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