SB 364

Bill Subjects

Abstract

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 23 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.