Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Revenue and Taxation Code

Property Taxation

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

Chapter 2. Change in Ownership and Purchase

Section 69

69. Disaster relief. (a) Notwithstanding any other law, pursuant to Section 2 of Article XIII A of the Constitution, the base year value of property that is substantially damaged or destroyed by a disaster, as declared by the Governor, may be transferred to comparable property within the same county, which is acquired or newly constructed within five years after the disaster, including in the case of the Northridge earthquake, as a replacement for the substantially damaged or destroyed property. At the time the base year value of the substantially damaged or destroyed property is transferred to the replacement property, the substantially damaged or destroyed property shall be reassessed at its full cash value; however, the substantially damaged or destroyed property shall retain its base year value notwithstanding the transfer authorized by this section. If the owner or owners of substantially damaged or destroyed property receive property tax relief under this section, that property shall not be eligible for property tax relief under subdivision (c) of Section 70 in the event of its reconstruction.

(b) The replacement base year value of the replacement property acquired shall be determined in accordance with this section.

The assessor shall use the following procedure in determining the appropriate replacement base year value of comparable replacement property:

(1) If the full cash value of the comparable replacement property does not exceed 120 percent of the full cash value of the property substantially damaged or destroyed, then the adjusted base year value of the property substantially damaged or destroyed shall be transferred to the comparable replacement property as its replacement base year value.

(2) If the full cash value of the replacement property exceeds 120 percent of the full cash value of the property substantially damaged or destroyed, then the amount of the full cash value over 120 percent of the full cash value of the property substantially damaged or destroyed shall be added to the adjusted base year value of the property substantially damaged or destroyed. The sum of these amounts shall become the replacement property's replacement base year value.

(3) If the full cash value of the comparable replacement property is less than the adjusted base year value of the property substantially damaged or destroyed, then that lower value shall become the replacement property's base year value.

(4) The full cash value of the property substantially damaged or destroyed shall be the amount of its full cash value immediately prior to its substantial damage or destruction, as determined by the county assessor of the county in which the property is located.

(c) For purposes of this section:

(1) Property is substantially damaged or destroyed if either the land or the improvements sustain physical damage amounting to more than 50 percent of either the land's or the improvement's full cash value immediately prior to the disaster. Damage includes a diminution in the value of property as a result of restricted access to the property where the restricted access was caused by the disaster and is permanent in nature.

(2) Replacement property is comparable to the property substantially damaged or destroyed if it is similar in size, utility, and function to the property which it replaces.

(A) Property is similar in function if the replacement property is subject to similar governmental restrictions, such as zoning.

(B) Both the size and utility of property are interrelated and associated with value. Property is similar in size and utility only to the extent that the replacement property is, or is intended to be, used in the same manner as the property substantially damaged or destroyed and its full cash value does not exceed 120 percent of the full cash value of the property substantially damaged or destroyed.

(i) A replacement property or any portion thereof used or intended to be used for a purpose substantially different than the use made of the property substantially damaged or destroyed shall to the extent of the dissimilar use be considered not similar in utility.

(ii) A replacement property or portion thereof that satisfies the use requirement but has a full cash value that exceeds 120 percent of the full cash value of the property substantially damaged or destroyed shall be considered, to the extent of the excess, not similar in utility and size.

(C) To the extent that replacement property, or any portion thereof, is not similar in function, size, and utility, the property, or portion thereof, shall be considered to have undergone a change in ownership when the replacement property is acquired or newly constructed.

(3) "Disaster" means a major misfortune or calamity in an area subsequently proclaimed by the Governor to be in a state of disaster as a result of the misfortune or calamity.

(d) (1) This section applies to any comparable replacement property acquired or newly constructed on or after July 1, 1985.

(2) The amendments made by Chapter 1053 of the Statutes of 1993 apply to any comparable replacement property that is acquired or newly constructed as a replacement for property substantially damaged or destroyed by a disaster occurring on or after October 20, 1991, and to the determination of base year values for the 1991–92 fiscal year and fiscal years thereafter.

(3) The amendments made by Chapter 317 of the Statutes of 2006 apply to any comparable replacement property that is acquired or newly constructed as a replacement for property substantially damaged or destroyed by a disaster occurring on or after July 1, 2003, and to the determination of base year values for the 2003–04 fiscal year and fiscal years thereafter.

(e) Only the owner or owners of the property substantially damaged or destroyed, whether one or more individuals, partnerships, corporations, other legal entities, or a combination thereof, shall receive property tax relief under this section. Relief under this section shall be granted to an owner or owners of substantially damaged or destroyed property obtaining title to replacement property. The acquisition of an ownership interest in a legal entity, which directly or indirectly owns real property is not an acquisition of comparable property.

(f) Notwithstanding any other law, the board of supervisors of the County of San Diego may by ordinance extend the time period specified in subdivision (a) to transfer the base year value of property that is substantially damaged or destroyed by the Cedar Fire that commenced in October 2003, as declared by the Governor, to comparable property within the same county that is acquired or newly constructed as a replacement for the substantially damaged or destroyed property by two years. This subdivision shall apply to the determination of base year values for the 2003–04 fiscal year and fiscal years thereafter.

(g) The amendments made to this section by the act adding this subdivision shall apply commencing with the lien date for the 2012-13 fiscal year.

History.—Added by Stats. 1986, Ch. 855, effective September 17, 1986, operative July 1, 1985. Stats. 1987, Ch. 219, in effect July 23, 1987, substituted "; however, the substantially damaged or destroyed property shall retain its base-year value notwithstanding the transfer authorized by this section." for "," after "full cash value" in the second sentence of subdivision (a). Stats. 1993, Ch. 1053, in effect October 11, 1993, substituted "three" for "two" after "constructed within" in the first sentence of subdivision (a); and added "(1)" after "(d)" and added paragraph (2) to subdivision (d). Stats. 1997, Ch. 353 (SB 594), in effect August 26, 1997, added ",or five years in the case of the Northridge earthquake," after "after the disaster" in the first sentence of subdivision (a). Stats. 2006, Ch. 317 (AB 1890), in effect September 18, 2006, substituted "five" for "three" after "newly constructed within" in the first sentence of subdivision (a); substituted "The assessor shall use the following procedure" for "The following procedure shall be used by the assessor" before "in determining the" in the second paragraph of subdivision (b); substituted "that" for "which" twice in clause (ii) of subparagraph (B) of paragraph (2) of subdivision (c); and substituted "applies" for "shall apply" after "This section" in the first sentence of subparagraph (1), substituted "Chapter 1053 of the Statutes of 1993" for "the act adding this paragraph shall" after "amendments made by" in the first sentence of paragraph (2), and added paragraph (3) to subdivision (d). Stats. 2009, Ch. 67 (SB 824), in effect January 1, 2010, deleted "provision of" after "any other", substituted "that" for "which" after "of property", and substituted "that" for "which" after "same county" in the first sentence of subdivision (a); substituted "the land or the improvements sustain" for "it sustains" after "or destroyed" in the first sentence of paragraph (1) and substituted "that" for "which" after "the property" in the first sentence of paragraph (2) of subdivision (c); and substituted "that" for "which" after "legal entity" in the third sentence of subdivision (e). Stats. 2010, Ch. 341 (AB 157), in effect September 27, 2010, substituted ", which" for "that" after "same county" and substituted "including" for "or five years" after "the disaster," in the first sentence of subdivision (a); substituted "which" for "that" after the second "the property" in the first sentence of paragraph (2) of subdivision (c); substituted "Chapter 317 of the Statutes of 2006" for "the act adding this paragraph" after "made by" in the first sentence of paragraph (3) of subdivision (d); substituted ", which directly or indirectly owns real property," for "that, directly or indirectly, owns real property" after "legal entity" in the third sentence of subdivision (e); and added subdivision (f). Stats. 2011, Ch. 351 (SB 947), in effect January 1, 2012, added "either" after "destroyed if" and substituted "either the land's or the improvement's" for "its" after "50 percent of" in the first sentence of paragraph (1) of subdivision (c) and added subdivision (g).

Note.—Section 2 of Stats. 1986, Ch. 855, provided no reimbursement is required by this act. Sec. 3 thereof provided that this act shall not become operative unless Senate Constitutional Amendment No. 28 of the 1985–86 Regular Session is adopted by the voters. In that event, this act shall become operative on the effective date of Senate Constitutional Amendment No. 28. SCA 28 was adopted by the voters on June 3, 1986, and its effective date is June 4, 1986.

Note.—Section 2 of Stats. 1987, Ch. 219 provided that the amendment made by this act shall apply to substantially damaged or destroyed property for which comparable replacement property was acquired or newly constructed on or after July 1, 1985.

Note.—Section 2 of Stats 1997, Ch. 353 provided that the Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution as a result of the unique difficulties being suffered by homeowners affected by the Northridge earthquake.

Note.—Section 2 of Stats. 2010, Ch. 341 (AB 157), provided that the Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution as a result of the unique difficulties being suffered by homeowners affected by the Cedar Fires of 2003.

Section 3 thereof provided that the Legislature finds and declares that this act fulfills a statewide public purpose because of all of the following:

(a) Former Governor Gray Davis had officially proclaimed a state of emergency declaring that the wildfires that occurred within the County of San Diego, commencing in October 2003, constitute conditions of extreme peril to public health and safety to persons and property within that county, thus qualifying affected persons for various forms of governmental assistance and relief.

(b) This act is consistent with the proclaimed disaster assistance and relief by extending necessary tax relief to affected homeowners, many of whom are still struggling to replace their homes lost in those wildfires or have encountered delays, not of their making, in this process of transferring their base year values of damaged or destroyed property to their replacement property.