BILL ANALYSIS �
AB 2231
Page 1
Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2231 (Gordon) - As Amended: March 24, 2014
SUBJECT : State Controller: property tax postponement.
SUMMARY : Reinstates the Senior Citizens and Disabled Citizens
Property Tax Postponement program to provide property tax
deferment to seniors and disabled persons. Specifically, this
bill :
1)Reinstates the Senior Citizens' Property Tax Postponement
(PTP) program that provided property tax deferment to seniors
and disabled persons and eliminates, on July 1, 2015, the
current prohibition on any person filing a claim and the
Controller from accepting applications for the PTP program.
2)Establishes the Senior Citizens and Disabled Citizens Property
Tax Postponement Fund (Fund) within the State Treasury and
annually appropriates moneys in the Fund for the purposes of
paying costs and disbursements related to the postponement of
property taxes for eligible senior citizens and disabled
citizens.
3)Requires any loan repayments relating to the PTP Law to be
deposited into the Fund. Repeals current law which requires
that all moneys in an impound account created pursuant to PTP
law are continually appropriated to the Controller. Requires
all funds remaining in an impound account, at the end of the
six month period as specified, to be transferred to the Fund
instead of to the General fund (GF). Makes other conforming
changes to delete the impound account from statue.
4)Requires the Controller to transfer any moneys in the Fund in
excess of $10 million to the GF.
5)Repeals the Senior Citizens Mobilehome Property Tax
Postponement Law. Removes mobilehomes, houseboats, and
floating homes from the definition of "residential dwelling".
Makes conforming changes to remove references to the
postponement of property taxes for mobilehomes, houseboats,
and floating homes from statute.
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6)Repeals current law which allows the Controller to subordinate
the lien for postponed real property taxes, if the interests
of the state are adequately protected and if the Controller
deemed subordination to be appropriate. Makes conforming
changes to remove specified authority for the Controller to
subordinate a lien.
7)Increases the amount of equity a claimant must possess in the
residential dwelling from 20% to 40% of the full value of the
property in order to be eligible for the PTP program. Makes
conforming changes to the information required of each
claimant applying for the PTP program.
8)Deletes the options provided in current law when a claim has
been approved for the Controller to make payments directly to
a lender, mortgage company, or escrow company or to issue a
certificate of eligibility to a qualified claimant, and
instead, requires the Controller to make payments directly to
a county tax collector for the property taxes owed on behalf
of the qualified claimant. Makes conforming changes to delete
requirements in existing law for the Controller in issuing the
certificates of eligibility to pay all delinquent taxes.
9)Adds to the existing list of circumstances when taxes are due
and payable in full to include
if the claimant is refinancing the residential dwelling and if
the claimant has elected to participate in a reverse mortgage
program for the residential dwelling.
10)Requires funds derived from the voluntary sale of a
residential dwelling, which has a lien placed on it due to the
PTP program, to be placed in the Fund, instead of an impound
account. Repeals the option for a claimant whose residential
dwelling was voluntarily sold to draw upon the amount in the
account to purchase a new residential dwelling, secured by a
new lien. Prohibits a claimant whose residential dwelling was
voluntarily sold from drawing upon the amount in the Fund.
11)Changes the requirement from 20% to 40% of the amount of
equity a claimant must possess if the Controller shall
subordinate the new lien against the new residential dwelling
that current law allows a claimant whose dwelling was sold or
condemned to purchase.
12)Establishes a 60-day timeframe for the county tax collector
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to notify the Controller of all property subject to a "Notice
of Lien for Postponed Property Taxes" recorded pursuant to
existing law. Deletes the requirement for the tax collector
to notify the Controller if a property subject to a "Notice of
Lien for Postponed Property Taxes" becomes subject to those
collection procedures that are available for collection of
delinquent taxes or assessments on the unsecured roll.
13)Requires the Controller, upon request of the tax collector,
to provide to the tax collector information that is required
for the preparation and enforcement of the sale of property.
Allows this information to include social security numbers.
Requires the tax collector, or his or her designee, to certify
under penalty of perjury to the Controller that the
information requested is required for the preparation and
enforcement of the sale of property. Specifies that any
information provided to the tax collector pursuant to this
subdivision is not public record and is not open to public
inspection.
14)States that for the definition of "income" used by PTP law
that all losses and nonexpenses shall be converted to zero for
the purpose of determining whether the homeowner meets the PTP
requirement.
15)Defines "property taxes" to mean "property taxes for current
fiscal years for which the claim is made and excludes
delinquent taxes for prior fiscal years."
16)Requires, if a claimant's property taxes are paid by a lender
as specified, the tax collector to notify the auditor of the
claimant's duplicate amount of money transferred in an
electronic fund transfer to the tax collector. Requires the
county auditor, treasurer, or disbursing officer to send a
check in the amount of money based on the electronic transfer
by the Controller, to the Controller within 60 days of the
replicated payment. Deletes current law which made these
requirements optional, if the Commission on State Mandates
determined them to be a reimbursable mandate.
17)Allows, in the event of willful neglect, for a claimant to
use an electronic funds transfer for that current fiscal year
to pay delinquent taxes only if there are sufficient amounts
to pay all of the delinquent penalties, costs, fees, and
interest. Authorizes the tax collector to return the
electronic funds transfer to the Controller to deny the
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postponement claim, if a sufficient amount is not received by
the tax collector within 30 days from the date of the
electronic funds transfer. Requires the Controller to notify
the claimant in writing when the electronic funds transfer has
been submitted to the tax collector. Requires, in the event
of willful neglect, the Controller to notify the claimant in
writing and provide a copy of the notification to the tax
collector, that a payment amount sufficient to pay all the
delinquent penalties, costs, fees, and interest must be
received by the tax collector within 30 days from the date of
the electronic funds transfer, and that if the payment is not
received, then the tax collector may return the transfer to
the Controller to deny the postponement claim. Requires the
Controller to notify the claimant in writing when an
electronic funds transfer is made if a denial for postponement
claim is appealed and reversed pursuant to existing law.
18)Requires the claim for postponement to be filed after
September 1, instead of May 15, of the calendar year in which
the fiscal year for which postponement is claimed begins, and
on or before April 10, instead of December 10, of that fiscal
year.
19)Finds and declares that this measure imposes a limitation on
the public's right of access to the meetings of public bodies
or the writings of public officials and agencies, and that
this measure is necessary to protect against the risk of
identity theft.
20)States that no reimbursement is required for certain costs
that may be incurred by a local agency or school district
because this act creates a new crime or infraction, eliminates
a crime or infraction, or changes the penalty for a crime or
infraction. However, if the Commission on State Mandates
determines this act contains other costs mandated by the
state, reimbursement to local agencies and school districts
for costs shall be made pursuant to current law governing
state-mandated local costs.
EXISTING LAW :
1)Establishes the Senior Citizens and Disable Citizens PTP Law,
the Senior Citizens Tenant-Stockholder PTP Law, the Senior
Citizens Mobilehome PTP Law, and the Senior Citizens
Possessory Interest Holder PTP Law, all of which allow the
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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)Suspends the PTP program and prohibits individuals from filing
new claims for property tax postponement, and the Controller
from accepting application, in the 2009 calendar year and
thereafter.
3)Requires a claimant to repay the Controller upon sale of the
home, which secures the property tax loan made by the
Controller.
4)Prohibits the filing of a claim and prohibits the Controller
from accepting applications to postpose the payment of ad
valorem property taxes under the Senior Citizens and Disabled
Citizens Property Tax Postponement Law.
5)Establishes the County Deferred Property Tax Program.
FISCAL EFFECT : This bill is keyed fiscal and contains an
appropriation.
COMMENTS :
1)Purpose of this bill . This bill reinstates the PTP program to
provide property tax deferment to seniors and disabled persons
and eliminates, beginning July 1, 2015. Though the funding
was eliminated in 2009 the statute remains. This bill is
sponsored by the California Association of County Treasurers
and Tax Collectors.
2)PTP program . California has several property tax programs
benefiting elderly and disabled individuals, including
property tax reappraisal relief, property tax assistance, and
the PTP program. 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 XIII, 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
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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.
3)Suspension of the PTP program . 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.
According to the sponsor, "In these five intervening years,
county treasurers have fielded hundreds, if not thousands, of
panicked calls from low income seniors and disabled people,
asking for some help to pay their taxes. The statute is clear
regarding when and how property taxes must be paid, and what
penalties are accrued when they are not paid timely. Without
this program, it is very likely that a huge number of
properties owned by seniors and disabled persons' homes will
become eligible for tax sale in 2014, due to five years of
non-payment."
4)Suspended PTP program vs. this bill . Under existing law the
PTP program required some loan repayments to go to the General
Fund and some repayments to go to the program's impound
account. Those latter amounts were transferred to the General
Fund after six months. Appropriations were made from the
General Fund to pay the postponed property taxes, as opposed
to the revolving fund concept embodied in this bill.
a) Home equity . Under the current PTP program senior and
disabled claimants must meet criteria, including 20% equity
in their homes and annual household income of $39,000 or
less. This bill increases the threshold of equity from 20%
to 40%.
b) Filing date . Current law requires claimants to file
applications annually with the Controller's Office, between
May 15th and December 10th of each calendar year for the
fiscal year (FY) beginning July 1 of that year. This bill
requires applications to be filed after September 1,
instead of May 15, of the calendar year in which the fiscal
year for which postponement is claimed begins, and on or
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before April 10, instead of December 10, to coincide with
the property tax installment date.
c) Payments by the Controller . Upon approval of the claim,
the Controller either made payments directly to the county
tax collector or issued certificates of eligibility to the
claimant. A certificate constituted a written promise of
the state to pay all or part of the property taxes on the
home. This bill removes the option for the Controller to
make payments by issuing a certificate of eligibility and
requires the Controller to make payments directly to a
county tax collector by electric funds transfer.
d) Definition of property taxes . The current definition of
"property taxes" included everything on the claimants'
secured property tax bill, including special assessment,
charges, and user fees, in addition to ad valorem taxes.
However, special assessments levied independently of the
county tax bill were ineligible for postponement. This
bill amends the term property taxes to only include
property taxes for the current year FY's delinquent taxes.
e) Loan terms . Under the current program, in exchange for
paying a claimant's property taxes, the state placed a lien
on the property for which state funding was used. The loan
was secured by the property and was repaid, with interest,
when the property owner died, sold the home, moved, or
allowed a "senior lien" to become delinquent. Each year,
interest accrued on the amount that the state paid to the
county on behalf of the property owner. The claimant must
repay the Controller upon sale of the home, who secures the
loan by recording a lien. Loans do not become due and
payable if the claimant or the claimant's spouse continues
to occupy the home secured by the lien. This bill adds to
the requirements when a loan for postponement is due and
payable to include if a claimant is refinancing the
property or doing a reverse mortgage.
f) Tax lien . Current law allows a county to issue a tax
lien against property when an owner is late on paying
property taxes, and provides that a judgment is satisfied,
and the tax lien removed when the property tax is paid, or
the property is sold to satisfy the lien. Upon sale, tax
liens are paid out of proceeds in the order recorded;
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however, property tax and special assessment liens have
priority over all other liens regardless of the time of its
creation. Under current law the Controller's lien for a
property tax postponement loan is not afforded "super
priority" status. This bill does not change that.
5)Author's statement . According to the author, "Many California
seniors and individuals living with disabilities are on fixed
incomes. Those who are property owners are increasingly faced
with tax bills they cannot afford. As a result [of the PTP
program indefinite suspension], thousands of seniors and
disabled Californians were left with a difficult choice
between buying food and medications or suddenly having to pay
previously deferred property tax bills. This bill would fix
this problem by reinstating the program and establishing the
Senior Citizens and Disabled Citizens PTP Fund incorporating
several changes to increase the sustainability of the program,
[and] giving qualified seniors and disabled Californians some
much needed financial flexibility."
6)County Deferred Property Tax Program . In response to the
negative impacts of the suspension of the PTP program, AB 1718
(Blumenfield) of 2010 was introduced. AB 1718 would have
established the County Deferred Property Tax Program for
Senior Citizens and Disabled Citizen, but was vetoed by
Governor Schwarzenegger. Subsequently, the Legislature
enacted AB 1090 (Blumenfield), Chapter 369, Statutes of 2011,
creating the County Deferred Property Tax Program. AB 1090
was substantially similar to AB 1718, except that it did not
allow the county treasurer-tax collector to secure the
deferral with a superior priority status lien.
In contrast to the PTP program that was funded exclusively by
GF moneys, the County Deferred PTP program is self-financing
and not reliant on an annual GF appropriation. It is funded
by a participating county through a fund to be established
within its treasury. Upon adoption of a resolution by the
county's governing body, and with the consent of the county
treasurer, excess county funds are deposited in the fund for
the purpose of providing property tax postponement loans to
qualified claimants. AB 1090 established uniform statewide
eligibility criteria for the claimants and certain rules and
guidelines for a County Deferred Property Tax program.
Since the passage of AB 1090, the Committee is only aware of
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one county (Santa Cruz County) that has implemented the
optional program. Supporters of this bill argue that while
the County Deferred Property Tax Program provides a county
with an option to defer property taxes for homeowners residing
within the county, it nonetheless leaves many low-income
homeowners without assistance in counties that choose not to
participate in the program. Additionally, without the ability
to place a priority lien on the property to ensure repayment
of deferred property taxes, counties are limited in the
ability to finance such a program.
7)Previous legislation to reinstate the PTP program . Several
bills have sought to reinstate the PTP program including AB
1029 (Blumenfield) of 2010 and AB 1322 (Patterson) of 2013,
which both died in the Assembly Appropriations Committee.
ABx1 34 (Budget Committee) of 2011 was vetoed by Governor
Brown stating, "Given the very significant cuts to state and
local core public services that are occurring, the state
cannot afford the $19.3 million that the Department of Finance
estimates this bill would cost during the 2011-2012 fiscal
year or the continuing estimated annual revenue cost of $30
million. For this reason I am unable to sign the bill."
8)Arguments in support . Supporters argue that 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 and that this bill will reinstate the
critical program.
9)Arguments in opposition . None on file.
10)Two-thirds vote . The bill requires a two-thirds vote of each
house because of the continuous appropriation.
11)Committee amendments : For uniformity purposes the Committee
may wish to ask the author to take amendments to strike out
additional references to mobilehomes, the impound account, the
ability for a claimant to re-borrow from the account, and the
option for the Controller to subordinate a lien in order to be
consistent with the changes made by this bill.
12)Double-referral . This bill is double-referred to the Revenue
and Taxation Committee.
REGISTERED SUPPORT / OPPOSITION :
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Support
California Association of County Treasurers and Tax Collectors
[SPONSOR]
California Association of Realtors
California Taxpayers Association
Howard Jarvis Taxpayers Association
Marin County Board of Supervisors
Rural County Representatives of California
Sonoma County
Opposition
None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958