BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 477 |Hearing |4/22/15 |
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|Author: |Leyva |Tax Levy: |No |
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|Version: |2/26/15 |Fiscal: |Yes |
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|Consultant|Grinnell |
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PROPERTY TAX POSTPONEMENT: MOBILEHOMES AND FLOATING HOMES.
Adds mobilehomes to the property tax postponement program.
Background and Existing Law
The Senior Citizens and Disabled Citizens Property Tax
Postponement Law (PTP) allows the State Controller to pay
property taxes to county tax collectors on behalf of individuals
over the age of 62 or disabled persons making less than $39,000
in income per year. The Controller secures repayment by
recording a lien against the claimant's property, which is
satisfied when the home is sold or refinanced. As liens are
repaid out of sales proceeds, revenue flows back to SCO, who in
turn uses these funds to pay property taxes for new applicants.
Loans do not become due and payable if the claimant or the
claimant's spouse continues to occupy the home. However, the
Controller's lien is only paid off when proceeds remain after
previously filed liens have been satisfied; liens filed by
county tax collectors have "super priority" status, and
therefore must be satisfied before all others regardless of when
they're filed.
In 2009, due to budgetary constraints, and fewer funds flowing
back to SCO as a result of diminishing sales prices, the
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Legislature prohibited persons from filing new claims for
property tax postponement, and the Controller from accepting
applications (SBx3 8, Ducheny, 2009). However, the Legislature
resuscitated the program last year by removing SBx 8's
prohibition, albeit with tightened eligibility criteria, and a
requirement for the SCO to transfer to the General Fund
repayments received above a $20 million total (AB 2231, Gordon,
2014). However, the measure didn't contain an appropriation;
instead, the Controller will likely begin accepting applications
in September, and paying property taxes out of approximately $7
million of previously collected funds on a first-come,
first-served basis.
Before 2009, PTP included mobile and manufactured homes in the
program, as many low-income persons and seniors live in these
homes; however, AB 2231 didn't include mobilehomes in the new
program. Advocates for mobile and manufactured homeowners want
to expand the PTP program to again include them.
.
Proposed Law
Senate Bill 477 expands PTP eligibility to again include
mobilehomes by amending several sections of the Government Code
that govern PTP, with some modifications, including:
Ensuring that the lien secures all sums paying and owing
under PTP, providing that the lien is secured when the
Controller transfers funds to the county, requiring the
lien to be evidenced by a notice of lien for property taxes
executed by the Controller or his or her authorized
delegate, allowing the notice of lien to bear the
Controller's facsimile signature, and prescribing specified
information on the lien. Modifications to this section for
mobilehomes include:
o Instead of sending the notice of lien to the
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county, SB 477 directs the Controller to transmit it
to the Department of Housing and Community Development
(HCD) at its Sacramento office, which serves as the
title registry for all the state's mobile homes,
o Upon receipt of the lien, the bill directs HCD
to amend the permanent title record of the mobilehome
to reflect that the property taxes have been
postponed,
o The measure requires HCD to provide the
Controller with acknowledgement of receipt, and
amendment of the permanent title lien,
o Upon receipt of the notice of lien from the
Controller, SB 477 also requires HCD to impose a
moratorium on any other amendments to the permanent
title record of the mobilehome for purposes of
transferring any ownership interest or transferring or
creating any security interest until released or
authorized by the Controller,
o The bill states that once a notice of lien is
filed, the lien attaches to the mobilehome which is
eligible for PTP
Directing the Controller to reduce obligation amounts by
the amount of payment received.
Providing for the Controller to release the lien upon
satisfaction of all amounts it secures, directing the tax
collector to remove specified information required of PTP
properties from the secured roll, and transmitting a
release of lien to the owners of the mobilehome or the
owner's heirs or assigns. Once the owners, heirs, or
assigns receive the notice of lien, they must send it to
HCD with a $6 fee.
Adding "mobilehomes" to the law's definition of
"residential dwelling," thereby applying AB 2231's higher
equity requirement of 40%, compared to the former 20%.
SB 477 also provides that real property surrounding the
mobilehome necessary for its use as a home, and makes conforming
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changes to ensure that the bill's expansion of PTP to
mobilehomes doesn't include houseboats and floating homes.
The bill also provides that its changes are optional if the
Commission on State Mandates determines that they're a
reimbursable mandate. The measure also applies this provision
to AB 2231's changes that modernized PTP by replacing references
to "certificates of eligibility" to "electronic funds
transfers."
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "Last year, AB
2231 (Gordon) Chapter 703, Statutes of 2014 reestablished the
Property Tax Postponement Program, which provides property tax
assistance to certain lower-income households. However, in
reinstating the program, AB 2231 removed mobilehomes from
eligibility. This leaves mobilehome owners, many of whom are
lower-income seniors and/or disabled, vulnerable to a tax sale
of their homes. SB 477 would reinstate mobilehome owners as
eligible participants in the State Property Tax Postponement
Program. This proposal would ensure that low-income disabled
persons and seniors who live in mobilehomes are not at risk of
losing their homes because of property taxes. The State Property
Tax Postponement Program helps ensure that lower-income
residents and households in California who cannot meet their
taxes do not lose their home to a tax sale."
2. Tradeoffs . The Legislature reestablished PTP last year to
benefit many low-income and disabled taxpayers who have
difficulty paying their property taxes; however, it didn't
provide any additional funds, so the Controller can only pay
property taxes with funds from previous repayments, currently $7
million. While this figure will increase over time, the
Controller can't likely meet current demand given the program's
lengthy hiatus, so she plans on paying claims out of available
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funds on a first-come, first-served basis. Adding mobilehomes
to PTP allows the Controller to help very low-income individuals
living in these homes, but doing so again adds to demand without
adding funds. As a result, the Controller may have to grant
fewer applications for homeowners eligible under the current
program. Additionally, mobilehomes usually depreciate in value
over time, or have no recovery value, which could generate lower
repayment amounts, again reducing the number and amount of
claims the Controller can grant. The Controller states that the
discharge rates for PTP loans (when the state writes off the
loan as a loss) is higher for mobilehomes (16%) than for
traditional homes (6%). However, mobilehomes haven't
traditionally been a large part of the program: constituting
only 4% of PTP accounts, and less than 1% of outstanding loans
in 2008. The Committee may wish to consider SB 477's tradeoffs.
3. Another way ? PTP is a popular program that targets
low-income and disabled homeowners who can demonstrate they have
more than 40% equity in their homes. The state transfers funds
to county tax collectors, who deposit the transfers with the
county along with other property tax revenues, who repays the
state when the lien securing the loan is repaid upon sale or
refinancing. When repayments exceed $20 million, the Controller
must transfer any repayment back to the General Fund. One way
to accommodate the increased demand from adding mobilehomes
would be to eliminate this repayment requirement. While a
one-time General Fund appropriation would help more homeowners
more quickly, allowing repayments to stay with the PTP fund will
also help.
4. Cart and horse . Mobilehomes are different than traditional
residential properties in California in many ways, especially
for tax purposes. For many years, mobilehomes paid the Vehicle
License Fee to the Department of Motor Vehicles, but in 1980,
the Legislature provided that any mobilehomes sold after July 1,
1980, pay the property tax instead. However, many mobilehomes
are not on the local property tax rolls, and don't go through
escrow when transferred. As such, allowing PTP for mobilehomes
may require additional work for the Controller and tax
collectors to ensure applicants actually have title to the
mobilehome, without which repayment of postponed property taxes
could be jeopardized. While AB 587 (Chau) attempts to improve
the title registration process, it may be premature to expand
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PTP to mobilehomes given this risk, especially when PTP funds
are limited. The Committee may wish to consider deferring
action on SB 477 until the current process for establishing
ownership is improved.
5. Mandates . SB 477 contains some curious local mandate
reimbursement provisions, stating that "any action required of a
local agency to give effect to PTP that has been determined by
the Commission on State Mandates to be a reimbursable mandate,
shall be optional." This language appears in two places, and
appears to have the effect of making optional duties of tax
collectors to implement PTP should the Commission approve a
reimbursement claim, including one part of existing law. The
Committee may wish to consider deleting this language.
6. Technicals . Committee Staff recommends the following
technical amendments.
Make a conforming change to 16181 after any mention of
"real property" to also include "mobilehome."
Page 4, Line 18, after "receipt" add "notice of lien"
Page 4, Line 30, strike "eligibility for the
postponement of taxes has been granted" and replace with
"taxes have been postponed."
Page 6, Line 32 change "Section 2514" to "Section
"2515."
Support and
Opposition (4/17/15)
Support : California Assessors' Association; Golden State
Mobilehome Owners League; Howard Jarvis Taxpayers Association;
20 Individuals; Western Center on Law and Poverty.
Opposition : Unknown.
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