BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 434 Hearing Date: 4/21/2015
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|Author: |Allen |
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|Version: |2/25/2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Christine Hochmuth |
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SUBJECT: Manufactured housing: vehicle license fee: property
taxation
DIGEST: This bill requires a mobile- or manufactured home owner
to request a transfer from the vehicle license fee to local
property taxation when they submit building plans that rebuild
the home on a foundation system which leaves only the original
chassis.
ANALYSIS:
Existing law:
1.Requires the Department of Housing and Community Development
(HCD) to establish regulations for manufactured home,
mobilehome, and commercial modular foundation systems
(referred to hereafter collectively as manufactured homes).
These types of homes may be installed on a foundation as
either a fixture or improvement to the real property or as a
chattel (an item of property other than real estate), each
condition dependent upon meeting certain criteria, including
obtaining permits, payming of fees, and undergoing proper
inspections.
2.Requires a manufactured home owner or contractor to obtain a
building permit from HCD before installing a manufactured home
on a foundation system.
3.Requires HCD, within five days of the issuance of the
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certificate of occupancy for the manufactured home, to record
a document with a county recorder's office naming the owner of
the real property and declaring that a manufactured home has
been affixed to that real property by installation on a
foundation system.
4.Requires that manufactured homes originally purchased new on
or after July 1, 1980 be automatically subject to local
property taxes (LPT). If purchased new prior to that date,
the prior owner could voluntarily convert the annual vehicle
license fee (VLF) to local taxation though HCD. Owners of
manufactured homes not subject to local property tax (LPT)
must pay a vehicle license fee (VLF) to HCD. The annual
amount of the fee is a sum equal to 0.65 percent of the market
value of the manufactured home.
This bill requires an owner of a manufactured home that is
currently subject to the VLF to request a transfer to LPT at the
time they submit building plans to, and receive building permits
from, HCD when the building plans rebuild the manufactured home
on a foundation system leaving only the chassis of the original
home in place.
COMMENTS:
1.Purpose of the bill. According to the author, this bill
intends to close a loophole where certain older homes, under
current code, are considered vehicles and are not subject to
property tax rules. This loophole is invoked by retaining the
steel chassis of the original manufactured home, surrounded by
the new foundation and under the floor of the newly built
home.
The author contends that an issue of fairness arises when a
VLF home is extensively rebuilt into an essentially new home,
and the owner is allowed to continue paying the relatively low
annual VLF. In the case of a typical single-family home, when
rebuilt to be essentially the same as new, the property is
reassessed, and the property taxes will increase to an
appropriate amount, based on the increase in the property's
value. However, any home under VLF, no matter how extensively
it is reconstructed, is allowed to remain subject to the
relatively low annual license fee. This bill seeks to resolve
the inequity created by this abuse.
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2.Taxation of manufactured homes. Manufactured homes in
California are taxed in two ways: via the annual VLF,
sometimes known as the In-Lieu Tax (ILT), or as personal
property via LPT. HCD administers the program involving homes
subject to the VLF. A manufactured home first sold prior to
July 1, 1980, is subject to the annual VLF, under which a
homeowner will pay between $16 and $80 per year (0.65% of the
original pre-1980 value, determined by a manufactured home
"blue book"). This is much less than the amount owed if the
home were subject to LPT. LPT includes a 1% rate based on a
property's assessed value, and the assessment increases each
year by 2%.
VLF is a state revenue, whereas LPT is a local revenue, so
this bill has the potential to shift revenues to local
jurisdictions. However, the manufactured homes that utilized
the loophole this bill intends to close currently number less
than 100, and this bill does not retroactively affect these
existing homes. This bill sets provisions for future projects
at the time of building permit submission.
3.Support for the bill. The Assessor for the County of Los
Angeles states that this bill ensures that extensively rebuilt
manufactured homes are properly assessed and taxed
accordingly. They claim this bill is not intended to affect
manufactured-home homeowners who make basic repairs or perform
essential maintenance on their homes; it only applies to homes
that are extensively rebuilt. The California Assessors'
Association states that this bill addresses an assessment
fairness issue with certain manufactured homes.
4.Opposition to the bill. The Western Manufactured Housing
Communities Association states that the issue this bill is
attempting to address has already been taken care of at the
administrative level, by virtue of bringing this issue to
HCD's attention. Opponents also contend that current rebuilds
that are the examples for this legislation are being
reassessed at the rebuilt value. Further, they are concerned
with the interpretations that arise in the legislative counsel
digest which refers to alterations on these homes being done
on real property, whereas the code section that this bill
amends pertains to mobilehomes that are installed in
manufactured housing communities on leased land.
5.Double referral. This bill has been double-referred to the
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Governance and Finance Committee.
RELATED LEGISLATION:
AB 379 (Brown, Chapter 137, Statutes of 2013) - changes the
process whereby the law deems a mobilehome a fixture or
improvement to real property.
SB 259 (Haynes, Chapter 423, Statutes of 1997) - allows
manufactured homes, mobilehomes, or commercial coaches to be
installed on a foundation system as either a fixture or an
improvement to real property, or as a chattel. SB 259 specifies
that manufactured homes or mobilehomes on a foundation system as
chattel are subject to permit requirements and their foundations
must meet minimum standards.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: No Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 15, 2015.)
SUPPORT:
County of Los Angeles Assessor (Sponsor)
California Assessors' Association
OPPOSITION:
Western Manufactured Housing Communities Association
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