BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
SB 824 - Committee on Revenue and Taxation
Introduced: March 10, 2009
Hearing: April 22, 2009 Fiscal: Yes
SUMMARY: Enacts Technical Changes to Property Tax Law
I. Locations of BOE Hearings:
EXISTING LAW requires BOE to hold regular meetings at
the state capital each month, and allows special meetings
at the direction of the chairperson. BOE wants flexibility
to hold hearings in other locations in the state to hear
taxpayer appeals in Southern California more quickly.
THIS BILL deletes the requirement that BOE hold
regular meetings at the state capital each month, instead,
BOE must meet once per quarter at the state capital, and
may hold special meetings at places within the state at the
direction of the chairperson.
II. Assessment Practices Survey
EXISTING LAW defines "market data" for purposes of
granting taxpayers access to Board of Equalization (BOE)
assessments, but only refers to "Section 408," which is
intended to refer to the Revenue and Taxation Code.
THIS BILL corrects the reference to the statutory
definition of "market data" in the Revenue and Taxation
SB 824 - Committee on Revenue and Taxation
Page 3
Code.
III. Disaster-Affected Property
EXISTING LAW allows taxpayers to transfer the base
year of property "substantially damaged or destroyed" in a
governor-declared disaster to a replacement property up to
five years after the disaster. The disaster must cause
more than 50% loss of a property's current value to be
eligible. In the case of a fire where a structure is
damaged or destroyed, but the underlying property is
reasonably unharmed, affected taxpayers may be precluded
from the benefit if the undamaged property is worth more
than the damaged or destroyed structure. For example, a
fire damages a property worth $550,000 with $300,000 of
land value and $250,000 of value for the structure, a
possibility in some high land value communities in
California. The fire destroys the structure, resulting in
value subtraction of $250,000, but diminishes the
property's land value less than $50,000. The taxpayer
would not be eligible for the base year transfer because
the land's total value is so much higher than the value of
the structure, and the 50% threshold is not met.
THIS BILL amends the two sections of law allowing
disaster base year transfers to provide that land and
improvements must be considered as separate appraisal
units, meaning that more than 50% diminishment of value of
either makes the taxpayer eligible for the base year
transfer.
IV. Welfare Exemption
EXISTING LAW provides under the general welfare
exemption, public schools and universities (public schools
exemption), as well as privately held property leased
exclusively for public schools and colleges (lessor's
exemption) are exempt from property tax. Churches and
property owned by churches is similarly exempt (the church
and religious exemption). For privately owned property
SB 824 - Committee on Revenue and Taxation
Page 3
leased to public schools, rents cannot exceed ordinary and
usual expenses for maintaining the property. Many
facilities owned by both public and private parties are
leased to schools and colleges for shared or joint uses.
The law allows a similar exemption, but provides divergent
filing requirements for the same property under the welfare
exemption, the lessors' exemption, and the religious
exemption.
THIS BILL adds the University of California as an
eligible lessee under the lessor's exemption, a change made
to 202.2 of the Revenue and Taxation Code made pursuant to
a recent court decision, but not made to 214.6. The bill
also provides that when two entities eligible under the
lessor's exemption have a lease for a joint use project,
the organization must include a copy of the lease agreement
with the annual filing of the welfare exemption claim.
Additionally, the bill provides that churches claiming the
religious exemption and who also lease property under the
lessor's exemption but use the property in a joint manner
shall annually file a church lessor's exemption claim, to
be developed by BOE.
V. Disabled Veterans
EXISTING LAW refers to an obsolete amount for the
disabled veterans' exemption, listing both the $60,000
exemption and the $40,000 exemption, which the Legislature
changed to $100,000 and $150,000 in 1989. The section also
errantly links to 4895, which does not exist, instead of
4985, which is the correct reference for canceling
outstanding property taxes.
THIS BILL deletes the exempt amounts and corrects the
cross-reference.
VI. Preliminary Change of Ownership Report
SB 824 - Committee on Revenue and Taxation
Page 3
EXISTING LAW enumerates the specific form and contents
of the "Preliminary Change of Ownership Report," a report
that taxpayers must submit to an assessor to ensure
property is reassessed when ownership changes. The form
requires information necessary for the assessor to enroll
its new value, and also helps the assessor identify
property that may be eligible for change of ownership
exclusions from reassessment. BOE's recent survey on
change in ownership issues indicated that the form could be
more user-friendly, but BOE cannot revise the form as its
contents are specifically enumerated in statute.
THIS BILL deletes the form as it appears in statute,
and replaces it with a requirement that the Preliminary
Change of Ownership Report include specified information
relative to the transfer (a requirement in the existing
form). The bill also requires that BOE in consultation
with the California Assessors' Association and other
interested parties shall prescribe a new form for uniform
use in the state. The bill also updates Revenue and
Taxation Code 480.3 to require the form the assessors must
currently make available is certified by the transferee as
containing information that is true and correct to the best
of his or her knowledge, a requirement in existing law.
FISCAL EFFECT:
BOE estimated minor costs and no revenue impact.
COMMENTS:
A. Purpose of the bill
SB 1045 consolidates six items that make minor,
technical changes to property tax law sponsored by BOE.
The bill improves the administration of property tax laws
to help both taxpayers and tax administration agencies.
Consolidating the measures into a single bill negates the
SB 824 - Committee on Revenue and Taxation
Page 3
need for individual bills to enact each change.
Additionally, the measure only contains items with
universal agreement; items that are controversial or
problematic will be removed from the bill.
Support and Opposition
Support:State Board of Equalization
Oppose:None Received
---------------------------------
Consultant: Colin Grinnell