BILL ANALYSIS Ó
SB 1304
Page 1
SENATE THIRD READING
SB
1304 (Huff)
As Amended August 15, 2016
2/3 vote. Urgency
SENATE VOTE: 36-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Revenue & |9-0 |Ridley-Thomas, Brough, | |
|Taxation | |Dababneh, Gipson, | |
| | |Mullin, O'Donnell, | |
| | |Patterson, Quirk, | |
| | |Wagner | |
| | | | |
| | | | |
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SUMMARY: Revises the eligibility criteria for reassessment of
property, which was damaged or destroyed by a major misfortune
or calamity, and thereby retroactively authorizes property tax
relief to property owners impacted by the Porter Ranch
neighborhood methane gas leak. Specifically, this bill:
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1)Authorizes a county board of supervisors to provide for
reassessment of property destroyed or damaged by a major
misfortune or calamity in an area or region subsequently
proclaimed by the Governor to be in a state of emergency, in
addition to a state of disaster.
2)Expands the definition of "damage" to include a diminution in
the value of property as a result of environmental
contamination to the property caused by a major misfortune or
calamity.
3)Requires properties destroyed or damaged in an area or region
proclaimed by the Governor to be in a state of emergency to be
assessed pursuant to Revenue and Taxation Code (R&TC) Section
51(a) if partial reconstruction, restoration, or repair is not
progressing in a timely fashion on the third lien date
following the calamity.
4)Specifies that this bill's provisions apply retroactively to
the County of Los Angeles with respect to property located in
the Porter Ranch neighborhood in the City of Los Angeles that
was affected by the methane gas leak in that area in 2015 and
2016.
5)States that the application for reassessment, in the case of
the Porter Ranch properties, may be filed within 12 months of
the enactment of this bill or within the time specified in the
county ordinance, whichever is later.
6)Specifies that the retroactive application of this bill to the
Porter Ranch neighborhood does not alter any existing law
regarding claims or defenses related to diminution of property
values.
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7)Specifies that the enactment of the retroactive application of
this bill does not in itself establish a presumption that
property values have declined or that any property is in any
way "damaged or destroyed" or otherwise "contaminated" for
purposes of a civil action related to the methane gas leak.
8)Declares that a special law is necessary and that a general
law cannot be made applicable within the meaning of the
California Constitution Article IV Section 16 because of the
unique circumstances related to the methane gas leak that
occurred in the Porter Ranch neighborhood of the City of Los
Angeles in 2015 and 2016.
9)Makes technical, non-substantive changes.
10)Takes effect immediately as an urgency statute necessary for
the immediate preservation of the public peach, health or
safety within the meaning of the California Constitution
Article IV.
EXISTING LAW:
1)Allows a county board of supervisors, by ordinance, to provide
property tax relief to property owners following a "disaster"
if the property owner's property is damaged or destroyed, and
the property owner is not at fault. (California Constitution
Article XIII Section 15; R&TC Section 170).
2)Provides that, in order to be eligible for reassessment, the
damage or destruction to the property shall have been caused
by any of the following:
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a) A major misfortune or calamity, in an area or region
subsequently proclaimed by the Governor to be in a state of
disaster. Defines "damage" to include a diminution in the
value of property as a result of restricted access to the
property where the restricted access was caused by the
major misfortune or calamity;
b) A misfortune or calamity; and,
c) A misfortune or calamity that, with respect to a
possessory interest in land owned by the state or federal
government, has caused the permit or other right to enter
upon the land to be suspended or restricted.
3)Allows the application of reassessment to be filed within the
time specified in the ordinance or within 12 months of the
misfortune or calamity, whichever is later, as specified.
4)Authorizes the Governor to proclaim a state of emergency under
specified circumstances, as defined:
a) "State of war emergency" is the condition which exists
immediately, with or without a proclamation thereof by the
governor, whenever this state or nation is attacked by an
enemy of the United States, or upon receipt by the state of
a warning from the federal government indicating that such
an enemy attack is probable or imminent.
b) "State of emergency" is the duly proclaimed existence of
conditions of disaster or of extreme peril to the safety of
persons and property within the state.
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c) "Local emergency" is the duly proclaimed existence of
conditions of disaster or of extreme peril to the safety of
persons and property within the territorial limits of a
county, city and county, or city.
FISCAL EFFECT: None
COMMENTS:
1)Disaster Relief: Background. Existing law provides broad
property tax relief to disaster victims, ranging from a
reassessment of property to an authorization to rebuild or
repair damaged property without incurring any increase in
property tax liability. For example, the county assessor may
reassess property that was damaged or destroyed in a disaster
to recognize the diminution in the property's market value,
provided the county in which the damaged property is located
has adopted an ordinance authorizing such reassessment and the
property owner is not at fault. As pointed out in the State
Board of Equalization (BOE) analysis, the disaster relief
applies to both a "major" event impacting a widespread area or
region resulting in a Governor's proclamation, such as a
wildfire, and a site-specific event, such as a single-home
fire. In the case of a major event, property tax law uses the
phrase "an area or region subsequently proclaimed by the
Governor to be in a state of disaster."
State law sets forth a very specific process for taxpayers to
follow. The property value loss must be at least $10,000 and
the taxpayer must file a written request with the assessor
before the date specified in the ordinance or within 12 months
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of the major misfortune or calamity, whichever is later. If
relief is granted, the assessor will reduce the property's
assessed value in proportion to the property's market value
loss immediately after the event and will send a notice to the
taxpayer. In turn, the county must refund any previously
overpaid taxes. The reduced assessment will remain in place
until the taxpayer restores, repairs, or reconstructs the
property.
2)What Does this Bill Do? This bill would expand eligibility
for disaster reassessment. First, this bill would revise the
circumstances under which property would qualify for the
reassessment by specifying that a "state of emergency" is a
qualifying event. Currently, the relevant provisions of the
statute state that property is eligible for reassessment if
the damage or destruction to the property was caused by a
major misfortune or calamity ("a disaster") in an area or
region subsequently proclaimed by the Governor to be in a
"state of disaster." As aptly noted in the BOE analysis, "the
governor does not proclaim a 'state of disaster;' the governor
proclaims a 'state of emergency'" (as authorized by the
Government Code Sections 8625 and 8558). The inconsistent
terminology causes confusion. This bill would clarify
existing law to state that an area or region must be
proclaimed by the Governor to be in a "state of emergency or
disaster." Thus, whenever the Governor proclaims a state of
emergency or disaster, the county board of supervisors may
allow taxpayers, by ordinance, to apply for reassessment
property.
Furthermore, this bill would revise the definition of "damage"
to include market value loss caused by environmental
contamination of the property due to a major misfortunate or
calamity that has resulted in a Governor's state of emergency
proclamation. Since it may be decades before contaminated
property is "restored," this bill would also provide that
properties covered by the Governor's proclamation be assessed
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pursuant to general methodologies (R&TC Section 51(a)) after
three years if partial reconstruction, restoration, or repair
has not progressed in a timely fashion. Finally, the revised
definition of "damage" would apply retroactively to properties
located in the Porter Ranch neighborhood of the City and
County of Los Angeles affected in 2015 and 2016 by the methane
gas leak.
3)The Porter Ranch Gas Leak. On October 23, 2015, a massive
natural gas leak was discovered in the Aliso Canyon Natural
Gas Storage Facility in Los Angeles County, 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 gas leak spewed an estimated 107,000 tons
of methane over 16 weeks. The estimated cost of a massive gas
well blowout that lasted nearly four months and uprooted 8,000
Los Angeles families has more than doubled to $665 million
according to Sempra Energy. Currently, approximately 54% of
relocated residents have returned and more are returning each
week. However, according to the author's office, some 3,700
households remain in short- or long-term housing, many because
of fears of returning until they are assured their homes are
clean and safe.
On January 6, 2016, the Governor issued a proclamation
declaring the situation a "state of emergency." The
proclamation, however, did not declare the situation a
"disaster," as required by existing law in order for the board
of supervisors to provide for reassessment of damaged
properties. Consequently, the Los Angeles County Board of
Supervisors could not enact an ordinance directing the
assessor to revalue properties to reflect the gas leak's
impact on property values. Furthermore, since the gas leak
did not cause physical damage to property, it is unclear
whether the Porter Ranch properties were "damaged" within the
existing definition of "damage."
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4)Retroactivity. This bill would retroactively apply to
properties damaged by the Porter Ranch gas leak. The affected
property owners would be eligible to file reassessment claims
within 12 months of this bill's enactment. As such, 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 since it would create uncertainty for both
taxpayers and tax enforcement agencies. However, taxpayers
can usually obtain refunds when they are eligible for an
exemption or transfer and did not claim it on time; the
Legislature has enacted bills in the past that change tax law
retroactively.
Analysis Prepared by:
Oksana Jaffee - Irene Ho / REV. & TAX. / (916)
319-2098 FN:
0003729