Survey Topic — Declines in Value

Description

In 1978, California voters passed Proposition 8, which is a constitutional amendment to article XIII A allowing a temporary reduction to the assessed value when real property suffers a decline in current market value, from either internal or external factors, or both. A decline in value occurs when the current market value of real property is less than its factored base year value (FBYV).

Revenue and Taxation Code section 51(a) provides that for each lien date after the lien date in which the base year value is determined pursuant to section 110.1, the taxable value of real property shall be the lesser of the property's FBYV or its current market (full cash) value, as defined in section 110, as of the lien date. Section 51(e) provides that, while the Assessor is not required to make an annual reappraisal of all assessable property, once a property has been reduced due to a decline in value, for each lien date after the first lien date for which the taxable value of the property is reduced, the value of that property shall be annually reappraised at its full cash value until that value exceeds its FBYV.

Section 619(a) requires the Assessor to inform each assessee of real property on the local secured roll whose property's full value has increased over its full value for the prior year of the assessed value of that property as it shall appear on the completed local roll. Section 619(b) provides that the Assessor shall include a notification of hearings by the county board of equalization, including the appeals filing period and the place where the appeal may be filed, as well as an explanation of the stipulation procedure set forth in section 1607 and the manner in which this procedure may be requested. In addition, section 619(c) provides that in the case of an increase in the property's full value, the notice for decline-in-value properties shall include the FBYV of the property. Section 619(f) provides that the increase does not apply to annual increases in the valuation of property which reflect the inflation rate, not to exceed 2 percent.