Amended in Senate May 11, 2016

Senate Bill No. 1104

Introduced by Senator Stone

February 17, 2016

An act to amend Sections begin delete 51 and 205.5 end delete begin insert 51, 205.5, and 5813 end insert of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1104, as amended, Stone. Property tax: senior and disabled veterans.

(1) The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value, as defined, of that property, and provides that the full cash value base may be adjusted each year by the inflationary rate not to exceed 2% for any given year.

Existing property tax law implementing this constitutional authority provides that the taxable value of real property is the lesser of its base year value compounded annually by an inflation factor not to exceed 2%, as provided, or its full cash value. begin insert end insert begin insert Existing property tax law also provides that the taxable value of a manufactured home is the lesser of its base year value compounded annually by an inflation factor not to exceed 2% or its full cash value. end insert

This begin delete bill end delete begin insert bill, for any assessment year commencing on or after January 1, 2017, end insert would provide that the inflation factor shall not apply to the principal place of begin delete residence end delete begin insert residence, including a manufactured home, end insert of a begin insert qualified end insert veteran, as defined, who is 65 years of age or older begin delete and end delete begin insert on the lien date, was end insert honorably discharged from military begin delete service for any assessment year commencing on or after either January 1, 2017, or the veteran’s 65th birthday, whichever occurs later. end delete begin insert service, and meets specified requirements. end insert

By changing the manner in which local tax officials calculate the taxable value of real property owned by senior veterans, this bill would impose a state-mandated local program.

(2) Existing property tax law provides, pursuant to the authorization of the California Constitution, a disabled begin delete veterans’ end delete begin insert veteran’s end insert property tax exemption for the principal place of residence of a veteran or a veteran’s spouse, including an unmarried surviving spouse, if the veteran, because of injury incurred in military service, is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled, as those terms are defined, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000, if the veteran’s household income does not exceed $40,000, adjusted for inflation, as specified.

This bill, commencing with the lien date for the 2017-18 fiscal year and for each fiscal year thereafter, would instead exempt the full value of the principal place of residence of a veteran or veteran’s spouse. The bill would also make technical and conforming changes to the disabled begin delete veterans’ end delete begin insert veteran’s end insert property tax exemption.

By changing the manner in which local tax officials administer the disabled begin delete veterans’ end delete begin insert veteran’s end insert property tax exemption, this bill would impose a state-mandated local program.

(3) Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

(5) This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 51 of the Revenue and Taxation Code is
amended to read:

51.  

(a) For purposes of subdivision (b) of Section 2 of Article
XIII A of the California Constitution, for each lien date after the
lien date in which the base year value is determined pursuant to
Section 110.1, the taxable value of real property shall, except as
otherwise provided in subdivision (b) or (c), be the lesser of:

(1) Its base year value, compounded annually since the base
year by an inflation factor, which shall be determined as follows:

(A) For any assessment year commencing prior to January 1,
1985, the inflation factor shall be the percentage change in the cost
of living, as defined in Section 2212.

(B) For any assessment year commencing after January 1, 1985,
and prior to January 1, 1998, the inflation factor shall be the
percentage change, rounded to the nearest one-thousandth of 1
percent, from December of the prior fiscal year to December of
the current fiscal year in the California Consumer Price Index for
all items, as determined by the begin delete California end delete Department of Industrial
Relations.

(C) For any assessment year commencing on or after January
1, 1998, the inflation factor shall be the percentage change, rounded
to the nearest one-thousandth of 1 percent, from October of the
prior fiscal year to October of the current fiscal year in the
California Consumer Price Index for all items, as determined by
the begin delete California end delete Department of Industrial Relations.

(D) The percentage increase for an assessment year determined
pursuant to subparagraph (A), (B), or (C) shall not exceed 2 percent
of the prior year’s value.

(E)  begin insert (i) end insert begin insert   end insert Notwithstanding any other law, begin insert for any assessment year
commencing on or after January 1, 2017, end insert the percentage increase
for an assessment year determined pursuant to subparagraph (A),
(B), or (C) shall not apply to the principal place of begin delete residence end delete
begin insert residence, including end insert begin insert so much of the land surrounding it as is
reasonably necessary for use of the dwelling as a home, end insert of a
begin insert qualified end insert veteran who is 65 years of age or older begin insert on the lien date end insert
and was honorably discharged from military begin delete service for any
assessment year commencing on or after either January 1, 2017,
or the veteran’s 65th birthday, whichever occurs later. For end delete begin insert service. end insert

begin insert (ii) end insert begin insert   end insert begin insert For end insert the purpose of this subparagraph, begin delete “veteran” end delete begin insert “qualified
veteran end insert begin insert ” end insert means a person begin delete who meets end delete begin insert who meets the following
criteria: end insert

begin insert (I) end insert begin insert   end insert begin insert He or she meets end insert the criteria specified in subdivision (o) of
Section 3 of Article XIII of the California Constitution, except for
the limitation on the value of property owned by the veteran or the
veteran’s spouse.

begin insert

(II) If the qualified veteran is single, his or her annual income,
as defined in Section 20504, is less than fifty thousand dollars
($50,000).

end insert begin insert

(III) If the qualified veteran is married, his or her household
combined annual income, as defined in Section 20504, is less than
one hundred thousand dollars ($100,000).

end insert begin insert

(iii) When claiming the benefit provided by this subparagraph,
the claimant shall provide all information required by, and answer
all questions contained in, an affidavit furnished by the assessor
to determine that the claimant is a qualified veteran. The assessor
may require additional proof of the information or answers
provided in the affidavit before allowing the benefit provided by
this subparagraph.

end insert

(2) Its full cash value, as defined in Section 110, as of the lien
date, taking into account reductions in value due to damage,
destruction, depreciation, obsolescence, removal of property, or
other factors causing a decline in value.

(b) If the real property was damaged or destroyed by disaster,
misfortune, or calamity and the board of supervisors of the county
in which the real property is located has not adopted an ordinance
pursuant to Section 170, or any portion of the real property has
been removed by voluntary action by the taxpayer, the taxable
value of the property shall be the sum of the following:

(1) The lesser of its base year value of land determined under
paragraph (1) of subdivision (a) or full cash value of land
determined pursuant to paragraph (2) of subdivision (a).

(2) The lesser of its base year value of improvements determined
pursuant to paragraph (1) of subdivision (a) or the full cash value
of improvements determined pursuant to paragraph (2) of
subdivision (a).

In applying this subdivision, the base year value of the subject
real property does not include that portion of the previous base
year value of that property that was attributable to any portion of
the property that has been destroyed or removed. The sum
determined under this subdivision shall then become the base year
value of the real property until that property is restored, repaired,
or reconstructed or other provisions of law require establishment
of a new base year value.

(c) If the real property was damaged or destroyed by disaster,
begin delete misfortune end delete begin insert misfortune, end insert or calamity and the board of supervisors
in the county in which the real property is located has adopted an
ordinance pursuant to Section 170, the taxable value of the real
property shall be its assessed value as computed pursuant to Section
170.

(d) For purposes of this section, “real property” means that
appraisal unit that persons in the marketplace commonly buy and
sell as a unit, or that is normally valued separately.

(e) Nothing in this section shall be construed to require the
assessor to make an annual reappraisal of all assessable property.
However, for each lien date after the first lien date for which the
taxable value of property is reduced pursuant to paragraph (2) of
subdivision (a), the value of that property shall be annually
reappraised at its full cash value as defined in Section 110 until
that value exceeds the value determined pursuant to paragraph (1)
of subdivision (a). In no event shall the assessor condition the
implementation of the preceding sentence in any year upon the
filing of an assessment appeal.

SEC. 2.  

Section 205.5 of the Revenue and Taxation Code is
amended to read:

205.5.  

(a) Property that constitutes the principal place of
residence of a veteran, that is owned by the veteran, the veteran’s
spouse, or the veteran and the veteran’s spouse jointly, is exempted
from taxation if the veteran is blind in both eyes, has lost the use
of two or more limbs, or if the veteran is totally disabled as a result
of injury or disease incurred in military service.

(b) (1) For purposes of this section, “veteran” means either of
the following:

(A) A veteran as specified in subdivision (o) of Section 3 of
Article XIII of the California Constitution, except for the limitation
on the value of property owned by the veteran or the veteran’s
spouse.

(B) A person who would qualify as a veteran pursuant to
paragraph (1) except that he or she has, as a result of a
service-connected injury or disease, as determined by the United
States Department of Veterans Affairs, died while on active duty
in military service.

(2) For purposes of this section, property is deemed to be the
principal place of residence of a veteran, disabled as described in
subdivision (a), who is confined to a hospital or other care facility,
if that property would be that veteran’s principal place of residence
were it not for his or her confinement to a hospital or other care
facility, provided that the residence is not rented or leased to a
third party. For the purposes of this paragraph, a family member
that resides at the residence is not a third party.

(c) (1) Property that is owned by, and that constitutes the
principal place of residence of, the unmarried surviving spouse of
a deceased veteran is exempt from taxation if the deceased veteran
was blind in both eyes, had lost the use of two or more limbs, or
was totally disabled, provided that either of the following
conditions is met:

(A) The deceased veteran during his or her lifetime qualified
for the exemption pursuant to subdivision (a), or would have
qualified for the exemption under the laws effective on January 1,
1977, except that the veteran died prior to January 1, 1977.

(B) The veteran died from a disease that was service-connected,
as determined by the United States Department of Veterans Affairs.

(2) Property that is owned by, and that constitutes the principal
place of residence of, the unmarried surviving spouse of a veteran
described in subparagraph (B) of paragraph (1) of subdivision (b)
is exempt from taxation.

(3) Property is deemed to be the principal place of residence of
the unmarried surviving spouse of a deceased veteran, who is
confined to a hospital or other care facility, if that property would
be the unmarried surviving spouse’s principal place of residence
were it not for his or her confinement to a hospital or other care
facility, provided that the residence is not rented or leased to a
third party. For purposes of this paragraph, a family member who
resides at the residence is not a third party.

(d) As used in this section, “property that is owned by a veteran”
or “property that is owned by the veteran’s unmarried surviving
spouse” includes all of the following:

(1) Property owned by the veteran with the veteran’s spouse as
a joint tenancy, tenancy in common, or as community property.

(2) Property owned by the veteran or the veteran’s spouse as
separate property.

(3) Property owned with one or more other persons to the extent
of the interest owned by the veteran, the veteran’s spouse, or both
the veteran and the veteran’s spouse.

(4) Property owned by the veteran’s unmarried surviving spouse
with one or more other persons to the extent of the interest owned
by the veteran’s unmarried surviving spouse.

(5) That portion of the property of a corporation that constitutes
the principal place of residence of a veteran or a veteran’s
unmarried surviving spouse when the veteran, the veteran’s spouse,
or the veteran’s unmarried surviving spouse is a shareholder of
the corporation and the rights of shareholding entitle one to the
possession of property, legal title to which is owned by the
corporation. The exemption provided by this paragraph shall be
shown on the local roll and shall reduce the full value of the
corporate property. Notwithstanding any law or articles of
incorporation or bylaws of a corporation described in this
paragraph, any reduction of property taxes paid by the corporation
shall reflect an equal reduction in any charges by the corporation
to the person who, by reason of qualifying for the exemption, made
possible the reduction for the corporation.

(e) For purposes of this section, the following definitions shall
apply:

(1)  begin delete “Being” end delete begin insert “Being end insert blind in both eyes” means having a visual
acuity of 5/200 or less, or concentric contraction of the visual field
to 5 degrees or less.

(2) “Lost the use of two or more limbs” means that the limb has
been amputated or its use has been lost by reason of ankylosis,
progressive muscular dystrophies, or paralysis.

(3) “Totally disabled” means that the United States Department
of Veterans Affairs or the military service from which the veteran
was discharged has rated the disability at 100 percent or has rated
the disability compensation at 100 percent by reason of being
unable to secure or follow a substantially gainful occupation.

(f) An exemption granted to a claimant pursuant to this section
shall be in lieu of the veteran’s exemption provided by subdivisions
(o), (p), (q), and (r) of Section 3 of Article XIII of the California
Constitution and any other real property tax exemption to which
the claimant may be entitled. No other real property tax exemption
may be granted to any other person with respect to the same
residence for which an exemption has been granted pursuant to
this section; provided, that if two or more veterans qualified
pursuant to this section coown a property in which they reside,
each is entitled to the exemption to the extent of his or her interest.

(g) The amendments made to this section by begin delete the act adding this
subdivision end delete begin insert Senate Bill 1104 of the 2015- end insert begin insert 16 Regular Session of
the Legislature shall end insert apply for property tax lien dates for the
2017-18 fiscal year and for each fiscal year thereafter.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 5813 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

5813.  

begin delete For end delete begin insert (a) end insert begin insert   end insert begin insert For end insert each lien date after the lien date for which
the base year value is determined, the taxable value of a
manufactured home shall be the lesser of:

begin delete

(a)

end delete

begin insert (1) end insert  Its base year value, compounded annually since the base
year by an inflation factor, which shall be the percentage change
in the cost of living, as defined in Section 51, provided, that any
percentage increase shall not exceed 2 percent of the prior year’s

begin delete value; or end delete begin insert value. end insert

begin delete

(b)

end delete

begin insert (2) end insert  Its full cash value, as defined in Section 5803, as of the lien
date, taking into account reductions in value due to damage,
destruction, depreciation, obsolescence, or other factors causing
a decline in begin delete value; or end delete begin insert value. end insert

begin delete

(c)

end delete

begin insert (3) end insert  If the manufactured home is damaged or destroyed by
disaster, misfortune, or calamity, its value determined pursuant to
begin delete (b) end delete begin insert paragraph (2) end insert shall be its base year value until the
manufactured home is restored, repaired or reconstructed or other
provisions of law require establishment of a new base year value.

begin insert

(b) (1) Notwithstanding any other law, for any assessment year
commencing on or after January 1, 2017, the percentage increase
for an assessment year determined pursuant to paragraph (1) of
subdivision (a) shall not apply to the principal place of residence
of a qualified veteran who owns a manufactured home as his or
her principal place of residence and who is 65 years of age or
older on the lien date and was honorably discharged from military
service.

end insert begin insert

(2)  For the purpose of this subdivision, “qualified veteran”
means a person who meets the following criteria:

end insert begin insert

(A) He or she meets the criteria specified in subdivision (o) of
Section 3 of Article XIII of the California Constitution, except for
the limitation on the value of property owned by the veteran or the
veteran’s spouse.

end insert begin insert

(B) If the qualified veteran is single, his or her annual household
income, as defined in Section 20504, is fifty thousand dollars
($50,000) or less.

end insert begin insert

(C) If the qualified veteran is married, his or her combined
annual household income, as defined in Section 20504, is one
hundred thousand dollars ($100,000) or less.

end insert begin insert

(3) When claiming the benefit provided by this subdivision, the
claimant shall provide all information required by, and answer
all questions contained in, an affidavit furnished by the assessor
to determine that the claimant is a qualified veteran. The assessor
may require additional proof of the information or answers
provided in the affidavit before allowing the benefit provided by
this subdivision.

end insert

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

begin delete SEC. 4. end delete

begin insert SEC. 5. end insert   

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

begin delete SEC. 5. end delete

begin insert SEC. 6. end insert   

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.