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COVID-19 Update:

California Property Taxes and the Potential for Economic Relief

 

by Scott Donald, Irvine | October 2020

As the impact of the pandemic expands throughout the various commercial real estate sectors, concerns as to how COVID-19 is considered during the 2020 review is gaining momentum.

 

With Senate Bill 1431 currently shelved, which is typically an indication that it will not likely be approved, a best practice would be to work up front with the assessor in Q1 2021 to develop a position with supporting documentation in an attempt to achieve relief prior to the release of the 2021 assessment.

 

The commentary below offers some insight as to where things stand and why we feel it is important begin working up front with assessors.

Proposition 8

Proposition 8 mandates that if the current market value declines below the base year, the Assessor must enroll the lower value. An appeal is often required to ensure this happens.

It is important to note that the annual lien date (date of value) is January 1. Counties that have responded to consideration of COVID-19’s impact have confirmed that any loss of value will be considered for 2021 when the year-end 2020 data is reviewed. This does not preclude filing a property tax appeal for 2020 (1/1/20) and incorporating subject income throughout 2020 when supplying year-end 2019 information.

Section 170 (Disaster Relief)

Misfortune and Calamity disaster relief has been historically utilized for natural disasters, such as the massive wildfires raging across the state. In such instances, California's property tax laws provide a mechanism for the Assessor to adjust assessed values to recognize destruction caused by a calamity or misfortune which damages real or personal property.

It was initially believed that “damage” caused by a calamity or misfortune, as written in Section 170, could be applied to pandemic-related issues. However, this approach has been denied by multiple counties.

SB 1431

Proposed Senate Bill 1431 seeks to include the COVID-19 pandemic in the term "Misfortune or Calamity", making the provisions retroactive to April 2020, and authorizing applications for reassessment in connection with COVID-19.

This bill currently resides with the legislative sub-committee where it has sat dormant since June 18, which is not an encouraging sign that it will pass. If the bill does not pass then pandemic-related issues will not apply to Disaster Relief, and COVID-19 will not be considered under Proposition 8 until January 1, 2021.

 

 

We will continue to monitor the situation. If you have any questions about your property taxes, please contact us.