BILL ANALYSIS �
AB 2231
Page 1
ASSEMBLY THIRD READING
AB 2231 (Gordon, et al.)
As Amended April 21, 2014
2/3 vote
LOCAL GOVERNMENT 9-0 REVENUE & TAXATION 9-0
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|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Bocanegra, Harkey, Beth |
| |Bradford, Gordon, | |Gaines, Gordon, Mullin, |
| |Melendez, Mullin, Rendon, | |Nestande, Pan, |
| |Waldron | |V. Manuel P�rez, Ting |
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APPROPRIATIONS 17-0
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, | | |
| |Donnelly, Eggman, Gomez, | | |
| |Holden, Jones, Linder, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Reinstates the Senior Citizens and Disabled Citizens
Property Tax Postponement (PTP) program to provide property tax
deferment to seniors and disabled persons. Specifically, this bill :
1)Reinstates the 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.
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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).
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."
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.
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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)Establishes a 60-day timeframe for the county tax collector 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.
12)Requires the Controller, upon request of the tax collector, to
provide to the tax collector specified information that is
required for the preparation and enforcement of the sale of
property. 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.
13)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.
14)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."
15)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
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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.
16)Allows, in the event of willful neglect, for a claimant to use an
electronic funds transfer for that current fiscal year (FY) 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 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.
17)Requires the claim for postponement to be filed after September
1, instead of May 15, of the calendar year in which the FY for
which postponement is claimed begins, and on or before April 10,
instead of December 10, of that FY.
18)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.
19)States that no reimbursement is required for certain costs that
may be incurred by a local agency because this act creates,
eliminates, or changes the penalty for a new 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.
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EXISTING LAW :
1)Establishes the Senior Citizens and Disabled 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 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.
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.
3)Requires a claimant to repay the Controller upon sale of the home,
which secures the property tax loan made by the Controller.
4)Establishes the County Deferred Property Tax Program.
FISCAL EFFECT : According to the Assembly Appropriations Committee:
1)GF costs to the Controller of approximately $3.5 million in FY
2015-16 to reinitiate the program, eventually decreasing to annual
administration costs of approximately $3 million per year. Over
the long term, these costs may be offset, at least in part, by
ongoing interest on loans and the Fund, and fees generated by the
program.
2)In order to reinitiate the PTP program, a source of initial seed
capital funds and an appropriation to the Controller to make the
first loans will be required.
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
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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
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 GF programs [SB 8 X3 (Ducheny), Chapter
4, Statutes of 2009-10 Third Extraordinary Session]. 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. 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
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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 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 FY for which postponement is claimed
begins, and on or 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
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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; 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. It is
funded by a participating county through a fund to be established
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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 Legislature is only aware of 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. AB 34 X1 (Budget
Committee) of the 2011-12 First Extraordinary Session 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 FY or the
continuing estimated annual revenue cost of $30 million."
8)Two-thirds vote. The bill requires a two-thirds vote of each
house because of the continuous appropriation.
9)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.
10)Arguments in opposition. None on file.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
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