Assembly committee advances bill to add notice, hearing process for county Chapter 8 tax sales

AB 418, which would create a standardized process for county tax collectors to follow when using the Chapter 8 negotiated tax-sale process, was moved out of the Assembly Revenue and Taxation Committee on a 6-0 vote and referred to the Appropriations Committee.

The bill's sponsor, Assemblymember Laura Wilson, told the committee AB 418 would require notification and a public notice hearing in Chapter 8 sales so property owners and other stakeholders may review and question negotiated sale prices and the justification for them. She said the measure also increases pre-sale notice from 30 to 45 days.

Supporters said the bill is intended to protect property owners who might not receive excess proceeds when a defaulted property is sold for less than fair market value. "When property is tax-defaulted, there are two primary ways to dispose of it," Wilson said in her presentation, describing Chapter 7 auctions and Chapter 8 negotiated sales. She cited the U.S. Supreme Court's decision in Tyler v. Hennepin County as a warning about the risks when owners do not receive excess proceeds.

Chuck Lomeli, treasurer and tax collector for Solano County, told the committee AB 418 "establishes a clear-cut process for all the parties involved in the Chapter 8 process" and requires a public hearing in which nonprofits, cities and counties can explain intended uses and how negotiated prices were set. "Just the fact that we have a noticed public hearing where everybody has to come together and discuss it in public and the neighborhoods ... have the opportunity to come in and weigh in is critical," Lomeli said.

Lake County Treasurer-Tax Collector Patrick Sullivan described the properties often handled through Chapter 8 as low-value, unusual parcels — inaccessible subdivisions, wildfire-damaged parcels or lands with little development potential — where auctioning has proven ineffective and costly for counties.

Support was also noted from the Howard Jarvis Taxpayers Association (which shifted to a support position after amendments) and housing advocates. The committee record shows the motion carried on a roll call with members recorded as voting aye: Gibson; Ta (Taw); Baines; DeMio; Garcia; and Quirk Silva.

Action and next steps: The committee recorded a motion that AB 418 be "due pass to appropriations." The committee clerk recorded the vote as 6 ayes, 0 noes. The bill will be considered in the Appropriations Committee.

Ending: Proponents said they hope the new procedures will preserve public funds, reduce repeated failed auctions, and give property owners and local stakeholders a clearer, public path to review negotiated sales. Opponents were not recorded in committee testimony.