BILL ANALYSIS Ó AB 2450 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2450 (Achadjian) As Amended August 2, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | 76-0 |(May 19, 2016) |SENATE: |38-0 |(August 16, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY: Requires contracts with government agencies restricting the use of property for owner-occupied housing available at affordable cost to be recorded. The Senate amendments: 1)Require contracts with government agencies restricting the use of property for owner-occupied housing available at affordable cost to be recorded. 2)Provide that nothing in this bill shall be construed to prevent the assessor from considering a contract that restricts the use of the property to owner-occupied housing available at affordable housing cost, including under any locally adopted inclusionary housing program, for purposes of AB 2450 Page 2 applying existing law. AS PASSED BY THE ASSEMBLY, this bill required 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. FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS: 1)Property Tax and County Assessors. California Constitution Article XIII Section One 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 1% of full cash value, and growth in the value of the property to 2% 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. 2)Bill Summary. This bill requires contracts with government agencies restricting the use of property for owner-occupied housing available at affordable cost to be recorded. 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 AB 2450 Page 3 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 agency achieve their objective of assisting low-income families by ensuring BMR families do not pay more property taxes than required." 4)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 18 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." AB 2450 Page 4 5)Arguments in Opposition. None on file. Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0003911