BILL ANALYSIS Ó
SB 909
Page 1
SENATE THIRD READING
SB
909 (Beall)
As Amended August 19, 2016
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+------------------------+--------------------|
|Local |9-0 |Eggman, Waldron, Alejo, | |
|Government | |Bonilla, Chiu, Cooley, | |
| | |Beth Gaines, Gordon, | |
| | |Linder | |
| | | | |
|----------------+-----+------------------------+--------------------|
|Revenue & |9-0 |Ridley-Thomas, Brough, | |
|Taxation | |Dababneh, Gipson, | |
| | |Mullin, O'Donnell, | |
| | |Patterson, Quirk, | |
| | |Wagner | |
| | | | |
|----------------+-----+------------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, Bonta, | |
| | |Calderon, Chang, Daly, | |
| | |Eggman, Gallagher, | |
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| | |Eduardo Garcia, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood, | |
| | |Chau | |
| | | | |
| | | | |
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SUMMARY: Authorizes qualified beneficiaries of special needs
trusts to apply to the State Controller to defer payment of
property taxes through the Senior Citizens and Disabled Citizens
Property Tax Postponement (PTP) Program. Specifically, this
bill:
1)Adds the interest of a beneficiary of a special needs trust to
the list of ownership interest in a residential dwelling
defined in existing law for the purposes of eligibility for
the PTP Program.
2)Contains chaptering out language to avoid conflicts with AB
1952 (Gordon) of the current legislative session.
3)Provides that no reimbursement is required by this bill
because the only costs that may be incurred by a local agency
or school district will be incurred because this bill creates
a new crime or infraction, eliminates a crime or infraction,
or changes the penalties for a crime or infraction, as
specified.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, negligible state costs.
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COMMENTS:
1)Existing Law and Bill Summary. Under existing law, the PTP
Program is limited to a claimant's principal place of
residence, which is owned by the claimant, the claimant and
spouse, the claimant and another individual eligible for the
program, or specified members of the claimant's family. A
claimant must demonstrate ownership interest in the property,
which is defined by current law, as follows: a) the interest
of a vendee in possession under a land sale contract, provided
that it is recorded; b) the interest of a holder of a life
estate; c) the interest of a joint tenant or tenant in common
in the residential dwelling; d) the interest of a tenant in
cooperative housing; or, e) the interest of a residential
dwelling in which title is held in trust, pursuant to a
specified definition of trust in the Revenue and Taxation
Code, which is either revocable, or where the transferor of
assets into the trust is also its beneficiary. Additionally,
existing law tasks the Controller with making the
determination that the state's interest is adequately
protected in each PTP loan.
The definition of ownership interest in a property used to
determine eligibility does not currently include a special
needs trust. A special needs trust is a specific type of
trust that can be created by individual beneficiaries, family
members, attorneys, or county public guardians or conservators
to benefit a person with a disability while allowing that
person to continue to be eligible for public benefits. Many
programs like Medi-Cal and Supplemental Security Income,
require asset or income requirements that may disqualify a
beneficiary. A special needs trust allows trustees to manage
a beneficiary's affairs, if they are unable to manage their
own affairs, and to ensure that the beneficiary continues to
receive essential services.
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This bill expands the definition of ownership to include the
beneficiary of a special needs trust to the types of ownership
interests eligible to participate in the PTP Program. All
existing eligibility requirements in current law for potential
claimants to the PTP Program would still apply.
2)Author's Statement. According to the author, "A special needs
trust is designed for beneficiaries who are disabled, either
physically or mentally. Some special needs trust
beneficiaries have financial difficulty in meeting their
property tax obligations and meet the financial qualifications
for the Property Tax Postponement Program. However, because
the trust itself, rather than the individual, is considered to
be the technical owner of the residence held in trust, special
needs trust beneficiaries are considered ineligible for the
program. Thus, under current law, some special needs trust
beneficiaries who have financial difficulty meeting their tax
obligations may be forced to move from their homes because
they are not able to defer their tax burden.
"SB 909 would clarify that beneficiaries of special needs
trusts who meet all other criteria for participation are
eligible to apply for the property tax postponement program.
This bill will allow low-income, disabled individuals to stay
in their own home regardless of whether their homes are held
in trust."
3)PTP Program. California has several property tax programs
benefiting elderly and disabled individuals, including
property tax reappraisal relief, property tax assistance, and
the PTP Program. 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. Under
the PTP Program, the Controller makes payments directly to
county tax collectors on behalf of individuals over the age of
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62 or disabled persons with less than $39,000 annual income to
pay their property taxes. In exchange for paying a claimant's
property taxes, a lien is placed on the claimant's property.
The loan is secured by the property and is repaid when the
home is sold or refinanced.
The program was enacted in 1977, after the passage of a
constitutional 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.
On February 20, 2009, the PTP Program was indefinitely
suspended as part of the budget reductions to the state's
General Fund programs [SB 8 X3 (Ducheny), Chapter 4, Statutes
of 2009 Third Extraordinary Session]. The funding for the
program was eliminated and the Controller was prohibited from
accepting any new applications after February 20, 2009. In
response to the negative impacts of the suspension of the PTP
Program, AB 1718 (Blumenfield) of 2010 was introduced.
AB 1718 would have established the County Deferred Property
Tax Program for Senior Citizens and Disabled Citizens, but was
vetoed by Governor Schwarzenegger. Subsequently, the
Legislature enacted AB 1090 (Blumenfield), Chapter 369,
Statutes of 2011, creating the County Deferred Property Tax
Program. AB 1090 was substantially similar to AB 1718, except
that it did not allow the county treasurer-tax collector to
secure the deferral with a superior priority status lien.
Since the passage of AB 1090, the Legislature was only aware
of one county (Santa Cruz County) that implemented the
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optional program.
AB 2231 (Gordon), Chapter 703, Statutes of 2014, reinstated a
modified PTP Program to provide property tax deferment to
seniors and disabled persons and allows income-eligible senior
citizens and disabled persons to apply to the Controller to
defer payment of property taxes, beginning on July 1, 2016.
Though the funding for the previous program was eliminated in
2009, the statute remained.
4)Arguments in Support. Santa Clara County argues that this
bill "will allow special needs trust entities to be qualified
claimants in the [PTP] program when the residential dwelling
held by the trust is occupied by its beneficiary who is a
senior or disabled. This change will allow a special needs
trust beneficiaries to participate in the program. The
ability to defer property tax payment will provide financial
relief for elderly and disabled people, enabling them to
remain in their homes."
5)Arguments in Opposition. The Department of Finance "opposes
this bill because it exposes the General Fund to potentially
significant costs if the number of qualified special needs
trust applicants exceeds the available Program repayment
revenues."
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0004643
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