Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2011
 

Revenue and Taxation Code

Property Taxation

Part 0.5. Implementation of Article XIII A of the California Constitution

Chapter 1. Base Year Values

Section 51

51. Adjustments to base year values. (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 California 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 California 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.

History.—Stats. 1981, Ch. 377, in effect January 1, 1982, added "and the board . . . to Section 170" after "calamity" and "value; or" after "new base year" in subdivision (c); lettered the former second paragraph as subdivision (e) and substituted "subdivisions (a) and (b)," for "this section" therein; and lettered the former third paragraph as subdivision (f). Stats. 1984, Ch. 1164, in effect January 1, 1985, substituted "determined as follows:" for "the percentage change in the cost of living, as defined in Section 2212; provided, that any percentage increase shall not exceed 2 percent of the prior year's value; or" in the first sentence of subdivision (a), and added subsections (1) and (2) thereto. Stats. 1985, Ch. 441, effective July 31, 1985, substituted "." for "; or" at the end of subdivisions (a)(1), (a)(2), (b), and (c); added "removal of property," after "obsolescence," in subdivision (b); and substituted "marketplace" for "market place" after "the" in subdivision (e). Stats. 1995, Ch. 491, in effect January 1, 1996, added subdivision letter designation (a) before "For purposes" and added ", except as . . . or (c)," after "property shall" in the first paragraph; renumbered former subdivisions (a) and (b) as paragraphs (1) and (2), respectively, relettered former paragraphs (1) and (2) of former subdivision (a) as subparagraphs (A) and (B), respectively; substituted ". In no event shall" for "; provided, that" after "Relations", substituted "subparagraph (A) or (B)" for "paragraph (1) or (2) shall not" after "pursuant to" in subparagraph (B) of paragraph (2) of subdivision (a); relettered former subdivisions (c), (d), (e), and (f) as (b), (c), (d), and (e) respectively; added "real" after "If the", added "real" after "which the", added "any portion . . . has been" after "170, or", added "taxable . . . be the" after "taxpayer, the", added "the following:" after "sum of" and created new paragraph with the balance of subdivision (b) beginning with "(1)"; substituted "The" for "the" after "(1)", added "paragraph (1) of" after "determined under", added "paragraph (2) of" after "pursuant to", and substituted "(a)" for "(b), plus" in paragraph (1) of subdivision (b); created new paragraph beginning with "(2)", substituted "The" for "the", substituted "pursuant to paragraph (1) of" for "under" after "improvements determined", added "paragraph (2)" after "determined pursuant to", substituted "(a)." for "(b), which" after "subdivision", created new paragraph with the balance of the sentence by adding "The sum determined under this subdivision" before "shall then", added "of the real property" after "year value", and substituted "that" for "such" after "until" in paragraph (2) of subdivision (b); added "real" after "If the", added "real" after "in which the", and added "the taxable . . . shall be" after "Section 170" in subdivision (c); substituted "this section" for "subdivisions (a) and (b)" after "For purposes of", substituted "that" for "which" after "appraisal unit", and substituted "that is" for "which are" in subdivision (d); and added second and third sentences in subdivision (e). Stats. 1996, Ch. 1087, in effect January 1, 1997, added ", rounded to the nearest one-thousandth of 1 percent," after "percentage change in" the first sentence of subparagraph (B) of paragraph (1) of subdivision (a). Stats. 1997, Ch. 940 (SB 1105), in effect January 1, 1998, added "and prior to January 1, 1998," after "January 1, 1985," in subparagraph (B), added subparagraph (C), substituted "(A), (B), or (C)" for "(A) or (B)" after "pursuant to subparagraph", and lettered the former second sentence of subparagraph (B) as subparagraph (D) in subdivision (a). Stats. 2000, Ch. 647 (SB 2170), in effect January 1, 2001, added the first sentence of the second paragraph of subdivision (b).

Note.—Stats. 1995, Ch. 491, provided that the amendments to Section 51 made by that act do not constitute a change in, but are declaratory of, existing law.

Note.—Stats. 1981, Ch. 377, provided no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it under this act, because any property tax revenues lost would be as a result of a constitutional amendment approved by the voters.

Construction.—County assessment appeals board did not err in separating cable television system's property into component parts rather than considering all the property as one appraisal unit for valuation purposes. Neither this section nor subdivision (e) of this section mandates appraisal of the property as a single unit. Orange County v. Orange County Assessment Appeals Board No. 1, 13 Cal.App.4th 524.

Inflation factor.—Requiring adjustment of 1975–76 base values for the three tax years between establishment of the full cash value base in 1975 and the 1978 effective date of Article XIII A represented a valid exercise of legislative power. Armstrong v. San Mateo County, 146 Cal.App.3d 597.

Valuation.—The correct method for computing the taxable value of property as of the lien date is set forth in this section. Thus, an assessment appeals board must determine not only the base year value or factored base year value of the property, but also its full cash value undepreciated for any damage. After the full cash value is determined, it is then reduced for damage or depreciation. If the depreciated cash value is less than the base year value or the factored base year value, it is the taxable value. If such value is more than the base year value or in later years becomes more than the factored base year value, then the base year value or factored base year value is the taxable value. San Diego County v. Assessment Appeals Board No. 2, 148 Cal.App.3d 548.

A determination of the base year value for certain property does not automatically determine the assessable value for subsequent years. Canandaigua Wine Company, Inc. v. County of Madera (Madera County Assessor), 177 Cal.App.4th 298.

Decline in value.—An assessor was required under subdivision (e) to reappraise a taxpayer's real property after the assessment for 1993 was reduced due to a decline in value. No reappraisal was required to be performed before February 1997, the date on which the assessment appeals board found that the property value for 1993 should be reduced. Once that value was established, however, the reappraisal requirement became retroactive to 1994 and 1995; and refunds for those tax years were available, even though taxpayer failed to file assessment appeals for 1994 and 1995. Where a property owner has been granted a reduction under this section, subdivision (e) dispenses with the usual requirement of filing an assessment appeal. El Dorado Palm Springs, Ltd. v. Board of Supervisors, 104 Cal.App.4th 1262.

Disaster, misfortune, or calamity.—As used in Sections 51 and 170, "disaster, misfortune, or calamity" require at a minimum some event out of the ordinary. The purpose of the sections is to afford financial relief to the owners of property physically damaged or destroyed by an unforeseeable occurrence beyond their control. Thus, damage to a building that occurred gradually due to ordinary natural forces was not caused by disaster, misfortune, or calamity. T. L. Enterprises, Inc. v. Los Angeles county, 215 Cal.App.3d 876.

Pollution cleanup.—Although the cost of pollution cleanup that reduces the fair market value of property may form the basis for a reduction in that property's valuation, the contamination must be evident, and there was insufficient evidence to establish that the assessor knew or should have known that a tire manufacturing plant was contaminated on the date he valued it. Firestone Tire & Rubber Co. v. Monterey County, 223 Cal.App.3d 382.

Appeal.—Existence of pending causes of action between parties does not invariably render unappealable an order directing an assessment appeals board to redetermine value applying a different valuation method since finality of such an order is dependent on the substance of the remaining causes of action. Where resolution of remaining claims will require additional findings of fact, writ order is not appealable. A determination of the base year value for certain property does not automatically determine the assessable value for subsequent years. Canandaigua Wine Company, Inc. v. County of Madera (Madera County Assessor), 177 Cal.App.4th 298.