Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2012
 

Revenue and Taxation Code

Property Taxation

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

Chapter 3. New Construction

Section 73

73. "Newly constructed"; "new construction"; exclusion. [Repealed by Stats. 1985, Ch. 878, in effect January 1, 1991.]

73. "Newly constructed"; "new construction"; exclusion. [Repealed by Stats. 1991, Ch. 28, in effect January 1, 1995.]

73. "Newly constructed"; "new construction"; exclusion. (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 deletionconveyance 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.

(deletiong) This section applies to property tax lien dates for the 1999–2000 fiscal year to the 2015–16 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, 2017, and as of that date is repealed.

(2) Active energy solar systems that qualify for an exclusion under this section prior to January 1, 2017, shall continue to be excluded on and after January 1, 2017, until there is a subsequent change in ownership.

History.—Added by Stats. 1998, Ch. 855 (AB 1755), in effect January 1, 1999. Stats. 2005, Ch. 193 (AB 1099), in effect September 6, 2005, substituted "applies" for "shall apply" after "This section" and substituted "1999–2000 fiscal year to the 2008–09 fiscal year" for "1999–2000 to 2004–05 fiscal years" in the first sentence and substituted "applies" for "shall apply" after "this section" in the second sentence of subdivision (d); substituted "2010" for "2006" after "January 1," and deleted ", unless a later enacted statute that is enacted before January 1, 2006, deletes or extends that date" after "date is repealed" in the first sentence of subdivision (e). Stats. 2008, Ch. 538 (AB 1451), in effect September 28, 2008, added subdivision (c) and (e); relettered former subdivisions (c), (d), and (e) as subdivisions (d), (f), and (h), respectively; substituted "solar collecting equipment" for "collectors" after "cells or other" in the second sentence and substituted "conveyance" for "the transmission" after "the stage of" in the third sentence of subparagraph (B) of paragraph (1) of subdivision (d); substituted "2015–16" for "2008–09" after "year to the" in the first sentence and deleted the second sentence, which read "For purposes of supplemental assessment, this section applies only to qualifying construction or additions completed on or after January 1, 1999." of subdivision (f); added subdivision (g); and substituted "2017" for "2010" after "January 1," in the first sentence of subdivision (h). Stats. 2011, Ch. 3 of the First Extraordinary Session (AB 15), in effect June 28. 2011, added ", upon completion of the construction of a system as part of a new property or the addition of a system to an existing property," after "system that" in the first sentence of paragraph (1) of subdivision (b); deleted "the" after "stage of" in the third sentence of subparagraph (B) of paragraph (1) of subdivision (d); added subdivision (f); relettered former subdivisions (f) and (g) as subdivisions (g) and (h), respectively; and relettered former subdivision (h) as (i) and added paragraph designation (1) to the first sentence therein and added paragraph (2).

Note.—Section 3 of Stats. 1998, Ch. 855 (AB 1755) provided that no reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the duties imposed on a local agency or school district by this act were expressly included in a ballot measure approved by the voters in a statewide election, within the meaning of Section 17556 of the Government Code.

Note.—Section 2 of Stats. 2005, Ch. 193 (AB 1099), provided that 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.

Note.—Section 1 of Stats. 2011, Ch. 3 of the 1st Extraordinary Session (AB 15), provided that the Legislature finds and declares all of the following:

(a) That Section 73 of the Revenue and Taxation Code was enacted to encourage and to provide incentives for the development of active solar energy systems by providing an exclusion from classification as newly constructed the construction or addition of active solar energy systems. In 2008, Section 73 of the Revenue and Taxation Code was amended to provide that this exclusion would apply to the initial purchaser from an owner-builder that incorporated an active solar energy system in the initial construction of the new building that the owner-builder did not intend to occupy or use, under specified circumstances.

(b) That newly constructed active solar energy systems are often sold or transferred in sale-leaseback arrangements, partnership flip structures, or other transactions to purchasers that may also be eligible for federal tax benefits. As long as the active solar energy system is newly constructed or added and another taxpayer has not received an exclusion for the same active solar energy system, it is the intent of the Legislature that the purchaser of the active solar energy system in a transaction such as that described above receive an exclusion.

(c) That newly constructed active solar energy systems that are constructed as freestanding or parking lot canopies, or that are constructed as installations on existing buildings qualify for the exclusion from classification as newly constructed under Section 73 of the Revenue and Taxation Code, including active solar energy systems sold in sale-leaseback transactions.

(d) That the amendments made to Section 73 of the Revenue and Taxation Code by this act do not constitute a change in, but are declaratory of, existing law.

Section 3 thereof provided that this act addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation on January 20, 2011, pursuant to subdivision (f) of Section 10 of Article IV of the California Constitution.

Section 4 thereof provided that this act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to timely clarify the application and requirements of the real property exclusion for active solar energy systems, it is necessary that this act take effect immediately.