BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1152 HEARING: 5/7/14
AUTHOR: Anderson FISCAL: Yes
VERSION: 4/30/14 TAX LEVY: Yes
CONSULTANT: Grinnell
PROPERTY TAX EXEMPTIONS FOR VETERANS' ORGANIZATIONS
Provides that the veterans' organization exemption from
property tax applies when the organization occasionally
rents its property.
Background and Existing Law
Section One of Article XIII of the California Constitution
provides that all property is taxable unless explicitly
exempted by the Constitution or federal law, but allows the
Legislature to exempt property used for charitable purposes
owned by nonprofit entities organized and operated for
charitable purposes, none of whose income inures to the
benefit of any private shareholder or individual. The
Legislature enacted this exemption, commonly known as the
"welfare exemption."
Property owned by a veterans' organization chartered by the
United States Congress is eligible for the welfare
exemption, so long as the organization isn't conducted for
profit, and no part of any net earnings inures to any one
individual. Veterans' organizations must be tax-exempt
under federal and state law, and have a certificate of
compliance on file with the county assessor to be eligible
for the exemption.
Proposed Law
Senate Bill 1152 provides that the veterans' organization
exemption applies to property owned by the organization
that is occasionally made available to the public as a
service to the community. Rental proceeds must be limited
to the amount necessary to reimburse the organization for
its costs of providing the rental, and any proceeds are
exclusively used for the organization's charitable
SB 1152 - 3/26/14 -- Page 2
purposes.
State Revenue Impact
As the measure as currently written doesn't exempt any
additional property, BOE estimates that the measure has no
revenue impact.
Comments
1. Purpose of the bill . According to the author, "Veteran
halls in communities across our country are an invaluable
resource for millions of active military, veterans, and
their families. Due to skyrocketing operation and business
costs, the number of veteran halls has declined and fewer
military families are receiving the much needed services
that they provide. This bill would ensure that as
non-profit organizations, existing property tax exemptions
for veteran halls are preserved so that they can continue
to provide high quality and important services to the
heroes who have served our country."
2. Another way ? The Constitution precludes the
Legislature's from enacting changes to the property tax
that conflict with its provisions. The most effective way
to exclude property owned by veterans' organizations is to
amend the Constitution.
3. Missed target ? SB 1152 amends Section 215.1 of the
Revenue and Taxation Code to provide that the welfare
exemption applies to property owned by veterans'
organizations occasionally rented to the public.
Subdivision (b) of that section requires that the property
also comply with Section 214(a), which in part states that
to be eligible for the welfare exemption:
"The property is not used by the owner or members
thereof for fraternal or lodge purposes, or for social
club purposes except where that use is clearly
incidental to a primary, religious, hospital,
scientific, or charitable purpose."
SB 1152 - 3/26/14 -- Page 3
It's not clear that SB 1152's changes to Section 215 will
exempt any more property so long as Section 214 restricts
the use of the property to non-social purposes. However,
the Legislature is limited in its options for amending
Section 214, because any changes must also be consistent
with the welfare exemption in the Constitution, which says
that property must be used exclusively for charitable
purposes. Additionally, to the extent legislation allows
veterans' organizations to use property for fraternal and
social uses whilst maintaining the welfare exemption, it
would set a precedent for other social and fraternal
organizations to ask for similar treatment.
4. Further definition ? SB 1152 states that property
should be exempt if it's rented "occasionally." However,
the term is not defined, which could lead to disagreements
between assessors and veterans' organizations.
Support and Opposition (05/01/14)
Support : American Legion-Department of California; AMVETS
- Department of California; California Association of
County Veterans Services Officers; the Military Officers
Association of America, California Council of Chapters;
Vietnam Veterans of America-California State Council.
Opposition : None received.