The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975–76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. Existing law defines “newly constructed” and “new construction” to mean any addition to real property since the last lien date and any alteration of land or of any improvement since the last lien date that constitutes a major rehabilitation thereof or that converts the property to a different use. Existing law, where real property has been damaged or destroyed by misfortune or calamity, excludes from the definition of “newly constructed” and “new construction” any timely reconstruction of the real property, or portion thereof, where the property after reconstruction is substantially equivalent to the property prior to damage or destruction. Existing law, pursuant to the authorization of the California Constitution, authorizes the transfer of the base year value of property that is substantially damaged or destroyed by a disaster, as declared by the Governor, to comparable replacement property within the same county that is acquired or newly constructed within 5 years after the disaster, as provided.

This bill would authorize the owner of property substantially damaged or destroyed by a disaster, as declared by the Governor, to apply the base year value of that property to replacement property reconstructed on the same site of the damaged or destroyed property within 5 years after the disaster if the reconstructed property is comparable to the substantially damaged or destroyed property, determined as provided. The bill would specify that property is substantially damaged or destroyed for these purposes if the improvements sustain physical damage amounting to more than 50% of the improvements’ full cash value immediately prior to the disaster. The bill would provide that person who owns substantially damaged or destroyed property that receives property tax relief under these provisions is not eligible to transfer the base year value of that property to a comparable replacement property, as described above. Under the bill, the adjusted base year value of the original property substantially damaged or destroyed would apply to the reconstructed property if the full cash value of the reconstructed property does not exceed 120% of the full cash value of the original property immediately prior to its substantial damage or destruction. If the full cash value of the reconstructed property exceeds 120% of the full cash value of the original property, the bill would require that the base year value of the reconstructed property be the sum of the full cash value that exceeds 120% of the full cash value of the original property plus the adjusted base year value of the original property. The bill would apply these provisions to real property damaged or destroyed by misfortune or calamity on or after January 1, 2017.

By imposing new duties on county assessors with respect to assessing reconstructed property that has been substantially damaged or destroyed by a disaster, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations regarding the public purpose served by the bill.

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.

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.