Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Application.
The provisions of this section are applicable only to supplemental assessments
levied pursuant to Chapter 3.5 (commencing with Section 75) of Part 0.5 of
Division 1 of the Revenue and Taxation Code.
(b) Date of Completion of New Construction.
The date of completion of new construction resulting from actual physical new
construction on the site shall be the earliest of either the date upon which
the new construction is available for use by the owner or, if all of the
conditions of paragraph (b) (1) are satisfied, the date the property is
occupied or used by the owner, or with the owner's consent, after the owner has
provided a notice in accordance with paragraph (b) (1).
(1) The date of completion of new
construction resulting from actual physical new construction shall not be the
date upon which it is available for use if the owner does not intend to occupy
or use the property and the owner notifies the assessor in writing prior to, or
within 30 days after, the date of commencement of construction that he/she/it
does not intend to occupy or use the identified property or a specified portion
thereof.
(2) The date of completion
of new construction resulting from actual physical new construction shall be
conclusively presumed to be the date upon which the new construction is
available for use by the owner if the assessor fails to receive notice as
provided in paragraph (b) (1).
(c) Definitions.
(1) "Property" means land, improvement(s)
including fixtures, and mobilehome(s) subject to taxation under Part 13
(commencing with Section 5800) of Division 1 of the Revenue and Taxation
Code.
(2) "New Construction
resulting from actual physical new construction" means "new construction" as
defined in Section
463, subsections (b) and (f). "New
construction resulting from actual physical new construction" also includes:
(A) the installation of a new fixture which
is an addition or is a replacement of an existing fixture;
(B) the rehabilitation, renovation or
modernization of any fixture which converts it to the substantial equivalent of
a new fixture;
(C) the severance of
improvements, including structures and fixtures, which is associated with new
construction;
(D) the severance on,
or after, March 1, 1985, of fixtures which qualify for assessment pursuant to
Sections
75.15
and
75.16
of the Revenue and Taxation Code, whether or not the severance is associated
with other new construction; or
(E)
the severance on, or after, July 31, 1985, of structures, whether or not the
severance is associated with other new construction.
"New construction resulting from actual physical new
construction" does not include:
(A)
the severance prior to March 1, 1985, of improvements, including structures and
fixtures, which is not associated with other new construction;
(B) the severance on, or after, March 1, 1985
of any improvements, other than structures or fixtures, which is not associated
with other new construction;
(C)
the severance prior to July 31, 1985, of structures which is not associated
with other new construction; or
(D)
the discontinued use of improvements, including structures and fixtures, which
are not physically severed from the property but which are made redundant by
newly installed or erected structures, fixtures, or other improvements.
Examples:
(A) The installation of a multi-level
printing press (a fixture) as an addition to existing facilities constitutes
actual physical new construction.
(B) The installation of a printing press as
the replacement of an existing press is also actual physical new
construction.
(C) The complete
renovation of an existing press to the substantial equivalent of a new press
constitutes actual physical new construction.
(D) The severance of the old press (also a
fixture) is actual physical new construction if it is associated with the
installation of the new press or other new construction, or if it occurred on
or after March 1, 1985.
(3) "Commencement of construction" means the
performance of physical activities on the property which results in changes
which are visible to any person inspecting the site and are recognizable as the
initial steps for the preparation of land or the installation of improvements
or fixtures. Such activities include clearing and grading land, layout of
foundations, excavation of foundation footing, fencing the site, or
installation of temporary structures. Such activities also include the
severance of existing improvements or fixtures.
"Commencement of construction" does not include activities
preparatory to actual construction such as obtaining architect services,
preparing plans and specifications, obtaining building permits or zoning
variances or filing subdivision maps or environmental impact reports.
"Commencement of construction" shall be determined solely
on the basis of activities which occur and are apparent on the property
undergoing new construction. Where several parcels are adjacent and will be
used as a single unit by the builder for the construction project, the
commencement of construction shall be determined on the basis of the activities
which occur on any part of the several parcels comprising the unit. Where a
property has been subdivided into separate lots, the commencement of
construction shall be determined on the basis of the activities occurring on
each separate lot. Where the property has been subdivided into separate lots
and several or all of those lots will be used as a single unit by the builder
for the construction project, the commencement of construction shall be
determined on the basis of the activities which occur on any part of the
several parcels comprising the unit.
(4) "Available for use" means that the
property, or a portion thereof, has been inspected and approved for occupancy
by the appropriate governmental official or, in the absence of such inspection
and approval procedures, when the prime contractor has fulfilled all of the
contractual obligations. When inspection and approval procedures are
non-existent or exist but are not utilized and a prime contractor is not
involved, the newly constructed property is available for use when outward
appearances clearly indicate it is immediately usable for the purpose intended.
Fixtures are available for use when all testing necessary for proper operation
or safety is completed.
New construction is not available for use if, on the date
it is otherwise available for use, it cannot be functionally used or occupied.
In that case, the property is not available for use until the date that any
legal or physical impediment to functional use or occupancy is removed.
If a structure is constructed with the expectation that the
tenant(s) will have improvements added after a lease(s) is executed, "available
for use" means that point in time when the structure is ready to receive tenant
improvements, whether or not there are any tenants at that time and regardless
of who is to construct the improvements. If a construction project is completed
in stages with some portions available for occupancy prior to completion of the
total project, any portion of the project ready to receive tenant improvements
is available for use even though other portions of the project are not ready
for such improvements. In the case of physical alterations to land, such as
leveling, "available for use" means that point in time when the land is ready
for use by the owner and no further new construction is required for the new
use. In the case of fixtures added as part of a larger new construction
project, "available for use" means that point in time when the project,
including the fixture, is ready for use.
(5) "Occupied or used" means the physical
occupancy of the property by the owner or any physical use of the property by
the owner, except where such occupancy or use is incidental to an offer for a
change of ownership. "Occupied or used" also includes the rental or lease of
the property or any occupancy or use of the property by third persons with the
owner's consent. The occupancy or use of the property occurs on the earliest
date when the property is physically occupied or used, or when the agreed upon
term of occupancy commences. "Used" does not include the transfer of legal
title to the property as security.
(6) "Functionally used or occupied" means
that the property is or can be used or occupied for the purpose for which it
was constructed. The purpose for which the property was constructed or improved
shall be determined on the basis of the type of property and any special facts
or circumstances which affect its use or occupancy. Property shall not be
considered "functionally used or occupied" if any legal restriction or physical
impediment beyond the owners' control prevents the use of the property for the
purpose intended.
Examples:
(A) A
building intended for use as a warehouse can be functionally used when physical
construction is completed even though the property to be stored has not arrived
at the site.
(B) Land improved by
leveling and the installation of an irrigation system which converts it from
grazing land to farm land can be functionally used when the improvement
activity is completed even though the planting season will not commence for
several months.
(C) An office or
hotel building on which construction is completed cannot be functionally used
if it is uninhabitable because of the lack of power, water or sewer service, or
if a natural disaster, such as a flood or earth slide, prevents reasonable
public access to the facility.
(7) "Owner's consent" means the express or
implied agreement of an owner to allow the property, or a portion thereof, to
be physically occupied or used by a third person. Where the use or occupancy is
visible to, or ascertainable by, the assessor, it shall be rebuttably presumed
that the property is occupied or used with the owner's consent. If the owner
has received actual or constructive notice of the occupancy or use, failure of
the owner to communicate an objection to the user or enforce his rights to
remove the occupant within a reasonable time shall be evidence of
consent.
(8) "Incidental to an
offer for a change of ownership" means that an activity is usual or necessary
to the holding of property for sale in the regular course of business. It
includes any use or occupancy arising from the demonstration or display of the
property for the purpose of selling that property or other property in the
vicinity under the same ownership. It includes use of the property by the owner
or by any person using the property with the owner's consent. Use of property
as a model home, a sales office, or as a temporary storage facility for
building materials or furnishings intended to be installed in other property to
be held for sale, shall be considered to be incidental to an offer for a change
in ownership. Temporary use of the property as lodging by a potential buyer for
the purpose of sales promotion shall be considered incidental to an offer for a
change of ownership. The use of this property, however, by a potential buyer as
a principal residence pending the arrangement or approval of the financing
necessary to complete the purchase is not incidental to an offer for a change
in ownership.
(9) "Structures"
means all improvements subject to supplemental assessment other than living
improvements (trees and vines) and fixtures which qualify for assessment
pursuant to Sections
75.15
and
75.16
of the Revenue and Taxation Code.
1. New
section filed 7-21-87; operative 8-20-87 (Register 87, No. 30).
2.
Change without regulatory effect amending section number filed 1-27-97 pursuant
to section 100, title 1, California Code of
Regulations (Register 97, No. 5).
Note: Authority cited: Section
15606,
Government Code. Reference: Sections
75.10,
75.11
and
75.12,
Revenue and Taxation Code.
