BILL ANALYSIS
SB 1494
Page 1
SENATE THIRD READING
SB 1494 ( Revenue & Taxation Committee)
As Amended August 16, 2010
Majority vote
SENATE VOTE :33-0
REVENUE & TAXATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Portantino, DeVore, |Ayes:|Fuentes, Conway, |
| |Beall, | |Bradford, |
| |Charles Calderon, Coto, | |Huffman, Coto, Davis, De |
| |Fuentes, Gatto, Harkey, | |Leon, Gatto, Hall, |
| |Nestande | |Harkey, Miller, Nielsen, |
| | | |Norby, Skinner, Solorio, |
| | | |Torlakson, Torrico |
| | | | |
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SUMMARY : Makes several changes to the property tax law, repeals
duplicative provisions, and corrects erroneous cross-references.
Specifically, this bill :
1)Corrects a drafting error inadvertently created by recent
amendments made by AB 3076, (Committee on Revenue and Taxation),
Chapter 634, Statutes of 2006 to Revenue and Taxation Code
(R&TC) Section 61, relating to change in ownership provisions
for certain leasehold interests.
2)Adds a trustee to the list of persons who can file claims for
the parent-child and grandparent-grandchild "change in
ownership" exclusion claims on behalf of eligible transferors
and transferees.
3)Authorizes a trustee to inspect otherwise confidential claims
for the exclusion previously filed.
4)Provides that, for purposes of the "base year value" transfer,
the definition of "person" includes an individual who is the
present beneficiary of a trust.
5)Establishes a general provision to preclude assessors from
revoking homeowners' exemptions for disaster-affected property
upon a declaration of disaster from the Governor, thereby
avoiding the need for special purpose legislation for each
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individual disaster.
6)Extends the use of the existing assessment valuation methodology
for inter-county pipeline rights-of-way that is otherwise
scheduled to sunset on January 1, 2011.
7)Clarifies that in the case of assessment appeals that have not
been decided yet, the two-year period before a property owner's
opinion of value becomes controlling applies to supplemental and
escape assessment appeals.
8)Repeals provisions of R&TC Sections 1624.3, 1636.2, and 1636.5,
relating to assessment appeals board members and hearing
officers, that are duplicative of R&TC Sections 1612.5 and
1612.7.
9)Recasts R&TC Section 4831 to clarify provisions relating to the
statute of limitations on assessment roll corrections.
10)Corrects the cross-reference error in R&TC Section 5096,
relating to property tax refunds resulting from an assessment
appeal.
11)Amends both the Public Resources Code (PRC) and the R&TC to
reflect recent changes in the state government's organizational
structure.
12)Includes double-jointing language to avoid chaptering out with
AB 2408 (Torlakson), introduced in the current legislative
session and pending on the Senate Floor.
FISCAL EFFECT : The State Board of Equalization's (BOE) staff
estimates that this bill will have no direct impact on state
revenue.
COMMENTS : The purpose of this bill. This bill, sponsored by the
BOE, is intended to improve the administration of property tax
laws to help both taxpayers and tax administration agencies and to
codify BOE's existing administrative practice and procedures
related to the transfer of real property from parents to children
and to the base year value transfers.
Leasehold Interests. Under existing law, the creation,
termination, and transfer of certain leasehold interests with a
term of 35 years or more may be a change in ownership resulting in
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reassessment. AB 3076 (Committee on Revenue and Taxation),
Chapter 364, Statutes of 2006, amended R&TC Section 61(c) to
codify the county assessor practice of reassessing only the
floating home, and not the berth, when a floating home undergoes a
change of ownership. However, the amendments also mistakenly
deleted the "(1)" at the beginning of the first sentence of
subdivision (c). This bill corrects that drafting error by adding
paragraph and subparagraph designations to the previously
undesignated text to make complete sentences for each provision.
Parent-child exclusion. Existing law provides that a transfer of
real property between parents and children through the medium of a
trust is eligible for the exclusion from reassessment [R&TC
Section 63.1(9)]; however, it does not expressly list a trustee as
the person who may file and sign the claim for the exclusion. In
its Letter to Assessors 2008/018, BOE has advised assessors that a
trustee can sign a claim form requesting a parent-child exclusion
from reassessment. The BOE reasoned that, since the trustee has
the fiduciary responsibility to carry out the terms of the trust
and can sign legal documents on behalf of the trust, it follows
that he/she/it is authorized to sign the parent-child exclusion
claim. Nonetheless, many practitioners and some property owners
are concerned that R&TC Section 63.1(d), which lists persons who
may sign the claim, does not expressly include trustees.
Base Year Value Transfer. A person over the age of 55, or a
disabled person of any age, may sell his/her principal residence
and transfer its base year value to a replacement principal
residence within the same county or another county that accepts
inter-county transfers. In its Letter to Assessors 2006/010, BOE
has advised that the individual who has the present beneficial
interest in a trust is considered a claimant for purposes of the
base year value transfer, if all of otherwise applicable
requirements are met. However, existing law - R&TC Section 69.5 -
does not expressly address trusts and, therefore, causes
uncertainty and confusion among property owners and practitioners.
Hence, this bill is necessary to clarify existing law and to
eliminate that uncertainty and confusion.
Disaster Relief - Homeowners' Exemption. Existing law provides a
homeowners' exemption from property taxes equal to $7,000 in
assessed value for owner-occupied homes. An assessor may deny
this exemption if the property becomes vacant or is under
construction as of the January 1st lien date. For example, a home
destroyed on or before January 1, 2010 is not eligible for the
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exemption for the 2010-11 year. When a Governor has declared a
state of emergency for a natural disaster, legislation is usually
enacted to allow the exemption to apply to homes that are damaged
or destroyed in the disaster. This bill would establish a general
rule precluding assessors from revoking the homeowner's exemption
for disaster-affected property upon a Governor's declaration of
disaster, thus avoiding the need for special purpose legislation
for each individual disaster. Specifically, this bill addresses
eligibility for the exemption under three different scenarios. A
dwelling that has been partially destroyed or damaged in a
disaster would continue to be eligible for the exemption if the
owner's absence is temporary and the owner intends to return to
the home. Similarly, a dwelling that has suffered total
destruction in a Governor-declared disaster would continue to be
eligible for the exemption. However, a dwelling that was
previously eligible for the exemption but no longer exists on the
lien date because it was totally destroyed in a disaster that was
not a Governor-declared disaster would not be eligible for the
exemption until the structure is replaced and occupied.
According to the sponsor, this provision codifies current BOE
guidance and administrative practices and is consistent with
legislation enacted in 2008 for the disabled veterans' exemption.
Furthermore, this bill improves efficiency and saves on
legislative bill printing costs by avoiding the need for double-
and triple-joining language in years with multiple disasters.
Inter-county Pipeline Rights-of-Way. The valuation methodology
for inter-county pipeline rights-of-way was first established in
1996 by AB 1286 (Takasugi), Chapter 801, Statutes of 1996. It
codified an agreement reached between county assessors and
inter-county pipeline rights-of-way owners after litigation had
transferred the assessment duty from the BOE to local county
assessors. (Southern Pacific Pipe Lines, Inc. v. State Board of
Equalization, 14 Cal.App.4th 42). The use of the methodology was
extended by AB 2612 (Brewer), Chapter 607, Statutes of 2000, until
January 1, 2011, and this bill is intended to do the same through
the 2015-16 fiscal years. The BOE sponsored the extension of the
existing methodology at the request of both the California
Assessors' Association and taxpayer representatives.
State Government's Organizational Structure. This bill would
correct responsible state agency references in the Emergency
Telephone Users Surcharge Act (R&TC Section 41001 et seq.) to
conform to the Governor's Reorganization Plan No. 1 of 2009, which
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transferred duties of the Division of Telecommunications in the
Department of General Services to the Office of the State Chief
Information Officer. It would also correct responsible state
agency references in the Integrated Waste Management Fee Law (R&TC
Section 45001 et seq.) to conform to SB 63 (Strickland), Chapter
21, Statutes of 2009, which abolished the California Integrated
Waste Management Board and transferred its duties to the
Department of Resources Recycling and Recovery within the
California Natural Resources Agency. Finally, SB 1494 would
delete the obsolete definition of "board" contained in the
Electronic Waste Recycling Act of 2003 (PRC Section 42460 et
seq.).
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916) 319-2098
FN: 0005902