California Assembly Bill AB1332 Introduced / Bill

 BILL NUMBER: AB 1332INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Salas FEBRUARY 27, 2009 An act to amend Section 107.4 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 1332, as introduced, Salas. Taxation: military housing. Existing property tax law requires that all property subject to tax be assessed at its full value, and includes certain possessory interests among those property interests that are subject to tax. Existing property tax law defines a taxable possessory interest to be a use that is independent, durable, and exclusive. Existing property tax law specifies that, for purposes of the definition of a taxable possessory interest, a possession or use is not independent if it is pursuant to a contract that includes, but is not limited to, a long-term lease for the private construction, renovation, rehabilitation, replacement, management, or maintenance of housing for active duty military personnel and their dependents, if the housing units and the private contractor constructing the housing meet specified criteria. Existing law specifies that one of these criteria is a requirement that any reduction, as specified, in property taxes on leased property used for military housing, as defined, inures solely to the benefit of the residents of the military housing through improvements. This bill would delete the requirement that the housing be for military personnel and their dependents and instead specify that the housing be for military personnel or their dependents or both. This bill would clarify that, for the purposes of the definition of a taxable possessory interest, any reduction, as specified, in property taxes on leased property used for military housing, as defined, would inure solely to the benefit of the residents of the military housing through improvements, including community improvements, as specified, and housing improvements, as specified, and the renovation and refurbishment of those improvements. This bill would authorize the private contractor to use the reasonable estimate of property tax savings to construct, or to secure financing for the construction of, the community and housing improvements to be constructed as part of the initial construction of the project, as defined. This bill would authorize the private contractor and the county assessor to agree to extend the time for the initial construction of the project, as specified. This bill would extend the time period the county assessor may make an escape assessment, as specified, by a period equal to the extension of the initial construction period agreed upon by the county assessor and the private contractor. This bill would require the private contractor to submit specified information to the county assessor, as provided, and would require the private contractor's response that was accepted by the military, and the binding project documents, for certain leases, to include specified information. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 107.4 of the Revenue and Taxation Code is amended to read: 107.4.  (a)    For purposes of paragraph (1) of subdivision (a) of Section 107, there is no independent possession or use of land or improvements if that possession or use is pursuant to a contract that includes, but is not limited to, a long-term lease, for the private construction, renovation, rehabilitation, replacement, management, or maintenance of housing for active duty military personnel  and   or  their dependents,  or   both,  if all of the following criteria are met:  (a)   (1)  The military  family  housing constructed and managed by private contractor is situated on a military facility under military control, and the construction of that housing is performed under military guidelines in the same manner as construction that is performed by the military.  (b)   (2)  All services normally provided by a municipality are required to be purchased from the military facility or a provider designated by the military.  (c)   (3)  The private contractor is not given the right and ability to exercise any significant authority and control over the management or operation of the military  family  housing, separate and apart from the rules and regulations of the military.  (d)   (4)  The number of units, the number of bedrooms per unit, and the unit mix are set by the military, and may not be changed by the contractor without prior approval by the military.  (e)  (5)  Tenants are designated by a military housing agency.  (f)   (6)  Financing for the project is subject to the approval of the military in its sole discretion.  (g)   (7)  Rents charged to military personnel or their dependents are set by the military.  (h)   (8)  The military controls the distribution of revenues from the project to the private contractor, and the private contractor is allowed only a predetermined profit or fee for constructing the military  family  housing.  (i)   (9)  Evictions from the housing units are subject to the military justice system.  (j)   (10)  The military prescribes rules and regulations governing the use and occupancy of the property.  (k)   (11)  The military has the authority to remove or bar persons from the property.  ()   (12)  The military may impose access restrictions on the contractor and its tenants.  (m)   (13)  Any reduction or, if that amount is unknown, the private contractor's reasonable estimate of savings, in property taxes on leased property used for military housing under the Military Housing Privatization Initiative (10 U.S.C. Sec. 2871 and  following)   et seq.)  shall inure solely to the benefit of the residents of the military housing through  any of the following  improvements,  such as a child care center   and the renovation and refurbishment of those improvements,  provided by the private contractor  .   :   (A) (i) Community improvements, including, but not limited to, child care centers and recreation centers.   (ii) Housing improvements, including, but not limited to, the construction of additional housing units.   (B) (i) Except as provided in subparagraph (C), the private contractor shall expend the reasonable estimate of property tax savings for an assessment year through the construction of community and housing improvements and the renovation and refurbishment of those improvements each year or within the time period the county assessor may make an escape assessment under Section 532.   (ii) Any expenditure of property tax savings pursuant to this subparagraph shall be in addition to any contractual obligation incurred by the private contractor for the construction, renovation, rehabilitation, replacement, management, or maintenance of the military housing.   (C) (i) The private contractor may use the reasonable estimate of property tax savings that will be realized over the term of the lease of the housing project to construct, or to secure financing for, the construction of community and housing improvements and the renovation and refurbishment of those improvements as specified in paragraph (1) as part of the initial construction of the project.   (ii) If, before the expiration of the time period for the initial construction of the project, the private contractor and the county assessor agree, in writing, to extend the time period, the initial construction time period shall be extended to the time period agreed upon. The time period may also be extended by subsequent agreements, in writing, made before the expiration of the time period previously agreed upon.   (iii) The time period the county assessor may make an escape assessment under Section 532 shall be extended by a time period equal to the extension of the initial construction period agreed upon by the county assessor and the private contractor pursuant to clause (ii).   (iv) Any expenditure of property tax savings pursuant to this subparagraph shall be in excess of the minimum improvements required by the military in its request for proposals or equivalent document, including any subsequent modifications and amendments, for which the private contractor submitted a response that was accepted by the military for the housing project.   (D) For purposes of this section, both of the following shall apply:   (i) The estimate of assessed value that will determine the property tax savings to be realized over the term of the lease of the housing project shall be calculated by using an income approach to value.   (ii) "Initial construction of the project" means construction completed within the first four years of the term of the lease of the housing project.   (n)   (14)  The military family housing is constructed, renovated, rehabilitated, remodeled, replaced, or managed under the Military Housing Privatization Initiative, or any successor to that law.  (o)   (15) For purposes of this section, "military facility under military control" means a military base that restricts public access to the military base.  (b) For purposes of this section, both of the following shall apply:   (1) The private contractor shall, at the request of county assessor, provide all of the following:   (A) The request for proposals or equivalent document, including any subsequent modifications or amendments.   (B) The response submitted by the private contractor and accepted by the military for the housing project.   (C) Upon execution thereof, the lease and any other binding project documents that identify the initial project scope.   (2) For housing projects where the lease was entered into on or after January 1, 2008, and the private contractor would like to expend the reasonable estimate of property tax savings as authorized by paragraph (13), the private contractor's response that was accepted by the military and the binding project documents, shall include all of the following:   (A) The private contractor's reasonable estimate of property tax savings over the term of the lease of the housing project.   (B) A detailed calculation of the private contractor's estimate of property tax savings.   (C) The community and housing improvements to be constructed with the property tax savings.   (D) The projected scope of the housing project if the estimated property tax savings were not available to be used to construct or secure financing for the community or housing improvements.   (3) The county assessor shall not be bound by the information provided by the private contractor pursuant to paragraphs (1) and (2) and may conduct his or her own investigation.   (c) The amendments made to this section by the act adding this subdivision shall apply to any housing project where the contract or lease for the possession or use of land was entered into on or after January 1, 2006.  SEC. 2. Subdivision (m) of Section 107.4 of the Revenue and Taxation Code enacted by Section 1 of Chapter 853 of the Statutes of 2004 and amended by this act shall be interpreted to prevent the possession or use of land or improvements from escaping assessment. Specifically, that if the tax savings for a given assessment year are not expended through constructed improvements within the time period that the county assessor may make an escape assessment for that assessment year, the requirement of subdivision (m) of Section 107.4 of the Revenue and Taxation Code, as amended by this act, is not satisfied. Further, in any hearing involving the appeal of an escape assessment made by the county assessor for a failure to satisfy the requirements of that subdivision (m) of Section 107.4, the county assessor shall have rebutted the presumption affecting the burden of proof in favor of the taxpayer or assessee under subdivision (a) of Section 167 of the Revenue and Taxation Code by submitting a statement that, to the best of his or her knowledge, the requirements of Section 107.4 have not been satisfied. Except as provided by this section, the amendments made to Section 107.4 of the Revenue and Taxation Code by this act shall not be construed as limiting the ability of the county assessor and a taxpayer from extending the period of time within which to make an escape assessment under Section 532.1 of the Revenue and Taxation Code.