BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1099
                                                                  Page  1

          Date of Hearing:   May 18, 2005

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                 AB 1099 (Leno) - As Introduced:  February 22, 2005 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            7-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  


          This bill deletes the sunset date for the exclusion of an active  
          solar energy system from the definition of new construction for  
          property tax purposes.   The exclusion applies through the  
          2004-05 fiscal year under current law.

           
          FISCAL EFFECT  


          The Board of Equalization (BOE) estimates forgone local property  
          tax revenues of $746,000 annually from deleting the sunset date,  
          beginning in 2005-06.  


          In addition, the state General Fund would incur costs to  
          backfill K-12 property tax losses pursuant to Proposition 98 of  
          approximately $320,780 in 2005-06, $290,000, in 2006-07, and 39  
          percent of the total annually thereafter.

           COMMENTS  


           1)Background  .  Article XIII A, Section 2 (c) of the California  
            Constitution (part of Proposition 13) provides that real  
            property may only be reassessed when it changes ownership or  
            when new construction takes place. In November 1980, the  
            voters approved Proposition 7 which amended Proposition 13 to  
            permit the Legislature to exclude from the definition of new  
            construction "the construction or addition of any active solar  








                                                                  AB 1099
                                                                  Page  2

            system." The Legislature enacted a statute which exempted  
            active solar energy systems from assessment as new  
            construction (effectively exempting these systems from  
            property taxation until a change of ownership.) That statute  
            included a sunset date that has been extended three times.


           2)Purpose  .  This bill deletes the sunset date for the statue  
            that exempts active solar energy systems from assessment as  
            new construction. "Active solar energy system" is defined as a  
            system using solar devices to provide for collection, storage  
            or distribution of solar energy for (1) domestic,  
            recreational, therapeutic or service water heating (not  
            including swimming pool or hot tub heaters), (2) space  
            conditioning, (3) production of electricity, (4) process heat,  
            and (5) solar mechanical energy. 




           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081