Agenda

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LEGISLATION COMMITTEE

Meeting Date:	06/05/2014
Subject: AB 2231, as amended (Gordon): State Controller: Property Tax Postponement
Submitted For:	LEGISLATION COMMITTEE
Department:	County Administrator
Referral No.:	2014-22
Referral Name:	AB 2231, as amended (Gordon): State Controller: Property Tax Postponement
Presenter:	Russell V. Watts	Contact:	L. DeLaney, 925-335-1097

Information

Referral History:

Russell V. Watts, County Treasurer-Tax Collector, requested support from the Board of Supervisors on AB 2231. Supervisor Mitchoff sent a "Chair" letter expressing her support.

Referral Update:

SUBJECT: State Controller: Property Tax Postponement

CURRENT STATUS: 05/27/2014: In ASSEMBLY. Read third time. Passed ASSEMBLY. *****To SENATE.

SUMMARY: This bill reinstates the Senior Citizens and Disabled Citizens Property Tax Postponement (PTP) program, allowing applications to the State Controller to provide property tax deferment to seniors and disabled persons to recommence on July 1, 2015. In summary, this bill:

1) Establishes the Senior Citizens and Disabled Citizens Property Tax Postponement Fund (Fund) within the State Treasury and annually appropriates funds for the purposes of paying costs and disbursements related to the PTP program; requires the Controller to transfer moneys in the Fund in excess of $10 million to the General Fund (GF).

2) Increases the amount of equity required of applicants in a residential dwelling from 20% to 40% of the full value of the property to be eligible for the PTP program.

3) Requires loan payments and funds derived from the voluntary sale of a residential dwelling that has a lien placed on it due to the PTP program to be deposited into the Fund.

4) Repeals current law allowing the Controller to subordinate liens for postponement of real property taxes, and instead requires all liens under the PTP program to have the priority of judgment liens.

5) Provides that taxes shall become due and payable in full if, in addition to current law, the claimant is refinancing the residential dwelling or has executed a reverse mortgage.

6) Requires a county tax collector to notify the Controller within 60 days of any property subject to a PTP program lien that becomes tax defaulted.

7) Requires the Controller, upon request of the tax collector, to provide information that is required for the preparation and enforcement of the sale of property.

8) Makes various other modifications to the procedures for filings for the PTP program as well as notifications and payments with respect to tax delinquent properties.

COMMENTS

1) Purpose. According to the author, this bill would reinstate the PTP program and give seniors and disabled Californians some financial flexibility. The bill would also incorporate several changes to the suspended PTP program designed to secure the PTP Fund ensure the program's long-term sustainability.

The author claims the PTP program provided assistance to nearly 6,000 California seniors and disabled persons over the 30 years it was previously in operation. After five years of suspension, the homes of some former participants in the program are now at risk of tax default sale. This bill would provide relief to those on fixed incomes who are unable to pay their tax bills and risk losing their homes.

2) Background to the PTP Program. The state currently has and has had several property tax relief programs benefitting elderly and disabled persons, including property tax reappraisal relief, property tax assistance, and property tax postponement. Unlike assistance programs that refund a percentage of property taxes paid, the PTP program provides a direct grant to qualifying seniors and disabled persons who own their residence, allowing recipients to defer payment of all or a portion of their property taxes.

Historically, aggregate loan repayments have equaled or exceeded the program's administrative costs, and over the long-term, the program has been self-supporting. In addition to allowing program participants to remain in their homes, the PTP program has reduced county property tax default rates and increased county tax collection revenues.

The state has not provided funding for the PTP program since the 2007-08 budget and has not paid claims since 2008. On February 20, 2009, the postponement program was indefinitely suspended as part of the budget reductions to the state's GF programs; the funding was eliminated, and the Controller was prohibited from accepting new applications from that date.

3) Implementation and Seed Capital. The bill currently contains no appropriation or other source of seed funding to reinitiate loans, and the Controller has identified several implementation concerns and areas where the program could be further refined and improved. Should this bill be passed by this Committee, the members may wish to encourage the author to continue working with the Controller to resolve these issues.

4) Related Legislation. AB 1322 (Patterson) of 2013 was similar to this bill and would have reinstated the Senior Citizens' PTP program that provided property tax deferment to seniors and disabled persons. That bill was held on the Suspense File of this Committee.

Recommendation(s)/Next Step(s):

ADOPT a position of "support" on AB 2231, as amended (Gordon): State Controller: Property Tax Postponement, as recommended by the County Treasurer-Tax Collector.

Fiscal Impact (if any):

1) GF costs to the Controller of approximately $3.5 million in FY 2015-16 to reinitiate the program, eventually decreasing to annual administration costs of approximately $3 million per year. Over the long term, these costs may be offset, at least in part, by ongoing interest on loans and the Fund, and fees generated by the program.

2) In order to reinitiate the PTP program, a source of initial seed capital funds and an appropriation to the Controller to make the first loans will be required.

Attachments
AB 2231 Bill Text
AB 2381 "Chair" support letter