To: Board of Supervisors
From: Legislation Committee
Report Title: ADOPT a position of “Oppose Unless Amended” on SB 964
☐Recommendation of the County Administrator ☒ Recommendation of Board Committee
RECOMMENDATIONS:
ADOPT a position of “Oppose Unless Amended” on SB 964 (Seyarto) Property Tax: Tax Defaulted-Property Sales.
FISCAL IMPACT:
Unknown. However, sending unclaimed proceeds to the State Controller will create new state costs to manage the funds. In addition, by requiring a county to undertake new duties with respect to excess proceeds from sales of property would impose a state-mandated local program.
BACKGROUND:
At their March 25, 2024 meeting, the Legislation Committee (Supervisors Burgis & Carlson) considered a recommendation to “Oppose Unless Amended” SB 964 (Seyarto) by the County’s Treasurer-Tax Collector. The Legislation Committee voted to recommend an “Oppose Unless Amended” position on the bill to the Board. Because there is no policy in the Board of Supervisors’ adopted 2023-24 State Legislative Platform that relates to this bill, the recommendation from the Legislation Committee is provided to the Board for consideration of an advocacy position on the bill.
SB 964 (Seyarto) was introduced on 01/24/24 and referred to the Committee on Revenue and Taxation. The bill was amended on March 5, 2024 and then re-referred to the Committee on Revenue and Taxation. The bill was set for hearing on April 10 but canceled at the request of the author.
See Attachment A for the text of the bill, as amended.
See Attachment B for the “Oppose Unless Amended” letter from the California Association of Treasurers and Tax Collectors.
LEGISLATIVE COUNSEL'S DIGEST
SB 964, as amended, Seyarto. Property tax: tax-defaulted property sales.
Existing law governs the sale to certain entities of a property that has been tax defaulted for 5 years or more, or 3 years or more, as applicable, in an applicable county, including by authorizing the state, county, any revenue district the taxes of which on the property are collected by county officers, or a redevelopment agency created pursuant to the California Community Redevelopment Law, to purchase the property or any part thereof, as prescribed. Existing law also authorizes a nonprofit organization to purchase, with the approval of the board of supervisors of the county in which it is located, a residential or vacant property that has been tax-defaulted for 5 years or more, or 3 years or more if the property is subject to a nuisance abatement lien, as prescribed. Existing law requires the sales price of a property sold pursuant to the provisions described or referenced above to include certain amounts, including all defaulted taxes and assessments and all associated penalties and costs.
This bill would prohibit a property or property interest from being offered for sale under the provisions described above if that property or property interest has not been offered for sale under the provisions described below, unless certain conditions are satisfied.
Existing law generally authorizes a county tax collector to sell to any person tax-defaulted property 5 years or more, or 3 years or more, as applicable, after that property has become tax defaulted. Existing law authorizes a party of interest in the property to file with the county a claim for the excess proceeds, in proportion to that person’s interest held with others of equal priority in the property at the time of sale, at any time before the expiration of one year following the recordation of the tax collector’s deed to the purchaser and provides for the distribution of those excess proceeds. Existing law requires, if excess proceeds from the sale of tax-defaulted property exceed $150, the county to provide notice of the right to claim the excess proceeds, as prescribed.
This bill would require a county to review a claim filed pursuant to the provisions described above and determine whether the claim is complete and valid, and would prescribe a procedure for curing any deficiency in the claim. The bill would also require the notice described above to include certain information, including the consequences for failing to apply for excess proceeds within the claims period. By requiring a county undertake new duties with respect to the claims process, the bill would impose a state-mandated local program.
Existing law authorizes certain excess proceeds from sales of property pursuant to the provisions described above to be transferred to the county general fund, as specified. Existing law generally governs and regulates the receipt, custody, investment, management, disposal, and escheat of various classes of unclaimed property to the possession of which the state is, or may become, entitled under the provisions of certain law. Existing law creates the Unclaimed Property Fund and requires all money, except permanently escheated money, paid to the state or any officer or employee thereof for deposit in the State Treasury under those provisions to be deposited in the fund on order of the Controller. Existing law provides that moneys in that fund are continuously appropriated to the Controller for specified purposes.
This bill would instead require those excess proceeds from sales of property pursuant to the provisions described above to be transferred to the Controller for deposit in the Defaulted Tax Sale Subaccount, which this bill would establish in the fund to consist of moneys received by the Controller pursuant to the bill’s provisions. The bill would provide that those moneys are available upon appropriation for specified purposes. By requiring a county to undertake new duties with respect to these moneys, this 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.
Vote: majority Appropriation: no Fiscal Committee: yes Local Program: yes
CONSEQUENCE OF NEGATIVE ACTION:
The Board will not have an advocacy position on the bill.