Court Opinion

ID: 9862537
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:18:40.557122+00
Date Added: 2024-06-11T11:25:43.851684
License: Public Domain

MIHARA, J., Concurring.
Appellant Santa Cruz County (the County) challenges the trial court’s order requiring it to grant plaintiffs’ application for a property tax basis transfer. The issue is whether, when a replacement dwelling is constructed on a lot already owned by a person prior to the sale of the person’s original property, the value of the lot for “equal or lesser value” purposes under Revenue and Taxation Code section1 69.5 is based on the lot’s value at the time it was purchased or the lot’s value when construction is completed on the replacement dwelling. I write separately to explain why, in my view, the language of the statute and the legislative purpose underlying it require us to conclude that the value of the replacement dwelling for “equal or lesser value” purposes must be determined as of the date when both purchase and construction have been completed.
I. Facts
The facts are undisputed. Plaintiffs Kenneth Wunderlich and Jeanette Engelhart owned a home (the original property) in Santa Cruz and a lot across the street from the original property. They had purchased the lot in 1979, and, as of 2004, it was assessed at $62,477 for property tax purposes. In January 2004, they sold the original property for $830,000. At that time, the original property was assessed at $187,992 for property tax purposes. Plaintiffs constructed a new home on the lot. The new home was completed within one year after the sale of the original property.
The new property (the lot and the new home built upon it) was assessed for property tax purposes at $730,877. This total included $62,477 for the land and $668,400 for the improvements. When plaintiffs applied for a tax basis transfer, the County determined that the “full cash value” of the new property was $900,000 for purposes of the “equal or lesser value” requirement of section 69.5. The difference between the County’s assessment of the new *701property for property tax purposes and the County’s valuation of the new property for purposes of section 69.5’s “equal or lesser value” requirement was due to the fact that the value of the land for tax basis transfer purposes was determined as of the time of completion of the construction of the new home in 2004, while the value of the land for property tax purposes was based on its value when it was purchased in 1979. The land’s full cash value in 2004 for tax basis transfer purposes was determined to be $231,600. Because the “full cash value” of the new property ($900,000) exceeded 105 percent of the “full cash value” of the original property at the time of its sale ($871,500), the County deemed plaintiffs ineligible to transfer the tax basis from the original property to the new property.
Plaintiffs filed this action against the County and its assessor.2 Plaintiffs moved for summary judgment, and the parties stipulated that there were no triable issues of material fact and that the only issue was one of law. The trial court found that the “full cash value” of the new property’s lot for tax basis transfer purposes was identical to its assessed value for property tax purposes. The court ordered the County to allow plaintiffs to transfer their tax basis from their original property to the new property. The County appeals.
II. Discussion
The County contends that, in making the “equal or lesser value” determination that is necessary to qualify a replacement dwelling for a tax basis transfer, the new property, including both the new home and the previously purchased lot, must be valued as of the date of completion of the construction of the new home. Plaintiffs maintain that the lot should be valued for tax basis transfer purposes in the same manner as it is assessed for property tax purpose—that is, based on the lot’s value at the time of its purchase in 1979. The parties agree that the resolution of this issue turns entirely on a proper construction of section 69.5.
A. Standard of Review
“We begin as always ‘with the fundamental premise that the objective of statutory interpretation is to ascertain and effectuate legislative intent.’ [Citation.] To discover that intent we first look to the words of the statute, giving them their usual and ordinary meaning. [Citations.] ‘Where the words of the statute are clear, we may not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history.’ [Citation.]” (Trope v. Katz (1995) 11 Cal.4th 274, 280 [45 Cal.Rptr.2d 241, 902 P.2d 259].) “In construing a statute, we must ascertain the Legislature’s *702intent in order to carry out the purpose of the law. [Citation.] To do so, we must first examine the language of the statute. [Citation.] If the language is not ambiguous, ‘we presume the Legislature meant what it said, and the plain meaning of the statute governs. [Citation.]’ [Citation.] However, ‘if the statutory language permits more than one reasonable interpretation, courts may consider various extrinsic aids, including the purpose of the statute, the evils to be remedied, the legislative history, public policy, and the statutory scheme encompassing the statute. [Citation.] In the end, we “ ‘must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.’ ” ’ [Citation.] [][] The interpretation of a statute is a question of law, which we review de novo. [Citation.]” (State Bd. of Equalization v. Superior Court (2006) 138 Cal.App.4th 951, 955-956 [42 Cal.Rptr.3d 116].)
B. Proposition 60 and Section 69.5
Proposition 60 was submitted to the voters by the Legislature and passed by the voters in 1986. It amended article XIII A, section 2, subdivision (a) of the California Constitution to add the following language: “[A]ny person over the age of 55 years who resides in property which is eligible for the homeowner’s exemption . . . may transfer the base year value of the property entitled to exemption ... 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, ‘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. . . . This paragraph shall apply to any replacement dwelling that was purchased or newly constructed on or after November 5, 1986.” (Cal. Const., art. XIII A, § 2, subd. (a).)
Proposition 60 expressly granted authority to the Legislature to delineate the “appropriate circumstances” and the “definitions and procedures” under which a tax basis transfer would be permitted. (Cal. Const., art. XIII A, § 2, subd. (a).) The Legislature promptly utilized this authority to enact section 69.5 in 1987. The Legislature amended a portion of section 69.5 that is material to the issue before us in 1988.
“[A]ny person claiming the property tax relief provided by this section shall be eligible for that relief only if the following conditions are met: [!]... [1] (5) The original property of the claimant is sold by him or her within two years of the purchase or new construction of the replacement dwelling. For purposes of this paragraph, the purchase or new construction of *703the replacement dwelling includes the purchase of that portion of land on which the replacement building, structure, or other shelter constituting a place of abode of the claimant will be situated and that, pursuant to paragraph (3) of subdivision (g), constitutes a part of the replacement dwelling.” (§ 69.5, subd. (b)(5).)
“For purposes of [section 69.5]: [f] . . . [][] (3) ‘Replacement dwelling’ means a building, structure, or other shelter constituting a place of abode, whether real property or personal property, that is owned and occupied by a claimant as his or her principal place of residence, and any land owned by the claimant on which the building, structure, or other shelter is situated. . . . [][]... HQ (5) ‘Equal or lesser value’ means that the amount of the full cash value of a replacement dwelling does not exceed one of the following: [f] (A) One hundred percent of the amount of the full cash value of the original property if the replacement dwelling is purchased or newly constructed prior to the date of the sale of the original property, [f] (B) One hundred and five percent of the amount of the full cash value of the original property if the replacement dwelling is purchased or newly constructed within the first year following the date of the sale of the original property, [f] (C) One hundred and ten percent of the amount of the full cash value of the original property if the replacement dwelling is purchased or newly constructed within the second year following the date of the sale of the original property. [IQ For the purposes of this paragraph, except as otherwise provided in paragraph (4) of subdivision (h), if the replacement dwelling is, in part, purchased and, in part, newly constructed, the date the ‘replacement dwelling is purchased or newly constructed’ is the date of purchase or the date of completion of construction, whichever is later, [f] (6) ‘Full cash value of the replacement dwelling’ means its full cash value, determined in accordance with Section 110.1, as of the date on which it was purchased or new construction was completed, and after the purchase or the completion of new construction.” (§ 69.5, subd. (g).)
“With respect to the transfer of base year value of original properties to replacement dwellings located in the same county, this section, except as provided in paragraph (3) or (4), shall apply to any replacement dwelling that is purchased or newly constructed on or after November 6, 1986.” (§ 69.5, subd. (j)(l).)
C. Legislative History
The ballot pamphlet for Proposition 60 did not explicitly or implicitly address the possibility that a lot might be purchased more than two years before the sale of the original property and a structure built upon that lot to serve as a replacement dwelling within two years of the sale of the original property.
*704The Legislature exercised its authority under Proposition 60 by enacting Assembly Bill No. 60 (1987-1988 Reg. Sess.), which created section 69.5. (Stats. 1987, ch. 186, § 1, p. 1142.) The Legislative Analyst’s analysis of an early version of Assembly Bill No. 60 opined that “[the original] property must be sold prior to the purchase or new construction of the replacement property, and prior to the purchase of land on which a replacement dwelling will be built”3 (Legis. Analyst, analysis of Assem. Bill No. 60 (1987-1988 Reg. Sess.) Apr. 3, 1987, pp. 2-3, italics added.) However, Assembly Bill No. 60 was subsequently amended to allow the replacement dwelling to be purchased before the sale of the original property so long as the purchase occurred within two years of the sale. (Assem. Amend, to Assem. Bill No. 60 (1987-1988 Reg. Sess.) June 1, 1987.)
In 1988, the Legislature enacted Assembly Bill No. 2878 (1987-1988 Reg. Sess.), which amended section 69.5. One of the amendments made by Assembly Bill No. 2878 was the addition of the language in section 69.5, subdivision (g)(5) regarding “the date” to be used “if the replacement dwelling is, in part, purchased and, in part, newly constructed.” The purpose of this added language was to “speciffy] the replacement date when the replacement dwelling is acquired through acquisition of vacant land and subsequently constructed on the land, for purposes of determining the permissible value of the replacement dwelling.” (Sen. Com. on Revenue and Taxation, Rep. on Assem. Bill No. 2878 (1987-1988 Reg. Sess.) as amended Aug. 9, 1988, italics added.) This added language was intended to “specif[y] what replacement date should be used if the replacement dwelling is acquired through the acquisition of vacant land and the new construction of a dwelling on the land {the replacement date determines the permissible value of the replacement dwelling for qualification for relief).” (Assem. Com. on Revenue and Taxation, Rep. on Assem. Bill No. 2878 (1987-1988 Reg. Sess.) as amended June 6, 1988, italics added; Assem. 3d reading analysis of Assem. Bill No. 2878 (1987-1988 Reg. Sess.) as amended June 28, 1988.)
D. Analysis
The parties agree that the value of the original property was required to be determined as of the time it was sold in 2004. They disagree about how to value the replacement dwelling for purposes of the equal or lesser value determination. The County’s position is that the replacement dwelling is a composite of the new home and the lot, and the value of this composite was required to be determined as of the time that the last component, the new home, was completed. Plaintiffs argue that the two components of the *705replacement dwelling should be valued as of different dates, with the lot valued as of the time of its original purchase in 1979, and the new home valued as of the time of the completion of its construction in 2004.
The resolution of this dispute turns on the Legislature’s intent when it enacted and amended section 69.5. Section 69.5 sets forth three basic requirements that must be satisfied to qualify for a tax basis transfer. A person who is over 55 and owns and resides at the original property must sell the original property. Within two years of that sale (which may be either two years before or two years after), that person must purchase or construct a replacement dwelling. The replacement dwelling must be of equal or lesser value than the original property.
The Legislature went to great pains to clearly identify the “replacement dwelling” as an integrated composite of a structure and the land upon which it stands. “ ‘[Replacement dwelling’ means a building . . . and any land on which it may be situated.” (Cal. Const., art. XIII A, § 2, subd. (a), italics added; see § 69.5, subd. (g)(3).) Both Proposition 60, which was submitted to the voters by the Legislature, and section 69.5, which was enacted and amended by the Legislature, repeatedly and explicitly refer to the “replacement dwelling” as a single integrated entity composed of the land and the structure upon it. Not once do they suggest that a “replacement dwelling” is composed of separable components. It is the “replacement dwelling” that must be purchased or constructed within two years of the sale of the original property, and the “replacement dwelling” that must be of “equal or lesser value.”
Section 69.5, subdivision4 (g)(5) contains section 69.5’s definition of “equal or lesser value.” It is here that section 69.5 refers to a “part” of a “replacement dwelling”: “[I]f the replacement dwelling is, in part, purchased and, in part, newly constructed, the date the ‘replacement dwelling is purchased or newly constructed’ is the date of purchase or the date of completion of construction, whichever is later.”5 (Subd. (g)(5), italics added.) This provision serves to confirm the Legislature’s intent to treat a replacement dwelling as a single unified composite. By explicitly requiring the equal or lesser value determination to be premised on a single date for the entire replacement dwelling, even where the purchase of one part and the completion of construction of another part occurred on different dates, the Legislature strongly indicated its intent that the determination of whether a replacement dwelling was of equal or lesser value than the original dwelling *706was to be made based on the unified whole rather than on the sum of two separable parts. By mandating the use of the “later” of these two dates, the Legislature reinforced its intent to require the equal or lesser value determination to be based on the value of the fully unified and complete replacement dwelling rather than on the value of two separate components.
Plaintiffs contend that the only significance to “the date the ‘replacement dwelling is purchased or newly constructed’ ” is the selection of the percentage multiplier that applies under subdivision (g)(5). They claim that this date has no other role to play in malting the equal or lesser value determination. While the final sentence of subdivision (g)(5) may not explicitly preclude such an interpretation when viewed in isolation, the totality of the statutory scheme and all of the relevant indications of the Legislature’s intent render such an interpretation unreasonable.
First, the mere fact that the final sentence of subdivision (g)(5) begins “For the purposes of this paragraph,” tells us very little because the “paragraph” in question is subdivision (g)(5), the crucial equal or lesser value definition, which contains, but is not limited to, the percentage multiplier determination. The introductory clause of subdivision (g)(5) states the rule that “the amount of the full cash value of a replacement dwelling” may not exceed a specified percentage of the original property’s value. This clause treats the replacement dwelling as a single unified entity. The final sentence of subdivision (g)(5) confirms that the equal or lesser value determination must treat the replacement dwelling as a single unified entity (a single date) and that the value of that single unified entity cannot be evaluated until all purchase and construction have been completed (the later date).
Second, the legislative history reflects that the Legislature did not view the final sentence of subdivision (g)(5) in the narrow manner that plaintiffs advocate. When this sentence was added to section 69.5 in 1988, the Legislature indicated that this sentence would “specif[y] what replacement date should be used . . . [to] determine^ the permissible value of the replacement dwelling for qualification for relief.” (Assem. Com. on Revenue and Taxation, Rep. on Assem. Bill No. 2878 (1987-1988 Reg. Sess.) as amended June 6, 1988; Assem. 3d reading analysis of Assem. Bill No. 2878 (1987-1988 Reg. Sess.) as amended June 28, 1988.) By referring broadly to the “permissible value” rather than narrowly to the applicable percentage multiplier, the Legislature indicated that the broader interpretation was the one it intended.
*707Finally, the overriding purpose of the equal or lesser value determination would be subverted if it were not required to be based on the value of the fully completed, unified replacement dwelling rather than component parts evaluated at disparate times. The Legislature (and the voters) plainly intended to permit a tax basis transfer only when an eligible person moved from a more valuable dwelling to a less valuable dwelling. A determination of the current value of the entire completed replacement dwelling serves this purpose. A determination of the value of the replacement dwelling that is based in part on the long-ago value of a component part of the replacement dwelling invalidates the comparison between the original and replacement properties and would permit a person to qualify for a tax basis transfer when he or she moved from a less valuable original property to a more valuable replacement dwelling. The language and history of Proposition 60 and section 69.5 are utterly inconsistent with such an interpretation.
Plaintiffs also argue that subdivision (g)(6)’s reference to section 110.1 means that the lot must be valued based on its 1979 purchase price. Subdivision (g)(6) reads: “ ‘Full cash value of the replacement dwelling’ means its full cash value, determined in accordance with Section 110.1, as of the date on which it was purchased or new construction was completed, and after the purchase or the completion of new construction.” (Subd. (g)(6), italics added.) This subdivision, like the others, refers to the replacement dwelling as a single unified entity that must be valued “as of the date on which it was purchased or new construction completed.” (Italics added.) This language is inconsistent with an interpretation that requires each part of a replacement dwelling to be valued as of a different date. The reference to section 110.1 obviously was intended to incorporate that section’s definition of “full cash value” as meaning “fair market value.” (§ 110.1, subd. (a).) Nothing in section 110.1’s definition of “full cash value,” which is the sole import of subdivision (g)(6), requires parts of a dwelling to be separately valued as of different dates.
Plaintiffs argue that it makes no sense for the County to make a different valuation determination for tax basis transfer purposes as opposed to property tax purposes. The rationale is obvious. Property tax assessments are made on an ongoing basis, and they depend on previous assessments. On the other hand, the equal or lesser value determination that is essential to qualify for a tax basis transfer is made a single time when the applicant applies for that transfer. Property tax assessments are simply unrelated to equal or lesser value determinations. Hence, it makes perfect sense that different methodologies would be employed in making these unrelated valuations.
*708The only reasonable construction of section 69.5 is that it requires the equal or lesser value determination to be based on the value of the replacement dwelling at the time that both the purchase and construction of the component parts of the replacement dwelling are complete. Hence, the trial court erred in ordering the County to permit plaintiffs to transfer their tax basis.
III. Conclusion
The trial court’s order must be reversed. On remand, the trial court should be directed to vacate its order granting plaintiffs’ summary judgment motion and enter a new order denying their motion. The County should recover its costs on appeal.

 Subsequent statutory references are to the Revenue and Taxation Code.

 Defendants are referred to collectively as the County.

 I take judicial notice of the legislative history of section 69.5. (Evid. Code, § 452, subd. (c).)

 All subdivision references are to subdivisions of section 69.5.

 Subdivision (b)(5) also refers to a “part” of the replacement dwelling, but this reference is made only to reinforce the point that the land is included as “part” of the replacement dwelling.