Linda Santillano Property Tax Manager October 2 2016 Presentation Objectives Background of Proposition 13 and its effect on property taxes Property Tax functions by County Departments Overview of Property Tax Bills ID: 677480
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Slide1
Property Tax Overview
Linda Santillano
Property Tax Manager
October 2, 2016Slide2
Presentation Objectives:Background of Proposition 13 and its effect on property taxes.
Property Tax functions by County Departments
Overview of Property Tax BillsOverview on how Property T
axes are Allocated
Property Tax Overview
Slide3
Local jurisdictions had authorization to set their own tax rate on an annual basis.Rate was driven by the amount of revenue needed to finance the desired level of service.
Rate was independent of other jurisdictions.
The sum of all rates for each taxing entity was applied on tax bills.
Property Taxes Before Proposition 13Slide4
San Bernardino County property tax rate was 2.84 percent in FY1977-78
Average statewide property tax rate was 2.67 percentStatewide property tax revenue was approximately $10.3 billion and represented 57% of combined city and county general purpose revenues.
Property Taxes Before Proposition 13Slide5
Proposition 13 was passed by voters on June 6,1978 by a vote of 65% to 35%.Transferred control over property tax allocations to the state.
Prop. 13 limited the property tax rate to 1% of assessed value, exclusive of bonded indebtedness approved by the voters.
Annual assessed value adjustments were limited to the lesser of the increase in the CA Consumer Price index or two percent.
Resulted in a reduction of $7 billion in statewide property taxes in the first year of implementation.
Property Taxes Post Proposition 13Slide6
In an effort to mitigate the fiscal distress local governments were facing and to implement an allocation process the legislature approved a series of legislation.
Senate Bill 154 (SB 154) June 1978Allocated property taxes at the 1% based on the share of property taxes taxing entities received prior to Prop. 13 and
Provided state assistance / “bailout” block grant.Assembly Bill 8 (AB 8)
1979
Established the property tax allocation system.
Established ongoing “bailout” for local governments.
Property Taxes Post Proposition 13Slide7
Property TaxesSan Bernardino County levies, receives and apportions approximately $2.8 billion in property tax revenues and direct charges annually.
Four departments share the property tax responsibilities:
Assessor-Recorder-ClerkTax Collector
Auditor-Controller
Assessment Appeals Board (Clerk of the Board)
Functions of Property Tax Departments Slide8
Property Tax ProcessSlide9
The Assessor is responsible for:Maintaining inventory of assessable propertyMaintaining ownership and location information
Determines ValuationReal propertyPersonal property
Business propertyManufactured housingBoats, airplanes
Records exemptions (if owner is eligible)
Homeowner’s Exemption
Assessor ResponsibilitiesSlide10
The County Assessor is responsible for submitting the local roll to the County Auditor-Controller on or before July 1st
. The local roll consists of:Secured roll – property valuations on which the lien date, January 1
st, is sufficient to secure the payment of taxes. (land, mineral rights, improvements, personal property, trade fixtures and exemptions)
Unsecured roll
– valuations are comprised of improvements, business trade fixtures, business personal property, boats.
The CA Board of Equalization (BOE) is responsible for submitting the Utility roll on or before July 31
st
.
Comprised of unitary and nonunitary values; examples of nonunitary
are railroad property and property owned by a state assessed utility company.
Assessor
Responsibilities Slide11
The Auditor-Controller is responsible for:Calculating and applying tax rate(s) for levying agencies by TRAApplying direct charges
Auditor-Controller ResponsibilitiesSlide12
Auditor-Controller Responsibilities
Upon receipt of the secured roll from the Assessor and the utility roll from the Board of Equalization, the values are loaded into the property tax system and reconciled before proceeding with the tax rate calculations.
Tax Rate Calculations
Agencies are provided with valuations and applicable deadlines on an annual basis. The rates can be calculated / applied as follows:
The levying agency can submit the rate along with a Board approved resolution
to the
Auditor-Controller.
(estimated revenue is calculated)
Agencies or Agent can submit bond levy requirements for the fiscal year and have the Auditor-Controller calculate the rate.
(rate and estimated revenue is calculated)Slide13
Auditor-Controller Calculated Tax RateSlide14
Auditor-Controller Calculated Tax Rate (continued)Slide15
Board Approved Tax Rates
Government Code Section 29100 requires the Board of Supervisors to adopt the rates being applied to the secured roll on or before October 3 of each year.
County Auditor-Controller presents the BAI on the first Board meeting in September in order to extend the tax charge to the Tax Collector no later than the third week in September.Slide16
Board Approved Tax RatesSlide17
Auditor-Controller Responsibilities
Applying Special Assessments or Direct Charges to the Tax Roll
A Special Assessment or direct charge is a non ad valorem amount levied on a per parcel basis which may include charges for services, improvement district charges, community facilities district (Mello-Roos), special taxes and fees.
Agency must agree and guarantee that the taxes, fees, or assessments that are being applied are in compliance with all requirements of state law, including but not limited to, Articles XIIC and XIID of the CA constitution (Proposition 218) and other applicable laws that allow the placement on the tax bill.
Important deadlines
July 1 – Preliminary notification must be submitted by agency
August 10 – Submissions are due
September 5 – Last day to submit correctionsSlide18
Auditor-Controller Responsibilities
The Auditor-Controller extends the secured roll and tax charge to the Tax Collector to bill and collect.
The secured tax charge includes :
Local secured roll charges
$1,999,912,328.40 Secured Tax Charge
255,300,053.59
Direct Charges
$2,255,212,381.99 Total
State Utility ChargeSlide19
The Tax Collector is responsible for:Printing and mailing of tax billsCollecting tax revenue
1% general tax levyDebt service overridesDirect charges
Penalties and interest Recording taxes received by parcelConducting tax sales on eligible properties
Tax Collector ResponsibilitiesSlide20
Unsecured tax bills are mailed on or before July 31Secured tax bills are mailed before November Supplemental tax bills are mailed out in January, May and August.
Important dates to remember:August 31 – Unsecured tax bills payment deadline. A 10% penalty is added plus a $76 collection fee if the bill is not paid timely.
October 31 – Unsecured tax bills in default if not paid by 5pm and a penalty of 1-1/2% is added per month on unpaid amounts.
December 10
– Secured tax bill first installment payment deadline.
April 10
– Secured tax bill second installment payment deadline.
June 30
– Delinquent Secured accounts are transferred to delinquent tax roll and additional penalties 1-1/2% per month on unpaid amounts and $15 redemption fee are added.
Tax
Collector
Responsibilities Slide21
The Auditor-Controller is responsible for:Distribution of 1% ad valorem property tax to local agencies.
Distribution of debt override revenue and direct charge revenue to agencies.
Notice that contact information for the levying agency is provided on bills.
Auditor-Controller Distribution ResponsibilitiesSlide22
Calculation of Tax Bill Amount (Total Net Value)
Parcel Number
Tax Rate Area
Total Tax Rate
0283-215-16-0000
13010
0.012595
Description
Assessed
Land
56,387.00
Improvements/Fixtures
131,568.00
Homeowner's Exemption
(7,000.00)
Net Value
180,955.00
Service Agency
Tax Rate
Applied to Value Amount
Amount
General Tax Levy
1.0000%
180,955.00
1,809.55
Loma Linda Vector Control
per parcel charge
5.62
Street Light Benefit AD1
per parcel charge
38.00
San Bndo Comm College Bond
0.0403%
180,955.00
72.92
School Bonds
-
Redlands Unified Bond
0.0567%
180,955.00
102.60
School State Repayment
-
San Bndo Valley Muni Water Debt Service
0.1625%
180,955.00
294.05
Total Tax Rate
Total Taxes Due
1.2595%
2,322.74 Slide23
Calculation of Tax Bill Amount (w/ L& I Rate)
Parcel Number
Tax Rate Area
Total Tax Rate
0183-561-45-0000
9006
0.010329
Description
Assessed
Land
6,520.00
Improvements/Fixtures
41,340.00
Homeowner's Exemption
(7,000.00)
Net Value
40,860.00
Service Agency
Tax Rate
Applied to Value Amount
Amount
General Tax Levy
1.0000%
40,860.00
408.60
Barstow City - Debt Service
Barstow Unified Bond
0.0329%
40,860.00
13.44
School Bonds
-
School State Repayment
-
Odessa Water Debt Service
-
Mojave Water Bond Debt #2
0.0550%
47,860.00
(Land + Imp)
26.32
Mojave Water Bond Debt #1
0.1125%
6,520.00
(Land only)
7.33
Total Tax Rate
Total Taxes Due
1.0329%
455.69 Slide24
The Auditor-Controller conducts approximately twenty property tax apportionments on an annual basis including:Homeowner’s Exemption Reimbursements
RDA Dissolution / RPTTF distributionsFYE Teeter Plan ReconciliationAn apportionment schedule is prepared and provided to local taxing entities for cash flow planning purposes.
Prepares reports for corresponding apportionments.
Auditor-Controller
Responsibilities Slide25
Apportionment ScheduleSlide26
The Auditor-Controller apportions taxes to local taxing entities utilizing the AB8 formula below:
+ Amount received in prior year (base year)+ Annual growth for their boundaries
+/- Tax Transfers for Jurisdictional Changes+/- Tax Equity Allocation (TEA – No/Low Tax Cities)
- ERAF Contributions (if applicable)
= Total amount per taxing entity
/ Divided by total for all taxing entities within County
= AB8 Factor*
*1% GTL collections, less RDA increment, less refunds, multiplied by the AB8 factor is the apportionment amount
.
Property Tax Apportionment ProcessSlide27
AB8 Factor Calculation Process - Step 1
Record prior year revenue / base year values.
Valuation reports must be loaded to the system and reconciled.Valuations are recorded by the Tax Rate Area (TRA)
Base year (prior year) valuations are loaded into the system for the new roll year and reconciled to the prior year AB8 report
(PI739E04 report – allocation percentage report)
Property Tax Apportionments / AB8 ProcessSlide28
AB8 Factor Calculation Process - Step 1 (PY Values/Revenue)
Property Tax Apportionments / AB8 ProcessSlide29
AB8 Factor Calculation Process - Step 2
Calculate the annual growth. Growth is defined to be:
Current Year Equalized Roll AV (net of RDA Value) - Prior Year Equalized Roll AV (net of RDA Value)
= Annual Growth (or value increment)
Property Tax Apportionments / AB8 ProcessSlide30
Property Tax Apportionments / AB8 ProcessSlide31
AB8 Factor Calculation Process - Step 3
Apply Tax Transfers for Jurisdictional Changes
In order to calculate growth (increment) correctly, we must align the base year values by TRA with the new year TRA’s added / deleted in the current year.Tax transfers are negotiated through the LAFCO process for the proposed annexation /detachment by the affected taxing entities.
Board of Equalization (BOE) provides “Tax Rate Area Change Notices” on an annual basis instructing the Auditor-Controller what actions need to be applied to TRAs and taxing entities.
Property Tax Apportionments / AB8 ProcessSlide32
AB8 Factor Calculation Process - Step 3 continued
Property Tax Apportionments / AB8 ProcessSlide33
AB8 Factor Calculation Process - Step 4
Tax Equity Allocations (TEA) (No/Low Cities)Legislation requires counties to shift property tax revenues to certain cities if they meet the following criteria:
No Cities – Levied no tax rate in 1975-76, 1976-77 or 1977– 78.Low Cities – receive less than 7% of the total taxes within the city for all jurisdictions.
Revenue and Taxation Code Section 97, 97.5, 98 and 98.6
T
wo cities in San Bernardino County were determined to be a qualifying cities in 1988-89; Rancho Cucamonga and Victorville.
The TEA calculation is performed on an annual basis to determine if a TEA allocation is required.
Property Tax Apportionments / AB8 ProcessSlide34
AB8 Factor Calculation Process - Step 5 ERAF Contributions What is ERAF?
ERAF is the Educational Revenue Augmentation FundEstablished by the state to resolve a budget deficit
In 1992/93 (ERAF I) and 1993/94 (ERAF II) the State legislature permanently shifted over $3 billion of annual AB8 property tax revenues from local taxing entities.ERAF I and II are components of the AB8 revenue and should be considered for jurisdictional changes, TEA, unitary, etc.
Property Tax Apportionments / AB8 ProcessSlide35
AB8 Factor Calculation Process - Step 6
The sum of steps 1 thru 5 equal the total amount per taxing entity
Total amount per taxing entity divided by the total for all taxing entities within County = AB8 factor. ($1,020,572.07 / 1,309,305,667.32 = 0.077947 for the City of Loma Linda)
Property Tax Apportionments / AB8 ProcessSlide36
Example Tax BillSlide37
TRA 13010 projected share for AB8 factors
Property Tax ApportionmentsSlide38
The Supplemental Roll and Tax Charges are extended in January, May and August.Supplemental bills are a result of reassessments of real property based on the date of event for:
Changes in ownership New constructionThe supplemental factors are the same as the AB8 factors for most agencies.
The AB8 factors are modified to create supplemental factors for K-12 schools pursuant to R&T Code Section 75.70(c)(6).
Property Tax – Supplemental Property TaxesSlide39
The CA Dept. of Education provides the Average Daily Attendance (ADA) factors for K-12 schools on an annual basis to the County Auditor-Controller to calculate the supplemental factors.
ADA and supplemental factors for basic aid schools is zero pursuant to R&T Code Section 75.70(d)(2)San Bernardino County currently has two K-12 districts identified as basic aid:
Cucamonga ElementaryBaker Unified School District
Property Tax – Supplemental Property TaxesSlide40
Average Daily Attendance Supplemental FactorsSlide41
Property Taxes are apportioned to Redevelopment Agencies (RDAs) outside of the AB8 factors and are disbursed in accordance with RDA Dissolution legislation ABX1 26, AB1484 and SB107.RDAs receive the tax increment above the frozen base.
The tax increment revenue is held in the Redevelopment Property Tax Trust Fund (RPTTF) and disbursed twice a year on January 2 and June 1
The County Auditor-Controller is the administrator for all the RPTTF funds and is responsible for all pass-through calculations and the oversight of several wind-down activities.
RDA Tax Increment / RPTTF ApportionmentsSlide42
The RPTTF apportionments are disbursed in the following order of priority:Auditor-Controller administration cost
Pass-through payments to affected taxing entities
Payment to the RDA Successor Agency for approved items on the Recognized Obligation Payment Schedule (ROPS)Tax Allocation Bonds
Revenue Bonds
Other Enforceable Obligations
Successor Agency Administration Cost
Residual payments to affected taxing entities.
RDA Tax Increment / RPTTF ApportionmentsSlide43
Senate Bill 418 was enacted in 1985 requiring the State Controller to audit the counties’ apportionment and allocation methods and report the results to the California State Legislature.
Audit objective – review the County’s apportionment and allocation of property tax revenue to local taxing entities, including schools within its jurisdiction to determine if the county complied with Revenue and Taxation requirements.
Extensive review and testing is conducted by SCO on the AB8 factor computation and apportionments.
Property Tax Oversight – SCO AuditsSlide44
Property Tax DistributionSlide45
Property Tax DistributionSlide46
Property Tax DistributionSlide47
Taxes Allocated Over 10 Year PeriodSlide48
Assessment Roll Historical TrendsSlide49
Questions?
Property Tax OverviewSlide50
Sources:California State Association of County Auditors – California Property Tax Managers’ Reference Manual
Demystifying the CA Property Tax Apportionment System – “A Step-by Step Guide through the AB 8 Process”
Understanding California’s Property Taxes www.lao.ca.gov
“Property Taxes: Why Some Local Governments Get More Than Others”
www.lao.ca.gov
Property Taxes Law Guide
www.boe.ca.gov
Pam Elias, Riverside County Property Tax Division Chief
Property Tax Overview