Property taxation: newly constructed property: reconstruction of damaged or destroyed property.

Assembly Member Schultz's property tax legislation modifies how California assessors evaluate reconstructed properties in areas affected by the 2025 fire disasters, allowing them to align "substantial equivalence" determinations with modified rebuilding standards mandated by state or local governments.

The bill creates flexibility in property tax assessments for owners rebuilding after fires in six specifically named communities - Palisades, Eaton, Hurst, Lidia, Sunset, and Woodley. Under existing law, reconstructed properties must be "substantially equivalent" to their pre-damage condition to avoid being classified as new construction and triggering a new tax assessment. The proposed changes permit assessors to consider government-mandated modifications to rebuilding requirements when determining substantial equivalence, potentially preserving original property tax bases even when reconstruction differs from the original structure.

Additional provisions maintain existing exemptions for underground storage tank improvements required by federal, state or local regulations. These upgrades, along with any associated structural work, continue to qualify as normal maintenance rather than new construction when the resulting structure remains equivalent in size, utility and function. The bill preserves the standard that only portions of reconstruction exceeding substantial equivalence will establish new base year values for property tax purposes.