BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1480|
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UNFINISHED BUSINESS
Bill No: SB 1480
Author: Committee on Governance and Finance
Amended: 6/8/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE FLOOR: 37-0, 4/28/16 (Consent)
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone,
Wieckowski, Wolk
NO VOTE RECORDED: Hernandez, Runner, Vidak
ASSEMBLY FLOOR: 79-0, 6/23/16 (Consent) - See last page for
vote
SUBJECT: Property taxation
SOURCE: California Assessors Association
California Association of County Treasurer-Tax
Collectors
State Board of Equalization
DIGEST: This bill strikes the current deadline for appealing
assessments to the Board of Equalization (BOE) of previously
taxable properties owned by local government but located in
other jurisdictions, and replaces it with November 30th.
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Assembly Amendments insert provisions that delete the specific
form of a card currently exempt taxpayers use to reaffirm
eligibility for the welfare exemption and restore a previously
existing authorization for tax collectors.
ANALYSIS:
Existing law:
1) Provides that all property is taxable and shall be assessed
at the same percentage of fair market value, unless
explicitly exempted by the California Constitution or federal
law.
2) Exempts property owned by a local government from taxation,
unless the property is located outside the boundaries of the
local government that owns it, and the property was taxable
before its acquisition, in which case the assessor in the
county where the property is located values it for tax
purposes.
3) States that assessment of these properties shall be subject
to review, equalization, and adjustment by the BOE, not the
assessment appeals board.
4) Sets a deadline for local agencies to file appeals for these
assessments with BOE of either July 20th, or two weeks from
the date the assessor delivers the property tax roll
containing the assessment to the auditor, usually around
mid-August, whichever is later.
5) Allows the Legislature to exempt property used for
charitable purposes, and owned by nonprofit entities
organized and operated for charitable purposes, such as
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Page 3
universities, hospitals, and libraries.
6) Details, specifically, certain property tax forms by
including the exact contents of the form in the law.
However, in recent years, the Legislature has enacted bills
that deleted from law the specific contents of the form,
instead providing that forms should contain specified
information, and be prescribed by the BOE in consultation
with the California Assessors' Association (CAA).
7) Requires taxpayers to annually verify eligibility for the
welfare and veterans' exemption from property tax, and sets
forth a process to do so; however, taxpayers who received the
exemption the previous year need not reapply in subsequent
years, so long as title to the property hasn't changed, and
the property continues to be used for an exempt purpose.
8) Requires assessors to send a notice to taxpayers who
currently qualify for the welfare exemption, along with a
card that sets forth specific questions for taxpayers to
answer to reaffirm eligibility, which the taxpayer then
returns to the assessor.
9) Allows tax collectors to sell property after falling into
delinquency and tax default for non-payment of property
taxes, known as a tax sale, after approval by the county
board of supervisors, and noticing specified parties.
10)Directs the auditor to allocate tax sale proceeds first to
pay for specified costs incurred by the tax collector, second
to taxing agencies with valid claims, and lastly to the tax
collector to pay for notices and contacting taxpayers. After
that, proceeds satisfy liens held by parties in interest.
11)Considers any amounts left over after the above claims are
satisfied "excess proceeds," and requires the auditor to
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transfer them to the county general fund (AB 2257, Cooley,
Chapter 501, Statutes of 2014). However, that bill struck
prior language which allowed the tax collector to deduct from
excess proceeds the costs of maintaining the redemption and
tax-defaulted property files, and those costs of
administering and processing the claims for excess proceeds.
This bill:
1) Strikes the current deadline for appealing assessments to
BOE of previously taxable properties owned by local
government but located in other jurisdictions, and replaces
it with November 30th.
2) Deletes the specific questions that must appear on the card
that the assessor must send to taxpayers currently qualifying
for the welfare exemption, and instead directs BOE to
prescribe the contents of the notice and any other required
information in consultation with the CAA.
3) Reenacts previous law which allowed the tax collector to
deduct from excess proceeds the costs of maintaining the
redemption and tax-defaulted property files, and those costs
of administering and processing the claims for excess
proceeds.
Background
The California Constitution provides unique treatment for
property owned by a local agency, but located outside its
boundaries, and taxable before the local agency acquired it.
These are known as "Section 11 properties" after the Section of
Article XIII that provides for its property tax treatment. The
deadline for the local government to appeal the assessment to
BOE is inconsistent with all other assessment appeals deadlines,
currently either September 15th or November 30th, depending on
whether the assessor mails notices by certain dates. This
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bill's revised deadline is more familiar than the current one,
and will give the local agency more time to decide whether to
appeal. According to BOE, counties filed five appeals in the
last 20 years, with four settled, and BOE deciding one. BOE
adds that no appeals are currently pending.
Once qualified for the welfare exemption, the recipients must
annually verify their eligibility. Existing law requires county
assessors to send an annual notice to recipients, along with a
card that contains specific questions relating to the property's
exempt purpose. The questions and the contents of the card are
prescribed by the state statute - Revenue and Taxation Code
Section 254.5. The CAA asserts that this statutory prescribed
form is inefficient. The majority of the forms related to
property tax administration are developed by the BOE, after
consultation with the CAA. Furthermore, the use of that card is
unnecessary as taxpayers may file with the county assessor
electronically.
Once a tax-defaulted property is sold, tax sale proceeds must be
distributed to the State, the county and taxing agencies to
reimburse them for costs incurred and for the amount of
defaulted taxes. Following these distributions, lienholders and
the former owner may claim proceeds in excess of the taxes and
cost of the sale. Finally, any remaining amounts not otherwise
claimed may be transferred to the county general fund. These
amounts are known as "excess proceeds." Prior to 2014, "excess
proceeds" were dispersed in the final round of distributions to
the local taxing agencies entitled to share in the proceeds.
However, the county was authorized to deduct the costs of
maintaining the redemption and tax-defaulted property files as
well as the costs of administering and processing the claims for
"excess proceeds" prior to the final distribution. The law was
changed in 2014 to allow the county auditor to transfer excess
proceeds to the county general fund instead of dispersing the
funds to the taxing agencies. Inadvertently, the language
authorizing the counties to recover the costs of administering
"excess proceeds" was deleted from the statute.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
Unknown with recent amendments.
SUPPORT: (Verified6/24/16)
California Assessors' Association (co-source)
California Association of County Treasurer-Tax Collectors
(co-source)
State Board of Equalization (co-source)
OPPOSITION: (Verified6/24/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "SB 1480
consolidates three technical changes to property tax law into a
single property tax administration omnibus bill. While SB
1480's changes don't significantly alter current policy, the
measure simplifies three sets of procedures within property tax
administration, one for each of the State Board of Equalization,
assessors, and county tax collectors. These improvements make
the current system of appealing Section 11 decisions,
reaffirming taxpayer eligibility for the welfare exemption, and
managing the tax sale system more efficient. All of the
measure's changes enjoy universal support; should anyone object,
any provision will be removed."
ASSEMBLY FLOOR: 79-0, 6/23/16
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,
Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: O'Donnell
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
6/24/16 14:33:57
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