BILL ANALYSIS Ó
SB 801
Page 1
Date of Hearing: July 13, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
SB
801 (Committee on Governance and Finance) - As Amended June 29,
2015
Majority vote. Non-fiscal
SENATE VOTE: 36-0
SUBJECT: Property tax postponement.
SUMMARY: Makes technical changes to the Senior Citizens and
Disabled Citizens Property Tax Postponement (PTP) Law.
Specifically, this bill:
1)Eliminates the outdated references to "a certificate of
eligibility" and to certain duties of local tax officials,
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with respect to lien notices, to conform to the superseding
duties of the State Controller (Controller) in preparing and
filing the notice of lien for postponed taxes.
2)Specifies timing of payments by the Controller to the county
and the refund by the county of taxes paid when a taxpayer
successfully appeals his/her denial of postponement under the
law.
3)Clarifies that the interest on existing loans made prior to
June 30, 2016 will continue to accrue at the Pooled Money
Investment Account rate, which was the rate in effect prior to
the suspension of the PTP program.
4)Authorizes the Controller to release a lien if there is a
foreclosure on an obligation secured by a lien that is senior
in recording priority.
5)Revises the definition of a "claimant" for purposes of the
cooperative housing and possessory interest property tax
postponement provisions to clarify that blind and disabled
persons are included in that definition, in addition to
individuals who are 62 years or older.
6)Requires a person who has postponed his/her proportionate
share of property tax in the cooperative housing to make a
written request when requesting that the Controller issue a
statement showing the total amount postponed and increases the
fee amount that may be charged by the Controller for the
provision of this statement from $10 to $30.
7)Deletes provisions relating to the eligibility of mobilehome
properties for the PTP program and specifies that cooperative
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housing is eligible for the program.
8)Removes the exception to a prohibition on the ability of a
claimant who is a holder of possessory interest in a
residential dwelling to participate in the PTP program if any
taxes or assessments on the possessory interest or improvement
are delinquent.
9)Specifies that a claim for property tax postponement must be
filed after October 1 of the fiscal year in which the
postponement is claimed, instead of September 1, and before
February 10 of that year, instead of April 10th.
10)Corrects grammatical errors, deletes duplicate numbering and
erroneous references, and makes other technical and conforming
changes.
EXISTING LAW:
1)Reinstates a modified PTP program that provides property tax
deferment to seniors and disabled persons and eliminates,
effective July 1, 2016, the current prohibition on any person
filing a claim and the Controller from accepting applications
for the PTP program.
2)Allows the Controller to pay property taxes to county tax
collectors, on behalf of individuals over the age of 62 or
disabled persons with an annual household income of $39,000 or
less.
3)Authorizes the Controller to secure repayment by recording a
lien against the claimant's property, which is satisfied when
the home is sold or refinanced.
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4)Requires the Controller to transfer to the General Fund (GF)
repayments in excess of a $20 million total.
FISCAL EFFECT: None
COMMENTS:
1)Purpose of this bill . In 2014, the Legislature reinstated a
modified PTP program to provide property tax deferment to
seniors and disabled persons and to allow income-eligible
senior citizens and disabled persons to apply to the
Controller to defer payment of property taxes, beginning on
July 1, 2016. Although the funding for the previous program
was eliminated in 2009, the statute remained. However, not
all of the statutory provisions related to the PTP program
were amended in 2014, which made it difficult for the
Controller to administer the program effectively. This bill
would make several technical changes to the program to ensure
that it is implemented correctly.
2)PTP Program: Background . California has several property tax
programs benefiting the elderly and disabled individuals,
including property tax assistance program and property tax
postponement. The assistance program, which is administered
by the FTB, was established in 1967 to provide direct property
tax relief to seniors living on a fixed income. The
assistance program provides a direct grant to qualifying
seniors and disabled individuals who own or rent a residence.
The program was later expanded to include renters who meet the
income requirement, and to homeowners who are blind and/or
disabled, regardless of their age.
Unlike the property tax assistance program that refunds a
percentage of property taxes paid, the PTP program allows
eligible homeowners to defer payment of all or a portion of
the property taxes on their residences. The program was
enacted in 1977, after the passage of a constitutional
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amendment authorizing the postponement of property taxes
(California Constitution Article XIII, Section 8) and is
administered by the Controller's Office. The constitutional
amendment was in response to concerns that senior homeowners
on fixed incomes could lose their homes because of the
inability to pay rising property tax bills. Originally
designed for persons over 62 years of age, the program is now
also available to eligible blind and disabled persons,
regardless of age.
3)Suspension and Subsequent Reinstatement of the PTP program .
On February 20, 2009, the PTP Program was indefinitely
suspended as part of the budget reductions to the state's GF
programs [SBx3 8 (Ducheny), Chapter 4, Statutes of 2009]. The
funding for the program was eliminated and the Controller was
prohibited from accepting any new applications after February
20, 2009. However, in 2014, the Governor signed into law AB
2231 (Gordon), Chapter 703, Statutes of 2014, which
resurrected the PTP program, but with tightened eligibility
criteria and a requirement for the Controller to transfer to
the General Fund repayments in excess of a total of $20
million. AB 2231 also increased the amount of equity required
in the home from 20% to 40%, and eliminated mobilehomes,
houseboats, and floating homes from the definition of
"residential dwelling." Increasing the necessary equity in the
home was thought to help ensure that California is made whole
in case of foreclosure or a forced sale. Additionally, AB
2231 modernized and streamlined payment methods by
establishing the Senior Citizens and Disabled Citizens PTP
Fund within the State Treasury, utilizing electronic fund
transfer in place of certificates and eliminating the impound
account. Finally, before 2009, the PTP Program included
mobile and manufactured homes in the program. However, AB
2231 excluded mobilehomes from the new program.
4)The Definition of "Claimant. " For purposes of the PTP program,
an individual is defined as a "claimant" if he/she is at least
62 years of age, blind or disabled, among other requirements,
and owns or rents a residential dwelling. However, in the
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case of individuals who own a proportionate share in a
cooperative housing corporation or a possessory interest in a
dwelling, the definition of a "claimant" does not include
individuals who are either blind or disabled and thus they are
not able to participate in the PTP program. This bill
proposes to standardize the definition of "claimant" for
purposes of the PTP program to include blind and disabled
individuals, regardless of whether they own a share in a
cooperative housing, hold a possessory interest, or own and
occupy a residential dwelling. This bill is intended to make
sure that the PTP program is consistent across the board and
that blind and disabled individuals are included in all
categories of the program.
5)Changing the Filing Deadlines . Under existing program, a
claim for postponement of property tax must be filed between
September 1of the fiscal year in which the postponement is
claimed and on, or before, April 10 of that fiscal year. This
bill would revise this period for filing by requiring
individuals to submit their claims between October 1 and
February 10. Currently, April 1 is the due date for the
property tax payments. According to the Controller's Office,
the application period must be completed well before April 1
in order to ensure that the Controller will have adequate time
to notify the claimants of the decision and to allow the
unsuccessful claimants to make an alternative arrangement for
the property tax payments.
6)Certificates of Eligibility . The PTP program formerly used a
process where the Controller provided "certificates of
eligibility" to applicants to pay their property taxes. The
Controller submitted these "checks" to the county. The
renewed program, instead, uses electronic funds transfers.
This bill deletes the outdated reference to "a certificate of
eligibility" and eliminates duplicate numbering in Government
Code Section 16183.
7)Lien Notice . Under the previous PTP program, a county tax
collector or assessor was required to enter, on a notice of
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lien, a description of the real property owned by individuals
enrolled in the program and to forward the notice of lien to
the county recorder. The new modified PTP program instead
directs the Controller to prepare a notice of lien for
postponed property taxes and file it with the county recorder.
This bill makes technical changes to the relevant provisions
of the PTP program to reflect the new requirements of the
Controller.
8)Lien Release . Currently, a lien attached to the property has
the priority of a judgment lien and remains in effect until it
is released by the Controller, as prescribed. The
Controller's Office argues that it needs the ability to
release a lien in the case of foreclosure. Hence, this bill
would provide that a lien may be released by the Controller in
the case of the foreclosure or sale of an obligation secured
by a lien which is senior in recording priority to the lien of
the State.
9)Replication Payments . Existing law provides that when the
Controller denies a taxpayer's application for the
postponement of property taxes, the taxpayer has a right to
appeal the Controller's decision. If the denial is reversed
on appeal, the Controller is required to transfer funds to the
county electronically for the amount of the property taxes.
The law, however, is silent with respect to the taxpayer's
right to receive a refund from the county for the property
taxes already paid. This bill would expressly require the
county to refund the overpayment of tax directly to the
taxpayer if the Controller sends a payment for taxes due in
the same fiscal year for which the taxpayer has paid the tax.
10)Conflicting Legislation . Provisions of this bill conflict
with SB 477 (Levya) and may need amendments to resolve the
conflict should both bills continue through the legislative
process.
11)Proposed Technical Amendments . The Committee staff proposes
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the following technical amendments to SB 801:
AMENDMENT 1
Amend Section 20602 to update the obsolete references to the
Government Code.
AMENDMENT 2
On page 13, line 25, strike out "otherwise"
AMENDMENT 3
On page 13, in line 25, strike out "16100" and insert "16180"
AMENDMENT 3
On page 20, line 9, strike out "Except as provided in this
section, any" and insert "Any"
AMENDMENT 4
On page 21, line 7, after "collector" insert:
or chartered city which levies and collects its own taxes,
AMENDMENT 5
On page 21, line 9, strike out "otherwise"
AMENDMENT 6
On page 21, line 10, strike out "16100" and insert "16180"
REGISTERED SUPPORT / OPPOSITION:
Support
SB 801
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Betty T. Yee, California State Controller
Opposition
None on file
Analysis Prepared by:Oksana Jaffe / REV. & TAX. / (916)
319-2098