Existing law relieves applicants granted a welfare exemption and owning certain exempt property from reapplying for the welfare exemption in any subsequent year in which there has been no transfer of, or other change in title to, the exempted property and the property is used exclusively by a governmental entity or by a nonprofit corporation, as specified. Existing law requires the assessor to annually mail a notice to every applicant relieved of the requirement of filing an annual application as so described and requires the notice to be in a form and contain that information that the State Board of Equalization may prescribe. Existing law also requires the notice to include a card that is to be returned to the assessor by an applicant desiring to maintain eligibility for the welfare exemption.

This bill would instead require the State Board of Equalization to prescribe the form and content of the notice after consultation with the California Assessors Association. The bill would eliminate the requirement that the notice include a card and would instead require the notice to inform any applicant desiring to maintain eligibility for the welfare exemption for the next fiscal year of the procedure to reaffirm exemption eligibility.

The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly owned property. Existing law requires that this application be submitted to the board on or before the later of either July 20 or within 2 weeks of the date upon which a county assessor delivers the local roll containing that assessment to the county auditor.

This bill would instead require that this application be submitted to the board on or before November 30.

Existing law generally authorizes a county tax collector to sell tax-defaulted property 5 years or more, or 3 years or more, as applicable, after that property has become tax defaulted. Existing law requires the proceeds from the sale of tax-defaulted property to be deposited in the delinquent tax sale trust fund and requires the proceeds in the fund to be distributed in a specified manner. Existing law requires any excess proceeds remaining in the delinquent tax sale trust fund after distribution of the proceeds to be retained in the fund subject to being claimed by parties of interest, as provided. Existing law, at the expiration of a specified time period, authorizes any excess proceeds not claimed to be transferred to the county general fund.

This bill would authorize the county to deduct certain costs prior to transferring any excess proceeds not claimed to the county general fund.

Existing law relieves applicants granted a welfare exemption and owning certain exempt property from reapplying for the welfare exemption in any subsequent year in which there has been no transfer of, or other change in title to, the exempted property and the property is used exclusively by a governmental entity or by a nonprofit corporation, as specified. Existing law requires the assessor to annually mail a notice to every applicant relieved of the requirement of filing an annual application as so described and requires the notice to be in a form and contain that information that the State Board of Equalization may prescribe. Existing law also requires the notice to include a card that is to be returned to the assessor by an applicant desiring to maintain eligibility for the welfare exemption.

This bill would instead require the State Board of Equalization to prescribe the form and content of the notice after consultation with the California Assessors Association. The bill would eliminate the requirement that the notice include a card and would instead require the notice to inform any applicant desiring to maintain eligibility for the welfare exemption for the next fiscal year of the procedure to reaffirm exemption eligibility.

The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly owned property. Existing law requires that this application be submitted to the board on or before the later of either July 20 or within 2 weeks of the date upon which a county assessor delivers the local roll containing that assessment to the county auditor.

This bill would instead require that this application be submitted to the board on or before November 30.

Existing law generally authorizes a county tax collector to sell tax-defaulted property 5 years or more, or 3 years or more, as applicable, after that property has become tax defaulted. Existing law requires the proceeds from the sale of tax-defaulted property to be deposited in the delinquent tax sale trust fund and requires the proceeds in the fund to be distributed in a specified manner. Existing law requires any excess proceeds remaining in the delinquent tax sale trust fund after distribution of the proceeds to be retained in the fund subject to being claimed by parties of interest, as provided. Existing law, at the expiration of a specified time period, authorizes any excess proceeds not claimed to be transferred to the county general fund.

This bill would authorize the county to deduct certain costs prior to transferring any excess proceeds not claimed to the county general fund.

The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly-owned property. Existing law requires that this application be submitted to the board on or before the later of either July 20 or within 2 weeks of the date upon which a county assessor delivers the local roll containing that assessment to the county auditor.

This bill would instead require that this application be submitted to the board on or before November 30.

The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly-owned property. Existing law requires that this application be submitted to the board on or before the later of either July 20 or within 2 weeks of the date upon which a county assessor delivers the local roll containing that assessment to the county auditor.

This bill would instead require that this application be submitted to the board on or before November 30.

 UNFINISHED BUSINESS  

Bill No: SB 1480

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16

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

SENATE FLOOR: 37-0, 4/28/16 (Consent)

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

NO VOTE RECORDED: Hernandez, Runner, Vidak

ASSEMBLY FLOOR: 79-0, 6/23/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: California Assessors’ Association

California Association of County Treasurer-Tax Collectors

State Board of Equalization

DIGEST: This bill strikes the current deadline for appealing assessments to the Board of Equalization (BOE) of previously taxable properties owned by local government but located in other jurisdictions, and replaces it with November 30th.

Assembly Amendments insert provisions that delete the specific form of a card currently exempt taxpayers use to reaffirm eligibility for the welfare exemption and restore a previously existing authorization for tax collectors.

ANALYSIS:

Existing law:

1. Provides that all property is taxable and shall be assessed at the same percentage of fair market value, unless explicitly exempted by the California Constitution or federal law.
2. Exempts property owned by a local government from taxation, unless the property is located outside the boundaries of the local government that owns it, and the property was taxable before its acquisition, in which case the assessor in the county where the property is located values it for tax purposes.
3. States that assessment of these properties shall be subject to review, equalization, and adjustment by the BOE, not the assessment appeals board.
4. Sets a deadline for local agencies to file appeals for these assessments with BOE of either July 20th, or two weeks from the date the assessor delivers the property tax roll containing the assessment to the auditor, usually around mid-August, whichever is later.
5. Allows the Legislature to exempt property used for charitable purposes, and owned by nonprofit entities organized and operated for charitable purposes, such as universities, hospitals, and libraries.
6. Details, specifically, certain property tax forms by including the exact contents of the form in the law. However, in recent years, the Legislature has enacted bills that deleted from law the specific contents of the form, instead providing that forms should contain specified information, and be prescribed by the BOE in consultation with the California Assessors’ Association (CAA).
7. Requires taxpayers to annually verify eligibility for the welfare and veterans’ exemption from property tax, and sets forth a process to do so; however, taxpayers who received the exemption the previous year need not reapply in subsequent years, so long as title to the property hasn’t changed, and the property continues to be used for an exempt purpose.
8. Requires assessors to send a notice to taxpayers who currently qualify for the welfare exemption, along with a card that sets forth specific questions for taxpayers to answer to reaffirm eligibility, which the taxpayer then returns to the assessor.
9. Allows tax collectors to sell property after falling into delinquency and tax default for non-payment of property taxes, known as a tax sale, after approval by the county board of supervisors, and noticing specified parties.
10. Directs the auditor to allocate tax sale proceeds first to pay for specified costs incurred by the tax collector, second to taxing agencies with valid claims, and lastly to the tax collector to pay for notices and contacting taxpayers. After that, proceeds satisfy liens held by parties in interest.
11. Considers any amounts left over after the above claims are satisfied “excess proceeds,” and requires the auditor to transfer them to the county general fund (AB 2257, Cooley, Chapter 501, Statutes of 2014). However, that bill struck prior language which allowed the tax collector to deduct from excess proceeds the costs of maintaining the redemption and tax-defaulted property files, and those costs of administering and processing the claims for excess proceeds.

This bill:

1. Strikes the current deadline for appealing assessments to BOE of previously taxable properties owned by local government but located in other jurisdictions, and replaces it with November 30th.
2. Deletes the specific questions that must appear on the card that the assessor must send to taxpayers currently qualifying for the welfare exemption, and instead directs BOE to prescribe the contents of the notice and any other required information in consultation with the CAA.
3. Reenacts previous law which allowed the tax collector to deduct from excess proceeds the costs of maintaining the redemption and tax-defaulted property files, and those costs of administering and processing the claims for excess proceeds.

Background

The California Constitution provides unique treatment for property owned by a local agency, but located outside its boundaries, and taxable before the local agency acquired it. These are known as “Section 11 properties” after the Section of Article XIII that provides for its property tax treatment. The deadline for the local government to appeal the assessment to BOE is inconsistent with all other assessment appeals deadlines, currently either September 15th or November 30th, depending on whether the assessor mails notices by certain dates. This bill’s revised deadline is more familiar than the current one, and will give the local agency more time to decide whether to appeal. According to BOE, counties filed five appeals in the last 20 years, with four settled, and BOE deciding one. BOE adds that no appeals are currently pending.

Once qualified for the welfare exemption, the recipients must annually verify their eligibility. Existing law requires county assessors to send an annual notice to recipients, along with a card that contains specific questions relating to the property's exempt purpose. The questions and the contents of the card are prescribed by the state statute – Revenue and Taxation Code Section 254.5. The CAA asserts that this statutory prescribed form is inefficient. The majority of the forms related to property tax administration are developed by the BOE, after consultation with the CAA. Furthermore, the use of that card is unnecessary as taxpayers may file with the county assessor electronically.

Once a tax-defaulted property is sold, tax sale proceeds must be distributed to the State, the county and taxing agencies to reimburse them for costs incurred and for the amount of defaulted taxes. Following these distributions, lienholders and the former owner may claim proceeds in excess of the taxes and cost of the sale. Finally, any remaining amounts not otherwise claimed may be transferred to the county general fund. These amounts are known as "excess proceeds." Prior to 2014, "excess proceeds" were dispersed in the final round of distributions to the local taxing agencies entitled to share in the proceeds. However, the county was authorized to deduct the costs of maintaining the redemption and tax-defaulted property files as well as the costs of administering and processing the claims for "excess proceeds" prior to the final distribution. The law was changed in 2014 to allow the county auditor to transfer excess proceeds to the county general fund instead of dispersing the funds to the taxing agencies. Inadvertently, the language authorizing the counties to recover the costs of administering "excess proceeds" was deleted from the statute.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

Unknown with recent amendments.

SUPPORT: (Verified 6/24/16)

California Assessors’ Association (co-source)

California Association of County Treasurer-Tax Collectors (co-source)

State Board of Equalization (co-source)

OPPOSITION: (Verified 6/24/16)

None received

ARGUMENTS IN SUPPORT: According to the author, “SB 1480 consolidates three technical changes to property tax law into a single property tax administration omnibus bill. While SB 1480’s changes don’t significantly alter current policy, the measure simplifies three sets of procedures within property tax administration, one for each of the State Board of Equalization, assessors, and county tax collectors. These improvements make the current system of appealing Section 11 decisions, reaffirming taxpayer eligibility for the welfare exemption, and managing the tax sale system more efficient. All of the measure’s changes enjoy universal support; should anyone object, any provision will be removed.”

ASSEMBLY FLOOR: 79-0, 6/23/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, 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, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: O'Donnell

Prepared by:

6/24/16 14:33:57

**** END ****

Date of Hearing: June 13, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

SBPCA Bill Id:SB 1480

Author:(Committee on Governance and Finance) – As Amended Ver:June 8, 2016

Majority vote.

SENATE VOTE: 37-0

SUBJECT: Property tax: local government property: application

SUMMARY: Makes technical amendments to the administrative provisions of the property tax law. Specifically, this bill:

1. Extends the deadline for local governments to file appeals with the State Board of Equalization (BOE) related to taxable government-owned property from July 20 to November 30.
2. Eliminates the requirement to use certain prescribed language in the annual notice used to verify eligibility for the welfare property tax exemption and instead directs the BOE to consult with the California Assessors' Association in designing the notice and prescribing other required information, as provided.
3. Restores the authorization for the county auditor to deduct specified costs of a tax sale prior to remitting the proceeds into the county general fund.
4. Makes other conforming, non-substantive changes.

EXISTING LAW:

1. Provides that all property is taxable unless explicitly exempted by the California Constitution or federal law and limits the maximum amount of any ad valorem tax on real property at 1% of full cash value.
2. Exempts local government-owned property from the property tax. (Section 3(b), Article XIII, California Constitution). However, the property that is located outside the local government's jurisdictional boundaries is subject to property tax if the property was taxable when acquired. (Section 11, Article XIII, California Constitution.)
3. Provides that any assessment made in the case of the properties owned by local governments (so-called "Section 11" properties) may be reviewed, equalized or adjusted by the BOE, not the local county assessment appeals board. (Section 11(g), Article XIII, California Constitution.)
4. Sets a deadline for local agencies to file Section 11 appeals with BOE of either July 20^th, or two weeks from the date the assessor delivers the property tax roll containing the assessment to the auditor, whichever is later.
5. Provides an exemption from taxation for property that is irrevocably dedicated to religious, hospital, scientific, or charitable purposes, if the property is used for the actual operation of the exempt activity and is owned by a nonprofit entity qualified as an exempt organization by the Internal Revenue Service, the Franchise Tax Board, or both (the so-called 'welfare exemption') [Article XIII, Section 4, of the California Constitution; Revenue and Taxation Code (RT&C) Section 214]. The entity that owns the property is prohibited from having any earnings that contribute to the benefit of any private shareholder or individual. This welfare exemption has been expanded over the years to add certain specific types of property that do not otherwise qualify under the general exemption.
6. Requires the county assessor to mail an annual notice to recipients of the welfare, non-profit cemetery, or religious exemption, along with a card asking if the property will continue to be used for the exempt purpose.
7. Provides that, if property taxes are not paid within five years of the notice of impending default, the property becomes subject to sale and will be sold at a public auction. The tax collector has the power to sell property that has been tax-defaulted for five years or more, or three years or more in the case of nonresidential commercial property.
8. Requires that proceeds from the sale of tax-defaulted property be deposited in the delinquent tax sale fund and then be distributed to the State of California General Fund and the county general fund for the costs incurred in connection with the sale of tax-defaulted property. Any excess proceeds, not otherwise claimed, may be transferred to the county general fund.
   

FISCAL EFFECT: Unknown

COMMENTS:

1. Purpose of the Bill. According to the author's office, "SB 1480 makes three changes to property tax law recommended by the State Board of Equalization, the California Assessors Association, and the California Association of County Treasurer Tax Collectors to improve property tax administration: First, the measure changes the deadline for Section 11 appeals to November 30th from the current dual deadline of either July 20th, or two weeks from the date the assessor delivers the property tax roll. The revised deadline is familiar, as it is the same as those for taxpayers filing appeals. Additionally, a later deadline will give the local agency more time to decide whether to appeal. Second, the measure strikes the contents of a card used by assessors to establish eligibility for an exemption, and instead directs BOE to design a general form in consultation with Assessors, thereby allowing electronic filing. Lastly, the measure restores previously enacted language that was inadvertently deleted that allows tax collectors to recover specific costs from the excess proceeds from tax sales prior to depositing them in the county general fund. SB 1480 only contains items with universal agreement; should anyone object to a provision in the measure, it will be removed."
2. Extending the Deadline for Filing Section 11 Appeals. Section 11 appeals are unique in that they are filed with the BOE instead of the local county assessment appeals board. According to the BOE staff, in the last 20 years five Section 11 appeals have been filed and the BOE has rendered only one decision.^[1] The remaining appeals were withdrawn because the assessor and local government reached an agreement.
   
   Existing law designates July 20^th as the deadline for filing a Section 11 appeal and extends that deadline by two weeks from the date the county assessor completes and delivers the roll to the county auditor (which is typically two weeks after July 31^st). In contrast, the deadline that applies to filing other locally assessed property appeals is generally November 30^th (although nine counties have an earlier deadline of September 15^th). This bill proposes to create uniformity for filing appeals for locally assessed property by designating November 30^th as the deadline for both Section 11 appeals and appeals with the local assessment appeals boards. Arguably, this uniform deadline, regardless of the county in which the property is located, would ease administration of property tax laws and would afford local governments the maximum amount of time to file an appeal with the BOE.
3. "Welfare Exemption": Revising the Annual Notice of Eligibility. The California Constitution provides that all property is taxable unless explicitly exempt 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, plus any locally authorized bonded indebtedness. The California Constitution allows the Legislature to establish a property tax exemption for property exclusively used for charitable purposes and owned by nonprofit entities organized and operated for charitable purposes. [California Constitution, Article XIII, Section (4)(b).] The California Constitution also exempts from property tax government-owned property; property used exclusively for educational purposes by a nonprofit institution of higher education; property used exclusively for religious workshop, cemeteries, and growing crops; property owned by veterans; property used for libraries and museums; and property used by public schools, among others.
   
   In 1954, the Legislature enacted the exemption, more commonly known as the “welfare exemption." Once qualified for the exemption, the recipients must annually verify their eligibility. Existing law requires county assessors to send an annual notice to recipients of the welfare, non-profit cemetery, or religious exemption, along with a card that contains specific questions relating to the property's exempt purpose. The questions and the contents of the card are prescribed by the state statute – Revenue and Taxation Code Section 254.5. The California Assessors' Association (CAA) asserts that this statutory prescribed form is inefficient. The majority of the forms related to property tax administration are developed by the BOE, after consultation with the CAA. Furthermore, the use of that card is unnecessary as taxpayers may file with the county assessor electronically. This bill would delete the statutorily prescribed questions that must be included in the card, eliminate the requirement for the county assessor to mail the card, and direct the BOE to designe the contents of the notice, in consultation with the CAA.
4. Sale of Tax-Defaulted Property and Distribution of Tax Sale Proceeds. Property is deemed in default if property taxes are not paid when due and is subject to penalties and costs. Once the real property is declared tax-defaulted, the county tax collector publishes the information on the defaulted roll. If the owner fails to redeem the property within five years (or three years if the property is also subject to a nuisance abatement lien) by full payment of the defaulted taxes, interest and penalties, then the property may be sold to the highest bidder at a public sale. Once the property becomes subject to sale, the county tax collector must attempt to sell the property in order to collect the defaulted taxes. The property may be offered for sale at public auction, a sealed bid sale, or a negotiated sale to a public agency or qualified non-profit organization. Public auctions are the most common way of selling tax-defaulted property, and the property is sold to the highest bidder. Generally, if no bid was received when the property was last offered for sale at public auction, the tax collector may re-offer property at a reduced price at the same or next scheduled sale.

Once a tax-defaulted property is sold, tax sale proceeds must be distributed to the State, the county and taxing agencies to reimburse them for costs incurred and for the amount of defaulted taxes. Following these distributions, lienholders and the former owner may claim proceeds in excess of the taxes and cost of the sale. Finally, any remaining amounts not otherwise claimed may be transferred to the county general fund. These amounts are known as "excess proceeds." Prior to 2014, "excess proceeds" were dispersed in the final round of distributions to the local taxing agencies entitled to share in the proceeds. However, the county was authorized to deduct the costs of maintaining the redemption and tax-defaulted property files as well as the costs of administering and processing the claims for "excess proceeds" prior to the final distribution.

The law was changed in 2014 to allow the county auditor to transfer excess proceeds to the county general fund instead of dispersing the funds to the taxing agencies. (AB 2257 (Cooley), Chapter 501, Statutes of 2014.) Inadvertently, the language authorizing the counties to recover the costs of administering "excess proceeds" was deleted from the statute. This bill proposes to restore this authority. This bill would maintain the county auditor's ability to transfer excess proceeds to the county general fund, but only after the tax collector is allowed to deduct specified costs relating to the tax sale from the excess proceeds.

REGISTERED SUPPORT / OPPOSITION:

Support

California Assessors' Association

Opposition

None on file

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

1. East Bay Municipal Utility District v. County of Calaveras (2003). ↑

 CONSENT  

Bill No: SB 1480

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/20/16

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

SUBJECT:

SOURCE: Board of Equalization

DIGEST: This bill strikes the current deadline for appealing assessments to the Board of Equalization (BOE) of previously taxable properties owned by local government but located in other jurisdictions, and replaces it with November 30th.

ANALYSIS:

Existing law:

1. Provides that all property is taxable and shall be assessed at the same percentage of fair market value, unless explicitly exempted by the California Constitution or federal law.
2. Exempts property owned by a local government from taxation, unless the property is located outside the boundaries of the local government that owns it, and the property was taxable before its acquisition, in which case the assessor in the county where the property is located values it for tax purposes.
3. States that assessment of these properties shall be subject to review, equalization, and adjustment by the BOE, not the assessment appeals board.
4. Sets a deadline for local agencies to file appeals for these assessments with BOE of either July 20th, or two weeks from the date the assessor delivers the property tax roll containing the assessment to the auditor, usually around mid-August, whichever is later.

This bill strikes the current deadline for appealing assessments to BOE of previously taxable properties owned by local government but located in other jurisdictions, and replaces it with November 30th.

Background

The California Constitution provides unique treatment for property owned by a local agency, but located outside its boundaries, and taxable before the local agency acquired it. These are known as “Section 11 properties” after the Section of Article XIII that provides for its property tax treatment. The deadline for the local government to appeal the assessment to BOE is inconsistent with all other assessment appeals deadlines, currently either September 15th or November 30th, depending on whether the assessor mails notices by certain dates. This bill’s revised deadline is more familiar than the current one, and will give the local agency more time to decide whether to appeal.

According to BOE, counties filed five appeals in the last 20 years, with four settled, and BOE deciding one. BOE adds that no appeals are currently pending.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 4/21/16)

Board of Equalization (source)

OPPOSITION: (Verified 4/21/16)

None received

ARGUMENTS IN SUPPORT: According to BOE, “This measure extends the Section 11 appeals deadline to reflect the November 30 deadline provided to other property owners in most counties. For administrative simplicity, a single deadline for all appeals filed with the BOE, regardless of the county in which the property is located, is preferable and affords local governments the maximum amount of time to file. This bill proactively prevents a local government from mistakenly filing an appeal according to the county deadline when the earlier state deadline applies. Providing local governments less time to decide to proceed with an appeal than is available to other locally assessed property owners in the county lacks a rational basis. Moreover, extending the appeals deadline would not negatively impact the BOE’s operations.”

Prepared by:

4/22/16 12:32:07

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Property tax: local government property: application

Changes the deadline for appeals for assessments of certain properties owned by local governments (Section 11 properties).

Background

Section One of Article XIII of the California Constitution provides that all property is taxable and shall be assessed at the same percentage of fair market value, unless explicitly exempted by the Constitution or federal law. One such exemption is for property owned by a local government, unless the property is located outside the boundaries of the local government that owns it, and the property was taxable before its acquisition. These are known as “Section 11 properties” after the Section of Article XIII that provides for its property tax treatment. In such a case, the assessor in the county where the property is located values it for tax purposes, but the Constitution provides that these assessments shall be subject to review, equalization, and adjustment by the Board of Equalization (BOE), not the assessment appeals board. According to BOE, counties filed five appeals in the last 20 years, with four settled, and BOE deciding one. BOE adds that no appeals are currently pending.

Current law sets a deadline for local agencies to file Section 11 appeals with BOE of either July 20th, or two weeks from the date the assessor delivers the property tax roll containing the assessment to the auditor, usually around mid-August, whichever is later. However, this deadline is inconsistent with all other assessment appeals deadlines, currently either September 15th or November 30th, depending on whether the assessor mails notices by certain dates. BOE wants to set one deadline for Section 11 appeals to simplify administration.

Proposed Law

Senate Bill 1480 strikes the current deadline for appealing assessments to BOE of previously taxable properties owned by local government but located in other jurisdictions, and replaces it with November 30th.

State Revenue Impact

BOE states that SB 1480 has no impact on state or local revenues.

Comments

1. Purpose of the bill. SB 1480 changes the deadline for Section 11 appeals to November 30^th from the current dual deadline of either July 20th, or two weeks from the date the assessor delivers the property tax roll. The revised deadline is familiar, as it’s the same as those for taxpayers filing appeals. Additionally, a later deadline will give the local agency more time to decide whether to appeal.

2. Committee Bill. Senate Rule 23 requires all members of the Committee to sign Committee Bills prior to introduction, so SB 1480 must have universal agreement; should anyone object to a provision in the measure, it will be removed.

Support and Opposition

(4/12/16)

Support: Board of Equalization.

Opposition: None received.

-- END --