BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
AB 157 - Anderson
Amended: May 20, 2009
Hearing: July 8, 2009 Tax Levy Fiscal: Yes
SUMMARY: Property tax: Transfer of base year value -
disaster relief
EXISTING LAW (California Constitution) required the
Legislature to allow taxpayers to transfer the base-year
value of property that is substantially damaged or
destroyed by a disaster, as declared by the Governor, to
comparable property within the same county that is acquired
or newly constructed as a replacement for the substantially
damaged or destroyed property (Proposition 50, 1986).
EXISTING LAW implements this constitutional
requirement, but limits the transfer of base-year value to
replacement property acquired or newly constructed within
the same county to five years after the disaster (to the
extent that the replacement property does not exceed 120%
of the fair market value of the old property immediately
prior to the disaster). In 2006, the Legislature extended
the deadline from three to five years for disasters
occurring on or after July 1, 2003 (AB 1890, Mountjoy).
The deadline applies only when the taxpayer acquires a new
property or rebuilds in a different location than the site
of the disaster; taxpayers may retain the base-year
transfer an unlimited amount of time to retaining the
base-year value when rebuilding on the site of the disaster
because the Constitution exempts real property that is
reconstructed after a disaster from the definition of "new
construction" requiring reassessment
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EXISTING LAW (California Constitution) allows similar
treatment for taxpayers seeking to transfer their base-year
value to a replacement property acquired or newly
constructed in a different county for three years.
THIS BILL extends the deadline for taxpayers to
transfer of base-year value to replacement property
acquired or newly constructed within the same county from
five years to seven years for disasters occurring on and
after October 1, 2007. The measure similarly extends the
deadline for taxpayers affected by the Cedar Fire in San
Diego County in 2003. AB 157 also makes legislative
findings and declarations.
FISCAL EFFECT:
According to the Board of Equalization (BOE), AB 157
results in annual property tax revenue losses of
approximately $10,000.
COMMENTS:
A. Purpose of the Bill
"Assembly Bill 157 is a disaster relief bill that
would extend the timeframe for survivors of the devastating
2003 Cedar Fire to replace their fire-destroyed properties.
Nothing will ever be the same again for survivors of these
catastrophic fire events, but we can help. The time it
takes to rebuild homes and lives cannot be underestimated,
and for many, restoration is an ongoing challenge. Even
now, property owners struggle to resolve the
necessary but time-consuming issues surrounding the
replacement of their [homes]. I introduced Assembly Bill
157 as a simple way to ensure a realistic timetable for
addressing the losses that survivors have suffered."
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B. Costs and Benefits
California voters and the Legislature allowed
base-year value transfers for taxpayers affected by
disasters to prevent these taxpayers from facing higher
property taxes when rebuilding or buying another property
after a disaster. Without this treatment, a taxpayer with
a base-year value of $100,000 from 1976 (and $1,000 in
property taxes due at the one per cent rate), would instead
pay 1% of the acquisition price of the new property, likely
resulting in a significant property tax increase.
Taxpayers also may apply for a reassessment of
disaster-affected property to reflect its post-disaster
value; the state even enacts legislation for every Governor
declared disaster to reimburse local agencies for
first-year revenue losses resulting from these
reassessments as sure as the sun rises in the East.
While AB 157 is a modest measure that likely will
grant benefits for taxpayers who have not yet acquired a
replacement property, is the measure really necessary? The
Constitution allows the Legislature to provide whatever
timeline it wishes, unlike for base-year transfers to
different counties, and after starting at two years, has
extended the time period three times: after the Oakland
Hills Fire, after the Northridge Earthquake, and again
following the Cedar Fire. BOE estimates that fewer than
ten taxpayers per year will benefit from AB 157. With
state and local agencies under intense fiscal stress,
should the Legislature enact a measure that extends a tax
benefit to such a small set of San Diego County taxpayers?
Additionally, while the impact upon individuals and
families of being displaced by a disaster destroying
property is difficult to underestimate; why should the
Legislature extend this benefit more than five years after
a disaster?
Support and Opposition
AB 157 - Anderson
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Support:Board of Equalization; California Association
of Realtors; California Department of Insurance;
Oppose:None received.
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Consultant: Colin Grinnell