California Proposition 3, Acquisition of New Property after Eminent Domain Proceedings (June 1982)
Proposition 3 altered the "change in ownership" provisions of Article XIII A of the California Constitution. Specifically, Proposition 3 changed the rules governing the reappraisal of replacement property for an owner who was displaced from his or her original property as a result of:
- An eminent domain seizure of the original property
- Purchase of the original property by a public entity
- Action taken by a government agency which resulted in inverse condemnation.
Under these circumstances, according to Proposition 3, the acquisition of replacement property by the person whose original property was taken by or sold to the government is not considered a "change in ownership for property tax reappraisal purposes," as long as the replacement property is comparable to the property from which the person was displaced.
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- SECTION 2. (a) The full cash value means the county assessor's valuation of real property as shown on the 1975-1976 tax bill under "full cash value" or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. All real property not already assessed up to the 1975-76 full cash value may be reassessed to reflect that valuation. For purposes of this section, the term "newly constructed" shall not include real property which is reconstructed after a disaster, as declared by the Governor, where the fair market value of such real property, as reconstructed after a disaster, as declared by the Governor, where the fair market value of such real property, as reconstructed, is comparable to its fair market value prior to the disaster.
- (b) The full cash value base may reflect from year to year the inflationary rate not to exceed 2 percent for any given year or reduction as shown in the consumer price index or comparable data for the area under taxing jurisdiction, or may be reduced to reflect substantial damage, destruction or other factors causing a decline in value.
- (c) For purposes of subdivision (a), the Legislature may provide that the term "newly constructed" shall not include the construction or addition of any active solar energy system.
- (d) For purposes of this section, the term "change in ownership" shall not include the acquisition of real property as a replacement for comparable property if the person acquiring the real property has been displaced from the property replaced by eminent domain proceedings, by acquisition by a public entity, or governmental action which has resulted in a judgment of inverse condemnation. The real property acquired shall be deemed comparable to the property replaced if it is similar in size, utility, and function, or if it conforms to state regulations defined by the Legislature governing the relocation of persons displaced by governmental actions. The provisions of this subdivision shall be applied to any property acquired after March 1, 1975, but shall affect only those assessments of that property which occur after the provisions of this subdivision take effect.
Proposition 3's official ballot summary said:
- "Under existing provisions, real property is reappraised for ad valorem tax purposes when a "change in ownership" occurs. This measure provides that "change in ownership" does not include the acquisition of real property as a replacement for comparable property if the person acquiring the real property has been displaced from the property replaced by eminent domain proceedings, by acquisition by a public entity, or governmental action resulting in a judgment of inverse condemnation. Applies to property acquired after March 1, 1975, for assessments made after date this measure takes effect. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: Unknown, but probably significant, loss of property tax revenues, and minor to moderate administrative cost increases to local governments. Under existing law, loss of revenue to local school and community college districts would be offset by increased state aid, which would increase state costs. State income tax revenues would increase a minor amount due to lower property tax deductions."
The fiscal estimate provided by the California Legislative Analyst's Office said:
- "This measure would result in an unknown, but probably significant, loss of property tax revenues to local governments. Cities, counties and special districts would have to bear these property tax losses. (Although school and community college districts would also lose property tax revenue, under existing law these losses would be fully offset by increases in state aid.) County assessors and tax collectors would probably experience minor to moderate administrative costs to revise assessments of properties affected by this measure.
- This amendment would affect state expenditures and revenues in two ways. First, the state would incur additional, but unknown, costs for providing aid to local school and community college districts, as noted above. Second, state income tax revenues would increase as a result of this measure because these property owners would have lower property tax deductions on their income tax returns. These income tax revenue increases, however, would represent only a small fraction of total property tax revenue reductions.
Path to the ballot
- See also: Amending the California Constitution
The California State Legislature voted to put Proposition 3 on the ballot via Assembly Constitutional Amendment 4 (Statutes of 1982, Resolution Chapter 5).
|Votes in legislature to refer to ballot|
- PDF of the mailed June 8, 1982 voter guide for Proposition 3
- Hastings California I&R database/Proposition 3
- California Law Library, June 8, 1982 ballot propositions