BILL NUMBER: AB 1332 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 14, 2009
INTRODUCED BY Assembly Member Salas
FEBRUARY 27, 2009
An act to amend Section 107.4 of the Revenue and Taxation Code,
relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 1332, as amended, Salas. Taxation: military housing.
Existing property tax law requires that all property subject to
tax be assessed at its full value, and includes certain possessory
interests among those property interests that are subject to tax.
Existing property tax law defines a taxable possessory interest to be
a use that is independent, durable, and exclusive. Existing property
tax law specifies that, for purposes of the definition of a taxable
possessory interest, a possession or use is not independent if it is
pursuant to a contract that includes, but is not limited to, a
long-term lease for the private construction, renovation,
rehabilitation, replacement, management, or maintenance of housing
for active duty military personnel and their dependents, if the
housing units and the private contractor constructing the housing
meet specified criteria. Existing law specifies that one of these
criteria is a requirement that any reduction, as specified, in
property taxes on leased property used for military housing, as
defined, inures solely to the benefit of the residents of the
military housing through improvements.
This bill would delete the requirement that the housing be for
military personnel and their dependents and instead specify that the
housing be for military personnel or their dependents or both. This
bill would clarify that, for the purposes of the definition of a
taxable possessory interest, any reduction, as specified, in property
taxes on leased property used for military housing, as defined,
would inure solely to the benefit of the residents of the military
housing through improvements, including community improvements, as
specified, and housing improvements, as specified, and the renovation
and refurbishment of those improvements. This bill would authorize
the private contractor to use the reasonable estimate of property tax
savings to construct, or to secure financing for the construction
of, the community and housing improvements to be constructed as part
of the initial construction of the project, as defined. This bill
would authorize the private contractor and the county assessor to
agree to extend the time for the initial construction of the project,
as specified. This bill would extend the time period the county
assessor may make an escape assessment, as specified, by a period
equal to the extension of the initial construction period agreed upon
by the county assessor and the private contractor.
This bill would require the private contractor to submit specified
information to the county assessor, as provided, and would require
the private contractor's response that was accepted by the military,
and the binding project documents, for certain leases, to include
specified information.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 107.4 of the Revenue and Taxation Code is
amended to read:
107.4. (a) For purposes of paragraph (1) of subdivision (a) of
Section 107, there is no independent possession or use of land or
improvements if that possession or use is pursuant to a contract that
includes, but is not limited to, a long-term lease, for the private
construction, renovation, rehabilitation, replacement, management, or
maintenance of housing for active duty military personnel or their
dependents, or both, if all of the following criteria are met:
(1) The military housing constructed and managed by private
contractor is situated on a military facility under military control,
and the construction of that housing is performed under military
guidelines in the same manner as construction that is performed by
the military.
(2) All services normally provided by a municipality are required
to be purchased from the military facility or a provider designated
by the military.
(3) The private contractor is not given the right and ability to
exercise any significant authority and control over the management or
operation of the military housing, separate and apart from the rules
and regulations of the military.
(4) The number of units, the number of bedrooms per unit, and the
unit mix are set by the military, and may not be changed by the
contractor without prior approval by the military.
(5) Tenants are designated by a military housing agency.
(6) Financing for the project is subject to the approval of the
military in its sole discretion.
(7) Rents charged to military personnel or their dependents are
set by the military.
(8) The military controls the distribution of revenues from the
project to the private contractor, and the private contractor is
allowed only a predetermined profit or fee for constructing the
military housing.
(9) Evictions from the housing units are subject to the military
justice system.
(10) The military prescribes rules and regulations governing the
use and occupancy of the property.
(11) The military has the authority to remove or bar persons from
the property.
(12) The military may impose access restrictions on the contractor
and its tenants.
(13) Any reduction or, if that amount is unknown, the private
contractor's reasonable estimate of savings, in property taxes on
leased property used for military housing under the Military Housing
Privatization Initiative (10 U.S.C. Sec. 2871 and et seq.) shall
inure solely to the benefit of the residents of the military housing
through any of the following improvements, and the renovation and
refurbishment of those improvements, provided by the private
contractor:
(A) (i) Community improvements, including, but not limited to,
child care centers and recreation centers.
(ii) Housing improvements, including, but not limited to, the
construction of additional housing units.
(B) (i) Except as provided in subparagraph (C), the private
contractor shall expend the reasonable estimate of property tax
savings for an assessment year through the construction of community
and housing improvements and the renovation and refurbishment of
those improvements each year or within the time period the county
assessor may make an escape assessment under Section 532.
(ii) Any expenditure of property tax savings pursuant to this
subparagraph shall be in addition to any contractual obligation
incurred by the private contractor for the construction, renovation,
rehabilitation, replacement, management, or maintenance of the
military housing.
(C) (i) The private contractor may use the reasonable estimate of
property tax savings that will be realized over the term of the lease
of the housing project to construct, or to secure financing for, the
construction of community and housing improvements and the
renovation and refurbishment of those improvements as specified in
paragraph (1) as part of the initial construction of the project.
(ii) If, before the expiration of the time period for the initial
construction of the project, the private contractor and the county
assessor agree, in writing, to extend the time period, the initial
construction time period shall be extended to the time period agreed
upon. The time period may also be extended by subsequent agreements,
in writing, made before the expiration of the time period previously
agreed upon.
(iii) The time period the county assessor may make an escape
assessment under Section 532 shall be extended by a time period equal
to the extension of the initial construction period agreed upon by
the county assessor and the private contractor pursuant to clause
(ii).
(iv) Any expenditure of property tax savings pursuant to this
subparagraph shall be in excess of the minimum improvements required
by the military in its request for proposals or equivalent document,
including any subsequent modifications and amendments, for which the
private contractor submitted a response that was accepted by the
military for the housing project.
(D) For purposes of this section, both of the following shall
apply:
(i) The estimate of assessed value that will determine the
property tax savings to be realized over the term of the lease of the
housing project shall be calculated by using an income approach to
value.
(ii) "Initial construction of the project" means construction
completed within the first four years of the term of the lease of the
housing project.
(14) The military family housing is constructed, renovated,
rehabilitated, remodeled, replaced, or managed under the Military
Housing Privatization Initiative, or any successor to that law.
(15) For purposes of this section, "military facility under
military control" means a military base that restricts public access
to the military base.
(b) For purposes of this section, both of the following shall
apply:
(1) The private contractor shall, at the request of county
assessor, provide all of the following:
(A) The request for proposals or equivalent document, including
any subsequent modifications or amendments.
(B) The response submitted by the private contractor and accepted
by the military for the housing project.
(C) Upon execution thereof, the lease and any other binding
project documents that identify the initial project scope.
(2) For housing projects where the lease was entered into on or
after January 1, 2008, and the private contractor would like to
expend the reasonable estimate of property tax savings as authorized
by paragraph (13), the private contractor's response that was
accepted by the military and the binding project documents, shall
include all of the following:
(A) The private contractor's reasonable estimate of property tax
savings over the term of the lease of the housing project.
(B) A detailed calculation of the private contractor's estimate of
property tax savings.
(C) The community and housing improvements to be constructed with
the property tax savings.
(D) The projected scope of the housing project if the estimated
property tax savings were not available to be used to construct or
secure financing for the community or housing improvements.
(3) The county assessor shall not be bound by the information
provided by the private contractor pursuant to paragraphs (1) and (2)
and may conduct his or her own investigation.
(c) The amendments made to this section by the act adding this
subdivision shall apply to any housing project where the contract or
lease for the possession or use of land was entered into on or after
January 1, 2006.
SEC. 2. Subdivision (m) of Section 107.4 of the
Revenue and Taxation Code enacted by Section 1 of Chapter 853 of the
Statutes of 2004 and amended by this act shall be interpreted to
prevent the possession or use of land or improvements from escaping
assessment. Specifically, that if the tax savings for a given
assessment year are not expended through constructed improvements
within the time period that the county assessor may make an escape
assessment for that assessment year, the requirement of subdivision
(m) of Section 107.4 of the Revenue and Taxation Code, as amended by
this act, is not satisfied. Further, in any hearing involving the
appeal of an escape assessment made by the county assessor for a
failure to satisfy the requirements of that subdivision (m) of
Section 107.4, the county assessor shall have rebutted the
presumption affecting the burden of proof in favor of the taxpayer or
assessee under subdivision (a) of Section 167 of the Revenue and
Taxation Code by submitting a statement that, to the best of his or
her knowledge, the requirements of Section 107.4 have not been
satisfied. Except as provided by this section, the amendments made to
Section 107.4 of the Revenue and Taxation Code by this act shall not
be construed as limiting the ability of the county assessor and a
taxpayer from extending the period of time within which to make an
escape assessment under Section 532.1 of the Revenue and Taxation
Code.