BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 587 (Chau) - Mobilehomes: payments: nonpayment or late
payments
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|Version: June 30, 2016 |Policy Vote: T. & H. 10 - 0, |
| | JUD. 6 - 1 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 587 would establish a three-year tax and penalty
abatement program for owners of mobilehomes who are unable to
properly register their ownership interest with the Department
of Housing and Community Development (HCD) because of past due
taxes and fees, as specified.
Fiscal
Impact:
HCD administrative costs of approximately $360,000 annually
for three years to process an estimated 10,000 titling and
registration applications each year for the duration of the
program. These costs would likely be offset by application
fee revenues. (Mobilehome-Manufactured Home Revolving Fund)
Unknown, potentially significant, foregone state revenues a
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result of the requirement that HCD waive specified past due
charges, fees, and penalties if an applicant meets specified
requirements. This impact would be partially mitigated to the
extent a portion of these revenues would have otherwise
remained uncollected in the absence of the abatement program.
(General Fund, various mobilehome-related special funds)
-----see staff comments-----
Unknown significant foregone property tax revenues as a result
of the specified limit on the amount of delinquent taxes that
an applicant would pay to the county tax collector in exchange
for a tax clearance or liability certificate. This impact
would be partially mitigated to the extent a portion of these
revenues would have otherwise remained uncollected in the
absence of the abatement program. Staff notes that any
impacts to the K-14 school share of the property tax revenues
are generally backfilled by the State General Fund. (General
Fund, local funds)
-----see staff comments-----
Unknown foregone local revenues as a result of the requirement
that county tax collectors waive all property tax penalties
and interest that would otherwise be owed by eligible
participants in the abatement program. (local funds)
Unknown reimbursable state-mandated local costs for county tax
collectors to establish administrative procedures and issue
tax clearance or liability certificates to eligible
participants in the abatement program. (General Fund)
Background: Existing law requires HCD to maintain a title registry of all
mobilehomes and manufactured homes in the state. Owners of
mobilehomes sold as new before July 1, 1980 are required to pay
an annual vehicle license fee (VLF) to HCD in lieu of a local
property tax, which is deposited into the General Fund, in
addition to other annual fees. The VLF is calculated at a rate
of .65 percent of the pre-1980 value depreciated according to a
statutory schedule. Existing law specifies that failure to pay
the VLF by the due date results in a 20 percent delinquency
penalty, and nonpayment of the VLF, annual fees, and any
penalties constitutes a lien on the mobilehome. Until the lien
is paid, HCD is prohibited from issuing duplicate or new title
or registration documents, and from amending existing title
AB 587 (Chau) Page 2 of
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records for purpose of transferring any ownership interest in
the mobilehome.
Existing law requires the owner of any mobilehome or
manufactured home sold after July 1, 1980 to pay the local
property tax as personal property, imposed at a rate of 1
percent of the assessed value. Existing law specifies that
failure to pay property taxes by the due date results in a 10
percent delinquency penalty and additional interest charges of
1.5 percent per month (18 percent per year), as specified. HCD
is required to withhold registration or transfer of registration
of any mobilehome or manufactured home that is subject to local
property taxation until the applicant presents a tax clearance
certificate or conditional tax clearance certificate issued by
the county tax collector that indicates satisfaction of tax
liability. A tax collector is required to issue a tax clearance
certificate when he or she finds that no local property tax is
due or is likely to become due, or that any applicable local
property taxes have been paid or are to be paid in a manner not
requiring the withholding of registration or transfer of
registration of a mobilehome.
Proposed Law:
AB 587 would establish a three-year tax and penalty abatement
program for owners of mobilehomes who are unable to properly
register their ownership interest with HCD because of past due
taxes and fees. Among other things, this bill would to the
following:
Revise a specified notice that park owners are required to
provide to mobilehome owners to disclose change of ownership
requirements, obligations for payment of property taxes or "in
lieu" fees, and to direct owners to HCD and the local tax
collector for questions regarding registration, titling, and
taxes.
Require HCD to waive all outstanding charges and release
liens, upon application for registration or transfer of
registration, if the applicant is not the current registered
owner and all the following requirements are met:
o The applicant demonstrates documented ownership and
the date of acquisition of ownership interest.
o The application is made prior to December 21, 2019.
o The applicant pays any charges assessed by HCD
AB 587 (Chau) Page 3 of
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during the period between the time the applicant took
ownership interest or December 31, 2015, whichever is
later, and the time the applicant applies for relief.
o Any lien under the Property Tax Postponement Program
has been satisfied.
o The applicant has not previously applied for relief.
Require HCD to waive the outstanding charges, fees or
penalties, amend the title record, and issue a duplicate,
substitute, or new certificate of title, registration card, or
copy of a registration card, if the applicant meets the
requirements of the abatement program and is subject to the
VLF.
Authorize HCD to establish a long-term repayment program of up
to five years, for specified amounts owed, and to provide that
any amounts owed constitutes a lien.
Require HCD to issue a conditional transfer of title if the
mobilehome is subject to local property taxation, and
authorize a person with the conditional transfer document to
apply to the county tax collector prior to January 1, 2020 to
issue either a tax liability or tax clearance certificate.
Require the county tax collector to issue a tax liability
certificate if the person pays the taxes reasonably owed from
the date on the conditional transfer of title, without
penalties or interest, and not to exceed the amounts
attributable one year prior to January 1, 2017.
Upon issuance of a tax clearance or liability certificate, the
applicant shall be listed as the owner of record for all local
property tax purposes, and the home shall not be subject to
lien or seizure for any taxes abated pursuant to the bill.
Require HCD to amend the title record and issue a duplicate,
substitute or new certificate of title to an owner who
presents the department with a completed tax liability
certificate, if the applicant meets all other requirements, as
specified.
Provide that the abatement program does not relieve any owner,
other than the applicant, from tax liability, including
penalties and interest arising from any non-payment prior to
the sale, and authorizes the tax collector to seek payment
from any owner other than the applicant.
Delete a provision that prohibits a person from occupying a
mobilehome that does not conform to HCD's registration
requirements, but reinstates that prohibition beginning in
2020 provided HCD provides notice to the occupant of the
registration requirements and any registration fees due.
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Staff
Comments: HCD indicates that its mobilehome title registry
current contains over a million records, even though there are
only approximately 400,000 known mobilehome lots in the state.
This simple fact underscores a fundamental problem of
noncompliance with current titling and registration
requirements, regardless of the cause for noncompliance, which
may be due to a failure to properly document changes of
ownership, failure to notify HCD when a mobilehome has been
abandoned or removed, inability to properly register a
mobilehome because of delinquent taxes or fees owed by a
previous owner, or willfully ignoring legal requirements.
Furthermore, HCD does not have sufficient resources to perform a
full audit of the mobilehome registry to "scrub" the system of
duplicative records and correct other inaccuracies, or to
implement stronger inspection and enforcement measures to ensure
compliance. While this bill is intended to provide a path to
bring some mobilehome owners into compliance with registration
requirements and tax obligations going forward, it is unlikely
to be a permanent or comprehensive solution for HCD's
Registration and Titling Program, and noncompliance issues are
likely to persist.
HCD indicates that neither the current number of active liens on
mobilehomes, nor the amount of delinquent "in lieu" VLF
revenues, penalties, and charges currently owed to the state, is
known. As such, the potential foregone revenue impacts of the
bill are unknown. Considering the pervasive noncompliance
issues, the inaccuracy of HCD's mobilehome titling records, and
the lack of enforcement, it seems unlikely that the state would
be able to collect on the majority of these delinquent taxes and
fees, regardless of whether AB 587 is signed into law. The
current inability to collect delinquent "in lieu" taxes and
other penalties and charges, and the unlikelihood that they will
be collected in the future, would partially or fully offset any
potential foregone revenue impacts to HCD noted above.
The total amount of delinquent property taxes, penalties, and
interest owed to counties is also unknown, but likely in the
tens of millions. Riverside and San Bernardino Counties, both
of which have a large number of mobilehome parks, report that
there were nearly 11,000 mobilehomes in 2015 with delinquencies
AB 587 (Chau) Page 5 of
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that total nearly $24 million. This bill would waive all
penalties and interest, and cap the amount of property taxes
that must be paid by abatement program participants in exchange
for a tax clearance certificate, resulting in significant
foregone property taxes and other charges. These losses would
be partially mitigated to the extent amounts forgiven under the
abatement program would never have been collected. While the
net impacts are likely to be significant revenue losses, the
bill would also bring some mobilehome owners into compliance,
which could have an unknown positive impact on future "in lieu"
VLF revenues and property tax collections.
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