BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 824|
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THIRD READING
Bill No: SB 824
Author: Committee on Revenue and Taxation
Amended: As introduced
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 8-0, 4/22/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Runner, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Taxation
SOURCE : State Board of Equalization
DIGEST : This bill makes changes in the property law
relative to (1) locations of State Board of Equalization
hearings, (2) the assessment practices survey, (3)
disaster-affected property, (4) the welfare exemption; (5)
disabled veterans, and (6) preliminary changes of ownership
reports.
ANALYSIS :
I. Locations of State Board of Equalization (BOE) Hearings
Existing law requires the BOE to hold regular meetings
at the state capitol each month, and allows special
meetings at the direction of the chairperson. BOE
wants flexibility to hold hearings in other locations
CONTINUED
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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 capitol each month, instead, BOE
must meet once per quarter at the state capitol, and
may hold 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 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
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 percent 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
percent threshold is not met.
This bill a mends the two sections of law allowing
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disaster base year transfers to provide that land and
improvements must be considered at separate appraisal
units, meaning that more than 50 percent 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 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 lessor's 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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/4/09)
State Board of Equalization (source)
DLW:cm 5/5/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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