BILL ANALYSIS                                                                                                                                                                                                    

                            Senator Lois Wolk, Chair

          BILL NO:  AB 2046                     HEARING:  7/3/12
          AUTHOR:  Allen                        FISCAL:  Yes
          VERSION:  5/21/12                     TAX LEVY:  Yes
          CONSULTANT:  Grinnell                 


           Tenant purchases of floating home marinas are the same as 
                               mobile home parks.

                           Background and Existing Law  

          Section One of Article XIII of the California Constitution 
          provides that all property is taxable unless explicitly 
          exempted by the Constitution or federal law.  The 
          Constitution limits the maximum amount of any ad valorem 
          tax on real property at 1% of full cash value, usually the 
          purchase price, plus any locally-authorized bonded 
          indebtedness.  Assessors reappraise property whenever it is 
          purchased, newly constructed, or when ownership changes.  
          However, a change of ownership generally does not include 
          any situation where one person continues to own or reside 
          in the home, such as placing property in a trust, creating 
          a life estate, or purchasing the land under a mobile home.  

          Assessing mobile homes for property tax purposes generally 
          differs from typical assessment: one taxpayer (the mobile 
          homeowner) is assessed for the value his or her structure, 
          while another (the mobile home park owner) pays tax on the 
          park under the structure, unless the owner both owns the 
          home and the park, in which case he or she is assessed for 
          both.  When tenants who rent the individual spaces in the 
          park want to buy it, state law provides that the transfer 
          does not constitute a change-in-ownership subject to 
          reassessment, subject to specified conditions.   However, 
          once excluded, any subsequent change of ownership of the 
          shares of stock or other equity ownership in the park 
          purchased by the former renters results in a pro rata 
          change in ownership, that particular share in the park 
          would be reassessed to current market value.


          AB 2046 - 5/21/12-- Page 2

          As fixed structures with no means of self-propulsion that 
          rest in permanent berths in marinas, floating homes are 
          subject to property taxes. Floating homes are connected to 
          utilities and services. Floating home marinas are privately 
          owned and charge homeowners monthly berthage fees.  Five 
          marinas of 400 floating homes can be found in Richardson 
          Bay in Sausalito, California. 

                                   Proposed Law  

          Assembly Bill 2046 extends provisions applicable to mobile 
          home parks to transfers of floating home marinas to current 
          tenants of berths at the marina.  The measure excludes 
          these transfers from the definitions of change of 
          ownership, thereby precluding reassessment of the marina to 
          fair market value upon transfer, so long as:
                 The transfer is to a nonprofit corporation, stock 
               cooperative corporation, limited equity stock 
               cooperative, or other entity formed buy tenants to 
               purchase the marina.
                 The currently renting tenants seeking to purchase 
               the marina total at least 51% of its berths through 
               the ownership of an aggregate of at least 51% of the 
               voting stock of the entity described above. 
                 Should any of the tenants that are excluded from 
               the reassessment under this bill subsequently sell or 
               transfer their share, that pro rata share shall be 
               reassessed to fair market value, unless the marina has 
               been converted to a condominium, stock cooperative 
               ownership, or limited equity cooperative ownership, or 
               is otherwise precluded.  

          The measure further requires a floating home marina that 
          does not utilize recorded deeds to file a report on or 
          before February 1st of each year with:
                 The full names and mailing addresses of each owner, 

                 The situs address including berth and dock number 
               of each unit, 
                 The date ownership was acquired, and
                 The Department of Housing and Community Development 
               decal number.

          New resident owners, purchasers, or transferees of a 


          AB 2046 - 5/21/12-- Page 3

          floating home in a park must file a preliminary change in 
          ownership report or a change in ownership statement.  The 
          measure imports a definition of "floating home marina" from 
          the Civil Code and "pro rata portion of the real property" 
          from the mobile home park exclusion.

                               State Revenue Impact
          BOE estimates property tax revenue losses of $212,000 
          resulting from AB 2046.


          1.   Purpose of the bill  .  According to the author, "Many 
          people use floating homes as their principal residences, 
          just like owners of mobile homes. Proposition 13 provides 
          protection from unfair or excessively burdensome property 
          taxes, and given that floating home marina tenants 
          presently use and occupy marinas, it is excessively 
          burdensome to require a property tax reassessment when 
          marina tenants wish to purchase the marina as a group.  
          Just as in mobile home parks, the tenants of a floating 
          home marina do not own the land underneath their homes 
          where they reside. Instead, they rent a berth in a marina 
          from the owner or operator of the park, or, in the case of 
          a mobile homes, a site from the mobile home park's owner or 
          operator. The ownership structure of a mobile home is the 
          same as that of a floating home, but the tax benefits are 
          only available for purchases of mobile home parks, and not 
          floating home marinas.  AB 2046 would protect floating home 
          marina tenants from excessively burdensome property taxes 
          by allowing the marina tenants to purchase their respective 
          floating home marina without triggering a reassessment of 
          property taxes. The purchase of a floating home marina by 
          current tenants should not trigger a property tax 
          reassessment due to "change in ownership" because tenants 
          have lived and paid taxes on that property and are not 
          entirely "new" owners. Additionally, floating homes are 
          already categorized with mobile homes for many other legal 
          purposes, so it makes sense to bring them into alignment 
          for property tax assessment. Passing this bill will help 
          bring financial stability to floating home owners by 
          allowing the marina tenants to form neighborhood 
          associations in an effort to purchase marinas without 
          triggering a reassessment of property taxes."


          AB 2046 - 5/21/12-- Page 4

          2.   Hope floats  .  AB 2046 applies laws that allow tenants 
          of mobile homes to purchase the park to owners of floating 
          homes that want to acquire the marina.  As mobile homes and 
          floating homes have important characteristics for property 
          tax purposes in common - tenants own the structure and the 
          park or marina owner owns the surrounding property - 
          differential tax treatment shouldn't exist.  While no 
          specific set of tenants is seeking to buy a marina at the 
          moment according to the Floating Homes Association, a 
          significant financial barrier will be removed should the 
          Legislature enact AB 2046.  

          3.   Yes we can.   The Legislature has clear power to enact 
          change in ownership exclusions according to case law, 
          despite the objections of critics. In 2005, three County 
          Assessors sued BOE asserting that Rule 462.240(k) which 
          provides an exclusion from the definition of change of 
          owner-ship for property transfers between registered 
          domestic partners is unauthorized by the California 
          Constitution in  Strong v. Board of Equalization  (Case 
          CO52818/Sup Ct. 05AS01701).  The Assessors argued that 
          neither BOE nor the Legislature has the authority to create 
          exclusions beyond those listed in the Constitution.  BOE 
          responded that because the Constitution is silent on this 
          issue, the definition is left to the BOE and the 
          Legislature.  Sacramento Superior Court denied the claim in 
          2003, siding with BOE, and the California Court of Appeal 
          affirmed the decision.  While the flash point in the 
          lawsuit was BOE's rule that was later enacted into state 
          law, the case appears ended up as a fight between defining 
          the relevant powers delegated by the people through the 
          Constitution to the Legislature and administrative 
          agencies.  Had the Court found the Assessors to be correct, 
          all statutory exclusions from change of ownership would 
          have been rendered invalid.

                                 Assembly Actions  

          Assembly Revenue and Taxation Committee:  6-2
          Assembly Appropriations Committee: 12-5
          Assembly Floor:                         48-25


          AB 2046 - 5/21/12-- Page 5

                         Support and Opposition  (6/28/12)

           Support  :  Floating Homes Association

           Opposition  :  Unknown.