BILL ANALYSIS �
AB 2231
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2231 (Gordon, et al.)
As Amended August 21, 2014
2/3 vote. Urgency
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|ASSEMBLY: |77-0 |(May 27, 2014) |SENATE: |34-0 |(August 25, |
| | | | | |2014) |
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Original Committee Reference: L. GOV.
SUMMARY : Reinstates the Senior Citizens and Disabled Citizens
Property Tax Postponement (PTP) program to provide property tax
deferment to seniors and disabled persons.
The Senate amendments :
1)Add July 1, 2016, (instead of 2015), as the date to end the
current prohibition on any person filing a claim and the State
Controller (Controller) from accepting applications for the
PTP program, to therefore authorize the Controller to accept
new claims for property tax postponement.
2)Require the Senior Citizens and Disabled Citizens Property Tax
Postponement Fund (Fund) to be an interest-bearing fund. Make
changes to the transfer of money in the Fund to the General
Fund (GF).
3)Prohibit participation in the PTP program if household income
exceeds $35,000 and delete current law regarding income
eligibility.
4)Require the Controller to do both of the following:
a) On June 30, 2017, transfer moneys in the Fund in excess
$20 million to the GF; and,
b) On June 20, 2018, and on June 30 each proceeding year,
transfer any moneys in the Fund in excess of $15 million to
the GF.
5)Require any funds remaining in an impound account, upon the
effective date of this bill, to be transferred to the Fund.
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6)Increase, from $10 to $30, the limit of a reasonable fee the
Controller may charge to provide lien status information.
7)Require that notice of lien for postponed property taxes be
processed expeditiously.
8)Establish a process for mobilehome loans established prior to
February 20, 2009.
9)Add provisions that require the minimum price at which a
tax-defaulted property may be offered for sale to ensure that
the ultimate sales price must include the outstanding balance
of any PTP loan.
10)Require that notice of lien for postponed property taxes be
processed expeditiously.
11)Authorize a county to adopt an ordinance to specify
conditions and procedures to delay the sale on a tax-defaulted
property if it is eligible to file a property tax postponement
claim.
12)Add an urgency clause.
13)Make other technical and conforming changes.
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 PTP Law.
3)Requires a claimant to repay the Controller upon sale of the
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home, which secures the property tax loan made by the
Controller.
AS PASSED BY THE ASSEMBLY , this bill:
1)Reinstated 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)Established the 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)Required 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)Required the Controller to transfer any moneys in the Fund in
excess of $10 million to the GF.
5)Repealed the Senior Citizens Mobilehome PTP Law. Removes
mobilehomes, houseboats, and floating homes from the
definition of "residential dwelling."
6)Repealed 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)Increased 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.
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8)Deleted 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)Added 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)Required 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)Established 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)Required 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.
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13)Stated 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)Defined "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)Required, 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.
16)Allowed, 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)Required the claim for postponement to be filed after
September 1, instead of May 15, of the calendar year in which
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the FY for which postponement is claimed begins, and on or
before April 10, instead of December 10, of that FY.
18)Found and declared 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)Stated 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)State Controller's Office administrative costs of
approximately $3.64 million (37.2 Personal Year (PY)) in
2015-16, $3.49 million (37.2 PY) in 2016-17, $3.32 million
(35.5 PY) in 2017-18, and $3.11 million (33.8 PY) ongoing.
Costs in the first three years include IT improvements to the
PTP accounting system and associated databases. (General Fund)
2)Unknown General Fund costs, likely in the range of $10 million
annually, to disburse new property tax loan claims, beginning
in 2016-17. Eventually loan payments and accumulated interest
would likely fully offset program expenditures.
3)Likely reimbursable mandate costs for duties imposed on county
tax administration officials. Staff notes that the previous
PTP program was deemed to have imposed reimbursable activities
on local agencies, resulting in annual General Fund
expenditures of up to $285,000 before the program was
suspended in 2009.
COMMENTS :
1)Purpose of this bill. This bill reinstates a modified PTP
program to provide property tax deferment to seniors and
disabled persons and allows income-eligible senior citizens
and disabled persons to apply to the Controller to defer
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payment of property taxes, beginning on July 1, 2016. Though
the funding for the previous program 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
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)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
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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."
5)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 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.
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6)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 First Extraordinary Session 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 FY or the continuing estimated annual
revenue cost of $30 million."
7)Two-thirds vote. The bill requires a two-thirds vote of each
house because of the urgency clause.
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 this
critical program.
9)Arguments in opposition. None on file.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0005384