AB 652: Property taxation: base year value: new construction.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2017-07-21
(1)The California Constitution generally limits the maximum amount of any ad valorem tax on real property to 1% of its full cash value and defines full cash value for these purposes as the county assessors valuation of real property as shown on the 197576 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Existing property tax law requires the assessor to determine a new base year value for the portion of any taxable real property which has been newly constructed and that new construction in progress on the lien date be appraised at its full value on that date, and each lien date thereafter, until construction is completed, at which time the entire portion of property which is newly constructed is reappraised at its full value.
This bill would instead prohibit new construction that is in progress from acquiring a new base year value until the date of completion.
(2)Existing property tax law prescribes procedures by which a taxpayer may seek a reduction in assessment from the county board of equalization or assessment appeals board or, in the case of certain publicly owned property, the State Board of Equalization, including deadlines for filing an application. Existing property tax law provides that an application for reduction in the base year value of an assessment on the current local roll may be filed during the regular filing period for that year, as provided and subject to certain limitations, including that the base year value determined in accordance with specified law is conclusively presumed to be the base year value unless the application is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
This bill would authorize an application for reduction in the value of new construction that is in progress on the lien date on the current roll to be filed during the regular filing period for that year, as provided. The bill would authorize an application for reduction in the base year value determined upon completion of new construction to be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
(4)By changing the manner in which assessors determine the base year value for new construction in progress, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(5)This bill would take effect immediately as a tax levy.
(1)The California Constitution generally limits the maximum amount of any ad valorem tax on real property to 1% of its full cash value and defines full cash value for these purposes as the county assessors valuation of real property as shown on the 197576 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Existing property tax law requires the assessor to determine a new base year value for the portion of any taxable real property which has been newly constructed and that new construction in progress on the lien date be appraised at its full value on that date, and each lien date thereafter, until construction is completed, at which time the entire portion of property which is newly constructed is reappraised at its full value.
This bill would instead prohibit new construction that is in progress from acquiring a new base year value until the date of completion.
(2)Existing property tax law prescribes procedures by which a taxpayer may seek a reduction in assessment from the county board of equalization or assessment appeals board or, in the case of certain publicly owned property, the State Board of Equalization, including deadlines for filing an application. Existing property tax law provides that an application for reduction in the base year value of an assessment on the current local roll may be filed during the regular filing period for that year, as provided and subject to certain limitations, including that the base year value determined in accordance with specified law is conclusively presumed to be the base year value unless the application is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
This bill would authorize an application for reduction in the value of new construction that is in progress on the lien date on the current roll to be filed during the regular filing period for that year, as provided. The bill would authorize an application for reduction in the base year value determined upon completion of new construction to be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
(4)By changing the manner in which assessors determine the base year value for new construction in progress, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(5)This bill would take effect immediately as a tax levy.
(1)The California Constitution generally limits the maximum amount of any ad valorem tax on real property to 1% of its full cash value and defines full cash value for these purposes as the county assessors valuation of real property as shown on the 197576 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Existing property tax law requires the assessor to determine a new base year value for the portion of any taxable real property which has been newly constructed and that new construction in progress on the lien date be appraised at its full value on that date, and each lien date thereafter, until construction is completed, at which time the entire portion of property which is newly constructed is reappraised at its full value.
This bill would instead prohibit new construction that is in progress from acquiring a new base year value until the date of completion, thereby requiring that new construction be reappraised only upon completion.
(2)Existing property tax law prescribes procedures by which a taxpayer may seek a reduction in assessment from the county board of equalization or assessment appeals board or, in the case of certain publicly owned property, the State Board of Equalization, including deadlines for filing an application. Existing property tax law provides that an application for reduction in the base year value of an assessment on the current local roll may be filed during the regular filing period for that year, as provided and subject to certain limitations, including that the base year value determined in accordance with specified law is conclusively presumed to be the base year value unless the application is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
This bill would authorize an application for reduction in the base year value of new construction that is in progress on the lien date on the current roll to be filed during the regular filing period for that year, as provided. The bill would authorize an application for reduction in the base year value determined upon completion of new construction to be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
(4)By changing the manner in which assessors determine the base year value for new construction in progress, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(5)This bill would take effect immediately as a tax levy.
(1)The California Constitution generally limits the maximum amount of any ad valorem tax on real property to 1% of its full cash value and defines full cash value for these purposes as the county assessors valuation of real property as shown on the 197576 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Existing property tax law requires the assessor to determine a new base year value for the portion of any taxable real property which has been newly constructed and that new construction in progress on the lien date be appraised at its full value on that date, and each lien date thereafter, until construction is completed, at which time the entire portion of property which is newly constructed is reappraised at its full value.
This bill would instead prohibit new construction that is in progress from acquiring a new base year value until the date of completion, thereby requiring that new construction be reappraised only upon completion.
(2)Existing property tax law prescribes procedures by which a taxpayer may seek a reduction in assessment from the county board of equalization or assessment appeals board or, in the case of certain publicly owned property, the State Board of Equalization, including deadlines for filing an application. Existing property tax law provides that an application for reduction in the base year value of an assessment on the current local roll may be filed during the regular filing period for that year, as provided and subject to certain limitations, including that the base year value determined in accordance with specified law is conclusively presumed to be the base year value unless the application is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
This bill would authorize an application for reduction in the base year value of new construction that is in progress on the lien date on the current roll to be filed during the regular filing period for that year, as provided. The bill would authorize an application for reduction in the base year value determined upon completion of new construction to be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the 3 succeeding years.
(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
(4)By changing the manner in which assessors determine the base year value for new construction in progress, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(5)This bill would take effect immediately as a tax levy.
For purposes of base year values as determined by Section 110.1, values determined for property which is purchased or changes ownership after the 1975 lien date shall be entered on the roll for the lien date next succeeding the date of the purchase or change in ownership. Values determined after the 1975 lien date for property which is newly constructed shall be entered on the roll for the lien date next succeeding the date of completion of the new construction. The value of new construction in progress on the lien date shall be entered on the roll as of the lien date. However, the value of new construction in progress shall not be a base year value until completion of that construction, as described in Section 71.
SEC. 2.Section 71 of the Revenue and Taxation Code is amended to read:71.The assessor shall determine the new base year value for the portion of any taxable real property which has been newly constructed. The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed. New construction in progress on the lien date shall be appraised at its full value on that date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value, and that value shall be the base year value. New construction in progress shall not acquire a base year value on each lien date.
SEC. 3.Section 82 is added to the Revenue and Taxation Code, to read:82.An application for reduction in the value of new construction that is in progress on the lien date on the current roll may be filed during the regular filing period for that year as set forth in Section 1603 or 1840. An application for reduction in the base year value determined upon completion of new construction may be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years, as provided in Section 80.
SEC. 4.Section 110.1 of the Revenue and Taxation Code is amended to read:110.1.(a)For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution, full cash value of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:
(1)The 1975 lien date.
(2)For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:
(A)The date on which a purchase or change in ownership occurs.
(B)The date on which new construction is completed, and if uncompleted, on the lien date.
(b)The value determined under subdivision (a) shall be known as the base year value for the property. However, uncompleted new construction shall not acquire a base year value until completed, as described in Section 71.
(c)Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 197576 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 197576 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision(f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined full cash value shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.
(d)If the value of any real property as shown on the 197576 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.
(e)As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 197576 fiscal year if the assessors determination of the value of the property for the 197576 fiscal year differed from the value used for purposes of computing the 197475 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 197576 fiscal year.
(f)For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.
SEC. 5.Notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.
SEC. 6.If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
SEC. 7.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
For purposes of base year values as determined by Section 110.1, values determined for property which is purchased or changes ownership after the 1975 lien date shall be entered on the roll for the lien date next succeeding the date of the purchase or change in ownership. Values determined after the 1975 lien date for property which is newly constructed shall be entered on the roll for the lien date next succeeding the date of completion of the new construction. The value of new construction in progress on the lien date shall be entered on the roll as of the lien date. However, the value of new construction in progress shall not be a base year value until completion of that construction, as described in Section 71.
SEC. 2.Section 71 of the Revenue and Taxation Code is amended to read:71.The assessor shall determine the new base year value for the portion of any taxable real property which has been newly constructed. The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed. New construction in progress on the lien date shall be appraised at its full value on that date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value, and that value shall be the base year value. New construction in progress shall not acquire a base year value on each lien date.
SEC. 3.Section 82 is added to the Revenue and Taxation Code, to read:82.An application for reduction in the value of new construction that is in progress on the lien date on the current roll may be filed during the regular filing period for that year as set forth in Section 1603 or 1840. An application for reduction in the base year value determined upon completion of new construction may be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years, as provided in Section 80.
SEC. 4.Section 110.1 of the Revenue and Taxation Code is amended to read:110.1.(a)For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution, full cash value of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:
(1)The 1975 lien date.
(2)For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:
(A)The date on which a purchase or change in ownership occurs.
(B)The date on which new construction is completed, and if uncompleted, on the lien date.
(b)The value determined under subdivision (a) shall be known as the base year value for the property. However, uncompleted new construction shall not acquire a base year value until completed, as described in Section 71.
(c)Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 197576 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 197576 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision(f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined full cash value shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.
(d)If the value of any real property as shown on the 197576 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.
(e)As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 197576 fiscal year if the assessors determination of the value of the property for the 197576 fiscal year differed from the value used for purposes of computing the 197475 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 197576 fiscal year.
(f)For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.
SEC. 5.Notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.
SEC. 6.If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
SEC. 7.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
For purposes of base year values as determined by Section 110.1, values determined for property which is purchased or changes ownership after the 1975 lien date shall be entered on the roll for the lien date next succeeding the date of the purchase or change in ownership. Values determined after the 1975 lien date for property which is newly constructed shall be entered on the roll for the lien date next succeeding the date of completion of the new construction. The value of new construction in progress on the lien date shall be entered on the roll as of the lien date, but date. However, the value of new construction that is in progress shall not acquire be a base year value for any lien date prior to until completion of that construction, as described in Section 71.
SEC. 2.Section 71 of the Revenue and Taxation Code is amended to read:71.The assessor shall determine the new base year value for the portion of any taxable real property which has been newly constructed. The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed. New construction in progress shall not acquire a new base year value on the lien date shall be appraised at its full value on that date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value. value, and that value shall be the base year value. New construction in progress shall not acquire a base year value on each lien date.
SEC. 3.Section 82 is added to the Revenue and Taxation Code, to read:82.An application for reduction in the base year value of new construction that is in progress on the lien date on the current roll may be filed during the regular filing period for that year as set forth in Section 1603 or 1840. An application for reduction in the base year value determined upon completion of new construction may be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years, as provided in Section 80.
SEC. 4.Section 110.1 of the Revenue and Taxation Code is amended to read:110.1.(a)For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution, full cash value of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:
(1)The 1975 lien date.
(2)For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:
(A)The date on which a purchase or change in ownership occurs.
(B)The date on which new construction is completed. Uncompleted construction shall not acquire a base year value until completed, as described in Section 71. completed, and if uncompleted, on the lien date.
(b)The value determined under subdivision (a) shall be known as the base year value for the property. However, uncompleted new construction shall not acquire a base year value until completed, as described in Section 71.
(c)Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 197576 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 197576 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision(f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined full cash value shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.
(d)If the value of any real property as shown on the 197576 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.
(e)As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 197576 fiscal year if the assessors determination of the value of the property for the 197576 fiscal year differed from the value used for purposes of computing the 197475 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 197576 fiscal year.
(f)For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.
SEC. 5.Notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.
SEC. 6.If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
SEC. 7.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
For purposes of base year values as determined by Section 110.1, values determined for property which is purchased or changes ownership after the 1975 lien date shall be entered on the roll for the lien date next succeeding the date of the purchase or change in ownership. Values determined after the 1975 lien date for property which is newly constructed shall be entered on the roll for the lien date next succeeding the date of completion of the new construction. The value of new construction in progress on the lien date shall be entered on the roll as of the lien date. date, but new construction that is in progress shall not acquire a base year value for any lien date prior to completion of that construction, as described in Section 71.
SEC. 2.Section 71 of the Revenue and Taxation Code is amended to read:71.The assessor shall determine the new base year value for the portion of any taxable real property which has been newly constructed. The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed. New construction in progress on the lien date shall be appraised at its full value on such date and each lien date thereafter shall not acquire a new base year value until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value.
SEC. 3.Section 82 is added to the Revenue and Taxation Code, to read:82.An application for reduction in the base year value of new construction that is in progress on the lien date on the current roll may be filed during the regular filing period for that year as set forth in Section 1603 or 1840. An application for reduction in the base year value determined upon completion of new construction may be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years, as provided in Section 80.
SEC. 4.Section 110.1 of the Revenue and Taxation Code is amended to read:110.1.(a)For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution, full cash value of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:
(1)The 1975 lien date.
(2)For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:
(A)The date on which a purchase or change in ownership occurs.
(B)The date on which new construction is completed, and if uncompleted, on the lien date. completed. Uncompleted construction shall not acquire a base year value until completed, as described in Section 71.
(b)The value determined under subdivision (a) shall be known as the base year value for the property.
(c)Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 197576 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 197576 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision(f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined full cash value shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.
(d)If the value of any real property as shown on the 197576 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.
(e)As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 197576 fiscal year if the assessors determination of the value of the property for the 197576 fiscal year differed from the value used for purposes of computing the 197475 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 197576 fiscal year.
(f)For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.
SEC. 5.Notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.
SEC. 6.If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
SEC. 7.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
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Date
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Status
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|---|---|
| Jul 21, 2017 | Chaptered by Secretary of State - Chapter 80, Statutes of 2017. |
| Jul 21, 2017 | Approved by the Governor. |
| Jul 12, 2017 | Enrolled and presented to the Governor at 11:30 a.m. |
| Jul 3, 2017 | In Assembly. Ordered to Engrossing and Enrolling. |
| Jul 3, 2017 | Read third time. Passed. Ordered to the Assembly. |
| Jun 27, 2017 | Read second time. Ordered to Consent Calendar. |
| Jun 26, 2017 | From committee: Be placed on second reading file pursuant to Senate Rule 28.8 and ordered to consent calendar. |
| Jun 7, 2017 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (June 7). Re-referred to Com. on APPR. |
| May 18, 2017 | Referred to Com. on GOV. & F. |
| May 4, 2017 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 4, 2017 | Read third time. Passed. Ordered to the Senate. (Ayes 76. Noes 0. Page 1391.) |
| Apr 27, 2017 | Read second time. Ordered to Consent Calendar. |
| Apr 26, 2017 | From committee: Do pass. To Consent Calendar. (Ayes 16. Noes 0.) (April 26). |
| Apr 18, 2017 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 10. Noes 0.) (April 17). Re-referred to Com. on APPR. |
| Apr 4, 2017 | Re-referred to Com. on REV. & TAX. |
| Apr 3, 2017 | From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended. |
| Mar 20, 2017 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Mar 2, 2017 | Referred to Com. on REV. & TAX. |
| Feb 15, 2017 | From printer. May be heard in committee March 17. |
| Feb 14, 2017 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jul 3, 2017 | Consent Calendar 2nd AB652 | Senate Floor |
Passed |
|
| Jun 7, 2017 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Governance and Finance |
Passed |
|
| May 4, 2017 | AB 652 FLORA Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Apr 26, 2017 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 17, 2017 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Revenue and Taxation |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| calaveras county assessor leslie k. davis | ** Support | Jun 28, 2017 |
| California Assessors' Association | ** Support | Jun 28, 2017 |
| California Chamber Of Commerce | ** Support | Jun 28, 2017 |
| County of Santa Clara | ** Support | Jun 28, 2017 |
| Office of the Assessor, County of Calaveras | ** Support | Apr 14, 2017 |
| Unknown. | ** Against | Jun 7, 2017 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB |
CONSENT
Bill No: AB 652
:
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/7/17
AYES: McGuire, Nguyen, Beall, Hernandez, Hertzberg, Lara, Moorlach
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 5/4/17 (Consent) - See last page for vote
SOURCE: California Assessors’ Association
DIGEST:
This bill provides that new construction only acquires a base year value for property tax purposes when completed.
Existing law:
- Provides that all property is taxable at the same percentage of fair market value unless explicitly exempted by the Constitution or federal law.
- 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 ownership changes (Proposition 13, 1978).
- Caps any inflationary growth of the full cash value base to 2% per year.
- Defines “full cash value” as the fair market value as of the 1975 lien date, the date on which the property changes ownership, or the date on which new construction is completed, and if uncompleted, on the lien date of January 1st.
- Provides that this full cash value becomes the property’s “base year value,” which is then subject to the Constitution’s 2% growth cap.
This bill:
- States that the value of new construction in progress is not a base year value until completed.
- Specifies that new construction in progress is appraised on each lien date until completed, at which time the assessor appraises the value of the property, and that value becomes the base year value.
- Clarifies that appeals for the valuation of construction in progress must be filed by either September 15th or November 30th of the same year, and appeals related to completed base year value of the property must be filed in the year the base year value is set or in the next three succeeding years.
- Provides that uncompleted new construction does not acquire a base year value until complete.
Background
For projects under construction, assessors generally value projects under construction based on their value as of the lien date, and then revalue the property again when complete – a process known as “construction in progress,” or CIP. The Board of Equalization’s (BOE) Assessor’s Handbook states that: “Partially completed new construction does not acquire a base year value. Instead, new construction in progress on any lien date is assessed, in effect, as a separate appraisal unit at its market value on that date, and on each successive lien date until it is completed. Upon completion, the entire portion of the property which is newly constructed is reappraised at its market value, and acquires its own base year value.”
Taxpayers may generally appeal their base year values up to three years after the year in which the assessor sets it because of its long-lasting effect. However, for CIP, taxpayers must usually challenge the assessment by either September 15th or November 30th of the same year.
In 2009, the Calaveras County Assessor valued John Ellis’s uncompleted large, unattached garage at $140,000, estimating that it was 90% complete, and would eventually have a value of $156,800. Ellis appealed the value to the assessment appeals board, who concurred with the Assessor regarding the eventual value of the completed garage, but reduced the value to $117,600, believing that the garage was only 75% done. Two years later, Ellis challenged the finding in court, but before the case was decided, entered into a settlement agreement which reduced the 2009 value to $25,000, and reaffirmed its 75% completion. In 2010, the Assessor valued the garage at $117,600. Ellis challenged the valuation, arguing that the 2009 value of $25,000 was its base year value, and therefore subject to the 2% cap, and requested the Assessor correct the property tax roll and issue a refund. After the trial court denied his motion in 2010, he appealed the 2010 assessment to the assessment appeals board, which determined in 2013 that the 2009 value was a CIP assessment, not a base year value, and denied his appeal as not timely filed. Ellis completed the garage in 2012, and received a supplemental assessment for the full value. In 2014, Ellis again challenged the 2010 assessment, which the court dismissed. However, Ellis appealed the dismissal to the Third Appellate District, which ruled that because the language of the statute establishes that the Assessor sets a base year value when determining the value of partially constructed property, his appeal was timely filed. However, because the Assessor revalues the property each year to reflect its completion percentage as of that lien date, thereby setting a new base year value, Ellis was not entitled to a refund based on values set in 2010 that were above the 2% cap (John Virgil Ellis v. County of Calaveras). The decision left a tangled result where taxpayers could file appeals on CIP assessments in the year of the assessment and the next three successive years, but could only receive a refund of taxes if the appeal was filed in the same year. As a result of the decision, the BOE issued updated guidance to assessors reflecting the decision (Letter to Assessors 2016/042). AB 652 revises statutes to restore the treatment for construction in progress that had been in place since Proposition 13.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Assessors’ Association (source)
Calaveras County Assessor Leslie K. Davis
California Chamber of Commerce
County of Santa Clara
OPPOSITION: (Verified 6/27/17)
None received
ARGUMENTS IN SUPPORT: According to the author, “AB 652 would codify an existing practice in clarifying that county property assessors cannot establish a base year value on a property with new construction until the date of completion. Construction in progress on the lien date does not get a base year value. Upon the date of completion, the new construction would be reappraised for its full cash value.”
ASSEMBLY FLOOR: 76-0, 5/4/17
AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon
NO VOTE RECORDED: Travis Allen, Bigelow, Cristina Garcia, Patterson
6/28/17 15:35:31
**** END ****
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Mike McGuire, Chair
2017 - 2018 Regular
Bill No: | AB 652 | Hearing Date: | 6/7/17 |
Author: | Flora | Tax Levy: | Yes |
Version: | 4/3/17 | Fiscal: | Yes |
Consultant: | Grinnell | ||
Property taxation: base year value: new construction
Provides that new construction only acquires a base year value for property tax purposes when completed.
Background
Article XIII of the California Constitution provides that all property is taxable at the same percentage of fair market value 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 ownership changes (Proposition 13, 1978). Proposition 13 additionally limited any inflationary growth of the full cash value base to 2% per year.
“Full cash value” means the fair market value as of the 1975 lien date, the date on which the property changes ownership, or the date on which new construction is completed, and if uncompleted, on the lien date of January 1st. State law provides that this value becomes the property’s “base year value,” which is then subject to the Constitution’s 2% growth cap. For projects under construction, assessors generally value projects under construction based on their value as of the lien date, and then revalue the property again when complete – a process known as “construction in progress,” or CIP. BOE’s Assessor’s Handbook states that:
“Partially completed new construction does not acquire a base year value. Instead, new construction in progress on any lien date is assessed, in effect, as a separate appraisal unit at its market value on that date, and on each successive lien date until it is completed. Upon completion, the entire portion of the property which is newly constructed is reappraised at its market value, and acquires its own base year value.”
Taxpayers may generally appeal their base year values up to three years after the year in which the assessor sets it because of its long-lasting effect. However, for CIP, taxpayers must usually challenge the assessment by either September 15th or November 30th of the same year.
In 2009, the Calaveras County Assessor valued John Ellis’s uncompleted large, unattached garage at $140,000, estimating that it was 90% complete, and would eventually have a value of $156,800. Ellis appealed the value to the assessment appeals board, who concurred with the assessor regarding the eventual value of the completed garage, but reduced the value to $117,600, believing that the garage was only 75% done. Two years later, Ellis challenged the finding in court, but before the case was decided, entered into a settlement agreement which reduced the 2009 value to $25,000, and reaffirmed its 75% completion. In 2010, the Assessor valued the garage at $117,600. Ellis challenged the valuation, arguing that the 2009 value of $25,000 was its base year value, and therefore subject to the 2% cap, and requested the assessor correct the property tax roll and issue a refund. After the trial court denied his motion in 2010, he appealed the 2010 assessment to the assessment appeals board, which determined in 2013 that the 2009 value was a CIP assessment, not a base year value, and denied his appeal as not timely filed. Ellis completed the garage in 2012, and received a supplemental assessment for the full value. In 2014, Ellis again challenged the 2010 assessment, which the court dismissed. However, Ellis appealed the dismissal to the Third Appellate District, which ruled that because the language of the statute establishes that the assessor sets a base year value when determining the value of partially constructed property, his appeal was timely filed. However, because the assessor revalues the property each year to reflect its completion percentage as of that lien date, thereby setting a new base year value, Ellis was not entitled to a refund based on values set in 2010 that were above the 2% cap (John Virgil Ellis v. County of Calaveras). The decision left a tangled result where taxpayers could file appeals on CIP assessments in the year of the assessment and the next three successive years, but could only receive a refund of taxes if the appeal was filed in the same year.
As a result of the decision, the Board of Equalization (BOE) issued updated guidance to assessors reflecting the decision (Letter to Assessors 2016/042). Assessors want to clarify the law to return to the practice before the decision where new construction only acquires a base year value when complete.
Proposed Law
AB 652 changes three sections of, and adds one section to, Revenue and Taxation Code to restore the previous interpretations of law before Ellis.
State Revenue Impact
BOE states that the measure has no revenue impact.
Comments
1. Purpose of the bill. According to the author, “AB 652 would codify an existing practice in clarifying that county property assessors cannot establish a base year value on a property with new construction until the date of completion. Construction in progress on the lien date does not get a base year value. Upon the date of completion, the new construction would be reappraised for its full cash value.”
2. Back to the past. AB 652 simply restores the state of affairs before Ellis that had been in place since Proposition 13 (1978). Specifically, the bill states that construction must be completed for a property to acquire a new base year value. The measure additionally clarifies that an appeal related to the value of ongoing construction must be filed within the deadlines that applied before the case. Lastly, this bill restates that appeals related to completed base year value of the property must be filed in the year the base year value is set or in the next three succeeding years.
3. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 652 changes the manner in which assessors value real property, Legislative Counsel says that it imposes a new state mandate. The measure provides that the state shall not reimburse local agencies for property tax revenue losses, instead stating that should the Commission on State Mandates determine that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.
Assembly Actions
Assembly Revenue and Taxation 10-0
Assembly Appropriations 16-0
Assembly Floor 76-0
Support and Opposition
(6/1/17)
Support: Calaveras County Assessor Leslie K. Davis, California Assessors’ Association, California Chamber of Commerce, County of Santa Clara,
Opposition: Unknown.
-- END --
Date of Hearing: April 26, 2017
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
ABPCA Bill Id:AB 652
Author:(Flora) – As Amended Ver:April 3, 2017
Policy Committee: | Revenue and Taxation | Vote: | 10 - 0 |
|
| ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill provides that property under construction does not acquire a “base year value” until the construction is completed, and also clarifies the appeals process related to the assessment of ongoing construction.
FISCAL EFFECT:
No additional state costs.
COMMENTS:
- Background. Adopted in June 1978, Proposition 13 was designed to provide real property tax relief by limiting the assessment and taxing powers of state and local governments. As a general rule, Proposition 13 limits any tax on real property to 1% of the property's assessed value, measured as either the assessed value as of the 1975-76 tax year or the appraisal value when purchased, constructed, or a change in ownership has occurred. This dollar estimate is the base year value of the property, and from there the property value cannot be adjusted by no more than 2% a year.
- Construction Projects. When new construction takes place, those projects or additions are assigned a new base year value that is added to the old base year value of the home. Each January 1, the county assessor values the project as of that date, even if it is unfinished. If unfinished, that value is considered construction-in-progress (CIP) for the coming year and assessed at its market value. Historically, assessors have not assigned these in-progress projects a base year value until the project is fully completed. Instead, they simply assign the in-progress project a market value. However, a recent court case (Jon Virgil Ellis v. County of Calaveras) ruled that a CIP assessment reflects a new base year value, upending traditional practice by county assessors.
The recent court ruling confuses the appeals process for taxpayers contesting an assessment of a construction project and hoping to get a refund if successful. A taxpayer has four years to appeal a base year value, but only less than a year to appeal a market value-based assessment. The court ruling found that a taxpayer contesting an assessment has four years to make a timely appeal, but even with this ruling a taxpayer must file and appeal every year in order to receive a refund.
- Purpose. AB 652 reaffirms previous interpretations of law before the Ellis Decision. According to the author, AB 652 will codify existing practice related to CIP assessments and the appeals process. This bill is supported by the Santa Clara County Assessor, who argues that the recent court ruling may lead to confusion in the assessment process.
Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081
Date of Hearing: April 17, 2017
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
ABPCA Bill Id:AB 652 (
Author:Flora) – As Amended Ver:April 3, 2017
Majority vote. Tax levy. Fiscal committee.
SUBJECT: Property taxation: base year value: new construction
SUMMARY: Provides that property under construction does not acquire a “base year value” until the construction is completed. Specifically, this bill:
- Provides that new construction that is in progress shall not acquire a “base year value” on each lien date, and instead provides that the “base year value” shall be the full cash value of the entire portion of the newly constructed property once completed.
- Requires an appeal related to the January 1 market value of ongoing construction to be filed by September 15 or November 30 of that same year depending on the county.
- Allows an appeal related to the market value of the construction on the day it is completed to be filed within four years.
- Provides that, notwithstanding Revenue and Taxation Committee (R&TC) Section 2229, no appropriation shall be made and the state shall not reimburse a local agency for any lost property tax revenues.
- Requires reimbursement to local agencies and school districts if the Commission on State Mandates determines that this bill contains costs mandated by the state.
- Takes effect immediately as a tax levy.
EXISTING LAW:
- Provides that all property is taxable, unless otherwise provided by the California Constitution or federal laws, and limits ad valorem taxes on real property to 1% of the full cash value of that property.
- Provides that the “full cash value” of real property shall be known as the “base year value” of the property, which is subject to annual increases for inflation, not to exceed 2%.
- Requires an assessor to value construction that is in progress every January 1 (the lien date).
- Provides taxpayers four years to protest a “base year value.” In contrast, depending on the county, the appeals deadline for annual market value-based assessments is September 15 or November 30 of the same year.
FISCAL EFFECT: The State Board of Equalization (BOE) estimates that this bill will have no revenue impact.
COMMENTS:
- The author has provided the following statement in support of this bill:
AB 652 would codify an existing practice in clarifying that county property assessors cannot establish a base year value on a property with new construction until the date of completion. Construction in progress on the lien date does not get a base year value. Upon the date of completion, the new construction would be reappraised for its full cash value.
- Writing in support, the Santa Clara County Assessor states that “the Third District Court of Appeals held in Ellis v. Calaveras that ‘when the assessor determines the value of partially completed construction as of the lien date, that value is also a ‘base year value.’’ The court cited the ‘plain statutory language’ of Revenue and Taxation Code Section 110.1 as the basis for their opinion. This interpretation runs counter to assessment practices and Board of Equalization (BOE) interpretation.” The Court’s decision may lead to confusion in the appeals process and may inadvertently lead to over-assessments. As such, this bill “eliminates any ambiguity for taxpayers and assessors as to how base year values are established, when assessment appeals can be filed on construction in progress, and that construction in progress on the lien date does not establish a base year value.”
- Committee Staff Comments:
- Background: In Jon Virgil Ellis v. County of Calaveras, a taxpayer constructed a large, detached garage on his property in Calaveras County. In 2009, the assessor assessed the partially constructed garage at $140,000[1]. The taxpayer sought a reduction of the assessment from the county assessment appeals board (AAB). In July 2010, the AAB reduced the value of the garage to $117,600 based on a finding that construction was only 75% complete. In February 2011, the taxpayer contested that finding in the trial court, and the parties reached a settlement agreement that the assessed value of the partially constructed garage for the 2009 lien date was $25,000.
The assessor assessed the partially constructed garage at $117,600 for the 2010 lien date. The taxpayer filed an application with the AAB to reduce the assessment for his 2010 property taxes on November 29, 2012. The taxpayer argued that the 2009 lien date value of $25,000 was the "base year value" of the partially constructed garage and, as such, had to be applied in subsequent years. The taxpayer also argued that his appeal was timely filed within four years of the “base year value” being entered on the tax roll in satisfaction of R&TC Section 80. The county argued that the 2009 lien date value applied only for the 2009 tax year, and that neither the 2009 nor 2010 lien date values were “base year values.” The county further argued that the taxpayer's appeal was time-barred because it was not filed on or before November 30, 2010 as required by R&TC Section 1603. The AAB determined that the taxpayer's appeal was not timely filed and that it therefore lacked jurisdiction to hear the appeal. The trial court subsequently dismissed the case for substantive and procedural reasons, and the taxpayer sought review in the Court of Appeal.
The Court of Appeal held that the value established on the 2010 lien date was a “base year value” even though construction was ongoing. The Court reached this conclusion after reviewing the plain language of R&TC Section 110.1(b), which states “The value determined under subdivision (a) shall be known as the base year value for the property.” Subdivision (a) provides that the full cash value means the fair market value of uncompleted construction set on the lien date.
- How does the Court’s decision change practices? The interpretation that the value of property while under construction is a “base year value” is contrary to the historical interpretation of the BOE and assessors. The Assessors’ Handbook specifically provides that “[p]artially completed new construction does not acquire a base year value.[2]” Instead, a “base year value” attaches only after construction of the new portion of property has been completed.
Because the Court held that the assessment of the partially completed construction as of the 2010 lien date was a base year value, the taxpayer's assessment appeal was timely filed under section 80(a)(3). The appeal would not have been allowed prior to the Court’s decision. However, the Court also determined that the taxpayer would only be allowed a refund if the complaint challenging the valuation was filed in the same year. In practice, allowing an individual to file an appeal within four years means little if a refund is only made available during the first year. Finally, even though the Court determined that the value set on the lien date for ongoing construction is a “base year value,” the Court also determined that “base year value” is not limited by the 2% inflationary adjustment because ongoing construction is required to be reassessed on the lien date and each lien date thereafter until the date of completion[3].
- Back to the past: This bill reaffirms previous interpretations of law before the Ellis decision. First, this bill provides that a new “base year value” is not acquired on new construction until the construction is completed. Second, this bill specifies that an appeal related to the January 1 market value of ongoing construction must be filed by September 15 or November 30 of that same year depending on the county. Finally, this bill allows an appeal related to the market value of the construction on the day it is completed to be filed within four years.
REGISTERED SUPPORT / OPPOSITION:
Support
California Assessors’ Association
California Chamber of Commerce
Office of the Assessor, County of Calaveras
Office of the Assessor, County of Santa Clara
Opposition
None on file
Analysis Prepared by: Carlos Anguiano / REV. & TAX. / (916) 319-2098
Bill Author
Bill Co-Author(s):