BILL ANALYSIS
SB 1692
Page 1
Date of Hearing: July 1, 1996
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Nao Takasugi, Chairman
SB 1692 (Petris) - As Amended: June 25, 1996
SENATE VOTE: 31-1
ASSEMBLY W. P. & W.: 13-0
VOTE REQUIREMENT: Majority. Tax Levy.
SUBJECT: Property taxation: welfare exemption: museums.
SUMMARY: Makes an exception to specified limitations on property
tax relief and extends the definition of property exempt from
taxation to property used by a museum for a specified purpose.
Specifically, this bill:
1) Provides that individuals who become severely and permanently
disabled subsequent to being granted, as a claimant, the
property tax relief allowed for any person over the age of 55
years shall be eligible to receive that property tax relief.
2) With respect to replacement dwellings and original property for
purposes of the base year value transfer allowed to persons who
either are over the age of 55 years or severely and permanently
disabled, states that the "area of reasonable size that is used
as a site for a residence" includes all land if no portion of
the property is used for commercial purposes. Specifies that
"commercial purposes" does not include activities that are
incidental to the use of the property as a residential site.
3) Extends the welfare exemption authorized by existing law to
property owned and used by a nonprofit organization performing
auxiliary services to a city or county museum, including
property used for storage of items donated for an annual
rummage sale, the proceeds of which are used to support the
museum.
FISCAL EFFECT:
According to the Board of Equalization staff analysis, the annual
property tax revenue loss attributable to the welfare exemption
provisions of this measure would be less than $100,000. The
fiscal impact of the property tax relief provisions of this
measure added by the June 25, 1996 amendments is unknown, but
probably minor.
EXISTING LAW:
1) Permits persons over 55 years of age and persons who are
permanently disabled to transfer the base year value of their
home to a replacement home in the same county, and until 1999,
authorizes the transfer of the base year value of a person's
SB 1692
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home in another county in certain circumstances.
2) Permits this property tax relief to a claimant who has not
previously been
granted, as a claimant, the property tax relief (i.e. a claimant
may only claim the base year value transfer one time).
3) Authorizes the Legislature to exempt certain property used for
charitable, religious or educational purposes.
4) Provides that property used exclusively for the charitable
purpose of museums, and owned and operated by a qualifying
nonprofit corporation is also exempt under the welfare
exemption.
BACKGROUND:
Welfare Exemption
This bill is sponsored by the Oakland Museum Women's Board, a
non-profit corporation organized to provide service and funds to
the Oakland Museum. The sponsor owns a warehouse that is used for
storage of museum artifacts, office needs and as a warehouse for
an annual "white elephant" sale, the proceeds of which help fund
the museum.
The Museum Board was formed in 1995 as an auxiliary to the Oakland
Museum and has raised more than $5,750,000 for support. In the
fiscal years 1994-1996, the Board raised over $800,000. The Board
members have also provided literally thousands of hours of
volunteer time.
The Board has held a White Elephant Sale for the past 35 years and
it involves the work of hundreds of volunteers. Any items not
sold are donated to charitable organizations. The proceeds from
the sale provide the revenue for the Board to carry out their
charitable activities. The sale requires a place to store items
throughout the year, thus the current use of the warehouse.
Property Tax Relief
Existing law allows a property owner who is over 55 years of age
or who is severely and permanently disabled to move from their
primary residence to a residence of equal or less value and
transfer the base year value of their original property thereby
allowing them to escape reassessment which results in lower
property taxes.
A taxpayer may only transfer their base year value one time. For
example, when a person who is over 55 years of age moves to a new
residence of equal (or lower) value, that individual is allowed to
transfer the base year value of his or her original residence.
Should that individual move a second time, the new residence would
be reassessed based upon the current market value of the property,
and thereby increasing the tax liability.
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This bill provides an exception to the "one time" rule when a
person is rendered severely and permanently injured after he or
she has claimed the property tax relief based upon his or her age.
Returning to the previous example, the individual who moved once
and claimed property tax relief due to his or her age, and then
moved a second time after being severely and permanently injured
would be able to claim the property tax relief a second time.
ARGUMENTS IN SUPPORT: According to the author, this bill is
needed to clarify an ambiguous interpretation of the tax law, and
to support the Oakland Museum Women's Board in providing private
funding assistance for the Oakland Museum.
ARGUMENTS IN OPPOSITION: None received by Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Oakland Museum Women's Board (sponsor)
State Board of Equalization
City of Oakland
Oakland Museum of California
The Clorox Company
Opposition
None reported to Committee
Analysis prepared by: Robert E. Becker / arevtax / 916.322.3730