BILL ANALYSIS
AB 157
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 157 (Anderson)
As Amended August 17, 2010
Majority vote. Tax levy
-----------------------------------------------------------------
|ASSEMBLY: |76-0 |(June 2, 2009) |SENATE: |36-0 |(August 23, |
| | | | | |2010) |
-----------------------------------------------------------------
Original Committee Reference: REV. & TAX.
SUMMARY : Allows the County of San Diego to extend, by two
years, the time period for transferring the base year value of
property substantially damaged or destroyed by the Cedar Fire
that began in October 2003 (Cedar Fire).
The Senate amendments :
1)Delete the general provision that increased from five years to
seven years the amount of time a property owner has to acquire
or construct property to replace property substantially
damaged or destroyed by any state-declared disaster and remain
eligible to receive a base year value transfer.
2)Allow the County of San Diego Board of Supervisors to extend
the time period for transferring the base year value of
property substantially damaged or destroyed by the Cedar Fire
to comparable property within the same county by two years.
3)Apply to the determination of base year values for fiscal year
(FY) 2003-04 and FYs thereafter.
4)Provide that, notwithstanding Revenue and Taxation Code
Section 2229, the state shall not reimburse any local agency
for property tax revenues lost as a result of this bill.
EXISTING LAW :
1)Values property at its 1975 fair market value, with annual
increases thereafter limited to the amount of inflation or 2%,
whichever is less, until the property changes ownership or new
construction occurs. Once a "reassessable" event occurs, the
value of the property for tax purposes is re-determined based
AB 157
Page 2
on its market value. The value initially established, or
re-determined where appropriate, is referred to as the "base
year value."
2)Provides for various situations where the base year value of a
property is either retained (notwithstanding new construction
or a change of ownership), or transferred to another property.
These special situations are provided under various
constitutional amendments modifying the original Proposition
13 framework and serve to avoid the otherwise required
reassessment of a property to its current market value.
3)Provides that persons who own property substantially damaged
or destroyed in a state-declared disaster may transfer the
base year value of that property to a property acquired or
constructed as a replacement if it is acquired within five
years of the disaster.
AS PASSED BY THE ASSEMBLY , this bill:
1)Increased, from five years to seven years, the amount of time
a property owner has to acquire or construct property to
replace property substantially damaged or destroyed by a
state-declared disaster and remain eligible to receive a base
year value transfer.
2)Applied to any comparable replacement property acquired or
constructed as a replacement for property substantially
damaged or destroyed by a disaster occurring on or after
October 1, 2007, and to the determination of base year values
for FY 2007-08 and FYs thereafter. Applied, in addition, to
any comparable replacement property acquired or constructed to
replace property substantially damaged or destroyed by the
Cedar Fire, and to the determination of base year values for
FY 2003-04 and FYs thereafter.
3)Contained legislative findings and declarations regarding the
need for special legislation. Specifically, the findings
noted that many homeowners were still struggling to replace
homes lost in the wildfires that occurred in San Diego County
in October of 2003.
4)Takes immediate effect as a tax levy.
AB 157
Page 3
FISCAL EFFECT : The Board of Equalization (BOE) estimates
property tax losses of less than $10,000 per year.
COMMENTS : The author states, "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." The author goes on to state, "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."
BOE states:
1)Base year value transfers provide tax relief to disaster
victims. "Permitting persons to 'transfer' their base year
value from one property to another provides tax relief by
allowing property owners to continue paying taxes on the
replacement property equivalent to that paid on the property
from which they were displaced. Without a base year value
transfer, the taxes on the new property would likely be
significantly more because, under the general change in
ownership laws, the taxes would be based on the property's
current fair market value. The rationale for providing a base
year value transfer is that the tax laws should not further
afflict disaster victims by imposing upon them higher property
taxes. If the disaster had not occurred, those individuals
would not have been compelled to relocate and thereby forfeit
their Proposition 13 protected base year values."
2)Five years might not be enough time. "While most property
owners will likely fit into the existing five-year period, the
financial impact to the individual property owner that doesn't
can be significant. Delays occur for a variety of reasons:
unsettled insurance claims, uninsured or underinsured property
owners, limited supply of replacement properties available for
purchase, and lack of construction workers. This is
especially true where the disaster creates mass destruction in
a localized area. And in present times, there are added
reasons for delays, such as difficulties in obtaining
AB 157
Page 4
financing or purchasers that are experiencing unprecedented
delays in completing the purchase of a bank owned home."
Committee Staff Notes: Under existing law, victims of the Cedar
Fire had until October of 2008 to acquire replacement property
eligible for a base year value transfer. Property purchased
after this date would, generally, be assessed at its fair market
value. Under this bill, a victim of the Cedar Fire who
purchased comparable replacement property after October of 2008
would be entitled to retroactive application of a base year
value transfer, assuming enactment of an appropriate ordinance
by the San Diego County Board of Supervisors.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN:
0006245