BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 1304 |Hearing |5/11/16 |
| | |Date: | |
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|Author: |Huff |Tax Levy: |No |
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|Version: |4/21/16 |Fiscal: |No |
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|Consultant| Grinnell |
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Property taxation: disaster relief: Porter Ranch methane gas
leak
Expands eligibility for disaster reassessment; allows assessors
to consider environmental contamination when revaluing the
property; applies retroactively to Porter Ranch.
Background
Article XIII of the California Constitution 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 directs assessors to only reappraise
property when newly constructed, or when ownership changes
(Proposition 13, 1978). Voters enacted Proposition 8 (1978) a
few months after Proposition 13, which amended the Constitution
to allow a temporary reduction in value to reflect substantial
damage, destruction, or other factors causing a decline in
value. The Constitution has for many years also allowed the
Legislature to authorize local agencies to provide for the
assessment or reassessment of taxable property physically
damaged or destroyed for property tax purposes.
To implement these Constitutional provisions, current law allows
a county board of supervisors to enact an ordinance allowing any
taxpayer whose property was damaged or destroyed without his or
SB 1304 (Huff) 4/21/16 Page 2
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her fault to apply for reassessment. The ordinance can apply to
large disasters, such as earthquakes or wildfires, or
site-specific incidents, like house fires. If the county enacts
an ordinance, assessors must revalue property that's physically
damaged by the disaster. However, assessors don't revalue
property when the disaster restricts access to property, unless
the Governor has issued a disaster proclamation as a result of
the disaster.
On October 23rd, 2015, a massive natural gas leak from a natural
gas storage facility was detected in Southern California, known
today as the Aliso Canyon or Porter Ranch gas leak. The leak
sickened and displaced residents, and may be one of the most
harmful environmental events in the country's history, according
to news reports. The Governor issued a proclamation declaring
the situation a state of emergency on January 6, 2016. However,
the gas leak didn't cause physical damage to property, and
neither the Governor's proclamation nor any subsequent
legislative bill declared the situation a disaster, so the Los
Angeles County Board of Supervisors cannot enact an ordinance
directing the assessor to revalue properties to reflect the gas
leak's impact on property values. The author wants to allow
local agencies to require disaster reassessments whenever the
Governor proclaims a state of emergency, and allow assessors to
consider value reductions resulting from environmental
contamination when performing a disaster reassessment.
Proposed Law
Senate Bill 1304 expands eligibility for disaster reassessment
to include a major misfortune or calamity in an area
subsequently proclaimed by the Governor to be in a state of
emergency, so long as the property was damaged or destroyed by
the major misfortune or calamity that caused the Governor to
issue the proclamation. The bill also allows the assessor to
consider damage from environmental contamination when revaluing
the property to its disaster-affected value.
The measure states that its provisions apply retroactively to
the County of Los Angeles with respect to property located in
the Porter Ranch neighborhood of the City of Los Angeles, and
allows affected taxpayers to apply for reassessment within 12
months of the date the bill is enacted. SB 1304 also contains
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legislative findings and declarations regarding the necessity
for a special law for the Porter Ranch neighborhood of the City
of Los Angeles, and contains an urgency clause.
State Revenue Impact
Pending.
Comments
1. Purpose of the bill . According to the author, "Residents of
the Porter Ranch in the City of Los Angles had been driven from
their homes and neighborhood due to harmful gas that was
released into the air from neighboring natural gas wells in
Aliso Canyon in October of 2015. After being displaced for
months, residents have struggled to manage the lasting impacts
of the damage to both their health and property. This bill is
an important step of financial assistance to residents of Porter
Ranch during this time of healing and repairing."
2. Disaster relief . State law sets forth a very specific
process for taxpayers to obtain disaster relief reassessments.
First, a county must adopt an ordinance, which all counties
except Fresno have done. Taxpayers must then file a written
request with the assessor before the date specified in the
ordinance, or within 12 months of the major misfortune or
calamity, whichever is later. In the application, the taxpayer
must show the condition and value of property immediately after
the damage or destruction, and the dollar amount of the damage.
Upon receipt of a complete application, the assessor must then
appraise the property, and determine separately the full cash
value of the land and improvements before and after the
disaster. If the value of the damage exceeds $10,000, the
assessor reduces the value and the taxes due to reflect the
disaster's impact, and sends a notice to the taxpayer. The
county must refund any previously overpaid taxes resulting from
the lower value, which remains in place until the taxpayer
repairs, restores, or reconstructs the property. Taxpayers can
also file a claim to postpone the next installment of property
taxes that occurs immediately after the disaster, which
postpones that payment without penalty or interest until the
county assessor has reassessed the property. After the
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reassessment, the tax collector issues a corrected tax bill.
Once repaired or restored, the assessor again revalues the
property; however, the post-disaster value cannot exceed the
previous base year value, unless any new square footage was
added, which the assessor would then appraise at full market
value.
3. Looking back . SB 1304 explicitly applies its changes to
property tax law retroactively, so that residents affected by
the gas leak can have their property values, and therefore the
taxes due, reduced to reflect the restricted access and
environmental contamination the gas leak caused. Generally, the
Legislature does not apply changes in tax law retroactively, as
doing so creates uncertainty for both taxpayers and tax
enforcement agencies, and can lead to fiscal shocks that can
reduce funding for public services. However, taxpayers can
usually obtain refunds when they are eligible for an exemption
or transfer, but didn't claim it on time, and the Legislature
has enacted bills that change tax law retroactively, including
SB 1203 (Jackson, 2014) which cancelled current assessments and
refunded past ones resulting from affordable housing projects
losing their welfare exemption from property tax due to entering
into a payment in-lieu of taxes agreement.
Support and
Opposition (5/5/16)
Support : Los Angeles County Assessor Jeffrey Prang
Opposition : Unknown.
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