Existing property tax law authorizes the board of supervisors of a county to provide that every assessee or person liable for taxes on any taxable property whose property was damaged or destroyed without his or her fault may apply for reassessment of that property, as provided. To be eligible for reassessment, existing law requires that the damage or destruction of the property be caused by specified circumstances, including a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of disaster.

This bill would additionally authorize the board of supervisors of a county to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency. The bill would specify that damage includes a diminution in the value of property as a result of environmental contamination. The bill would also provide that the amendments made by its provisions would apply retroactively to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016 and that, with respect to these properties, the application for reassessment may be filed within 12 months of the enactment of this bill or within the time specified in the ordinance, whichever is later. The bill would specify that these provisions do not alter existing law regarding claims or defenses related to diminution of property values or establish a presumption that property values have declined or that any property is in any way damaged or destroyed or otherwise contaminated for purposes of a civil action related to the methane gas leak in the Porter Ranch neighborhood.

Existing law requires the assessed value of the property in its damaged condition, determined as specified, to be the taxable value of the property until it is restored, repaired, reconstructed, or other provisions of the law require the establishment of a new base year value. Existing law, if partial reconstruction, restoration, or repair has occurred on any subsequent lien date, requires the taxable value to be increased by a specified amount.

This bill, for property destroyed or damaged in an area or region proclaimed by the Governor to be in a state of emergency, on the 3rd lien date following the calamity, if partial reconstruction, restoration, or repair is not progressing in a timely fashion, would require the assessed value of the property to be determined, as specified.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Los Angeles.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing property tax law authorizes the board of supervisors of a county to provide that every assessee or person liable for taxes on any taxable property whose property was damaged or destroyed without his or her fault may apply for reassessment of that property, as provided. To be eligible for reassessment, existing law requires that the damage or destruction of the property be caused by specified circumstances, including a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of disaster.

This bill would additionally authorize the board of supervisors of a county to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency. The bill would specify that damage includes a diminution in the value of property as a result of environmental contamination. The bill would also provide that the amendments made by its provisions would apply retroactively to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016 and that, with respect to these properties, the application for reassessment may be filed within 12 months of the enactment of this bill or within the time specified in the ordinance, whichever is later. The bill would specify that these provisions do not alter existing law regarding claims or defenses related to diminution of property values or establish a presumption that property values have declined or that any property is in any way damaged or destroyed or otherwise contaminated for purposes of a civil action related to the methane gas leak in the Porter Ranch neighborhood.

Existing law requires the assessed value of the property in its damaged condition, determined as specified, to be the taxable value of the property until it is restored, repaired, reconstructed, or other provisions of the law require the establishment of a new base year value. Existing law, if partial reconstruction, restoration, or repair has occurred on any subsequent lien date, requires the taxable value to be increased by a specified amount.

This bill, for property destroyed or damaged in an area or region proclaimed by the Governor to be in a state of emergency, on the 3rd lien date following the calamity, if partial reconstruction, restoration, or repair is not progressing in a timely fashion, would require the assessed value of the property to be determined, as specified.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Los Angeles.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing property tax law authorizes the board of supervisors of a county to provide that every assessee or person liable for taxes on any taxable property whose property was damaged or destroyed without his or her fault may apply for reassessment of that property, as provided. To be eligible for reassessment, existing law requires that the damage or destruction of the property be caused by specified circumstances, including a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of disaster.

This bill would additionally authorize the board of supervisors of a county to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency. The bill would specify that damage includes a diminution in the value of property as a result of environmental contamination. The bill would also provide that the amendments made by its provisions would apply retroactively to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016 and that, with respect to these properties, the application for reassessment may be filed within 12 months of the enactment of this bill or within the time specified in the ordinance, whichever is later.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Los Angeles.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing property tax law authorizes the board of supervisors of a county to provide that every assessee or person liable for taxes on any taxable property whose property was damaged or destroyed without his or her fault may apply for reassessment of that property, as provided. To be eligible for reassessment, existing law requires that the damage or destruction of the property be caused by specified circumstances, including a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of disaster.

This bill would additionally authorize the board of supervisors of a county to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency. The bill would specify that damage includes a diminuation diminution in the value of property as a result of environmental contamination. The bill would also provide that the amendments made by its provisions would apply retroactively to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016 and that, with respect to these properties, the application for reassessment may be filed within 12 months of the enactment of this bill or within the time specified in the ordinance, whichever is later.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Los Angeles.

This bill would declare that it is to take effect immediately as an urgency statute.

The Alcoholic Beverage Control Act defines alcoholic beverages for purposes of that act and includes a definition of wine.

This bill would make nonsubstantive changes to this provision.

 VETO  

Bill No: SB 1304

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 5/11/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 36-0, 5/27/16

AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Huff, Jackson, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

NO VOTE RECORDED: Berryhill, Hueso, Lara, Runner

SENATE FLOOR: 39-0, 8/30/16

AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

ASSEMBLY FLOOR: 78-0, 8/29/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill expands eligibility for disaster reassessment, allows assessors to consider environmental contamination when revaluing the property, and applies its provisions retroactively to taxpayers affected by the Porter Ranch gas leak.

ANALYSIS:

Existing law:

1. Provides that all property is taxable unless explicitly exempted by the Constitution or federal law.
2. Limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or when ownership changes.
3. Allows assessors to temporarily reduce value to reflect substantial damage, destruction, or other factors causing a decline in value.
4. Permits the Legislature to authorize local agencies to provide for the assessment or reassessment of taxable property physically damaged or destroyed for property tax purposes.
   1. Allows a county board of supervisors to enact an ordinance allowing any taxpayer whose property was damaged or destroyed without his or her fault to apply for reassessment. The ordinance can apply to large disasters, such as earthquakes or wildfires, or site-specific incidents, like house fires.
   2. Directs assessors to revalue property that’s physically damaged by the disaster if the county enacts the ordinance.
   3. Allows assessors to revalue property to reflect restricted access to property resulting from the disaster only when the Governor has issued a disaster proclamation as a result of the disaster.
   4. Does not provide for any reduction in value resulting from environmental contamination.

This bill:

1. Expands eligibility for disaster reassessment to reflect restricted access to include a major misfortune or calamity in an area subsequently proclaimed by the Governor to be in a state of emergency, not only a disaster, so long as the property was damaged or destroyed by the major misfortune or calamity that caused the Governor to issue the proclamation.
2. Allows the assessor to consider damage from environmental contamination when revaluing the property to its disaster-affected value.
3. States that its provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood of the City of Los Angeles.
4. Allows affected taxpayers to apply for reassessment within 12 months of the date the bill is enacted.
5. Provides that if repairs do not progress by the third lien date following the disaster, the property’s assessed value reverts to the lower of market value in its current damaged state or Proposition 13 assessed value.
6. States legislative findings and declarations regarding the necessity for a special law for the Porter Ranch neighborhood of the City of Los Angeles.
7. States that its change does not alter any claims or defenses related to diminution of property values, and that it does not establish a presumption that property values have declined, or that any property is in any way damaged, destroyed, or contaminated for purposes of specified civil actions.
8. Contains an urgency clause stating that the measure takes effect immediately.

Background

On October 23rd, 2015, a massive natural gas leak from a natural gas storage facility was detected in Southern California, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country’s history, according to news reports. The Governor issued a proclamation declaring the situation a state of emergency on January 6, 2016. However, the gas leak didn’t cause physical damage to property, and neither the Governor’s proclamation nor any subsequent legislative bill declared the situation a disaster, so the Los Angeles County Board of Supervisors cannot enact an ordinance directing the assessor to revalue properties to reflect the gas leak’s impact on property values.

State law sets forth a very specific process for taxpayers to obtain disaster relief reassessments. First, a county must adopt an ordinance, which all counties except Fresno have done. Taxpayers must then file a written request with the assessor before the date specified in the ordinance, or within 12 months of the major misfortune or calamity, whichever is later. In the application, the taxpayer must show the condition and value of property immediately after the damage or destruction, and the dollar amount of the damage. Upon receipt of a complete application, the assessor must then appraise the property, and determine separately the full cash value of the land and improvements before and after the disaster. If the value of the damage exceeds $10,000, the assessor reduces the value and the taxes due to reflect the disaster’s impact, and sends a notice to the taxpayer. The county must refund any previously overpaid taxes resulting from the lower value, which remains in place until the taxpayer repairs, restores, or reconstructs the property. Taxpayers can also file a claim to postpone the next installment of property taxes that occurs immediately after the disaster, which postpones that payment without penalty or interest until the county assessor has reassessed the property. After the reassessment, the tax collector issues a corrected tax bill. Once repaired or restored, the assessor again revalues the property; however, the post-disaster value cannot exceed the previous base year value, unless any new square footage was added, which the assessor would then appraise at full market value.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, SB 1304’s fiscal impact is insignificant.

SUPPORT: (Verified 8/15/16)

Los Angeles County Assessor Jeffrey Prang

BOE Member George Runner

California Apartment Association

California Assessors Association

OPPOSITION: (Verified 8/15/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “Residents of the Porter Ranch in the City of Los Angles had been driven from their homes and neighborhood due to harmful gas that was released into the air from neighboring natural gas wells in Aliso Canyon in October of 2015. After being displaced for months, residents have struggled to manage the lasting impacts of the damage to both their health and property. This bill is an important step of financial assistance to residents of Porter Ranch during this time of healing and repairing.”

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 1304 without my signature.

This bill allows for retroactive property tax assessments for those affected by the Porter Ranch gas leak and expands the basis for future tax relief in similar circumstances.

Under existing law, the county assessor can already reduce the assessed value of homes to reflect changed market conditions. I think that should be sufficient.

ASSEMBLY FLOOR: 78-0, 8/29/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Calderon, Gipson

Prepared by:

10/25/16 14:29:21

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 1304

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 5/11/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 36-0, 5/27/16

AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Huff, Jackson, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

NO VOTE RECORDED: Berryhill, Hueso, Lara, Runner

ASSEMBLY FLOOR: 78-0, 8/29/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill expands eligibility for disaster reassessment, allows assessors to consider environmental contamination when revaluing the property, and applies its provisions retroactively to taxpayers affected by the Porter Ranch gas leak.

Assembly Amendments provide that the value of any property reassessed due to a disaster where repairs have not progressed should be determined under existing law commencing on the third lien date following the disaster, add findings regarding the bill’s impact on claims or defenses for specified civil actions, make technical changes, and add co-authors.

ANALYSIS:

Existing law:

1. Provides that all property is taxable unless explicitly exempted by the Constitution or federal law.
2. Limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or when ownership changes.
3. Allows assessors to temporarily reduce value to reflect substantial damage, destruction, or other factors causing a decline in value.
4. Permits the Legislature to authorize local agencies to provide for the assessment or reassessment of taxable property physically damaged or destroyed for property tax purposes.
   1. Allows a county board of supervisors to enact an ordinance allowing any taxpayer whose property was damaged or destroyed without his or her fault to apply for reassessment. The ordinance can apply to large disasters, such as earthquakes or wildfires, or site-specific incidents, like house fires.
   2. Directs assessors to revalue property that’s physically damaged by the disaster if the county enacts the ordinance.
   3. Allows assessors to revalue property to reflect restricted access to property resulting from the disaster only when the Governor has issued a disaster proclamation as a result of the disaster.
   4. Does not provide for any reduction in value resulting from environmental contamination.

This bill:

1. Expands eligibility for disaster reassessment to reflect restricted access to include a major misfortune or calamity in an area subsequently proclaimed by the Governor to be in a state of emergency, not only a disaster, so long as the property was damaged or destroyed by the major misfortune or calamity that caused the Governor to issue the proclamation.
2. Allows the assessor to consider damage from environmental contamination when revaluing the property to its disaster-affected value.
3. States that its provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood of the City of Los Angeles.
4. Allows affected taxpayers to apply for reassessment within 12 months of the date the bill is enacted.
5. Provides that if repairs do not progress by the third lien date following the disaster, the property’s assessed value reverts to the lower of market value in its current damaged state or Proposition 13 assessed value.
6. States legislative findings and declarations regarding the necessity for a special law for the Porter Ranch neighborhood of the City of Los Angeles.
7. States that its change does not alter any claims or defenses related to diminution of property values, and that it does not establish a presumption that property values have declined, or that any property is in any way damaged, destroyed, or contaminated for purposes of specified civil actions.
8. Contains an urgency clause stating that the measure takes effect immediately.

Background

On October 23rd, 2015, a massive natural gas leak from a natural gas storage facility was detected in Southern California, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country’s history, according to news reports. The Governor issued a proclamation declaring the situation a state of emergency on January 6, 2016. However, the gas leak didn’t cause physical damage to property, and neither the Governor’s proclamation nor any subsequent legislative bill declared the situation a disaster, so the Los Angeles County Board of Supervisors cannot enact an ordinance directing the assessor to revalue properties to reflect the gas leak’s impact on property values.

State law sets forth a very specific process for taxpayers to obtain disaster relief reassessments. First, a county must adopt an ordinance, which all counties except Fresno have done. Taxpayers must then file a written request with the assessor before the date specified in the ordinance, or within 12 months of the major misfortune or calamity, whichever is later. In the application, the taxpayer must show the condition and value of property immediately after the damage or destruction, and the dollar amount of the damage. Upon receipt of a complete application, the assessor must then appraise the property, and determine separately the full cash value of the land and improvements before and after the disaster. If the value of the damage exceeds $10,000, the assessor reduces the value and the taxes due to reflect the disaster’s impact, and sends a notice to the taxpayer. The county must refund any previously overpaid taxes resulting from the lower value, which remains in place until the taxpayer repairs, restores, or reconstructs the property. Taxpayers can also file a claim to postpone the next installment of property taxes that occurs immediately after the disaster, which postpones that payment without penalty or interest until the county assessor has reassessed the property. After the reassessment, the tax collector issues a corrected tax bill. Once repaired or restored, the assessor again revalues the property; however, the post-disaster value cannot exceed the previous base year value, unless any new square footage was added, which the assessor would then appraise at full market value.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, SB 1304’s fiscal impact is insignificant.

SUPPORT: (Verified 8/15/16)

Los Angeles County Assessor Jeffrey Prang

BOE Member George Runner

California Apartment Association

California Assessors Association

OPPOSITION: (Verified 8/15/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “Residents of the Porter Ranch in the City of Los Angles had been driven from their homes and neighborhood due to harmful gas that was released into the air from neighboring natural gas wells in Aliso Canyon in October of 2015. After being displaced for months, residents have struggled to manage the lasting impacts of the damage to both their health and property. This bill is an important step of financial assistance to residents of Porter Ranch during this time of healing and repairing.”

ASSEMBLY FLOOR: 78-0, 8/29/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Calderon, Gipson

Prepared by:

8/30/16 14:41:20

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1304

Author:(Huff)

As Amended Ver:August 15, 2016

2/3 vote. Urgency

SENATE VOTE: 36-0

SUMMARY: Revises the eligibility criteria for reassessment of property, which was damaged or destroyed by a major misfortune or calamity, and thereby retroactively authorizes property tax relief to property owners impacted by the Porter Ranch neighborhood methane gas leak. Specifically, this bill:

1. Authorizes a county board of supervisors to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency, in addition to a state of disaster.
2. Expands the definition of "damage" to include a diminution in the value of property as a result of environmental contamination to the property caused by a major misfortune or calamity.
3. Requires properties destroyed or damaged in an area or region proclaimed by the Governor to be in a state of emergency to be assessed pursuant to Revenue and Taxation Code (R&TC) Section 51(a) if partial reconstruction, restoration, or repair is not progressing in a timely fashion on the third lien date following the calamity.
4. Specifies that this bill's provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016.
5. States that the application for reassessment, in the case of the Porter Ranch properties, may be filed within 12 months of the enactment of this bill or within the time specified in the county ordinance, whichever is later.
6. Specifies that the retroactive application of this bill to the Porter Ranch neighborhood does not alter any existing law regarding claims or defenses related to diminution of property values.
7. Specifies that the enactment of the retroactive application of this bill does not in itself establish a presumption that property values have declined or that any property is in any way "damaged or destroyed" or otherwise "contaminated" for purposes of a civil action related to the methane gas leak.
8. Declares that a special law is necessary and that a general law cannot be made applicable within the meaning of the California Constitution Article IV Section 16 because of the unique circumstances related to the methane gas leak that occurred in the Porter Ranch neighborhood of the City of Los Angeles in 2015 and 2016.
9. Makes technical, non-substantive changes.
10. Takes effect immediately as an urgency statute necessary for the immediate preservation of the public peach, health or safety within the meaning of the California Constitution Article IV.

EXISTING LAW:

1. Allows a county board of supervisors, by ordinance, to provide property tax relief to property owners following a "disaster" if the property owner's property is damaged or destroyed, and the property owner is not at fault. (California Constitution Article XIII Section 15; R&TC Section 170).
2. Provides that, in order to be eligible for reassessment, the damage or destruction to the property shall have been caused by any of the following:
   1. A major misfortune or calamity, in an area or region subsequently proclaimed by the Governor to be in a state of disaster. Defines "damage" to include a diminution in the value of property as a result of restricted access to the property where the restricted access was caused by the major misfortune or calamity;
   2. A misfortune or calamity; and,
   3. A misfortune or calamity that, with respect to a possessory interest in land owned by the state or federal government, has caused the permit or other right to enter upon the land to be suspended or restricted.
3. Allows the application of reassessment to be filed within the time specified in the ordinance or within 12 months of the misfortune or calamity, whichever is later, as specified.
4. Authorizes the Governor to proclaim a state of emergency under specified circumstances, as defined:
   1. "State of war emergency" is the condition which exists immediately, with or without a proclamation thereof by the governor, whenever this state or nation is attacked by an enemy of the United States, or upon receipt by the state of a warning from the federal government indicating that such an enemy attack is probable or imminent.
   2. "State of emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the state.
   3. "Local emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the territorial limits of a county, city and county, or city.

FISCAL EFFECT: None

COMMENTS:

1. Disaster Relief: Background. Existing law provides broad property tax relief to disaster victims, ranging from a reassessment of property to an authorization to rebuild or repair damaged property without incurring any increase in property tax liability. For example, the county assessor may reassess property that was damaged or destroyed in a disaster to recognize the diminution in the property's market value, provided the county in which the damaged property is located has adopted an ordinance authorizing such reassessment and the property owner is not at fault. As pointed out in the State Board of Equalization (BOE) analysis, the disaster relief applies to both a "major" event impacting a widespread area or region resulting in a Governor's proclamation, such as a wildfire, and a site-specific event, such as a single-home fire. In the case of a major event, property tax law uses the phrase "an area or region subsequently proclaimed by the Governor to be in a state of disaster."

State law sets forth a very specific process for taxpayers to follow. The property value loss must be at least $10,000 and the taxpayer must file a written request with the assessor before the date specified in the ordinance or within 12 months of the major misfortune or calamity, whichever is later. If relief is granted, the assessor will reduce the property's assessed value in proportion to the property's market value loss immediately after the event and will send a notice to the taxpayer. In turn, the county must refund any previously overpaid taxes. The reduced assessment will remain in place until the taxpayer restores, repairs, or reconstructs the property.

1. What Does this Bill Do? This bill would expand eligibility for disaster reassessment. First, this bill would revise the circumstances under which property would qualify for the reassessment by specifying that a "state of emergency" is a qualifying event. Currently, the relevant provisions of the statute state that property is eligible for reassessment if the damage or destruction to the property was caused by a major misfortune or calamity ("a disaster") in an area or region subsequently proclaimed by the Governor to be in a "state of disaster." As aptly noted in the BOE analysis, "the governor does not proclaim a 'state of disaster;' the governor proclaims a 'state of emergency'" (as authorized by the Government Code Sections 8625 and 8558). The inconsistent terminology causes confusion. This bill would clarify existing law to state that an area or region must be proclaimed by the Governor to be in a "state of emergency or disaster." Thus, whenever the Governor proclaims a state of emergency or disaster, the county board of supervisors may allow taxpayers, by ordinance, to apply for reassessment property.

Furthermore, this bill would revise the definition of "damage" to include market value loss caused by environmental contamination of the property due to a major misfortunate or calamity that has resulted in a Governor's state of emergency proclamation. Since it may be decades before contaminated property is "restored," this bill would also provide that properties covered by the Governor's proclamation be assessed pursuant to general methodologies (R&TC Section 51(a)) after three years if partial reconstruction, restoration, or repair has not progressed in a timely fashion. Finally, the revised definition of "damage" would apply retroactively to properties located in the Porter Ranch neighborhood of the City and County of Los Angeles affected in 2015 and 2016 by the methane gas leak.

1. The Porter Ranch Gas Leak. On October 23, 2015, a massive natural gas leak was discovered in the Aliso Canyon Natural Gas Storage Facility in Los Angeles County, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country's history according to news reports. The gas leak spewed an estimated 107,000 tons of methane over 16 weeks. The estimated cost of a massive gas well blowout that lasted nearly four months and uprooted 8,000 Los Angeles families has more than doubled to $665 million according to Sempra Energy. Currently, approximately 54% of relocated residents have returned and more are returning each week. However, according to the author's office, some 3,700 households remain in short- or long-term housing, many because of fears of returning until they are assured their homes are clean and safe.

On January 6, 2016, the Governor issued a proclamation declaring the situation a "state of emergency." The proclamation, however, did not declare the situation a "disaster," as required by existing law in order for the board of supervisors to provide for reassessment of damaged properties. Consequently, the Los Angeles County Board of Supervisors could not enact an ordinance directing the assessor to revalue properties to reflect the gas leak's impact on property values. Furthermore, since the gas leak did not cause physical damage to property, it is unclear whether the Porter Ranch properties were "damaged" within the existing definition of "damage."

1. Retroactivity. This bill would retroactively apply to properties damaged by the Porter Ranch gas leak. The affected property owners would be eligible to file reassessment claims within 12 months of this bill's enactment. As such, residents affected by the gas leak can have their property values (and, therefore, the taxes due) reduced to reflect the restricted access and environmental contamination the gas leak caused. Generally, the Legislature does not apply changes in tax law retroactively since it would create uncertainty for both taxpayers and tax enforcement agencies. However, taxpayers can usually obtain refunds when they are eligible for an exemption or transfer and did not claim it on time; the Legislature has enacted bills in the past that change tax law retroactively.

Analysis Prepared by: Oksana Jaffee - Irene Ho / REV. & TAX. / (916) 319-2098 FN: 0003729

SENATE THIRD READING

STR Bill Id:

Author:(Huff)

As Amended Ver:

2/3 vote. Urgency

SENATE VOTE: 36-0

SUMMARY: Revises the eligibility criteria for reassessment of property, which was damaged or destroyed by a major misfortune or calamity, and thereby retroactively authorizes property tax relief to property owners impacted by the Porter Ranch neighborhood methane gas leak. Specifically, this bill:

1. Authorizes a county board of supervisors to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency, in addition to a state of disaster.
2. Expands the definition of "damage" to include a diminution in the value of property as a result of environmental contamination to the property caused by a major misfortune or calamity.
3. Requires properties destroyed or damaged in an area or region proclaimed by the Governor to be in a state of emergency to be assessed pursuant to Revenue and Taxation Code (R&TC) Section 51(a) if partial reconstruction, restoration, or repair is not progressing in a timely fashion on the third lien date following the calamity.
4. Specifies that this bill's provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016.
5. States that the application for reassessment, in the case of the Porter Ranch properties, may be filed within 12 months of the enactment of this bill or within the time specified in the county ordinance, whichever is later.
6. Declares that a special law is necessary and that a general law cannot be made applicable within the meaning of the California Constitution Article IV Section 16 because of the unique circumstances related to the methane gas leak that occurred in the Porter Ranch neighborhood of the City of Los Angeles in 2015 and 2016.
7. Makes technical, non-substantive changes.
8. Takes effect immediately as an urgency statute necessary for the immediate preservation of the public peach, health or safety within the meaning of the California Constitution Article IV.

EXISTING LAW:

1. Allows a county board of supervisors, by ordinance, to provide property tax relief to property owners following a "disaster" if the property owner's property is damaged or destroyed, and the property owner is not at fault. (California Constitution Article XIII Section 15; R&TC Section 170).
2. Provides that, in order to be eligible for reassessment, the damage or destruction to the property shall have been caused by any of the following:
   1. A major misfortune or calamity, in an area or region subsequently proclaimed by the Governor to be in a state of disaster. Defines "damage" to include a diminution in the value of property as a result of restricted access to the property where the restricted access was caused by the major misfortune or calamity;
   2. A misfortune or calamity; and,
   3. A misfortune or calamity that, with respect to a possessory interest in land owned by the state or federal government, has caused the permit or other right to enter upon the land to be suspended or restricted.
3. Allows the application of reassessment to be filed within the time specified in the ordinance or within 12 months of the misfortune or calamity, whichever is later, as specified.
4. Authorizes the Governor to proclaim a state of emergency under specified circumstances, as defined:
   1. "State of war emergency" is the condition which exists immediately, with or without a proclamation thereof by the governor, whenever this state or nation is attacked by an enemy of the United States, or upon receipt by the state of a warning from the federal government indicating that such an enemy attack is probable or imminent.
   2. "State of emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the state.
   3. "Local emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the territorial limits of a county, city and county, or city.

FISCAL EFFECT: None

COMMENTS:

1. Disaster Relief: Background. Existing law provides broad property tax relief to disaster victims, ranging from a reassessment of property to an authorization to rebuild or repair damaged property without incurring any increase in property tax liability. For example, the county assessor may reassess property that was damaged or destroyed in a disaster to recognize the diminution in the property's market value, provided the county in which the damaged property is located has adopted an ordinance authorizing such reassessment and the property owner is not at fault. As pointed out in the State Board of Equalization (BOE) analysis, the disaster relief applies to both a "major" event impacting a widespread area or region resulting in a Governor's proclamation, such as a wildfire, and a site-specific event, such as a single-home fire. In the case of a major event, property tax law uses the phrase "an area or region subsequently proclaimed by the Governor to be in a state of disaster."

State law sets forth a very specific process for taxpayers to follow. The property value loss must be at least $10,000 and the taxpayer must file a written request with the assessor before the date specified in the ordinance or within 12 months of the major misfortune or calamity, whichever is later. If relief is granted, the assessor will reduce the property's assessed value in proportion to the property's market value loss immediately after the event and will send a notice to the taxpayer. In turn, the county must refund any previously overpaid taxes. The reduced assessment will remain in place until the taxpayer restores, repairs, or reconstructs the property.

1. What Does this Bill Do? This bill would expand eligibility for disaster reassessment. First, this bill would revise the circumstances under which property would qualify for the reassessment by specifying that a "state of emergency" is a qualifying event. Currently, the relevant provisions of the statute state that property is eligible for reassessment if the damage or destruction to the property was caused by a major misfortune or calamity ("a disaster") in an area or region subsequently proclaimed by the Governor to be in a "state of disaster." As aptly noted in the BOE analysis, "the governor does not proclaim a 'state of disaster;' the governor proclaims a 'state of emergency'" (as authorized by the Government Code Sections 8625 and 8558). The inconsistent terminology causes confusion. This bill would clarify existing law to state that an area or region must be proclaimed by the Governor to be in a "state of emergency or disaster." Thus, whenever the Governor proclaims a state of emergency or disaster, the county board of supervisors may allow taxpayers, by ordinance, to apply for reassessment property.

Furthermore, this bill would revise the definition of "damage" to include market value loss caused by environmental contamination of the property due to a major misfortunate or calamity that has resulted in a Governor's state of emergency proclamation. Since it may be decades before contaminated property is "restored," this bill would also provide that properties covered by the Governor's proclamation be assessed pursuant to general methodologies [R&TC Section 51(a)] after three years if partial reconstruction, restoration, or repair has not progressed in a timely fashion. Finally, the revised definition of "damage" would apply retroactively to properties located in the Porter Ranch neighborhood of the City and County of Los Angeles affected in 2015 and 2016 by the methane gas leak.

1. The Porter Ranch Gas Leak. On October 23, 2015, a massive natural gas leak was discovered in the Aliso Canyon Natural Gas Storage Facility in Los Angeles County, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country's history according to news reports. The gas leak spewed an estimated 107,000 tons of methane over 16 weeks. The estimated cost of a massive gas well blowout that lasted nearly four months and uprooted 8,000 Los Angeles families has more than doubled to $665 million according to Sempra Energy. Currently, approximately 54% of relocated residents have returned and more are returning each week. However, according to the author's office, some 3,700 households remain in short- or long-term housing, many because of fears of returning until they are assured their homes are clean and safe.

On January 6, 2016, the Governor issued a proclamation declaring the situation a "state of emergency." The proclamation, however, did not declare the situation a "disaster," as required by existing law in order for the board of supervisors to provide for reassessment of damaged properties. Consequently, the Los Angeles County Board of Supervisors could not enact an ordinance directing the assessor to revalue properties to reflect the gas leak's impact on property values. Furthermore, since the gas leak did not cause physical damage to property, it is unclear whether the Porter Ranch properties were "damaged" within the existing definition of "damage."

1. Retroactivity. This bill would retroactively apply to properties damaged by the Porter Ranch gas leak. The affected property owners would be eligible to file reassessment claims within 12 months of this bill's enactment. As such, residents affected by the gas leak can have their property values (and, therefore, the taxes due) reduced to reflect the restricted access and environmental contamination the gas leak caused. Generally, the Legislature does not apply changes in tax law retroactively since it would create uncertainty for both taxpayers and tax enforcement agencies. However, taxpayers can usually obtain refunds when they are eligible for an exemption or transfer and did not claim it on time; the Legislature has enacted bills in the past that change tax law retroactively.

Analysis Prepared by: Irene Ho / REV. & TAX. / (916) 319-2098 FN: 0003534

Date of Hearing: June 20, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

SBPCA Bill Id:SB 1304

Author:(Huff) – As Amended Ver:June 8, 2016

Urgency. 2/3 vote. Non-fiscal.

SENATE VOTE: 36-0

SUBJECT: Property taxation: disaster relief: Porter Ranch methane gas leak

SUMMARY: Revises the eligibility criteria for reassessment of property, which was damaged or destroyed by a major misfortune or calamity, and thereby retroactively authorizes property tax relief to property owners impacted by the Porter Ranch neighborhood methane gas leak. Specifically, this bill:

1. Authorizes a county board of supervisors to provide for reassessment of property destroyed or damaged by a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of emergency, in addition to a state of disaster.
2. Expands the definition of "damage" to include a diminution in the value of property as a result of environmental contamination to the property caused by a major misfortune or calamity.
3. Specifies that this bill's provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood in the City of Los Angeles that was affected by the methane gas leak in that area in 2015 and 2016.
4. States that the application for reassessment, in the case of the Porter Ranch properties, may be filed within 12 months of the enactment of this bill or within the time specified in the county ordinance, whichever is later.
5. Declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances related to the methane gas leak that occurred in the Porter Ranch neighborhood of the City of Los Angeles in 2015 and 2016.
6. Makes technical, non-substantive changes.
7. Takes effect immediately as an urgency statute necessary for the immediate preservation of the public peach, health or safety within the meaning of Article IV of the California Constitution.

EXISTING LAW:

1. Allows a county board of supervisors, by ordinance, to provide property tax relief to property owners following a "disaster" if the property owner's property is damaged or destroyed, and the property owner is not at fault. (Article XIII, Section 15 of the California Constitution; Revenue and Taxation Code (R&TC) Section 170).
2. Provides that, in order to be eligible for reassessment, the damage or destruction to the property shall have been caused by any of the following:
   1. A major misfortune or calamity, in an area or region subsequently proclaimed by the Governor to be in a state of disaster. Defines "damage" to include a diminution in the value of property as a result of restricted access to the property where the restricted access was caused by the major misfortune or calamity;
   2. A misfortune or calamity; and,
   3. A misfortune or calamity that, with respect to a possessory interest in land owned by the state or federal government, has caused the permit or other right to enter upon the land to be suspended or restricted.
3. Allows the application of reassessment to be filed within the time specified in the ordinance or within 12 months of the misfortune or calamity, whichever is later, as specified.
4. Authorizes the Governor to proclaim a state of emergency under specified circumstances, as defined:
   1. "State of war emergency" is the condition which exists immediately, with or without a proclamation thereof by the governor, whenever this state or nation is attacked by an enemy of the United States, or upon receipt by the state of a warning from the federal government indicating that such an enemy attack is probable or imminent.
   2. "State of emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the state.
   3. "Local emergency" is the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the territorial limits of a county, city and county, or city.

FISCAL EFFECT: According to the State Board of Equalization staff, the fiscal impact of this bill is insignificant.

COMMENTS:

1. Author's Statement. The author has provided the following statement in support of this bill:
   
   "Residents of the Porter Ranch in the City of Los Angeles had been driven from their homes and neighborhood due to harmful gas that was released into the air from neighboring natural gas wells in Aliso Canyon in October of 2015. After being displaced for months, residents have struggled to manage the lasting impacts of the damage to both their health and property. This bill is an important step of financial assistance to residents of Porter Ranch during this time of healing and repairing."
2. Arguments in Support. The proponents state that this bill would provide much-needed property tax relief to those affected by a disaster and would allow county assessors across the State much flexibility to conduct value reviews on properties located in areas declared by the Governor to be under "state of emergency." The proponents explain that current law excludes areas that "are merely considered to be 'in a state of emergency,' even though existing law allows county assessors to re-value property in areas where a "a misfortune or calamity has occurred and is subsequently proclaimed by the Governor to be in a 'state of disaster.' " They argue that this bill "will provide county assessors broader flexibility to respond to the needs of the public when facing unforeseen events and undefined disasters."
3. Disaster Relief: Background. Existing law provides broad property tax relief to disaster victims, ranging from a reassessment of property to an authorization to rebuild or repair damaged property without incurring any increase in property tax liability. For example, the county assessor may reassess property that was damaged or destroyed in a disaster to recognize the diminution in the property's market value, provided the county in which the damaged property is located has adopted an ordinance authorizing such reassessment and the property owner is not at fault. As pointed out in the State Board of Equalization (BOE) analysis, the disaster relief applies to both a "major" event impacting a widespread area or region resulting in a Governor's proclamation, such as a wildfire, and a site-specific event, such as a single-home fire. In the case of a major event, property tax law uses the phrase "an area or region subsequently proclaimed by the Governor to be in a state of disaster."
   
   State law sets forth a very specific process for taxpayers to follow. The property value loss must be at least $10,000 and the taxpayer must file a written request with the assessor before the date specified in the ordinance or within 12 months of the major misfortune or calamity, whichever is later. If relief is granted, the assessor will reduce the property's assessed value in proportion to the property's market value loss immediately after the event and will send a notice to the taxpayer. In turn, the county must refund any previously overpaid taxes. The reduced assessment will remain in place until the taxpayer restores, repairs, or reconstructs the property.
4. What Does this Bill Do? This bill would expand eligibility for disaster reassessment. First, this bill would revise the circumstances under which property would qualify for the reassessment by specifying that a "state of emergency" is a qualifying event. Currently, the relevant provisions of the statute state that property is eligible for reassessment if the damage or destruction to the property was caused by a major misfortune or calamity ("a disaster") in an area or region subsequently proclaimed by the Governor to be in a "state of disaster." As aptly noted in the BOE analysis, "the governor does not proclaim a 'state of disaster;' the governor proclaims a 'state of emergency' " (as authorized by the Government Code Sections 8625 and 8558). The inconsistent terminology causes confusion. This bill would clarify existing law to state that an area or region must be proclaimed by the Governor to be in a "state of emergency or disaster." Thus, whenever the Governor proclaims a state of emergency or disaster, the county board of supervisors may allow taxpayers, by ordinance, to apply for reassessment property.
   
   Furthermore, this bill would revise the definition of "damage" to include market value loss caused by environmental contamination of the property due to a major misfortunate or calamity that has resulted in a Governor's state of emergency proclamation. Finally, the revised definition of "damage" would apply retroactively to properties located in the Porter Ranch neighborhood of the City and County of Los Angeles affected in 2015 and 2016 by the methane gas leak.
5. The Porter Ranch Gas Leak. On October 23, 2015, a massive natural gas leak was discovered in the Aliso Canyon Natural Gas Storage Facility in Los Angeles County, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country's history according to news reports. The gas leak spewed an estimated 107,000 tons of methane over 16 weeks. The estimated cost of a massive gas well blowout that lasted nearly four months and uprooted 8,000 Los Angeles families has more than doubled to $665 million according to Sempra Energy. Currently, approximately 54% of relocated residents have returned and more are returning each week. However, according to the author's office, some 3,700 households remain in short- or long-term housing, many because of fears of returning until they are assured their homes are clean and safe.
   
   On January 6, 2016, the Governor issued a proclamation declaring the situation a "state of emergency." The proclamation, however, did not declare the situation a "disaster," as required by existing law in order for the board of supervisors to provide for reassessment of damaged properties. Consequently, the Los Angeles County Board of Supervisors could not enact an ordinance directing the assessor to revalue properties to reflect the gas leak's impact on property values. Furthermore, since the gas leak did not cause physical damage to property, it is unclear whether the Porter Ranch properties were "damaged" within the existing definition of "damage."
6. Retroactivity. This bill would retroactively apply to properties damaged by the Porter Ranch gas leak. The affected property owners would be eligible to file reassessment claims within 12 months of this bill's enactment. As such, residents affected by the gas leak can have their property values (and, therefore, the taxes due) reduced to reflect the restricted access and environmental contamination the gas leak caused. Generally, the Legislature does not apply changes in tax law retroactively since it would create uncertainty for both taxpayers and tax enforcement agencies. However, taxpayers can usually obtain refunds when they are eligible for an exemption or transfer and did not claim it on time; the Legislature has enacted bills in the past that change tax law retroactively.
7. BOE Technical Amendments. This bill expressly provides that the term "damage" includes market value loss related to the property's environmental contamination caused by a misfortune or calamity. As noted by the BOE staff in its analysis of this bill, this provision is not limited in scope to the recent Porter Ranch gas leak. The original language of R&TC Section 170 was based on a "market" value system, but under existing law the property's assessed value is not based on a current market value. BOE staff also notes that it may take decades before contaminated property is "restored" and proposes certain technical amendments to clarify these issues relating to the revised definition of "damage."

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California Assessors' Association

Jeffrey Prang, Los Angeles County Assessor

Member G. Runner, State Board of Equalization

Opposition

None on file

Analysis Prepared by: Oksana Jaffe / REV. & TAX. / (916) 319-2098

 THIRD READING  

Bill No: SB 1304

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 5/11/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: Author

DIGEST: This bill expands eligibility for disaster reassessment, allows assessors to consider environmental contamination when revaluing the property, and applies its provisions retroactively to taxpayers affected by the Porter Ranch gas leak.

ANALYSIS:

Existing law:

1. Provides that all property is taxable unless explicitly exempted by the Constitution or federal law.
2. Limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or when ownership changes.
3. Allows assessors to temporarily reduce value to reflect substantial damage, destruction, or other factors causing a decline in value.
4. Permits the Legislature to authorize local agencies to provide for the assessment or reassessment of taxable property physically damaged or destroyed for property tax purposes.
   1. Allows a county board of supervisors to enact an ordinance allowing any taxpayer whose property was damaged or destroyed without his or her fault to apply for reassessment. The ordinance can apply to large disasters, such as earthquakes or wildfires, or site-specific incidents, like house fires.
   2. Directs assessors to revalue property that’s physically damaged by the disaster if the county enacts the ordinance.
   3. Allows assessors to revalue property to reflect restricted access to property resulting from the disaster only when the Governor has issued a disaster proclamation as a result of the disaster.
   4. Does not provide for any reduction in value resulting from environmental contamination.

This bill:

1. Expands eligibility for disaster reassessment to reflect restricted access to include a major misfortune or calamity in an area subsequently proclaimed by the Governor to be in a state of emergency, not only a disaster, so long as the property was damaged or destroyed by the major misfortune or calamity that caused the Governor to issue the proclamation.
2. Allows the assessor to consider damage from environmental contamination when revaluing the property to its disaster-affected value.
3. States that its provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood of the City of Los Angeles.
4. Allows affected taxpayers to apply for reassessment within 12 months of the date the bill is enacted.
5. States legislative findings and declarations regarding the necessity for a special law for the Porter Ranch neighborhood of the City of Los Angeles.
6. Contains an urgency clause stating that the measure takes effect immediately.

Background

On October 23rd, 2015, a massive natural gas leak from a natural gas storage facility was detected in Southern California, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country’s history, according to news reports. The Governor issued a proclamation declaring the situation a state of emergency on January 6, 2016. However, the gas leak didn’t cause physical damage to property, and neither the Governor’s proclamation nor any subsequent legislative bill declared the situation a disaster, so the Los Angeles County Board of Supervisors cannot enact an ordinance directing the assessor to revalue properties to reflect the gas leak’s impact on property values.

State law sets forth a very specific process for taxpayers to obtain disaster relief reassessments. First, a county must adopt an ordinance, which all counties except Fresno have done. Taxpayers must then file a written request with the assessor before the date specified in the ordinance, or within 12 months of the major misfortune or calamity, whichever is later. In the application, the taxpayer must show the condition and value of property immediately after the damage or destruction, and the dollar amount of the damage. Upon receipt of a complete application, the assessor must then appraise the property, and determine separately the full cash value of the land and improvements before and after the disaster. If the value of the damage exceeds $10,000, the assessor reduces the value and the taxes due to reflect the disaster’s impact, and sends a notice to the taxpayer. The county must refund any previously overpaid taxes resulting from the lower value, which remains in place until the taxpayer repairs, restores, or reconstructs the property. Taxpayers can also file a claim to postpone the next installment of property taxes that occurs immediately after the disaster, which postpones that payment without penalty or interest until the county assessor has reassessed the property. After the reassessment, the tax collector issues a corrected tax bill. Once repaired or restored, the assessor again revalues the property; however, the post-disaster value cannot exceed the previous base year value, unless any new square footage was added, which the assessor would then appraise at full market value.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/11/16)

Los Angeles County Assessor Jeffrey Prang

BOE Member George Runner

OPPOSITION: (Verified 5/11/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “Residents of the Porter Ranch in the City of Los Angles had been driven from their homes and neighborhood due to harmful gas that was released into the air from neighboring natural gas wells in Aliso Canyon in October of 2015. After being displaced for months, residents have struggled to manage the lasting impacts of the damage to both their health and property. This bill is an important step of financial assistance to residents of Porter Ranch during this time of healing and repairing.”

Prepared by:

5/25/16 13:50:26

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Property taxation: disaster relief: Porter Ranch methane gas leak

Expands eligibility for disaster reassessment; allows assessors to consider environmental contamination when revaluing the property; applies retroactively to Porter Ranch.

Background

Article XIII of the California Constitution provides that all property is taxable unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or when ownership changes (Proposition 13, 1978). Voters enacted Proposition 8 (1978) a few months after Proposition 13, which amended the Constitution to allow a temporary reduction in value to reflect substantial damage, destruction, or other factors causing a decline in value. The Constitution has for many years also allowed the Legislature to authorize local agencies to provide for the assessment or reassessment of taxable property physically damaged or destroyed for property tax purposes.

To implement these Constitutional provisions, current law allows a county board of supervisors to enact an ordinance allowing any taxpayer whose property was damaged or destroyed without his or her fault to apply for reassessment. The ordinance can apply to large disasters, such as earthquakes or wildfires, or site-specific incidents, like house fires. If the county enacts an ordinance, assessors must revalue property that’s physically damaged by the disaster. However, assessors don’t revalue property when the disaster restricts access to property, unless the Governor has issued a disaster proclamation as a result of the disaster.

On October 23^rd, 2015, a massive natural gas leak from a natural gas storage facility was detected in Southern California, known today as the Aliso Canyon or Porter Ranch gas leak. The leak sickened and displaced residents, and may be one of the most harmful environmental events in the country’s history, according to news reports. The Governor issued a proclamation declaring the situation a state of emergency on January 6, 2016. However, the gas leak didn’t cause physical damage to property, and neither the Governor’s proclamation nor any subsequent legislative bill declared the situation a disaster, so the Los Angeles County Board of Supervisors cannot enact an ordinance directing the assessor to revalue properties to reflect the gas leak’s impact on property values. The author wants to allow local agencies to require disaster reassessments whenever the Governor proclaims a state of emergency, and allow assessors to consider value reductions resulting from environmental contamination when performing a disaster reassessment.

Proposed Law

Senate Bill 1304 expands eligibility for disaster reassessment to include a major misfortune or calamity in an area subsequently proclaimed by the Governor to be in a state of emergency, so long as the property was damaged or destroyed by the major misfortune or calamity that caused the Governor to issue the proclamation. The bill also allows the assessor to consider damage from environmental contamination when revaluing the property to its disaster-affected value.

The measure states that its provisions apply retroactively to the County of Los Angeles with respect to property located in the Porter Ranch neighborhood of the City of Los Angeles, and allows affected taxpayers to apply for reassessment within 12 months of the date the bill is enacted. SB 1304 also contains legislative findings and declarations regarding the necessity for a special law for the Porter Ranch neighborhood of the City of Los Angeles, and contains an urgency clause.

State Revenue Impact

Pending.

Comments

1. Purpose of the bill. According to the author, “Residents of the Porter Ranch in the City of Los Angles had been driven from their homes and neighborhood due to harmful gas that was released into the air from neighboring natural gas wells in Aliso Canyon in October of 2015. After being displaced for months, residents have struggled to manage the lasting impacts of the damage to both their health and property. This bill is an important step of financial assistance to residents of Porter Ranch during this time of healing and repairing.”

2. Disaster relief. State law sets forth a very specific process for taxpayers to obtain disaster relief reassessments. First, a county must adopt an ordinance, which all counties except Fresno have done. Taxpayers must then file a written request with the assessor before the date specified in the ordinance, or within 12 months of the major misfortune or calamity, whichever is later. In the application, the taxpayer must show the condition and value of property immediately after the damage or destruction, and the dollar amount of the damage. Upon receipt of a complete application, the assessor must then appraise the property, and determine separately the full cash value of the land and improvements before and after the disaster. If the value of the damage exceeds $10,000, the assessor reduces the value and the taxes due to reflect the disaster’s impact, and sends a notice to the taxpayer. The county must refund any previously overpaid taxes resulting from the lower value, which remains in place until the taxpayer repairs, restores, or reconstructs the property. Taxpayers can also file a claim to postpone the next installment of property taxes that occurs immediately after the disaster, which postpones that payment without penalty or interest until the county assessor has reassessed the property. After the reassessment, the tax collector issues a corrected tax bill. Once repaired or restored, the assessor again revalues the property; however, the post-disaster value cannot exceed the previous base year value, unless any new square footage was added, which the assessor would then appraise at full market value.

3. Looking back. SB 1304 explicitly applies its changes to property tax law retroactively, so that residents affected by the gas leak can have their property values, and therefore the taxes due, reduced to reflect the restricted access and environmental contamination the gas leak caused. Generally, the Legislature does not apply changes in tax law retroactively, as doing so creates uncertainty for both taxpayers and tax enforcement agencies, and can lead to fiscal shocks that can reduce funding for public services. However, taxpayers can usually obtain refunds when they are eligible for an exemption or transfer, but didn’t claim it on time, and the Legislature has enacted bills that change tax law retroactively, including SB 1203 (Jackson, 2014) which cancelled current assessments and refunded past ones resulting from affordable housing projects losing their welfare exemption from property tax due to entering into a payment in-lieu of taxes agreement.

Support and Opposition

(5/5/16)

Support: Los Angeles County Assessor Jeffrey Prang

Opposition: Unknown.

-- END --