Bill Text: CA SB364 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Change in ownership: nonresidential active solar energy systems: initiative.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2020-09-09 - Chaptered by Secretary of State. Chapter 58, Statutes of 2020. [SB364 Detail]

Download: California-2019-SB364-Amended.html

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Amended  IN  Assembly  July 27, 2020

Amended  IN  Assembly  June 18, 2019

Amended  IN  Senate  May 17, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 364

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Introduced by Senator StoneIntroduced by Senator Mitchell

February 20, 2019

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An act to amend, repeal, and add Sections 51 and 5813 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. An act to amend Section 73 of, to amend, repeal, and add Sections 105 and 106 of, and to add Chapter 4.5 (commencing with Section 83) to Part 0.5 of Division 1 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

SB 364, as amended, Stone Mitchell. Property taxation: senior and disabled veterans. Change in ownership: nonresidential active solar energy systems: initiative.

The California Constitution generally limits the maximum rate of ad valorem tax on real property to 1% of the full cash value of the property and defines “full cash value” for these purposes as the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Pursuant to constitutional authorization, existing property tax law excludes from the definition of “newly constructed” for these purposes the construction or addition of any active solar energy system, as defined, through the 2023–24 fiscal year. Under existing property tax law, this exclusion remains in effect only until there is a subsequent change in ownership, but an active solar energy system that qualifies for the exclusion before January 1, 2025, will continue to receive the exclusion until there is a subsequent change in ownership. Existing law defines and sets forth parameters for determining a change in ownership for real property.

The California Constitution authorizes the Legislature to provide for property taxation of all forms of tangible personal property, shares of capital stock, evidences of indebtedness, and any legal or equitable interest not otherwise exempt. The California Constitution also authorizes the Legislature to classify, by a ²/₃ vote of each house, such personal property for differential taxation or for exemption.

This bill would provide that for purposes of the provisions of the California Constitution described above, real property includes improvements, but not personal property. The bill would provide that a nonresidential active solar energy system, as defined, is personal property, not an improvement. The bill would, as provided, exempt a nonresidential active solar energy system constructed or installed prior to January 1, 2025, from taxation until there is a subsequent change in ownership of the nonresidential active solar energy system. The bill would also exempt those nonresidential active solar energy systems from taxation on and after January 1, 2025, until there is a subsequent change in ownership. The bill would provide that change in ownership of a nonresidential active solar energy system occurs if it would have met the parameters for a change in ownership applicable to real property had the system been considered real property instead of personal property. The bill would make its provisions operative on the date that an initiative measure relating to the definition of “full cash value” for commercial and industrial real property, adding a specified section to the California Constitution at the November 3, 2020, statewide general election, becomes effective. The bill would provide that its provisions relating to nonresidential active solar energy systems shall remain inoperative until, and be repealed on, January 1, 2021, if a majority of voters do not approve the initiative. The bill would make conforming changes and make related findings and declarations. By adding to the duties of county assessors when assessing commercial and industrial real property, the 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.

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.

This bill would take effect immediately as a tax levy.

(1)The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value, as defined, of that property, and provides that the full cash value base may be adjusted each year by the inflationary rate not to exceed 2% for any given year.

Existing property tax law implementing this constitutional authority provides that the taxable value of real property is the lesser of its base year value compounded annually by an inflation factor not to exceed 2%, as provided, or its full cash value. Existing property tax law also provides that the taxable value of a manufactured home is the lesser of its base year value compounded annually by an inflation factor not to exceed 2% or its full cash value.

This bill, for any assessment year commencing on or after January 1, 2020, and before January 1, 2030, would provide that the inflation factor shall not apply to the principal place of residence, including a manufactured home, of a qualified veteran, as defined, who is 65 years of age or older on the lien date, was honorably discharged from military service, and meets specified requirements.

The bill would require the State Board of Equalization to, on an annual basis beginning January 1, 2021, and until January 1, 2031, review the effectiveness of these tax benefits, as provided, and to submit a report of their review to the Legislature. The bill would require, for these purposes, each county assessor to make information available to the State Board of Equalization upon request.

By changing the manner in which local tax officials calculate the taxable value of real property owned by senior veterans, and by requiring county assessors to make information available to the State Board of Equalization, this bill would impose a state-mandated local program.

(2)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.

(3) 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.

(4) This bill would take effect immediately as a tax levy.

Digest Key

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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Bill Text

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

SECTION 1.

 Section 73 of the Revenue and Taxation Code is amended to read:

73.

 (a) Pursuant to the authority granted to the Legislature pursuant to paragraph (1) of subdivision (c) of Section 2 of Article XIII A of the California Constitution, the term “newly constructed,” as used in subdivision (a) of Section 2 of Article XIII A of the California Constitution, does not include the construction or addition of any active solar energy system, as defined in subdivision (b).

(b) (1) “Active solar energy system” means a system that, upon completion of the construction of a system as part of a new property or the addition of a system to an existing property, uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.

(2) “Active solar energy system” does not include solar swimming pool heaters or hot tub heaters.

(3) Active solar energy systems may be used for any of the following:

(A) Domestic, recreational, therapeutic, or service water heating.

(B) Space conditioning.

(C) Production of electricity.

(D) Process heat.

(E) Solar mechanical energy.

(c) For purposes of this section, “occupy or use” has the same meaning as defined in Section 75.12.

(d) (1) (A) The Legislature finds and declares that the definition of spare parts in this paragraph is declarative of the intent of the Legislature, in prior statutory enactments of this section that excluded active solar energy systems from the term “newly constructed,” as used in the California Constitution, thereby creating a tax appraisal exclusion.

(B) An active solar energy system that uses solar energy in the production of electricity includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items. In general, the use of solar energy in the production of electricity involves the transformation of sunlight into electricity through the use of devices such as solar cells or other solar collecting equipment. However, an active solar energy system used in the production of electricity includes only equipment used up to, but not including, the stage of conveyance or use of the electricity. For the purpose of this paragraph, the term “parts” includes spare parts that are owned by the owner of, or the maintenance contractor for, an active solar energy system that uses solar energy in the production of electricity and which spare parts were specifically purchased, designed, or fabricated by or for that owner or maintenance contractor for installation in an active solar energy system that uses solar energy in the production of electricity, thereby including those parts in the tax appraisal exclusion created by this section.

(2) An active solar energy system that uses solar energy in the production of electricity also includes pipes and ducts that are used exclusively to carry energy derived from solar energy. Pipes and ducts that are used to carry both energy derived from solar energy and from energy derived from other sources are active solar energy system property only to the extent of 75 percent of their full cash value.

(3) An active solar energy system that uses solar energy in the production of electricity does not include auxiliary equipment, such as furnaces and hot water heaters, that use a source of power other than solar energy to provide usable energy. An active solar energy system that uses solar energy in the production of electricity does include equipment, such as ducts and hot water tanks, that is utilized by both auxiliary equipment and solar energy equipment, that is, dual use equipment. That equipment is active solar energy system property only to the extent of 75 percent of its full cash value.

(e) (1) Notwithstanding any other law, for purposes of this section, “the construction or addition of any active solar energy system” includes the construction of an active solar energy system incorporated by the owner-builder in the initial construction of a new building that the owner-builder does not intend to occupy or use. The exclusion from “newly constructed” provided by this subdivision applies to the initial purchaser who purchased the new building from the owner-builder, but only if the owner-builder did not receive an exclusion under this section for the same active solar energy system and only if the initial purchaser purchased the new building prior to that building becoming subject to reassessment to the owner-builder, as described in subdivision (d) of Section 75.12. The assessor shall administer this subdivision in the following manner:

(A) The initial purchaser of the building shall file a claim with the assessor and provide to the assessor any documents necessary to identify the value attributable to the active solar energy system included in the purchase price of the new building. The claim shall also identify the amount of any rebate for the active solar energy system provided to either the owner-builder or the initial purchaser by the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, an electrical corporation, a local publicly owned electric utility, or any other agency of the State of California.

(B) The assessor shall evaluate the claim and determine the portion of the purchase price that is attributable to the active solar energy system. The assessor shall then reduce the new base year value established as a result of the change in ownership of the new building by an amount equal to the difference between the following two amounts:

(i) That portion of the value of the new building attributable to the active solar energy system.

(ii) The total amount of all rebates, if any, described in subparagraph (A) that were provided to either the owner-builder or the initial purchaser.

(C) The extension of the new construction exclusion to the initial purchaser of a newly constructed new building shall remain in effect only until there is a subsequent change in ownership of the new building.

(2) The State Board of Equalization, in consultation with the California Assessors’ Association, shall prescribe the manner, documentation, and form for claiming the new construction exclusion required by this subdivision.

(f) Notwithstanding any other law, the exclusion from new construction provided by this section shall remain in effect only until there is a subsequent change in ownership.

(g) This section applies to property tax lien dates for the 1999–2000 fiscal year to the 2023–24 fiscal year, inclusive.

(h) The amendments made to this section by the act that added this subdivision apply beginning with the lien date for the 2008–09 fiscal year.

(i) (1) This section shall remain in effect only until January 1, 2025, and as of that date is repealed.

(2) Active energy solar systems that qualify for an exclusion under this section prior to January 1, 2025, shall continue to be excluded on and after January 1, 2025, until there is a subsequent change in ownership.

(j) On and after the operative date of Chapter 4.5 (commencing with Section 83), this section shall no longer apply to nonresidential active solar energy systems, as defined in Section 85.

SEC. 2.

 Chapter 4.5 (commencing with Section 83) is added to Part 0.5 of Division 1 of the Revenue and Taxation Code, to read:

CHAPTER  4.5. Implementation of Article XIII A For Nonresidential Active Solar Energy Systems

83.

 The Legislature finds and declares that it is the intent of the Legislature, in enacting this chapter, to ensure active solar energy systems that would have been exempt from taxation because of the new construction exclusion continue to be exempt from taxation until there is a subsequent change in ownership of the active solar energy system.

83.5.

 For purposes of Article XIII A of the California Constitution, all of the following apply:

(a) Notwithstanding Section 105, “improvements” do not include nonresidential active solar energy systems.

(b) Notwithstanding Section 106, “personal property” includes nonresidential active solar energy systems.

(c) “Real property” includes improvements, as defined in Section 105, but does not include personal property, as defined in Section 106.

84.

 For purposes of this chapter, “residential property” means real property used as residential property, including both single-family and multiunit structures, and the land on which those structures are constructed or placed.

85.

 (a) (1) “Nonresidential active solar energy system” means a system that uses solar devices to provide for the collection, storage, or distribution of solar energy, and that is not constructed or installed in or on residential property.

(2) “Nonresidential active solar energy system” does not include solar swimming pool heaters or hot tub heaters.

(b) Nonresidential active solar energy systems may be used for any of the following:

(1) Recreational, therapeutic, or service water heating.

(2) Space conditioning.

(3) Production of electricity.

(4) Process heat.

(5) Solar mechanical energy.

(c) A nonresidential active solar energy system that uses solar energy in the production of electricity includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items. In general, the use of solar energy in the production of electricity involves the transformation of sunlight into electricity through the use of devices such as solar cells or other solar collecting equipment. However, a nonresidential active solar energy system used in the production of electricity includes only equipment used up to, but not including, the stage of conveyance or use of the electricity. For the purpose of this section, the term “parts” includes spare parts that are owned by the owner of, or the maintenance contractor for, a nonresidential active solar energy system that uses solar energy in the production of electricity and which spare parts were specifically purchased, designed, or fabricated by or for that owner or maintenance contractor for installation in a nonresidential active solar energy system that uses solar energy in the production of electricity, thereby including those parts in the tax exemption created by this chapter.

(d) A nonresidential active solar energy system that uses solar energy in the production of electricity also includes pipes and ducts that are used exclusively to carry energy derived from solar energy. Pipes and ducts that are used to carry both energy derived from solar energy and from energy derived from other sources are nonresidential active solar energy system property only to the extent of 75 percent of their fair market value.

(e) A nonresidential active solar energy system that uses solar energy in the production of electricity does not include auxiliary equipment, such as furnaces and hot water heaters, that use a source of power other than solar energy to provide usable energy. A nonresidential active solar energy system that uses solar energy in the production of electricity does include equipment, such as ducts and hot water tanks, that is utilized by both auxiliary equipment and solar energy equipment, that is, dual-use equipment. That equipment is nonresidential active solar energy system property only to the extent of 75 percent of its fair market value.

86.

 (a) (1) Subject to paragraph (2), a nonresidential active solar energy system constructed or installed prior to January 1, 2025, shall be exempt from taxation until there is a subsequent change in ownership of the nonresidential active solar energy system.

(2) The exemption described in paragraph (1) applies to a nonresidential active solar energy system constructed or installed prior to the date this chapter becomes operative only if that system would have been excluded, on the date this chapter becomes operative, from the term “newly constructed,” as described in Section 73, had the system been real property instead of personal property and had Section 73 been applicable to nonresidential active solar energy systems.

(3) No nonresidential active solar energy systems constructed or installed on or after January 1, 2025, shall be exempt from taxation pursuant to this subdivision.

(b) Nonresidential active solar energy systems that qualify for the exemption from taxation pursuant to paragraph (1) of subdivision (a) shall continue to be exempt therefrom on and after January 1, 2025, until there is a subsequent change in ownership.

(c) A change in ownership shall be deemed to have occurred for purposes of this section if the transaction would have constituted a change in ownership under Chapter 2 (commencing with Section 60) had the nonresidential active solar energy system been real property instead of personal property.

87.

 (a) The provisions of this chapter are to be construed liberally so as to effectuate their intent, policy, and purposes.

(b) The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

88.

 (a) This chapter shall become operative on the date that an initiative measure adding Section 2.5 to Article XIII A of the California Constitution at the November 3, 2020, statewide general election takes effect pursuant to subdivision (a) of Section 10 of Article II of the California Constitution.

(b) If a majority of the voters do not approve the initiative measure adding Section 2.5 to Article XIII A of the California Constitution at the November 3, 2020, statewide general election, then this chapter shall remain inoperative until January 1, 2021, and as of that date is repealed.

SEC. 3.

 Section 105 of the Revenue and Taxation Code is amended to read:

105.

 (a) “Improvements” includes: includes both of the following:

(a)

(1) All buildings, structures, fixtures, and fences erected on or affixed to the land.

(b)

(2) All fruit, nut bearing, nut-bearing, or ornamental trees and vines, not of natural growth, and not exempt from taxation, except date palms under eight years of age.

(b) This section shall be in effect until the date Chapter 4.5 (commencing with Section 83) of Part 0.5 goes into effect pursuant to subdivision (a) of Section 88, and as of that date is repealed.

SEC. 4.

 Section 105 is added to the Revenue and Taxation Code, to read:

105.

 (a) Except as provided in Section 83.5, “improvements” includes both of the following:

(1) All buildings, structures, fixtures, and fences erected on or affixed to the land.

(2) All fruit, nut-bearing, or ornamental trees and vines, not of natural growth, and not exempt from taxation, except date palms under eight years of age.

(b) This section shall go into effect on the date Chapter 4.5 (commencing with Section 83) goes into effect pursuant to subdivision (a) of Section 88.

SEC. 5.

 Section 106 of the Revenue and Taxation Code is amended to read:

106.

 (a) “Personal property” includes all property except real estate.

(b) This section shall be in effect until the date Chapter 4.5 (commencing with Section 83) of Part 0.5 goes into effect pursuant to subdivision (a) of Section 88, and as of that date is repealed.

SEC. 6.

 Section 106 is added to the Revenue and Taxation Code, to read:

106.

 (a) Except as provided in Section 83.5, “personal property” includes all property except real estate.

(b) This section shall go into effect on the date Chapter 4.5 (commencing with Section 83) of Part 0.5 goes into effect pursuant to subdivision (a) of Section 88.

SEC. 7.

 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. 8.

 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. 9.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.

SECTION 1.Section 51 of the Revenue and Taxation Code is amended to read:

51.

(a)For purposes of subdivision (b) of Section 2 of Article XIII A of the California Constitution, for each lien date after the lien date in which the base year value is determined pursuant to Section 110.1, the taxable value of real property shall, except as otherwise provided in subdivision (b) or (c), be the lesser of:

(1)Its base year value, compounded annually since the base year by an inflation factor, which shall be determined as follows:

(A)For any assessment year commencing prior to January 1, 1985, the inflation factor shall be the percentage change in the cost of living, as defined in Section 2212.

(B)For any assessment year commencing after January 1, 1985, and prior to January 1, 1998, the inflation factor shall be the percentage change, rounded to the nearest one-thousandth of 1 percent, from December of the prior fiscal year to December of the current fiscal year in the California Consumer Price Index for all items, as determined by the Department of Industrial Relations.

(C)For any assessment year commencing on or after January 1, 1998, the inflation factor shall be the percentage change, rounded to the nearest one-thousandth of 1 percent, from October of the prior fiscal year to October of the current fiscal year in the California Consumer Price Index for all items, as determined by the Department of Industrial Relations.

(D)The percentage increase for an assessment year determined pursuant to subparagraph (A), (B), or (C) shall not exceed 2 percent of the prior year’s value.

(E)(i)Notwithstanding any other law, for any assessment year commencing on or after January 1, 2020, and before January 1, 2030, the percentage increase for an assessment year determined pursuant to subparagraph (A), (B), or (C) shall not apply to the principal place of residence, including so much of the land surrounding it as is reasonably necessary for use of the dwelling as a home, of a qualified veteran who is 65 years of age or older on the lien date and was honorably discharged from military service.

(ii)For the purpose of this subparagraph, “qualified veteran” means a person who meets the following criteria:

(I)The person meets the criteria specified in subdivision (o) of Section 3 of Article XIII of the California Constitution, except for the limitation on the value of property owned by the veteran or the veteran’s spouse.

(II)If the qualified veteran is single, the qualified veteran’s annual income, as defined in Section 20503, is less than fifty thousand dollars ($50,000).

(III)If the qualified veteran is married, the qualified veteran’s annual household income, as defined in Section 20504, is less than one hundred thousand dollars ($100,000).

(iii)When claiming the benefit provided by this subparagraph, the claimant shall provide all information required by, and answer all questions contained in, an affidavit furnished by the assessor to determine that the claimant is a qualified veteran. The assessor may require additional proof of the information or answers provided in the affidavit before allowing the benefit provided by this subparagraph.

(2)Its full cash value, as defined in Section 110, as of the lien date, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a decline in value.

(b)If the real property was damaged or destroyed by disaster, misfortune, or calamity and the board of supervisors of the county in which the real property is located has not adopted an ordinance pursuant to Section 170, or any portion of the real property has been removed by voluntary action by the taxpayer, the taxable value of the property shall be the sum of the following:

(1)The lesser of its base year value of land determined under paragraph (1) of subdivision (a) or full cash value of land determined pursuant to paragraph (2) of subdivision (a).

(2)The lesser of its base year value of improvements determined pursuant to paragraph (1) of subdivision (a) or the full cash value of improvements determined pursuant to paragraph (2) of subdivision (a).

In applying this subdivision, the base year value of the subject real property does not include that portion of the previous base year value of that property that was attributable to any portion of the property that has been destroyed or removed. The sum determined under this subdivision shall then become the base year value of the real property until that property is restored, repaired, or reconstructed or other provisions of law require establishment of a new base year value.

(c)If the real property was damaged or destroyed by disaster, misfortune, or calamity and the board of supervisors in the county in which the real property is located has adopted an ordinance pursuant to Section 170, the taxable value of the real property shall be its assessed value as computed pursuant to Section 170.

(d)For purposes of this section, “real property” means that appraisal unit that persons in the marketplace commonly buy and sell as a unit, or that is normally valued separately.

(e)Nothing in this section shall be construed to require the assessor to make an annual reappraisal of all assessable property. However, for each lien date after the first lien date for which the taxable value of property is reduced pursuant to paragraph (2) of subdivision (a), the value of that property shall be annually reappraised at its full cash value as defined in Section 110 until that value exceeds the value determined pursuant to paragraph (1) of subdivision (a). In no event shall the assessor condition the implementation of the preceding sentence in any year upon the filing of an assessment appeal.

(f)This section shall remain in effect only until January 1, 2030, and as of that date is repealed.

SEC. 2.Section 51 is added to the Revenue and Taxation Code, to read:

51.

(a)For purposes of subdivision (b) of Section 2 of Article XIII   A of the California Constitution, for each lien date after the lien date in which the base year value is determined pursuant to Section 110.1, the taxable value of real property shall, except as otherwise provided in subdivision (b) or (c), be the lesser of:

(1)Its base year value, compounded annually since the base year by an inflation factor, which shall be determined as follows:

(A)For any assessment year commencing prior to January 1, 1985, the inflation factor shall be the percentage change in the cost of living, as defined in Section 2212.

(B)For any assessment year commencing after January 1, 1985, and prior to January 1, 1998, the inflation factor shall be the percentage change, rounded to the nearest one-thousandth of 1 percent, from December of the prior fiscal year to December of the current fiscal year in the California Consumer Price Index for all items, as determined by the Department of Industrial Relations.

(C)For any assessment year commencing on or after January 1, 1998, the inflation factor shall be the percentage change, rounded to the nearest one-thousandth of 1 percent, from October of the prior fiscal year to October of the current fiscal year in the California Consumer Price Index for all items, as determined by the Department of Industrial Relations.

(D)In no event shall the percentage increase for any assessment year determined pursuant to subparagraph (A), (B), or (C) exceed 2 percent of the prior year’s value.

(2)Its full cash value, as defined in Section 110, as of the lien date, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a decline in value.

(b)If the real property was damaged or destroyed by disaster, misfortune, or calamity and the board of supervisors of the county in which the real property is located has not adopted an ordinance pursuant to Section 170, or any portion of the real property has been removed by voluntary action by the taxpayer, the taxable value of the property shall be the sum of the following:

(1)The lesser of its base year value of land determined under paragraph (1) of subdivision (a) or full cash value of land determined pursuant to paragraph (2) of subdivision (a).

(2)The lesser of its base year value of improvements determined pursuant to paragraph (1) of subdivision (a) or the full cash value of improvements determined pursuant to paragraph (2) of subdivision (a).

In applying this subdivision, the base year value of the subject real property does not include that portion of the previous base year value of that property that was attributable to any portion of the property that has been destroyed or removed. The sum determined under this subdivision shall then become the base year value of the real property until that property is restored, repaired, or reconstructed or other provisions of law require establishment of a new base year value.

(c)If the real property was damaged or destroyed by disaster, misfortune, or calamity and the board of supervisors in the county in which the real property is located has adopted an ordinance pursuant to Section 170, the taxable value of the real property shall be its assessed value as computed pursuant to Section 170.

(d)For purposes of this section, “real property” means that appraisal unit that persons in the marketplace commonly buy and sell as a unit, or that is normally valued separately.

(e)Nothing in this section shall be construed to require the assessor to make an annual reappraisal of all assessable property. However, for each lien date after the first lien date for which the taxable value of property is reduced pursuant to paragraph (2) of subdivision (a), the value of that property shall be annually reappraised at its full cash value as defined in Section 110 until that value exceeds the value determined pursuant to paragraph (1) of subdivision (a). In no event shall the assessor condition the implementation of the preceding sentence in any year upon the filing of an assessment appeal.

(f)This section shall become operative on January 1, 2030.

SEC. 3.Section 5813 of the Revenue and Taxation Code is amended to read:

5813.

(a)For each lien date after the lien date for which the base year value is determined, the taxable value of a manufactured home shall be the lesser of:

(1)Its base year value, compounded annually since the base year by an inflation factor, which shall be the percentage change in the cost of living, as defined in Section 51, provided that any percentage increase shall not exceed 2 percent of the prior year’s value.

(2)Its full cash value, as defined in Section 5803, as of the lien date, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, or other factors causing a decline in value.

(3)If the manufactured home is damaged or destroyed by disaster, misfortune, or calamity, its value determined pursuant to paragraph (2) shall be its base year value until the manufactured home is restored, repaired, or reconstructed or other provisions of law require establishment of a new base year value.

(b)(1)Notwithstanding any other law, for any assessment year commencing on or after January 1, 2020, and before January 1, 2030, the percentage increase for an assessment year determined pursuant to paragraph (1) of subdivision (a) shall not apply to the principal place of residence of a qualified veteran who owns a manufactured home as their principal place of residence and who is 65 years of age or older on the lien date and was honorably discharged from military service.

(2)For the purpose of this subdivision, “qualified veteran” means a person who meets the following criteria:

(A)The person meets the criteria specified in subdivision (o) of Section 3 of Article XIII of the California Constitution, except for the limitation on the value of property owned by the veteran or the veteran’s spouse.

(B)If the qualified veteran is single, the qualified veteran’s annual income, as defined in Section 20503, is fifty thousand dollars ($50,000) or less.

(C)If the qualified veteran is married, the qualified veteran’s household income, as defined in Section 20504, is one hundred thousand dollars ($100,000) or less.

(3)When claiming the benefit provided by this subdivision, the claimant shall provide all information required by, and answer all questions contained in, an affidavit furnished by the assessor to determine that the claimant is a qualified veteran. The assessor may require additional proof of the information or answers provided in the affidavit before allowing the benefit provided by this subdivision.

(c)This section shall remain in effect only until January 1, 2030, and as of that date is repealed.

SEC. 4.Section 5813 is added to the Revenue and Taxation Code, to read:

5813.

For each lien date after the lien date for which the base year value is determined, the taxable value of a manufactured home shall be the lesser of:

(a)Its base year value, compounded annually since the base year by an inflation factor, which shall be the percentage change in the cost of living, as defined in Section 51, provided that any percentage increase shall not exceed 2 percent of the prior value.

(b)Its full cash value, as defined in Section 5803, as of the lien date, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, or other factors causing a decline in value.

(c)If the manufactured home is damaged or destroyed by disaster, misfortune, or calamity, its value determined pursuant to subdivision (b) shall be its base year value until the manufactured home is restored, repaired, or reconstructed or other provisions of law require establishment of a new base year value.

(d)This section shall become operative on January 1, 2030.

SEC. 5.

It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act. Therefore, the Legislature finds and declares all of the following with respect to Section 1 of this act amending Section 51 of the Revenue and Taxation Code and Section 3 of this act amending Section 5813 of the Revenue and Taxation Code:

(a)The specific goals, purposes, and objectives that the tax benefits allowed by subparagraph (E) of paragraph (1) of subdivision (a) of Section 51 of the Revenue and Taxation Code, as amended by Section 1 of this act, and subdivision (b) of Section 5813 of the Revenue and Taxation Code, as amended by Section 3 of this act, will achieve are as follows:

(1)Reducing the cost of housing for senior and disabled veterans.

(2)Reducing senior and disabled veteran homelessness.

(b)Detailed performance indicators for the Legislature to use in determining whether the tax benefits allowed by subparagraph (E) of paragraph (1) of subdivision (a) of Section 51 of the Revenue and Taxation Code, as amended by Section 1 of this act, and subdivision (b) of Section 5813 of the Revenue and Taxation Code, as amended by Section 3 of this act, meet the goals, purposes, and objectives described in subdivision (a) are as follows:

(1)The number of properties receiving the tax benefits.

(2)The assessed value of property claiming the tax benefits.

(c)The State Board of Equalization shall, on an annual basis beginning January 1, 2021, and until January 1, 2031, review the effectiveness of the tax benefits allowed by subparagraph (E) of paragraph (1) of subdivision (a) of Section 51 of the Revenue and Taxation Code, as amended by Section 1 of this act, and subdivision (b) of Section 5813 of the Revenue and Taxation Code, as amended by Section 3 of this act. The review shall include, but not be limited to, an analysis of the demand for the tax benefits, the economic impact of the tax benefits, and the performance indicators described in subdivision (b). The State Board of Equalization shall submit a report of their review to the Legislature in compliance with Section 9795 of the Government Code. Any individually identifiable information collected pursuant to subdivision (d) that is used in the report shall be compiled in an aggregate or anonymized manner to preserve confidentiality.

(d)The data collection requirements for determining whether the tax benefits allowed by subparagraph (E) of paragraph (1) of subdivision (a) of Section 51 of the Revenue and Taxation Code, as amended by Section 1 of this act, and subdivision (b) of Section 5813 of the Revenue and Taxation Code, as amended by Section 3 of this act, are meeting, failing to meet, or exceeding the goals, purposes, and objectives described in subdivision (a) are as follows:

(1)To assist the Legislature in determining whether the tax benefits allowed by subparagraph (E) of paragraph (1) of subdivision (a) of Section 51 of the Revenue and Taxation Code, as amended by Section 1 of this act, and subdivision (b) of Section 5813 of the Revenue and Taxation Code, as amended by Section 3 of this act, meet the goals, purposes, and objectives described in subdivision (a), and in carrying out their duties under subdivision (c), the State Board of Equalization may request information from each county assessor.

(2)Each county assessor shall provide any data requested by the State Board of Equalization pursuant to this subdivision.

SEC. 6.

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. 7.

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. 8.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.