By Judith Ann Cregan
Copyright © 2000 by University of the McGeorge School of Law
JD, McGeorge School of Law, University of the Pacific
to be conferred 2000
MBA Santa Clara University, 1987
B.S., California Polytechnic State University, San Luis Obispo, 1979
Table of Contents
The Initiative Review is produced by the Governmental Affairs Student Association of the McGeorge School of Law
Proposition 1 is a proposed amendment to Chapter XIIIA of the California state constitution. Chapter XIIIA was added to the California Constitution in 1978 by Proposition 13. Proposition 13 was written at a time when property values in California were rising rapidly. As the property values rose, so too did the property taxes. As a result of Proposition 13, property taxes in California are no longer calculated on the basis of the property's current market value, but on the basis of the purchase price plus a modest inflation factor of 2% per year. This resulted in tax savings for property owners. As long as property owners stay on the same property, do not sell and purchase or remodel their house, their property taxes stay at a relatively low rate with predictable increases.
Proposition 13 included a provision to allow the state to reassess the property tax basis when property is purchased, changes ownership or improvements are made to the house or other structures on the property. There are some exceptions. For example, improvements to a home to meet building code standards for earthquake safety do not trigger reassessment of the property tax basis.
Proposition 1, titled Property Taxes: Contaminated Property, is a proposed amendment to allow property contaminated with toxic substances to be excluded from Proposition 13's reassessment provisions. As a result, the owner of contaminated property can repair or replace the property without being subject to reassessment.
A. CURRENT GENERAL RULE
As a general rule, a property owner must pay 1% of the full cash value of the property in property taxes. (Cal. Const. XIIIA ' 1.) The full cash value of the property is based on the purchase price of the property, except in the case where the owner owned the property in 1975 and has continued to own the property since that time. In that case the full cash value was taken from the property tax statement for 1975-76. (Cal. Const. XIIIA ' 2(a).) The full cash value can be increased by a 2% inflationary figure every year. (Cal. Const. XIIIA ' 2(b).) If the value of the property drops, there is a provision to adjust the full cash value downward. (Cal. Const. XIIIA ' 2(b).) A new full cash value, based on a market rate assessment, is assigned to the property if the property owner adds structures, such as a house or shed, to the property or adds to existing structures, such as adding a room to a house. In addition, the property owner loses the beneficial full cash value when the property is sold or changes ownership, and the property is then reassessed at market rate. (Cal. Const. XIIIA ' 2(a).)
B. CURRENT EXCEPTIONS TO THE RULE
Several exceptions to the rule were included in Proposition 13 or other have been added. Two exceptions were mandatory as written, meaning the Legislature was required to pass a law to authorize the exception. The others were written as permissive exceptions, that is the Legislature could, if it chose, enact a law to grant the exception.
1. Exceptions to reassessment of "newly constructed" structures:
A property will not be reassessed if the repairs or improvements to a home are to
meet building code standards for earthquake safety. The improvements can only be done
on load bearing walls constructed of unreinforced masonry. This is a mandatory exception.
(Cal. Const. XIIIA ' 2(a).)
A property will not be reassessed if repairs are made to a house to fix damage caused by a state declared disaster, such as the Loma Prieta earthquake or major flooding. When the repair is made, an individual cannot take the opportunity to make the house more valuable and stay within this exception. This is a mandatory exception. (Id.)
If the local government declares that the building presents an earthquake hazard and earthquake mitigation technologies are used as prescribed by the State Architect, a property will not be reassessed if the work is to install seismic retrofitting improvements as defined by the Legislature. (Cal. Const. XIIIA ' 2(c)(4).) This exception was enacted into law but is set to expire July 1, 2000.
A property will not be reassessed if the single or multiple family dwelling is made to be accessible to a severely and permanently disabled person who permanently resides in the building. This includes such things as adding ramps or widening doors, etc. (Cal. Const. XIIIA ' 2(c)(3).)
A property will not be reassessed if the existing building or structure other than a single or multiple family dwelling is made to be more accessible or usable by a disabled person. This does not include constructing a new building or adding an addition to an existing building. (Cal. Const. XIIIA ' 2(c)(5).)
A property will not be reassessed if a fire detection system or fire extinguishing system is added (such as fire sprinklers) or adding or improving fire exits, as defined by law. (Cal. Const. XIIIA ' 2(c)(2).)
A property will not be reassessed if an active solar energy system is added. (Cal. Const. XIIIA ' 2(c)(1).) This exception was enacted and then repealed by the Legislature.
2. Exceptions to reassessment if you move or change ownership:
A property will not be reassessed if an individual is over the age of 55 that person
can transfer the current full cash value to their new house once in their lifetime.
The new house must be no more expensive than the house that was sold. (Cal. Const.
XIIIA ' 2(a).)
A property will not be reassessed if the government takes property under eminent domain, or a public entity acquires property, or if some action by the government results in an inverse condemnation. All of these governmental actions in some way forces an individual to move, so the government allows that person to take the old full cash value with them to the new property, as long as the property is roughly the same in value as the old property and used in a similar manner. (Cal. Const. XIIIA ' 2(a).)
A property will not be reassessed if a disaster substantially damages or destroys the property and the Governor officially declares the event a disaster. An individual can take the full cash value from the old property as long as the new property is no more expensive than the old one. This is a mandatory provision. (Cal. Const. XIIIA ' 2(e)(1).)
A property will not be reassessed if the purchase or transfer is between spouses or in a divorce settlement or legal separation. (Cal. Const. XIIIA ' 2(g).)
A property will not be reassessed if the transfer or purchase is between parent and child, it is the transferor's principal residence and if the property is of the first $1,000,000 of the full cash value of all other real property between parents and their children as defined by the Legislature. (Cal. Const. XIIIA ' 2(h)(1).)
If the transfer is the transfer or purchase is between grandparents and grandchildren and the parents are deceased and if the property is of the first $1,000,000 of the full cash value of all other real property between parents and their children as defined by the Legislature. (Cal. Const. XIIIA ' 2(h)(2).)
In addition to the above listed exceptions, the legislature has spelled out many transfers of title to property that are included in the exceptions.
C. NATURE OF THE PROBLEM AND PROPOSITION 1's SOLUTION
Suppose that Mary bought a piece of property with a house in 1993 for $150,000. The existing law, Chapter XIIIA of the state constitution, says that for property tax purposes, if Mary bought after 1975 the purchase price would provide the base from which her property would be assessed. As a result, in 1993 her property would be assessed at $150,000 and she would pay 1% of this, $1,500, in state property tax that year. Now if the price of properties in her neighborhood doubled in the next five years, her house would have a market value of $300,000. If state property taxes were assessed on this market value, for her property tax bill in 1998 she would have to pay 1% of $300,000, which is $3,000. But the existing law says that the amount of state property tax she pays is not based on the market value, but on what is called the "full cash value." The full cash value can be very different from the market value. The market value is what someone would pay her to buy her property, in this case $300,000. The full cash value is what she paid for her home when she bought it, plus 2% each year, which would come to $165,612 in 1998. Instead of having to pay $3,000 in state property tax in 1998, her tax bill for the year is only $1,656.
Now suppose that there was an earthquake and Mary's home that was worth $300,000 was damaged and she needs to repair it. Once she rebuilds, how does the state assess the property for property taxes? Does the state reassess the house at its full $300,000 market value, or does it still assess her property at the original purchase price plus 2% each year, which came to $165,612? Currently, there is a provision to allow her to continue to use her pre-rebuild assessment, $165,612, so Mary will not suddenly see a big jump in her state property tax after she rebuilds following a natural disaster.
Suppose Mary's home is declared a toxic waste site by the state or federal government because in the 1940s a local factory dumped benzene in what is now her back yard. She wants to move to a safer place. Perhaps her insurance coverage will pay for her to buy a new home. If she moves now and buys a house that is comparable to her existing house, $300,000, will she have to pay property tax on the full $300,000 market value? Under current law, because there is no exception for contaminated property, the answer is, "yes," she will have to pay property tax on the full market value. Her property taxes will be based on the $300,000 purchase price, so she will start 1998 with a $3,000 tax bill which will increase each year at the regular 2% rate.
If Proposition 1 passes, she would be able to transfer the full cash value of the old property, $165,612, to her new $300,000 property. What is the difference to Mary? Well, if she is allowed to transfer the old full cash value base to her new property, her total tax bill for the next five years will be $8,790. If she must start with the $300,000 and use that as the base for her new full cash value, she will have a total tax bill of $15,768 for that same five year period. Carry this out for the full time she owns the property and the savings become significant under Proposition 1.
D. QUALIFIED PROPERTIES UNDER PROPOSITION 1
In order for property to qualify for this new preferential tax treatment, four requirements must be met:
1. For residential property, the property must be judged "unfit for human habitation" because of the health hazards that result from the contamination. For nonresidential property, the property must be judged "unhealthy and unsuitable for occupancy" due to the health hazards resulting from the contamination.
2. The state or federal government must designate the site as either a toxic/environmental hazard or as an environmental cleanup site.
3. The property must have a building or structure on it and the building or structure must be "substantially damaged" or destroyed because of the toxic cleanup process.
4. The owner of the property can not have caused or agreed to the environmental problem in the first place.
E. STATUTORY INTERPRETATION OF PROPOSITION 1
Proposition 1 appears to be carefully drafted and has no significant problems of statutory interpretation. Proposition 1 does not raise any constitutional issues. Only two relatively minor statutory issues are presented:
First, in the requirements to qualify for the Proposition 1 exemption, the terms "unfit for human habitation" and "Unhealthy and unsuitable for occupancy" are not defined in the text of the proposed amendment. Currently each county health department determines when a building is considered unhealthy enough to be "Unfit for human habitation." Therefore, the qualifications will likely vary county by county.
Second, in the requirement that property be "Substantially damaged," Chapter XIIIA(f)(1) defines the term as "property is substantially damaged ... if it sustains physical damage amounting to more than 50 percent of its value immediately before the disaster. Damage includes a diminution in the value of the property as a result of restricted access caused by the disaster." It is not clear if damage during cleanup of the toxic substances that may limit access to the property will also be allowed in the calculation of diminution in value.
Property Taxes: Contaminated Property.
Legislative Constitutional Amendment
Directs Legislature to allow repair or replacement of environmentally contaminated
property or structures, as defined, without increasing the tax valuation of the original
or replacement property.
For tax purposes, property value is the assessed valuation for 1975-76 unless the property is reappraised upon purchase, new construction, or change in ownership. For property rendered unusable by environmental contamination, this measure allows either: transfer of the base-year valuation to a replacement property if the contaminated property is transferred; or exclusion of repair or replacement of damaged structures from the definition of Anew construction."
Summary of Legislative Analyst's
Estimate of Net State and Local Government Fiscal Impact:
Property tax revenue losses probably less than $1 million annually in the near term
to schools, counties, cities, and special districts.
School revenue losses (about half of total) would be made up by the state.
Final Votes Cast by the Legislature on ACA 22 (Proposition 1)
Assembly: Ayes 76 Senate: Ayes 30
Noes 0 Noes 3
Analysis by the Legislative Analyst
Local property taxes are based on each property's assessed value. As long as a property has the same owner, its assessed value generally cannot increase by more than 2 percent each year --even if the property's market value is increasing at a faster rate. As a result, the market value of many properties is higher than the assessed value. Whenever a property is sold or transferred, it is reappraised and its assessed value generally increases to reflect the current market value. In such cases, the property taxes for that piece of property also increase.
Current law allows for some exceptions to this general rule. For instance, homeowners over the age of 55 generally can transfer their current assessed value to a replacement home within their county and in some cases to other counties. Therefore, these homeowners do not experience an increase in property taxes when they purchase a replacement home.
This constitutional amendment allows property owners to transfer their current assessed value to a replacement property within their county if the original property was environmentally contaminated. This contamination could be caused, for example, by the presence of toxic or hazardous materials. The replacement property could involve either (1) the repair or reconstruction of a damaged structure on the contaminated site or (2) purchase of a similar structure on a different site.
In order to qualify for this special treatment, all of the following conditions would need to be met:
A residential property (for example, a house or condominium) is made uninhabitable
or a nonresidential property (for example, a store or business) is made unusable by
an environmental problem.
The current owner did not know of the environmental problem when the property was purchased or built.
A state or federal government agency designates the property as a toxic hazard, environmental hazard, or environmental cleanup site.
A property is substantially damaged or destroyed by the environmental cleanup efforts.
A lead government agency stipulates that the property was not made uninhabitable or unusable by an act or omission of the current owner.
The measure applies only to replacement property acquired, constructed, or repaired (1) after January 1, 1995 and (2) within five years after ownership of the contaminated property is sold or transferred. A county would be given the authority to extend this exemption to property owners moving from other counties and replacing environmentally contaminated property.
By exempting these replacement properties from appraisal at market value, this measure could reduce property tax revenues to local governments. Currently, there appear to be relatively few properties that would qualify for this special treatment. As a result, the annual property tax revenue loss would likely be less than $1 million in the next few years. However, changes in environmental laws or the discovery of new environmental contaminations could significantly increase the number of eligible properties in the future.
Counties, cities, and special districts would bear about one-half of any annual revenue loss. The remainder of the loss would affect schools and community colleges, which also receive property tax revenue. Under existing law, these losses to schools and community colleges would be made up by the state.
Argument in Favor of Proposition 1
Proposition 1 will provide property tax relief for innocent homeowners who are victims of environmental disasters. Specifically, if a family's home is destroyed as part of an environmental clean-up, Proposition 1 will enable those families to buy a similarly-valued home or rebuild their home once the area has been cleaned of the hazard.
Families have been protected from excessive property tax increases for 25 years because of Proposition 13. Taxes have remained low and predictable. Unfortunately, when homeowners, through no fault of their own, have their homes declared toxic waste sites, Proposition 13 protections no longer exist.
As we have become more aware of the existence and dangers of toxic waste, we have discovered previously undetected areas where toxic materials were dumped many years ago. Unfortunately, in some of these areas, residential neighborhoods have been built right on top of these toxic sites. Unsuspecting home buyers bought these homes without any knowledge of the terrible dangers on their property.
When these toxic sites have been discovered, some families have been forced to abandon their homes. Many times these homes are subsequently destroyed by order of government agencies as part of the necessary clean-up of this toxic waste.
In addition to the shock of being forced out of their home, these homeowners are also faced with potentially huge property tax increases in their new homes. The protection they enjoyed under the property tax limitations of Proposition 13 is lost. The new higher property taxes are preventing these people from obtaining another home of the same value and quality that they previously enjoyed. This is simply wrong and tragically unfair to innocent victims.
That is why I introduced in the Legislature ACA 22, which is now on your ballot as Proposition 1. The Legislature voted unanimously to put Proposition 1 on the ballot for your approval. It is only fair to allow people who have lost their home to be able to maintain their existing level of property taxes.
Under the current law, we already protect innocent homeowners who lose their home to natural disasters. If an earthquake, fire or flood destroys our home, you are allowed to rebuild or buy a new home without losing your existing Proposition 13 tax protection. This same degree of fairness should be extended to those people whose property is destroyed by health and life-threatening toxic waste buried on their residential property.
The last thing the victims of this type of catastrophe need is a tax increase. Proposition 1 will guarantee these people are treated fairly and not forced into paying higher taxes because of their misfortune.
One of my highest priorities in the Legislature has been to protect taxpayers against unnecessary and unwarranted taxes. Forcing people who have faced a major disaster to also pay higher property taxes is flat out wrong. That is why taxpayer associations, homeowner organizations and environmental groups have all come together to support Proposition 1.
Please join with us and vote for fairness. Vote YES on Proposition 1.
ASSEMBLYMAN CURT PRINGLE
Former Speaker, California State Assembly
This amendment proposed by Assembly Constitutional Amendment 22 (Statutes -of 1998, Resolution Chapter 60) expressly amends the California Constitution by amending a section thereof; therefore, existing provisions proposed to be deleted are printed in strikeout type and new provisions proposed to be added are printed in italic type to indicate that they are new.
PROPOSED AMENDMENT TO SECTION 2 OF ARTICLE XIII A
SEC. 2. (a) The full cash value "full cash value" means the county assessor's valuation of real property as shown on the 1975-76 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, "newly constructed" does not include real property which that is reconstructed after a disaster, as declared by the Governor, where the fair market value of the real property, as reconstructed, is comparable to its fair market value prior to the disaster. Also, the term "newly constructed" shall does not include the portion of reconstruction or improvement to a structure, constructed of unreinforced masonry bearing wall construction, necessary to comply with any local ordinance relating to seismic safety during the first 15 years following that reconstruction or improvement.
However, the Legislature may provide that, under appropriate circumstances and pursuant to definitions and procedures established by the Legislature, any person over the age of 55 years who resides in property which that is eligible for the homeowner's exemption under subdivision W of Section 3 of Article XIII and any implementing legislation may transfer the base year value of the property entitled to exemption, with the adjustments authorized by subdivision (b), to any replacement dwelling of equal or lesser value located within the same county and purchased or newly constructed by that person as his or her principal residence within two years of the sale of the original property. For purposes of this section, "any person over the age of 55 years" includes a married couple one member of which is over the age of 55 years. For purposes of this section, "replacement dwelling" means a building, structure, or other shelter constituting a place of abode, whether real property or personal property, and any land on which it may be situated. For purposes of this section, a two-dwelling unit shall be considered as two separate single-family dwellings. This paragraph shall apply to any replacement dwelling which that was purchased or newly constructed on or after November 5, 1986.
In addition, the Legislature may authorize each county board of supervisors, after consultation with the local affected agencies within the county's boundaries, to adopt an ordinance making the provisions of this subdivision relating to transfer of base year value also applicable to situations in which the replacement dwellings are located in that county and the original properties are located in another county within this State. For purposes of this paragraph, "local affected agency" means any city, special district, school district, or community college district which that receives an annual property tax revenue allocation. This paragraph shall apply to any replacement dwelling which that was purchased or newly constructed on or after the date the county adopted the provisions of this subdivision relating to transfer of base year value, but shall not apply to any replacement dwelling which that was purchased or newly constructed before November 9, 1988.
The Legislature may extend the provisions of this subdivision relating to the transfer of base year values from original properties to replacement dwellings of homeowners over the age of 55 years to severely disabled homeowners, but only with respect to those replacement dwellings purchased or newly constructed on or after the effective date of this paragraph.
(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 does not include any of the following:
(1) The construction or addition of any active solar energy system.
(2) The construction or installation of any fire sprinkler system, other fire extinguishing system, fire detection system, or fire-related egress improvement, as defined by the Legislature, which that is constructed or installed after the effective date of this paragraph.
(3) The construction, installation, or modification on or after the effective date of this paragraph of any portion or structural component of a single or multiple family single- or multiple-family dwelling which that is eligible for the homeowner's exemption if the construction, installation, or modification is for the purpose of making the dwelling more accessible to a severely disabled person.
(4) The construction or installation of seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies, which that are constructed or installed in existing buildings after the effective date of this paragraph. The Legislature shall define eligible improvements. This exclusion does not apply to seismic safety reconstruction or improvements which that qualify for exclusion pursuant to the last sentence of the first paragraph of subdivision (a).
(5) The construction, installation, removal, or modification on or after the effective date of this paragraph of any portion or structural component of an existing building or structure if the construction, installation, removal, or modification is for the purpose of making the building more accessible to, or more usable by, a disabled person.
(d) For purposes of this section, the term "change in ownership" shall 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 which that 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 that occur after the provisions of this subdivision take effect.
(e) (1) Notwithstanding any other provision of this section, the Legislature shall provide that the base year value of property which that is substantially damaged or destroyed by a disaster, as declared by the Governor, may be transferred to comparable property within the same county that is acquired or newly constructed as a replacement for the substantially damaged or destroyed property.
(2) Except as provided in paragraph (3), this subdivision shall apply to any comparable replacement property acquired or newly constructed on or after July 1, 1985, and to the determination of base year values for the 1985-86 fiscal year and fiscal years thereafter.
(3) In addition to the transfer of base year value of property within the same county that is permitted by paragraph (1), the Legislature may authorize each county board of supervisors to adopt, after consultation with affected local agencies within the county, an ordinance allowing the transfer of the base year value of property that is located within another county in the State and is substantially damaged or destroyed by a disaster, as declared by the Governor, to comparable replacement property of equal or lesser value that is located within the adopting county and is acquired or newly constructed within three years of the substantial damage or destruction of the original property as a replacement for that property. The scope and amount of the benefit provided to a property owner by the transfer of base year value of property pursuant to this paragraph shall not exceed the scope and amount of the benefit provided to a property owner by the transfer of base year value of property pursuant to subdivision (a). For purposes of this paragraph, "affected local agency" means any city, special district, school district, or community college district that receives an annual allocation of ad valorem property tax revenues. This paragraph shall apply to any comparable replacement property that is acquired or newly constructed as a replacement for property substantially damaged or destroyed by a disaster, as declared by the Governor, occurring on or after October 20, 1991, and to the determination of base year values for the 1991-92 fiscal year and fiscal years thereafter.
(f) For the purposes of subdivision (e):
(1) Property is substantially damaged or destroyed if it sustains physical damage amounting to more than 50 percent of its value immediately before the disaster. Damage includes a diminution in the value of property as a result of restricted access caused by the disaster.
(2) Replacement property is comparable to the property substantially damaged or destroyed if it is similar in size, utility, and function to the property which that it replaces, and if the fair market value of the acquired property is comparable to the fair market value of the replaced property prior to the disaster.
(g) For purposes of subdivision (a), the terms "purchased" and "change in ownership" shall do not include the purchase or transfer of real property between spouses since March 1, 1975, including, but not limited to, all of the following:
(1) Transfers to a trustee for the beneficial use of a spouse, or the surviving spouse of a deceased transferor, or by a trustee of such a trust to the spouse of the trustor.
(2) Transfers to a spouse which that take effect upon the death of a spouse.
(3) Transfers to a spouse or former spouse in connection with a property settlement agreement or decree of dissolution of a marriage or legal separation.
(4) The creation, transfer, or termination, solely between spouses, of any co-owner's interest.
(5) The distribution of a legal entity's property to a spouse or former spouse in exchange for the interest of the spouse in the legal entity in connection with a property settlement agreement or a decree of dissolution of a marriage or legal separation.
(h) (1) For purposes of subdivision (a), the terms "purchased" and "change in ownership" shall do not include the purchase or transfer of the principal residence of the transferor in the case of a purchase or transfer between parents and their children, as defined by the Legislature, and the purchase or transfer of the first $1,000,000 one million dollars ($1,000,000) of the full cash value of all other real property between parents and their children, as defined by the Legislature. This subdivision shall apply to both voluntary transfers and transfers resulting from a court order or judicial decree.
(2) (A) Subject to subparagraph (B), commencing with purchases or transfers that occur on or after the date upon which the measure adding this paragraph becomes effective, the exclusion established by paragraph (1) also applies to a purchase or transfer of real property between grandparents and their grandchild or grandchildren, as defined by the Legislature, that otherwise qualifies under paragraph (1), if all of the parents of that grandchild or those grandchildren, who qualify as the children of the grandparents, are deceased as of the date of the purchase or transfer.
(B) A purchase or transfer of a principal residence shall not be excluded pursuant to subparagraph (A) if the transferee grandchild or grandchildren also received a principal residence, or interest therein, through another purchase or transfer that was excludable pursuant to paragraph (1). The full cash value of any real property, other than a principal residence, that was transferred to the grandchild or grandchildren pursuant to a purchase or transfer that was excludable pursuant to paragraph (1), and the full cash value of a principal residence that fails to qualify for exclusion as a result of the preceding sentence, shall be included in applying, for purposes of subparagraph (A), the one million dollar ($1,000,000) full cash value limit specified in paragraph (1).
(I) (1) Notwithstanding any other provision of this section, the Legislature shall provide with respect to a qualified contaminated property, as defined in paragraph (2), that either, but not both, of the following shall apply:
(A) (I) Subject to the limitation of clause (ii), the base year value of the qualified contaminated property, as adjusted as authorized by subdivision (b), may be transferred to a replacement property that is acquired or newly constructed as a, replacement for the qualified contaminated property, if the replacement real property has a fair market value that is equal to or less than the fair market value of the qualified contaminated property if that property were not contaminated and, except as otherwise provided by this clause, is located within the same county. The base year value of the qualified contaminated property may be transferred to a replacement real property located within another county if the board of supervisors of that other county has, after consultation with the affected local agencies within that county, adopted a resolution authorizing an intercounty transfer of base year value as so described.
(ii) This subparagraph applies only to replacement property that is acquired or newly constructed within five years after ownership in the qualified contaminated property is sold or otherwise transferred.
(B) In the case in which the remediation of the environmental problems on the qualified contaminated property requires the destruction of, or results in substantial damage to, a structure located on that property, the term "new construction" does not include the repair of a substantially damaged structure, or the construction of a structure replacing a destroyed structure on the qualified contaminated property, - performed after the remediation of the environmental problems on that property, provided that the repaired or replacement structure is similar in size, utility, and function to the original structure.
(2) For purposes of this subdivision, "qualified contaminated property" means residential or nonresidential real property that is all of the following:
(A) In the case of residential real property, rendered uninhabitable, and in the case of nonresidential real property, rendered unusable, as the result of either environmental problems, in the nature of and including, but not limited to, the Presence of toxic or hazardous materials, or the remediation of those environmental problems, except where the existence of the environmental problems was known to the owner, or to a related individual or entity as described in paragraph (3), at the time the real property was acquired or constructed. For purposes of this subparagraph, residential real property is "uninhabitable" if that property, as a result of health hazards caused by or associated with the environmental problems, is unfit for human habitation, and nonresidential real property is "unusable" if that property, as a result of health hazards caused by or associated with the environmental problems, is unhealthy and unsuitable for occupancy.
(B) Located on a site that has been designated as a toxic or environmental hazard or as an environmental cleanup site by an agency of the State of California or the federal government.
(C) Real property that contains a structure or structures thereon prior to the completion of environmental cleanup activities, and that structure or structures are substantially damaged or destroyed as a result of those environmental cleanup activities.
(D) Stipulated by the lead governmental agency, with respect to the environmental problems or environmental cleanup of the real property, not to have been rendered uninhabitable or unusable, as applicable, as described in subparagraph (A), by any act or omission in which an owner of that real property participated or acquiesced.
(3) It shall be rebuttably presumed that an owner of the real property participated or acquiesced in any act or omission that rendered the real property uninhabitable or unusable, as applicable, if that owner is related to any individual or entity that committed that act or omission in any of the -following ways:
(A) Is a spouse, parent, child, grandparent, grandchild, or sibling of that individual.
(B) Is a corporate parent, subsidiary, or affiliate of that entity. 8 Is an owner of, or has control of that entity.
(D) Is owned or controlled by that entity,
If this presumption is not overcome, the owner shall not receive the relief provided for in subparagraph (A) or (B) of paragraph (1). The presumption may be overcome by presentation of satisfactory evidence to the assessor, who shall not be bound by the findings of the lead governmental agency in determining whether the presumption has been overcome.
(4) This subdivision applies only to replacement property that I . 3 acquired or constructed on or after January 1, 1995, and to property repairs performed on or after that date.
(I) Unless specifically provided otherwise, amendments to this section adopted prior to November 1, 1988, shall be effective for changes in ownership which that occur,'and new construction which that is completed, after the effective date of the amendment. Unless specifically provided otherwise, amendments to this section adopted after November 1, 1988, shall be effective for changes in ownership which that occur, and new construction which that is completed, on or after the effective date of the amendment.