California Proposition 23, Property Tax Exemptions for Earthquake Safety Reconstruction (1984)
Proposition 23 amended the "new construction" provisions of Article XIII A of the California Constitution by providing that when a building is reconstructed or modified to comply with a local earthquake safety ordinance, the reconstructed or modified portion shall not be considered "new construction" for property tax purposes.
The exemption created by Proposition 23 only applies to buildings with "unreinforced masonry bearing walls", including walls built with bricks, cement blocks, or other types of masonry material, which do not have steel reinforcing bars.
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Proposition 23's official ballot summary said, "Under the present provisions of the Constitution, real property is reassessed for taxation purposes when new construction occurs. An exception is made for specified reconstruction done after a disaster. This measure adds an additional exception where an unreinforced masonry bearing wall is reconstructed or improved. This measure excludes the portion of such reconstruction or improvement necessary to comply with any local ordinance relating to seismic safety from reassessment during the first 15 years following the reconstruction or improvement."
The fiscal estimate provided by the California Legislative Analyst's Office said:
- "This measure would reduce property tax revenues to local governments, since modifications or improvements to buildings that are made in order to comply with earthquake safety ordinances would not be added to the property tax rolls for a period of years. The amount of the loss cannot be determined at this time. It would depend upon the value of improvements made by property owners that are necessary to comply with local earthquake safety ordinances.
- "The measure also would affect state expenditures and revenues. It would do so in two ways. First, the state would automatically incur additional, but unknown, costs because under current law the state must replace property tax revenues lost by local school districts. Second, state income tax revenues would increase because property owners affected by this measure would have smaller property tax payments to deduct from income on their state income tax returns. These additional revenues, however, would be considerably less than the total reductions in property tax revenues."
Path to the ballot
The California State Legislature voted to put Proposition 23 on the ballot via Senate Constitutional Amendment 14 (Statutes of 1984, Resolution Chapter 2).