BILL NUMBER: ABX1 15	ENROLLED
	BILL TEXT

	PASSED THE SENATE  JUNE 27, 2011
	PASSED THE ASSEMBLY  JUNE 27, 2011
	AMENDED IN SENATE  JUNE 2, 2011
	AMENDED IN ASSEMBLY  MARCH 22, 2011

INTRODUCED BY   Assembly Member Hill

                        MARCH 14, 2011

   An act to amend Section 73 of the Revenue and Taxation Code,
relating to taxation, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 15, Hill. Property tax: newly constructed: exclusion: active
solar energy system.
   The California Constitution generally limits ad valorem taxes on
real property to 1% of the full cash value of that property. For
purposes of this limitation, "full cash value" is defined as the
assessor's valuation of real property as shown on the 1975-76 tax
bill under "full cash value" or, thereafter, the appraised value of
that real property when purchased, newly constructed, or a change in
ownership has occurred. Pursuant to an authorization in the
California Constitution, existing law excludes from classification as
"newly constructed" the construction or addition of an active solar
energy system. Existing law defines "active solar energy systems for
purposes of this exclusion to mean a system that uses solar devices,
which are thermally isolated from living space or any other area
where the energy is used, to provide for the collection, storage, or
distribution of solar energy.
   This bill would clarify the definition of active solar energy
system for purposes of this exclusion to mean a system that, upon
completion of the construction of a system as part of a new property
or the addition of a system to an existing property, uses solar
devices as described above and would make additional findings and
declarations, as provided. This bill would also clarify that this
exclusion shall remain in effect only until there is a subsequent
change in ownership. This bill would state that its provisions are
declaratory of existing law.
   The California Constitution authorizes the Governor to declare a
fiscal emergency and to call the Legislature into special session for
that purpose. Governor Schwarzenegger issued a proclamation
declaring a fiscal emergency, and calling a special session for this
purpose, on December 6, 2010. Governor Brown issued a proclamation on
January 20, 2011, declaring and reaffirming that a fiscal emergency
exists and stating that his proclamation supersedes the earlier
proclamation for purposes of that constitutional provision.
   This bill would state that it addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation issued on
January 20, 2011, pursuant to the California Constitution.
   This bill would declare that it is to take effect immediately as
an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) That Section 73 of the Revenue and Taxation Code was enacted
to encourage and to provide incentives for the development of active
solar energy systems by providing an exclusion from classification as
newly constructed the construction or addition of active solar
energy systems. In 2008, Section 73 of the Revenue and Taxation Code
was amended to provide that this exclusion would apply to the initial
purchaser from an owner-builder that incorporated an active solar
energy system in the initial construction of the new building that
the owner-builder did not intend to occupy or use, under specified
circumstances.
   (b) That newly constructed active solar energy systems are often
sold or transferred in sale-leaseback arrangements, partnership flip
structures, or other transactions to purchasers that may also be
eligible for federal tax benefits. As long as the active solar energy
system is newly constructed or added and another taxpayer has not
received an exclusion for the same active solar energy system, it is
the intent of the Legislature that the purchaser of the active solar
energy system in a transaction such as that described above receive
an exclusion.
   (c) That newly constructed active solar energy systems that are
constructed as freestanding or parking lot canopies, or that are
constructed as installations on existing buildings qualify for the
exclusion from classification as newly constructed under Section 73
of the Revenue and Taxation Code, including active solar energy
systems sold in sale-leaseback transactions.
   (d) That the amendments made to Section 73 of the Revenue and
Taxation Code by this act do not constitute a change in, but are
declaratory of, existing law.
  SEC. 2.  Section 73 of the Revenue and Taxation Code is amended to
read:
   73.  (a) Pursuant to the authority granted to the Legislature
pursuant to paragraph (1) of subdivision (c) of Section 2 of Article
XIII A of the California Constitution, the term "newly constructed,"
as used in subdivision (a) of Section 2 of Article XIII A of the
California Constitution, does not include the construction or
addition of any active solar energy system, as defined in subdivision
(b).
   (b) (1) "Active solar energy system" means a system that, upon
completion of the construction of a system as part of a new property
or the addition of a system to an existing property, uses solar
devices, which are thermally isolated from living space or any other
area where the energy is used, to provide for the collection,
storage, or distribution of solar energy.
   (2) "Active solar energy system" does not include solar swimming
pool heaters or hot tub heaters.
   (3) Active solar energy systems may be used for any of the
following:
   (A) Domestic, recreational, therapeutic, or service water heating.

   (B) Space conditioning.
   (C) Production of electricity.
   (D) Process heat.
   (E) Solar mechanical energy.
   (c) For purposes of this section, "occupy or use" has the same
meaning as defined in Section 75.12.
   (d) (1) (A) The Legislature finds and declares that the definition
of spare parts in this paragraph is declarative of the intent of the
Legislature, in prior statutory enactments of this section that
excluded active solar energy systems from the term "newly
constructed," as used in the California Constitution, thereby
creating a tax appraisal exclusion.
   (B) An active solar energy system that uses solar energy in the
production of electricity includes storage devices, power
conditioning equipment, transfer equipment, and parts related to the
functioning of those items. In general, the use of solar energy in
the production of electricity involves the transformation of sunlight
into electricity through the use of devices such as solar cells or
other solar collecting equipment. However, an active solar energy
system used in the production of electricity includes only equipment
used up to, but not including, the stage of conveyance or use of the
electricity. For the purpose of this paragraph, the term "parts"
includes spare parts that are owned by the owner of, or the
maintenance contractor for, an active solar energy system that uses
solar energy in the production of electricity and which spare parts
were specifically purchased, designed, or fabricated by or for that
owner or maintenance contractor for installation in an active solar
energy system that uses solar energy in the production of
electricity, thereby including those parts in the tax appraisal
exclusion created by this section.
   (2) An active solar energy system that uses solar energy in the
production of electricity also includes pipes and ducts that are used
exclusively to carry energy derived from solar energy. Pipes and
ducts that are used to carry both energy derived from solar energy
and from energy derived from other sources are active solar energy
system property only to the extent of 75 percent of their full cash
value.
   (3) An active solar energy system that uses solar energy in the
production of electricity does not include auxiliary equipment, such
as furnaces and hot water heaters, that use a source of power other
than solar energy to provide usable energy. An active solar energy
system that uses solar energy in the production of electricity does
include equipment, such as ducts and hot water tanks, that is
utilized by both auxiliary equipment and solar energy equipment, that
is, dual use equipment. That equipment is active solar energy system
property only to the extent of 75 percent of its full cash value.
   (e) (1) Notwithstanding any other law, for purposes of this
section, "the construction or addition of any active solar energy
system" includes the construction of an active solar energy system
incorporated by the owner-builder in the initial construction of a
new building that the owner-builder does not intend to occupy or use.
The exclusion from "newly constructed" provided by this subdivision
applies to the initial purchaser who purchased the new building from
the owner-builder, but only if the owner-builder did not receive an
exclusion under this section for the same active solar energy system
and only if the initial purchaser purchased the new building prior to
that building becoming subject to reassessment to the owner-builder,
as described in subdivision (d) of Section 75.12. The assessor shall
administer this subdivision in the following manner:
   (A) The initial purchaser of the building shall file a claim with
the assessor and provide to the assessor any documents necessary to
identify the value attributable to the active solar energy system
included in the purchase price of the new building. The claim shall
also identify the amount of any rebate for the active solar energy
system provided to either the owner-builder or the initial purchaser
by the Public Utilities Commission, the State Energy Resources
Conservation and Development Commission, an electrical corporation, a
local publicly owned electric utility, or any other agency of the
State of California.
   (B) The assessor shall evaluate the claim and determine the
portion of the purchase price that is attributable to the active
solar energy system. The assessor shall then reduce the new base year
value established as a result of the change in ownership of the new
building by an amount equal to the difference between the following
two amounts:
   (i) That portion of the value of the new building attributable to
the active solar energy system.
   (ii) The total amount of all rebates, if any, described in
subparagraph (A) that were provided to either the owner-builder or
the initial purchaser.
   (C) The extension of the new construction exclusion to the initial
purchaser of a newly constructed new building shall remain in effect
only until there is a subsequent change in ownership of the new
building.
   (2) The State Board of Equalization, in consultation with the
California Assessors' Association, shall prescribe the manner,
documentation, and form for claiming the new construction exclusion
required by this subdivision.
   (f) Notwithstanding any other law, the exclusion from new
construction provided by this section shall remain in effect only
until there is a subsequent change in ownership.
   (g) This section applies to property tax lien dates for the
1999-2000 fiscal year to the 2015-16 fiscal year, inclusive.
   (h) The amendments made to this section by the act that added this
subdivision apply beginning with the lien date for the 2008-09
fiscal year.
   (i) (1) This section shall remain in effect only until January 1,
2017, and as of that date is repealed.
   (2) Active energy solar systems that qualify for an exclusion
under this section prior to January 1, 2017, shall continue to be
excluded on and after January 1, 2017, until there is a subsequent
change in ownership.
  SEC. 3.  This act addresses the fiscal emergency declared and
reaffirmed by the Governor by proclamation on January 20, 2011,
pursuant to subdivision (f) of Section 10 of Article IV of the
California Constitution.
  SEC. 4.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to timely clarify the application and requirements of the
real property exclusion for active solar energy systems, it is
necessary that this act take effect immediately.