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AB-885 Property taxation: new construction: definition.(2019-2020)

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Date Published: 02/20/2019 09:00 PM
AB885:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 885


Introduced by Assembly Member Irwin

February 20, 2019


An act to amend Section 70 of the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 885, as introduced, Irwin. Property taxation: new construction: definition.
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.
This bill would define the term “substantially equivalent” for purposes of the provisions described above to mean the size of the improvement after reconstruction does not exceed 120% of the size of the improvement prior to damage or destruction or the full cash value of the improvement after reconstruction does not exceed 120% of the full cash value of the improvement prior to damage or destruction. The bill would apply this definition to real property damaged or destroyed by misfortune or calamity on or after January 1, 2017.
By imposing new duties upon local government officials, 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 70 of the Revenue and Taxation Code is amended to read:

70.
 (a) “Newly constructed” and “new construction” means:
(1) Any addition to real property, whether land or improvements, including fixtures, since the last lien date; and
(2) Any alteration of land or of any improvement, including fixtures, since the last lien date that constitutes a major rehabilitation thereof or that converts the property to a different use.
(b) Any rehabilitation, renovation, or modernization that converts an improvement or fixture to the substantial equivalent of a new improvement or fixture is a major rehabilitation of that improvement or fixture.
(c) (1) Notwithstanding subdivisions (a) and (b), where real property has been damaged or destroyed by misfortune or calamity, “newly constructed” and “new construction” does not mean 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. Any reconstruction of real property, or portion thereof, that is not substantially equivalent to the damaged or destroyed property, shall be deemed to be new construction and only that portion that exceeds substantially equivalent reconstruction shall have a new base year value determined pursuant to Section 110.1.
(2) For purposes of this subdivision, “substantially equivalent” means either of the following:
(A) The size of the improvement after reconstruction does not exceed 120 percent of the size of the improvement before damage or destruction.
(B) The full cash value of the improvement after reconstruction does not exceed 120 percent of the full cash value of the improvement before damage or destruction.
(d) (1) Notwithstanding subdivisions (a) and (b), where a tank must be improved, upgraded, or replaced to comply with federal, state, and local regulations on underground storage tanks, “newly constructed” and “new construction” does not mean the improvement, upgrade, or replacement of a tank to meet compliance standards, and the improvement, upgrade, or replacement shall be considered to have been performed for the purpose of normal maintenance and repair.
(2) Notwithstanding subdivisions (a) and (b), where a structure, or any portion thereof, was reconstructed, as a consequence of completing work on an underground storage tank to comply with federal, state, and local regulations on these tanks, timely reconstruction of the structure shall be considered to have been performed for the purpose of normal maintenance and repair where the structure, or portion thereof, after reconstruction is substantially equivalent to the prior structure in size, utility, and function.
(e) The amendments made to subdivision (c) by the act adding this subdivision shall apply to real property damaged or destroyed by misfortune or calamity on or after January 1, 2017.

SEC. 2.

 The Legislature find and declares that the amendments to Section 70 of the Revenue and Taxation Code by this act serve a public purpose and do not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution by providing necessary property tax relief to taxpayers whose property was damaged or destroyed by a destructive California wildfire.

SEC. 3.

 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. 4.

 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.