, but repayments only ranged between $6 and  
          $10 million, potentially leading to General Fund costs.  Because  
          of these risks, AB 2231 applied higher equity percentage  
          requirement of 40%, among other measures.  Additionally, AB 2231  
          required the Controller to shift repayment amounts above a  
          specified level back to the General Fund, leaving fewer funds to  
          grant future PTP claims, but providing more general resources  
          for other state priorities.  


          AB 1952 makes two changes to reduce the number of claimants that  
          may be turned away in the future: first, authorizing the  
          Director of Finance to supplement funds to cover administrative  
          costs and pay previously approved claims, and second, allowing  
          the Controller to deduct administrative costs before shifting  
          fund back to the General Fund.  However, in doing so, this bill  
          may result in less funds for other state priorities.


          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   Yes


          SUPPORT:   (Verified8/12/16)









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          State Controller Betty Yee (source)
          California Association of County Treasurer-Tax Collectors
          California Special Districts Association
          California State Association of Counties 
          League of California Cities
          Retired Public Employees Association
          Rural County Representatives of California
          Santa Clara County Board of Supervisors


          OPPOSITION:   (Verified8/12/16)


          None received


          ARGUMENTS IN SUPPORT:     According to the author, "AB 1952 will  
          make the reestablished Property Tax Postponement Program more  
          sustainable and accessible for eligible applicants.  Under the  
          existing program, the money in the PTP Revolving Fund comes from  
          collections on existing PTP loans; because the Fund relies on  
          loan repayments, it will take time in the beginning to develop a  
          strong base. If PTP Fund does not have enough money to make  
          payments on behalf of eligible and approved claimants, the  
          Controller will be forced to reject loans to applicants that  
          would otherwise be eligible once the fund is depleted.  By  
          permitting the Department of Finance to authorize additional  
          funding for the PTP program, this bill will ensure that the  
          Program is able to fulfill the purpose for which it was  
          developed, and assist as many qualified low income, disabled,  
          and senior Californians as possible."




          ASSEMBLY FLOOR:  78-0, 6/2/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos,  
            Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh,  
            Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  








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            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, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Bigelow, Beth Gaines

          Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
          8/18/16 16:50:28


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