BILL ANALYSIS
AB 1286
Page 1
Date of Hearing: June 10, 1996
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Nao Takasugi, Chairman
AB 1286 (Takasugi) - As Amended: May 14, 1996
SENATE VOTE: 38-0
SUBJECT: Property taxation: assessment of intercounty pipeline
rights-of-way.
VOTE REQUIREMENT: 2/3 Urgency. Tax Levy.
SUMMARY: Provides a method of assessing intercounty pipeline
rights-of-way. Specifically, this bill:
1) Assessment of Property. Creates a rebuttable presumption in
favor of a full cash value assessment of an intercounty
pipeline right-of-way for any of the 1984-85 through 2000-01
tax years if the following conditions are met:
A) The full cash value is determined to equal a 1975-76 base
year value, annually adjusted for inflation (in accordance
with subdivision (b) of Section 2 of Article XIII A of the
California Constitution), and the 1975-76 base year value
was determined in accordance with the following schedule:
(1) $20,000 per mile for a high density property.
(2) $12,000 per mile for a transitional density property.
(3) $ 9,000 per mile for a low density property.
B) The full cash value is determined utilizing the same
property density classifications that were assigned to the
property by the State Board of Equalization (BOE) for the
1984-85 tax year or, if density classifications were not so
assigned to the property for the 1984-85 tax year, the
density classifications that were first assigned to the
property of the BOE for a subsequent tax year.
C) If a taxpayer owns multiple pipelines in the same
right-of-way, an additional 50% of the value attributed to
the right-of-way for the presence of the fist pipeline
shall be added for each pipeline up to a maximum to two
additional pipelines. For any particular taxpayer, the
total valuation for a multiple pipeline right-of-way shall
not exceed 200% of the value determined for the
right-of-way of the first pipeline in the right-of-way in
accordance with the provisions of this measure.
If the BOE has determined that an intercounty pipeline,
located within a multiple pipeline right-of-way previously
valued in accordance with this measure (the previous
paragraph), has been abandoned as a result of physical
removal or blockage, the assessed value of the right-of-way
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attributable to the last pipeline enrolled in accordance
with this measure shall be reduced by not less than 75%
of the increase that resulted from the application of this
measure.
D) If all pipelines of a taxpayer located within the same
pipeline right-of-way, previously valued in accordance with
this measure, are determined by the BOE to have been
abandoned as the result of physical removal or blockage,
the assessed value of that right-of-way to that taxpayer
shall be determined to be no more than 25% of the assessed
value otherwise determined for the right-of-way for a
single pipeline of that taxpayer pursuant to the provisions
of this measure.
2) Provides that any taxpayer's right to challenge an assessment
made pursuant to the provisions of this measure for any tax
year from the 1984-85 tax year through the 2000-01 tax year
shall be deemed to have been raised and resolved.
3) Provides that if the assessor assigns values for any tax year
from the 1984-85 tax year through the 2000-01 tax year in
accordance with the methodology specified by this measure, any
pending taxpayer lawsuit that challenges the right to assess
the property shall be dismissed by the taxpayer with prejudice
as it applies to intercounty pipeline rights-of-way.
4) Specifies, notwithstanding any change in ownership, new
construction or decline in value occurring after March 1, 1975,
if an assessor assigns value to property in accordance with the
provisions of this measure, the taxpayer may not challenge the
right to assess that property and the values determined in
accordance with the provisions of this measure shall be
rebuttably presumed to be correct for that property for that
tax year.
5) Provides, notwithstanding any change in ownership, new
construction or decline in value occurring after March 1, 1975,
if the assessor does not assign values for rights-of-way in
accordance with the provisions of this measure, those
valuations shall not benefit from any presumption of
correctness, and the taxpayer may challenge the right to assess
that property or the values for that property for that tax
year.
6) Authorizes, during a four-year period commencing on the
effective date of this measure, an assessor to issue an escape
assessment in accordance with the specific valuation standards
set for in this measure for the following taxpayer and tax
years:
A) Any intercounty pipeline right-of-way taxpayer who was a
plaintiff in Southern Pacific Pipe Lines, Inc. v. State
Board of Equalization (1993) for the tax years 1984-85
through 1996-97.
B) Any intercounty pipeline right-of-way taxpayer who was a
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plaintiff in Southern Pacific Pipe Lines, Inc. v. State
Board of Equalization (1993) for the tax years 1989-90
through 1996-97.
7) Provides that any escape assessment levied in accordance to
this measure shall not be subject to penalties or interest
under the provisions of the Revenue and Taxation Code.
Prohibits a county from imposing any late payment penalty or
interest if payment is made within 45 days of demand by the tax
collector for payment. Provides that taxes not paid within 45
days are delinquent at that time, and the delinquent penalty,
redemption penalty, or other collection provisions of the
Revenue and Taxation Code shall thereafter apply.
8) Defines "intercounty pipeline right-of-way" as any interest in
publicly or privately owned real property through which or over
which an intercounty pipeline is placed. However, "intercounty
pipeline right-of-way" does not include any parcel or facility
that the BOE originally separately assessed using a valuation
method other than the multiplication of pipeline length with a
subject property by a unit value determined in accordance with
the density category of that subject property.
9) Refunds and Payments. Provides that refunds or payments, as
applicable, of taxes for intercounty pipeline right-of-way
property which is subject to local assessment pursuant to the
decision in Southern Pacific Pipe Lines, Inc. v. State Board of
Equalization (1993), shall be treated as follows for taxpayers
and tax years as follows:
A) The tax refund claims which are subject to this provision
are the tax refund claims for the following taxpayers and
tax years:
1) Tax refund claims of any taxpayer who was a plaintiff
in Southern Pacific Pipe Lines, Inc. v. State Board of
Equalization (1993), for tax years 1984-85 thorough tax
years 1996-97, which were not included in the judgment for
the taxpayer.
2) Tax refund claims of any taxpayer who was not a
plaintiff in Southern Pacific Pipe Lines, Inc. V. State
Board of Equalization (1993), for tax years 1989-90 through
1996-97.
B) If taxes due on local assessments, as calculated pursuant
to this measure, are less than the total taxes paid by the
taxpayer for that year, based on either the original BOE
assessments or escape assessments made by the local
assessor, or both, the county shall refund the difference
with interest, as specified.
C) If payment of any taxes due under the this provision is
made within 45 days of billing by the tax collector for
payment, the county shall not impose late payment penalties
or interest. Taxes not paid within 45 days of billing by
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the tax collector shall become delinquent at that time, and
the delinquent penalty, redemption penalty, or other
collection provisions of the Revenue and Taxation Code
shall thereafter apply.
10)Provides that the judgment obligation of each judgment debtor
under the judgment entered in Southern Pacific Pipe Lines, Inc.
v. State Board of Equalization (1993) shall be deemed fully
satisfied with respect to a judgment creditor if a debtor
county makes timely payment, as specified, to that judgment
creditor of the amount calculated pursuant to this provision.
Specifies that the amount that shall be paid to satisfy the
judgment is the total of amounts awarded to the judgment
creditor against the debtor county in specified paragraphs of
the judgment, together with post judgment interest as
specified.
11)Allows any refund or billing made pursuant to this measure to
be made on the basis of a single, countywide parcel per
taxpayer as described in the Revenue and Taxation Code (Section
401.8).
12)Provides that the provisions of this measure concerning
assessment of right-of-way property shall sunset January 1,
2001 and the provisions of this measure concerning refunds and
payments shall sunset January 1, 2000.
13)Clarifies that the provisions of this measure do not abrogate,
rescind, preclude, or otherwise affect any separate settlement
agreement entered into prior to the effective date of this
measure between a county and an intercounty pipeline
right-of-way taxpayer. States that in the event that the
provisions of this measure conflict with with any settlement
agreement, the settlement agreement shall control.
14)Makes legislative findings and declarations with respect to the
local assessment of intercounty pipeline rights-of-way, and
states the intent of the Legislature in enacting this measure.
15)Declares that this measure is to take effect immediately as an
urgency statute.
FISCAL EFFECT: Unknown. It is unclear whether assessment made
under the agreement enacted under this bill would be greater or
less than the final assessments after all appeals and litigation
are concluded.
EXISTING LAW:
1) Requires county assessors to assess property that is subject to
taxation at its full value.
2) Provides that the BOE is responsible for assessing the value of
property which exists in more than one county and the value of
which is only ascertainable by reference to the entirety of the
property rather than trough examination of the segment of the
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property within a particular county (i.e. "unitary" property).
BACKGROUND: The BOE assesses intercounty pipelines under the
"unitary" property policy. Beginning in 1984 the BOE began to
assess the underlying right-of-way on which the pipelines rest.
The BOE was subsequently sued by pipeline owners ( Southern Pacific
Pipe Lines vs. State Board of Equalization) and the appellate
court ruled that although the pipeline itself is appropriately
assessed by the BOE, the underlying right-of-way must be assessed
by county assessors.
Pursuant to the court ruling, county assessors began to levy
assessments on pipeline rights-of-way. However, there existed no
clear guidelines to govern how those properties should be valued,
and very few market sales on which to base the valuations.
Pipeline owners proceeded to appeal assessments and to file
lawsuits. In the face of potentially protracted and costly
litigation both counties and pipeline owners decided to settle on
a mutually agreeable assessment methodology, and to seek
legislation to implement the agreement. This bill represents that
agreement by setting out a uniform method for assessing
intercounty pipeline rights-of-way.
ARGUMENTS IN SUPPORT: The California State Association of
Counties (CSAC) states that this bill, "...Represents the product
of intense negotiations between county assessors and industry
leaders to reach an accommodation of acceptable practices for
counties to assess intercounty rights-of-way." CSAC further
states that this bill will protect counties from potential costly
litigation.
ARGUMENTS IN OPPOSITION: None reported to Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
California State Association of Counties
California Tax Payers' Association
County of Los Angeles
Western States Petroleum Association
Opposition
None
Analysis prepared by: Robert E. Becker / arevtax / 916.322.3730