BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 2046 (Allen/Huffman) - Property taxation: change in ownership 
          exclusion for floating homes.
          
          Amended: May 21, 2012           Policy Vote: G&F 6-1
          Urgency: No                     Mandate: Yes
          Hearing Date: August 16, 2012                          
          Consultant: Mark McKenzie       
          
          SUSPENSE FILE. 

          
          Bill Summary: AB 2046 would establish a new exclusion from 
          change in ownership provisions that would otherwise require a 
          reassessment for property transfers of floating home marinas to 
          current tenants of berths at the marina, under specified 
          conditions.

          Fiscal Impact: 
           Based on limited data, the Board of Equalization (BOE) 
            estimates that the bill would result in a statewide reduction 
            in property tax revenues of approximately $212,000 annually.  
            Assuming 50 percent of the statewide property tax revenues 
            offset General Fund obligations to schools pursuant to 
            Proposition 98, the State General Fund impact would be 
            approximately $106,000 due to increased state backfill 
            provided to schools.  Actual General Fund impacts would depend 
            upon a number of factors (see staff comments).

           Likely minor reimbursable mandate costs related to the 
            imposition of new duties on local tax officials related to the 
            new change in ownership exclusion. (General Fund)

          Background: Existing law generally requires a reassessment of 
          real property to current fair market value when there is a 
          change in ownership.  Subject to specified limitations, the 
          State Constitution and statutory provisions allow exceptions to 
          change in ownership requirements for property transfers between 
          spouses, domestic partners, parents and children, grandparents 
          and grandchildren, and persons that own property in joint 
          tenancy, as specified.  Existing law also provides a change of 
          ownership exclusion for a transfer of a mobilehome park if 
          purchased by an entity formed by the tenants renting at least 








          AB 2046 (Allen)
          Page 1


          51% of the spaces prior to the transfer and those tenants 
          represent at least a 51% ownership share of the park.  However, 
          once excluded, any subsequent change of ownership of shares of 
          stock or other equity ownership in the park purchased by former 
          renters results in a pro rata change in ownership, that 
          particular share in the park would be reassessed at current 
          market value.

          One unusual factor in the assessment of mobilehomes is that the 
          structure is assessed separately from the underlying real 
          property on which it stands.  Unless a person owns both the 
          mobilehome and the lot, the mobilehome owner pays property tax 
          on the structure and rents a space from a mobilehome park owner, 
          who is responsible for paying the property taxes on the park 
          itself.  This structure also applies to floating homes that rest 
          in permanent berths on a marina.  Floating homes are 
          legally-permitted residences that have no means of 
          self-propulsion, are permanently moored in a marina, and 
          connected to shoreside utilities and services.  Generally, 
          floating home marinas are privately owned and homeowners are 
          charged monthly berthage fees.

          Proposed Law: AB 2046 would exclude a transfer of a floating 
          home marina to an entity representing a majority of current 
          tenants from "change in ownership" provisions that result in a 
          reassessment to current fair market value.  

          This exclusion would apply for transfers to a nonprofit 
          corporation, stock cooperative corporation, limited equity stock 
          cooperative, or other entity formed by the tenants of a floating 
          home marina for purposes of purchasing the marina, provided the 
          entity represents participation of at least 51% of individual 
          renting tenants and those persons would represent at least 51% 
          of the ownership interest in the entity acquiring the marina.  
          Once an exclusion has been provided, any subsequent sales of 
          shares or ownership interest in the entity that acquired the 
          marina would be subject to a proportionate change in ownership 
          subject to reassessment, unless the marina has been converted to 
          a condominium or other cooperative ownership arrangement.

          The bill would also require a floating home marina that does not 
          utilize recorded deeds to file an annual report with the county 
          assessor's office by February 1 that includes owner contact 
          information, situs information on each unit, the dates of 








          AB 2046 (Allen)
          Page 2


          ownership acquisition, and other specified registration 
          information.

          Staff Comments: This bill is intended to provide a property tax 
          benefit for purchases of floating home marinas by marina tenants 
          that is currently provided for purchases of mobilehome parks.  
          By ensuring property taxes remain unchanged, this bill would 
          remove a significant barrier for floating homeowners who wish to 
          cooperatively purchase a marina.

          Mobilehomes and floating homes have important characteristics in 
          common for property tax purposes; tenants own the structure and 
          the park or marina owner owns the underlying property.  There 
          are also important distinctions that the Committee may wish to 
          consider as well.  For instance, the price of a mobilehome and 
          mobilehome park tend to be lower than the price of a floating 
          home and marina.  In addition, mobilehome parks generally 
          provide housing for low and moderate income residents, but there 
          is no corresponding evidence related to the owners of floating 
          homes.  When the Legislature enacted the exclusion from change 
          in ownership provisions for purchases of mobilehome parks, many 
          park residents were in danger of being displaced because many 
          parks were being sold and converted to uses that provided a 
          higher value to park owners.  It is unclear that floating home 
          marinas face similar challenges.

          An informal review of for-sale listings of floating homes in 
          Richardson Bay marinas indicates that the homes themselves can 
          range in value from $250,000 to $3 million.  The ownership 
          interests in marinas themselves rarely change, so information on 
          current values is difficult to ascertain.  Committee staff is 
          aware of a failed attempt by a floating home ownership group to 
          purchase Waldo Point Harbor in the Richardson Bay near Sausalito 
          for $8.5 million in 1991.  

          The BOE estimates that this bill could result in a loss of 
          $212,000 in property taxes statewide, but indicates that the 
          estimate is based on limited data.  This figure is derived from 
          the potential value of one Marin County marina property that is 
          currently assessed at $8.5 million, but current market value is 
          unknown.  Based upon an inflator BOE uses to determine market 
          value for rail transportation property, and assuming this one 
          property represents 50 percent of the marinas affected by the 
          bill, yields the estimated figure noted above.  








          AB 2046 (Allen)
          Page 3



          It is unclear how many floating home owners in the state would 
          be interested in assuming ownership of marinas, but it would 
          likely be an unusual occurrence.  However, the revenue impacts 
          of even a single transfer in ownership could result in annual 
          property tax losses in the hundreds of thousands annually.  
          Actual costs would depend upon the difference between the 
          factored base year value and current market value of a marina 
          subject to the new exclusion at the time of purchase, and the 
          number of property transfers to which the exclusions would 
          apply.  An additional consideration of the state General Fund 
          impact would be whether school districts in the area are basic 
          aid since the state does not backfill property losses in these 
          areas.