BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 909|
|Office of Senate Floor Analyses | |
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UNFINISHED BUSINESS
Bill No: SB 909
Author: Beall (D), et al.
Amended: 8/19/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/6/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 39-0, 4/21/16 (Consent)
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone,
Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 80-0, 8/24/16 - See last page for vote
SUBJECT: Property tax postponement: special needs trust
claimants
SOURCE: Author
DIGEST: This bill adds the interest of a beneficiary of a
special needs trust (SNT) to the list of ownership interests
necessary for the State Controller to accept a claim for the
Senior Citizens and Disabled Citizens Property Tax Postponement
Law (PTP) program.
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Page 2
Assembly Amendments clarify this bill's application to special
needs trusts.
ANALYSIS:
Existing law:
1)Establishes the PTP, which allows the State Controller to loan
funds to pay property taxes to county tax collectors on behalf
of individuals over the age of 62 or disabled persons with
less than $39,000 in income per year.
2)Requires the Controller to secure repayment by recording a
lien against the claimant's property, which is satisfied when
the home is sold or refinanced.
3)Restricts the Controller's authority to pay property taxes
only for a claimant's principal place of residence, and any
land reasonably necessary for the dwelling to be used as a
home, so long as it's 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.
Without a demonstrable ownership interest in the property, the
Controller won't accept a PTP application.
4)Charges the Controller with determining that the state's
interest is adequately protected for every PTP loan.
5)Defines ownership as:
a) The interest of a vendee in possession under a land sale
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Page 3
contract, provided that it's recorded,
b) The interest of a holder of a life estate, but not
remainder or reversionary interests,
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, using the definition of trust used in
Revenue and Taxation Code §62(d).
This bill:
1)Adds the interest of a beneficiary of an SNT, as described in
Revenue and Taxation Code §62(d), to the list of ownership
interests necessary for the Controller to accept a claim for
the PTP program.
2)Makes legislative findings regarding the potential for a
reimbursable state mandate.
3)Makes a grammatical change.
4)Contains language resolving conflicts with AB 1952 (Gordon).
Background
In 2009, the Legislature prohibited persons from filing new
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Page 4
claims for property tax postponement, and the Controller from
accepting applications, largely due to budgetary constraints and
less funds flowing back to the Controller as a result of
diminishing sales prices (SBX3 8, Ducheny, Chapter 4, Statutes
of 2009-10 Third Extraordinary Session). However, the
Legislature resuscitated the program in 2014 by removing SBX3
8's prohibition, albeit with tightened eligibility criteria, and
a requirement for the Controller to transfer to the General Fund
repayments received above a $20 million total (AB 2231, Gordon,
Chapter 703, Statutes of 2014). The Controller states that she
will begin accepting PTP applications under the reconstituted
program on November 1st of this year.
Ensuring that beneficiaries of SNTs are eligible for PTP is
legally difficult because no clear, comprehensive, definition
currently exists. To accomplish the goal, SB 909 adds a
beneficiary's interests in an SNT in which title is held in
trust to the list of ownership interests which qualifies for PTP
using the same code section which makes other interests in
trusts eligible. The Controller states that this approach makes
SNTs formed by public guardians eligible for PTP in most cases
because Probate Code §2111 states that a transaction made by a
guardian on behalf of a ward (or by a conservator on behalf of a
conservatee) in accordance with an order directing the
transaction has the same effect as if the ward had made the
transaction while having legal capacity to do so. The
Controller indicates that she will determine eligibility for PTP
for SNTs not formed by public guardians and conservators on a
case-by-case basis.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee, this bill's
costs are negligible.
SUPPORT: (Verified8/16/16)
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Board of Equalization Member George Runner
California State Association of Public Administrators, Public
Guardians, and Public Conservators
Santa Clara County Board of Supervisors
The Arc and United Cerebral Palsy California Collaboration
OPPOSITION: (Verified8/16/16)
None received
ARGUMENTS IN SUPPORT: 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."
ASSEMBLY FLOOR: 80-0, 8/24/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
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Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
8/25/16 17:34:48
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