BILL ANALYSIS Ó
AB 2450
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2450
(Achadjian) - As Amended April 12, 2016
SUBJECT: Property tax.
SUMMARY: Requires additional information to be included in a
Change of Ownership Statement in the case of real property
transfers that must be reported to the local county assessor,
and requires a public entity proposing to acquire tax exempt
property to provide specified notice to the county assessor.
Specifically, this bill:
1)Requires a Change in Ownership Statement (COS) to include any
enforceable restrictions placed upon the property that the
assessor is required to consider when determining a property's
value, pursuant to existing law.
2)Requires a public entity, if the public entity proposes to
acquire property for a public use that will make the property
exempt from taxation, to give notice to the county assessor,
in the same manner as the notice provided to the county tax
collector.
3)Provides that no reimbursement is required because of the
creation of a new crime or infraction, unless the Commission
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on State Mandates determines that this bill contains costs
mandated by the state.
EXISTING LAW:
1)Requires the new owner, whenever a change in ownership of real
property occurs, to file a signed COS in the county where the
real property, manufactured home, or floating home subject to
property tax is located.
2)Requires the COS to provide information as prescribed by the
State Board of Equalization (BOE) in consultation with the
California Assessors' Association.
3)Requires the information in a COS to include, but not be
limited to, the following:
a) A description of the property;
b) The parties to the transaction;
c) The date of acquisition;
d) The amount, if any, of the consideration paid for the
property, as specified; and,
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e) The terms of the transaction.
4)Requires county assessors, when determining assessed
valuation, to consider the effect on property of the value of
any enforceable restrictions against the use of the land, such
as recorded contracts with government agencies, zoning, and
environmental constraints.
5)Requires a public entity, the state, county, city, school,
district, or other public entity, to provide the local
assessor and auditor a copy of the instrument evidencing the
acquisition
of property by the entity.
6)Requires a public entity, if a public entity proposes to
acquire property for a public use that will make the property
exempt from taxation, to give notice to the county tax
collector and to any public entities whose taxes are not
collected by the county tax collector, but who at the time
exercise the right of assessment and taxation. Requires the
notice to be given within a reasonable time following the
initial budgeting of funds for the proposed acquisition, and
requires the notice to state the following:
a) The approximate extent of the proposed project; and,
b) The estimated time of completion of all acquisitions
necessary for the proposed project.
FISCAL EFFECT: This bill is keyed fiscal.
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COMMENTS:
1)Property Tax and County Assessors. Section One of Article
XIII of the California Constitution provides that all property
is taxable, unless explicitly exempted by the Constitution or
federal law. The Constitution limits the maximum amount of
any ad valorem tax on real property at one percent of full
cash value, and growth in the value of the property to two
percent per year. Pursuant to existing law, assessors must
consider enforceable restrictions, such as zoning,
environmental restrictions, and recorded contracts with
government entities when valuing property. Assessors
subsequently estimate the value of the property based on its
legal uses allowed by the enforceable restriction.
Assessors reappraise property whenever there is new
construction, or when ownership changes. Whenever ownership
changes, the new owner must file a COS. Alternatively, the
new owner may file a Preliminary Change in Ownership Report
(PCOR), which is nearly identical to the COS, at the time the
deed for change in ownership is recorded, thereby generally
satisfying the requirement for filing the COS. Existing law
prescribes the details
of the report, and tasks the BOE, after consultation with the
California Assessors Association, with determining the exact
form for COS.
Currently, both the PCOR and the COS include a check box to
identify a transfer that is subject to subsidized low-income
housing requirements with governmentally imposed restrictions.
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2)Bill Summary. This bill adds to the list of required
information in a COS to include any enforceable restrictions
placed upon the property that the assessor is required to
consider when valuing property, pursuant to existing law.
Additionally, this bill requires a public entity proposing to
acquire tax exempt property to provide specified notice to the
county assessor, in the same manner that existing law requires
that notice be provided to the county tax collector. This
bill is sponsored by the California Assessors Association.
3)Author's Statement. According to the author, "Assessors are
required to consider the effect of any enforceable
restrictions on a property's value. For low income housing,
also known as below market rate (BMR) properties, governmental
agencies execute contracts to restrict the use of the land for
owner occupied housing, which are sold at affordable or below
market prices. These contracts come with governmentally
imposed restrictions to ensure compliance with the terms of
the affordable housing program.
"During the past several years, it has been increasingly
difficult for assessors to properly assess BMR properties
because property owners, and governmental agencies do not
always disclose the existence of BMR contracts at the time of
transfer. Currently, only the homeowner is required to
disclose, and local housing agencies are not legally mandated
to inform the assessors of the existence of these BMR
contracts even though they maintain records for the purpose of
enforcing the restrictions. The result is low-income
homeowners are incorrectly over taxed. Correcting an
overpayment is expensive, time consuming and may not result in
a complete refund. This change will help the governmental
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agency achieve their objective of assisting low-income
families by ensuring BMR families do not pay more property
taxes than required."
4)Policy Considerations. The Committee may wish to consider if
Section 1 of this bill is necessary given the PCOR and COS
already include a check box to identify a property transfer
subject to subsidized low-income housing requirements with
governmentally imposed restrictions. If there are enforceable
restrictions in existing law that the proponents feel need to
be added to the forms, current law requires BOE to consult
with the California Assessors Association in determining the
exact form for a COS. Given this consideration, the Committee
may wish to consider asking the author to remove Section 1
from the bill.
5)Arguments in Support. The California Assessors Association
argues that this bill "will help assessors provide accurate
and timely property tax relief to low-income homeowners.
Moreover, it will assist cities and counties in assisting
low-income families by ensuring these families do not pay more
property taxes than required. In Santa Clara County, for
example, the Assessor discovered that more than 200 property
owners had been paying more property taxes than they owed -
some, for as long as eighteen years. When discovered in
August 2015, the Assessor manually processed over 2,000 roll
corrections, and worked with [the] County Board of Supervisors
and the County Finance Agency to refund more than $3 million
to taxpayers. All of this could have been avoided, had the
Assessor been properly notified when the transactions
occurred."
6)Arguments in Opposition. None on file.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Assessors Association [SPONSOR]
Opposition
None on file
Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958