BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2231 HEARING: 6/25/14
AUTHOR: Gordon FISCAL: Yes
VERSION: 6/19/14 TAX LEVY: No
CONSULTANT: Grinnell
PROPERTY TAX POSTPONEMENT (URGENCY)
Revises and reenacts the senior citizens and disabled
citizens property tax postponement program.
Background and Existing Law
The Senior Citizens and Disabled Citizens Property Tax
Postponement Law (PTP) allows 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. The claimant must
repay the Controller, who secures the loan by recording a
lien, upon sale of the home. Loans do not become due and
payable if the claimant or the claimant's spouse continues
to occupy the home secured by the lien. The Controller's
lien for a property tax postponement loan doesn't have
"super priority" status, similar to liens recorded by
county treasurer-tax collectors for unpaid property taxes,
which means that the county lien is paid before all others
if the secured property is sold.
When the Legislature enacted PTP in 1983, it continuously
appropriated $12.7 million annually to pay the face amount
of all certificates of eligibility for the PTP program. In
2009, due to budgetary constraints, the Legislature
prohibited persons from filing new claims for property tax
postponement, and the Controller from accepting
applications (SBX3 8, Ducheny, 2009).
PTP is distinct from the Senior Citizens Property Tax
Assistance Program (PTAP), administered by the Franchise
Tax Board, which is a direct grant program to
income-eligible senior citizens. The state has not funded
PTAP since the 2007-08 Budget, so the state has not paid
claims more recently than those made in 2007.
AB 2231 - 6/19/14 -- Page 2
In 2010, the Legislature enacted the County Deferred
Property Tax Program for Senior Citizens and Disabled
Citizens, which allowed participating counties to operate
property tax postponement programs using its own funds (AB
1090, Blumenfield). Under the bill, counties can enact an
ordinance participating in the program, set aside funds,
accept claims, and defer taxes for eligible claimants. The
County Auditor allocates the revenue to other local
agencies such as cities, special districts, and school
districts using county revenue as if the tax had been paid
until the house is sold and the lien can be satisfied. The
county opt-in program largely relies on eligibility
criteria used for the state program, with some updates, and
even allows counties to grant retroactive relief for
individuals who could not obtain deferment when the
Legislature defunded the program and precluded claimants
from filing new claims. So far, only Santa Cruz County
enacted an ordinance to grant postponements.
Proposed Law
Assembly Bill 2231 largely recreates the Property Tax
Postponement Program by reestablishing the Senior Citizens
and Disabled Citizens Property Tax Postponement Fund as an
interest bearing fund to pay for the Controller's costs for
administering the program and paying for disbursements to
property tax postponements. Any loan repayments are also
deposited into the Fund, but the Controller must transfer
any amounts in the Fund that exceed $10 million to the
General Fund.
AB 2231 allows counties to enact an ordinance to delay tax
sales for properties formerly funded by the program that
may be eligible for the reenacted program.
Additionally, the measure:
Deletes the past program's $12 million continuous
appropriation,
Repeals the prohibition on the Controller accepting
new applications for the program, allowing the him or
her to start accepting new applications on January 1,
2016,
Sweeps any current amounts in impound accounts into
the Fund,
Removes mobilehomes, houseboats, and floating
AB 2231 - 6/19/14 -- Page 3
homes, a part of the past program, from the reenacted
program, and provides a wind down process for existing
loans made to mobilehomes,
Increases from $10 to $30 the fee the Controller
can charge for providing the lien amount to a person
with a legal or equitable interest in the property,
Clarifies that the lien is secured when the
Controller transfers funds to the County on the
taxpayer's behalf,
Provides that the lien must be recorded within 14
days of the transfer of funds and the notice of lien
to the county by the Controller,
Repeals the Controller's ability to subordinate the
property tax postponement lien if the state's
interests are adequately protected, or pay the
taxpayer's delinquent taxes, interest, and penalties
in the event of a foreclosure on a senior lien,
Requires the assessor to notify the controller
within 60 days of a change in ownership of the
property enrolled in the program, as well as the tax
collector in specified circumstances,
Provides that amounts postponed become due and
payable when the taxpayer refinances the home or
enters into a reverse mortgage,
Requires proceeds of a sale or condemnation of real
property where the Controller recorded a property tax
postponement lien to instead flow to the Fund, instead
of an impound account, and prohibits the taxpayer from
drawing on the proceeds in the Fund,
Deletes references to certificates of eligibility,
and replaces them with electronic transfers to
properly reflect the modern information technology
that would implement the program,
Requires the tax collector to inform the Controller
of all amounts secured by a lien that becomes tax
defaulted, but deletes the requirement for the tax
collector to inform the Controller when the property
becomes subject to collection procedures for the
unsecured roll,
Directs the Controller to provide the tax collector
with information necessary to execute a tax sale,
requires the tax collector to certify under penalty of
perjury that the information is necessary for the tax
sales, and provides that this information is not a
public record due to social security numbers needed
for the sale,
AB 2231 - 6/19/14 -- Page 4
Converts to zero all losses and nonexpenses when
determining whether the taxpayer's income qualifies
for enrollment in the program,
Increases from 20% to 40% the amount of equity in
the property necessary for a taxpayer to enroll in the
program,
Clarifies the definition of property taxes,
Provides that taxpayers may file applications from
September 1st to April 10th of the fiscal year,
instead of May 15th to December 10th of the calendar
year,
In the event of willful neglect, requires the
Controller to notify the claimant and provide a copy
of the notification to the tax collector of the taxes
due and the 30-day deadline for payment, and allows
the tax collector to return funds and deny the claim,
Requires the Controller to notify the claimant when
it electronically transfers property taxes after
initially reversing its decision to deny the claim,
The measure enacts several technical and conforming changes
to implement the bill's provisions, makes legislative
findings and declarations regarding taxpayer information
not being public records for purposes of the California
Constitution's provisions for public records, and states
that state reimbursement of any mandate created by the bill
doesn't apply for specific reasons.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author,
""Assembly Bill 2231 would revise and reestablish the
Seniors Citizens and Disabled Citizens Property-Tax
Postponement (PTP) Program, which allowed eligible
homeowners to avoid tax-default by deferring payment of all
or a portion of their property taxes. Though conceived by
the legislature, the PTP program was initially authorized
(Prop. 13, June 1976) and subsequently expanded (Prop 33,
November 1984) by the voters of California. However, on
AB 2231 - 6/19/14 -- Page 5
February 20, 2009, the PTP program was indefinitely
suspended by SB x3 8 (Ducheny, Chapter 4, Statutes of 2009)
through a budget compromise. This bill would make critical
changes to the PTP program to allow the State Controller's
Office to once again accept claimants. These changes would
ensure the long-term sustainability of this relief program,
helping vulnerable Californians remain in their homes.
Over the 30-years it was in operation, this property-tax
postponement program helped almost 6,000 California seniors
and disabled citizens. For those living on fixed-incomes
where a tax-bill may mean losing their home, AB 2231 will
provide welcome relief."
2. Best intentions . Created by the Legislature in 1977,
the Senior Citizens and Disabled Citizens Property Tax
Postponement Law has helped thousands of California
families stay in their homes by directing the Controller to
transfer state funds to counties to pay property taxes on
behalf of taxpayers who can't afford to pay them. The
state secures the investment with a lien, so when the
taxpayer dies or sells the home, the proceeds of the sale
repay the state's lien. However, given declines in
property values, proceeds of sales were falling short of
satisfying the liens, so the Legislature barred the
Controller from accepting new applications. With the
recent rebound in property values, AB 2231 seeks to restart
the program, with the added security of a higher equity
requirement of 40% to safeguard the state's investment.
However, if values decline again, the state may again face
losses, even with the higher requirement unless its liens
are afforded "super-priority" status, similar to county
property taxes.
3. A little help . Many previous participants in the
program haven't paid property taxes since 2009 because of
the program's repeal, and are soon facing tax sales of
their properties due to non-payment. These taxpayers often
contact county tax collectors, who can only offer
installment programs. AB 2231 assists those taxpayers by
allowing counties to delay tax sales, in the hopes that the
reenacted program can reenroll those taxpayers.
4. Appropriation . Legislative Counsel keyed AB 2231 a 2/3
vote because it contains a $10 million continuous
appropriation to reinvigorate the program.
AB 2231 - 6/19/14 -- Page 6
5. What's different ? The Committee approved a largely
similar bill SB 1214 (Anderson), at its April 30, 2014
hearing. However, that measure was held on the Committee
on Appropriations' suspense file.
6. Urgency . AB 2231 contains an urgency clause, and must
be approved by 2/3 vote of each house of the Legislature.
Assembly Actions
Assembly Floor 77-0
Assembly Appropriations 17-0
Assembly Revenue and Taxation 9-0
Assembly Local Government 9-0
Support and Opposition (06/17/14)
Support : Butte County Board of Supervisors; California
Assessors' Association; California Association of County
Treasurers and Tax Collectors; California Association of
Realtors; California State Association of Counties;
California Taxpayers Association; Contra Costa County Board
of Supervisors; County of Del Norte Board of Supervisors;
County of El Dorado Board of Supervisors; County of Fresno
Assessor-Recorder; County of Humboldt Board of Supervisors;
County of Los Angeles Board of Supervisors; County of
Madera Board of Supervisors; County of Marin Board of
Supervisors; County of Nevada, State of California, Board
of Supervisors; County of Riverside Board of Supervisors;
County of San Benito Board of Supervisors; County of San
Bernardino Board of Supervisors; County of San Mateo Board
of Supervisors; County of Santa Clara; County of Sonoma
Board of Supervisors; County of Trinity Board of
Supervisors; Howard Jarvis Taxpayers Association; Los
Angeles County Board of Supervisors; Mariposa County Board
of Supervisors; Modoc County Board of Supervisors;
Monterey County Board of Supervisors; Napa County
Assessor; Orange County Board of Supervisors; San Luis
Obispo County Board of Supervisors; Resources for
Independence; Rural County Representatives of California;
Valley Caregiver Resource Center; Veterans Caucus of the
California Democratic Party;
Opposition : None received.
AB 2231 - 6/19/14 -- Page 7