BILL ANALYSIS
AB 1718
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1718 (Blumenfield)
As Amended August 31, 2010
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: | |(June 2, 2010) |SENATE: |21-13|(August 31, |
| | | | | |2010) |
-----------------------------------------------------------------
(vote not relevant)
Original Committee Reference: JUD.
SUMMARY : Establishes the County Deferred Property Tax Program
for Senior Citizens and Disabled Citizens.
The Senate amendments delete the provisions of the bill, and
instead:
1)Allow a treasurer, or other official responsible for the funds
of a local agency, upon the adoption of a resolution by the
legislative or governing body, and with the consent of the
county treasurer, to deposit excess funds in the county
treasury for the purpose of investment by the county treasurer
for the newly created Property Tax Deferral Fund.
2)Define "claimant" to mean an owner of a residential dwelling,
as specified, who applies to a participating county for
deferment of property taxes, and meets all of the following
requirements:
a) Has a household income that does not exceed $35,500;
b) Has attained eligibility for full Social Security
benefits as of the last day of the filing period for that
fiscal year (FY), or is blind and disabled, as defined,
except in the case of retroactive deferment, as specified,
in which the age of eligibility shall be 62 years old; and,
c) Has equity value of at least 20%, meaning the amount by
which the fair market value of a residence exceeds the
total amount of any liens or other obligations against the
property.
AB 1718
Page 2
3)Allow a participating county to require a claimant to provide
an appraisal by a licensed or certified appraiser in support
of the application, and provide for an alternate appraisal
method in specified circumstances.
4)Provide that only one claimant per residential dwelling may
have property taxes deferred pursuant to the provisions of
this bill, at any one time.
5)Allow the treasurer or treasurer-tax collector to require a
claimant to furnish evidence of the claimant's ongoing
eligibility in order to continue participation in the program
in a subsequent year.
6)State that if the claimant fails or refuses to furnish any
information requested in writing by the county, or files a
fraudulent claim, the claimant's application shall be null and
void, and any record of a deferment payment on the tax roll
shall be canceled, the tax or assessment shall be a lien as
though no payment had been made, and the amount of the lien
shall be increased by any penalties or interest resulting from
property tax delinquency.
7)State that a county may elect to participate in the County
Deferred Property Tax Program for Senior Citizens and Disabled
Citizens by adopting a resolution indicating the county's
intention to participate in and to administer the program, and
provide that a participating county may defer a claimant's
property taxes retroactively, for taxes due on or before
February 20, 2010, and prospectively as provided by the bill.
8)Provide that county treasurer or county tax collector shall
review the claimant's application for program eligibility,
upon receipt of a claim for property tax deferment that is
submitted within the filing period.
9)Provide that if the claimant is eligible to participate in the
program, and if there are sufficient funds within the county's
Property Tax Deferral Fund, the county treasurer or tax
collector may do the following:
a) Defer the property taxes due on the claimant's
residential dwelling for that FY;
b) Issue a subvention payment equivalent to the amount of
AB 1718
Page 3
the deferred property taxes, from the county's Property Tax
Deferral Fund to the county to be processed in the same
manner as all other property tax payments;
c) Direct the county auditor to apportion the subvention
payment in the same manner as the property taxes had they
been paid; and,
d) Provide a letter or other written notice to the claimant
with the relevant FY of participation for use as written
confirmation of participation.
10)Specify that if the claimant's property taxes are deferred,
the participating county shall not charge the claimant any
penalties, or undertake any collection actions with respect to
taxes deferred.
11)Provide that the amount of property taxes deferred, plus any
interest accrued thereon, shall be secured by a county
property tax lien against the claimant's residential dwelling.
12)Provide that the county recorder shall index the lien
according to the names of each record owner and the county.
13)Provide that the filing period for a claimant to apply to
under the program shall be from October 1 to December 10 of
each year.
14)Provide for other specified requirements for the county
treasurer, the county assessor, the county tax collector and
participating counties, in order to implement the provisions
of the bill.
15)Provide that a participating county may charge an application
fee from a claimant upon that claimant's submission of an
application to participate in the program, and provide that
the application fees derived from all claimants in a
participating county shall be used to offset that county's
costs incurred in administering the program.
16)Provide that a participating county shall charge claimants
interest on the amount of property taxes deferred and provide
that the effective annual interest rate shall be 7% or the
effective annual yield earned in the prior fiscal year by the
AB 1718
Page 4
Pooled Money Investment plus 2%, whichever is higher, rounded
to the nearest full percent.
17)Provide that no lender shall require a borrower to maintain
an impound, trust, or other similar type of account with
regard to property taxes once the borrower has deferred these
taxes pursuant to this bill, and has submitted to the lender
evidence of tax deferment, except in specified circumstances.
18)Define "household income" and "income," as specified.
19)Define "owner of a residential dwelling," as specified.
20)Define "participating county," as specified.
21)Define "property taxes," as specified.
22)Define "residential dwelling," as specified.
23)Make findings and declarations about the importance of the
Senior Citizens and Disabled Citizens Property Tax
Postponement Law.
EXISTING LAW :
1)Establishes the Senior Citizens and Disabled Citizens Property
Tax Postponement Law, the Senior Citizens Tenant-Stockholder
Property Tax Postponement Law, the Senior Citizens Mobilehome
Property Tax Postponement Law, and the Senior Citizens
Possessory Interest Holder Property Tax Postponement Law in
the Revenue and Taxation Code, which allows the Controller to
pay property taxes to county tax collectors on behalf of
individuals over the age of 62 or disabled persons making less
than $39,000 in income per year.
2)States that postponement shall not be allowed for claimants
with $39,000 or more of household income for claimants in the
2009 calendar year and thereafter.
AS PASSED BY THE ASSEMBLY , this bill revised the Senior Citizens
and Disabled Citizens Property Tax Postponement Law,
allowed the State Controller to accept applications for property
tax postponement under that law, and authorized county tax
collectors to cancel any delinquent penalties and interest owed
AB 1718
Page 5
by qualifying seniors or disabled citizens for FYs 2009-10 and
2010-11, as specified.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : California has several property tax programs
benefiting the elderly and disabled individuals, including
property tax reappraisal relief, property tax assistance, and
the Senior Citizens and Disabled Citizens Property Tax
Postponement Program (PTP). Unlike the property tax assistance
program that refunds a percentage of property taxes paid, the
PTP program allows eligible homeowners to defer payment of all
or a portion of the property taxes on their residences. The
program was enacted in 1977, after the passage of a
constitutional amendment authorizing the postponement of
property taxes (California Constitution, Article 13, Section 8)
and is administered by the Controller's Office. The
constitutional amendment was in response to concerns that senior
homeowners on fixed incomes could lose their homes because of
the inability to pay rising property tax bills. Originally
designed for persons over 62 years of age, the program is now
also available to eligible blind and disabled persons,
regardless of age. The claimants must also meet other criteria,
including having 20% equity in their homes and annual household
income of $39,000 or less.
On February 20, 2009, the PTP Program was indefinitely suspended
as part of the budget reductions to the state's General Fund
(GF) programs [SBx3 8 (Ducheny), Chapter 4, Statutes of 2009].
The funding for the program was eliminated and the Controller
was prohibited from accepting any new applications after
February 20, 2009. Consequently, the Controller's Office
notified the counties and each claimant who was approved for
postponement in FY 2008-09 that their application could not be
accepted. Most applications submitted by claimants in FY
2008-09 were processed before the suspension became effective.
For more than 30 years, the PTP program helped thousands of low-
and moderate-income elderly, blind and disabled individuals to
remain in their homes. Historically, the loan repayments, with
few exceptions, have equaled or exceeded the annual program
expenditures and administrative costs. The Controller's Office
reports that, over the long-term, the program is
AB 1718
Page 6
self-supporting, and that the program, since the year 2000, has
collected $35 million more in PTP loan repayments than it
disbursed in PTP loans. The program allows participants to
remain in their homes, reduces county property tax default rates
and increases county tax collection revenues.
According to the survey conducted by the Controller's Office,
the program suspension has had a direct negative impact not only
on the program participants but also on the counties. The
program participants expressed fear of losing their homes to tax
default sales and foreclosures by lenders because of the failure
to pay property taxes directly or through an impound account
initiated by the lender. They are also concerned with becoming
homeless or dependent on family members and not being able to
afford basic necessities. Many claimants have been in the
program for over 20 years and have been counting on the loan
program to pay their property taxes. More than 50% of the
program participants are 75 years of age or older, and 208
claimants approved for FY 2008-09 are older than 90 years of
age.
Furthermore, the counties have also been negatively impacted by
the program suspension. The county tax collectors reported a
decrease in revenue due to higher delinquencies rates, an
increase in related workload, including the number of properties
that the counties are forced to sell as tax-defaulted, and an
increased strain on county services by displaced homeowners
Support Arguments: The California State Association of Counties
(CSAC), along with county assessors, auditor-controllers, and
treasurer-tax collectors, have been working with Assembly Member
Blumenfield, the State Controller's Office, and the State
Treasurer's Office to reinstate the PTP Program. The Urban
Counties Caucus supports the effort to reinstate the
discontinued property tax postponement program and notes that
"this program was eliminated last year because the program
failed to pay for itself in 2007-08 and 2008-09 mostly due to
the housing crisis. However, in most years this program pays
for itself and often generates revenue for the General Fund."
The Howard Jarvis Taxpayers Association (HJTA) has long been in
favor of the Senior Citizens Property Tax Postponement Program.
In a declining economy, ensuring that seniors on fixed incomes
are able to stay in their homes is of prime importance to HJTA.
AB 1718
Page 7
Opposition Arguments: The California Bankers Association and
the California Financial Services Association state, "With
respect to the AB 1718's creation and recordation of a super
lien for the payment of delinquent property taxes, the measure
creates a violation of the terms of the mortgage or deed of
trust. The measure further limits the ability of a
lender/servicer from enforcing performance of the contract by
precluding the commencement of non-judicial foreclosure through
the filing of a notice of default for five years. AB 1718
creates [an] ex post facto law and impairs the obligation of the
mortgage contract in violation of the state and federal
constitutions." The California Land Title Association (CLTA)
asks whether it is sound public policy to give property tax
postponement liens a superpriority over other liens, such as
child support liens.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0006903