BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 477 (Leyva) - Property tax postponement: mobilehomes and
floating homes
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|Version: April 29, 2015 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 18, 2015 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 477 would authorize qualified mobilehome owners to
apply to the State Controller (SCO) to defer payment of property
taxes through the Senior Citizens and Disabled Citizens Property
Tax Postponement Program (PTP).
Fiscal
Impact:
Unknown expenditures for new PTP loans to mobilehome owners,
likely in the range of $150,000 to $200,000 in 2016-17 and
2017-18, decreasing to $75,000 to $125,000 in future years,
based on historical demand. Staff assumes higher amounts in
the initial years due to pent up demand. (General Fund*)
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Unknown SCO administrative costs, potentially over $100,000 in
staff time, to process new loans for mobilehome owners. In
addition, SCO administrative and legal staff spend a
disproportionate amount of time to recover debts owed for
mobilehome accounts, and there is a much higher default and
discharge rate for these loans. (General Fund*)
Minor costs to the Department of Housing and Community
Development (HCD) to receive liens for postponed property
taxes, amend mobilehome permanent title records to reflect the
postponement, and coordinate with the SCO. (General Fund)
Likely reimbursable mandate costs for duties imposed on county
tax administration officials. Staff notes that the previous
PTP program was deemed to have imposed reimbursable activities
on local agencies, resulting in annual General Fund
expenditures of up to $285,000 before the program was
suspended in 2009. The amount attributable to county
officials' administration of mobilehome transactions is
unknown, but likely minor.
*Staff notes that new loans and SCO administrative costs are
paid from the Senior Citizens and Disabled Citizens Property Tax
Postponement Fund, a continuously appropriated fund that is
General Fund-fungible. See AB 2231 background.
Background: The PTP was originally enacted by Chapter 1242 of 1977 to
provide property tax relief to eligible senior citizens, and was
later expanded to include blind and disabled persons. Under the
program, eligible persons could defer payment of property taxes
by requesting that the SCO pay the amount deferred to the
county. The SCO recovers payment by securing a lien on the
property, ensuring repayment of deferred property taxes with
accrued interest upon sale of the home, when the title changed
hands, or when the homeowner died or moved. The PTP was funded
by an annual General Fund allocation of $12.7 million
appropriated to the SCO to pay the face amount of all
certificates of eligibility for the program. The PTP was
permanently suspended and all funding was eliminated by SBx3 8
(Ducheny), Chap. 4/2008-09 3rd Ex. Session, as a budget action
to address severe General Fund shortfalls during the recession.
Prior to suspension, the program was available to persons over
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the age of 62, as well as blind and disabled persons, with an
income of less than $35,500 per year and at least 20 percent
equity in their homes.
Not accounting for SCO administrative costs, the original PTP
was generally self-supporting, and in most years loan repayments
exceeded new loans disbursed. The exception to this pattern was
during periods of economic recession. For example, in the
2008-09 fiscal year, just prior to suspension, the loan
disbursements exceeded loan repayments by over $4 million.
Existing law, AB 2231 (Gordon), Chap 703/2014, re-enacted the
PTP program, with modifications that were intended to improve
the program's solvency over the long-term and better protect the
state's interests. For instance, the program now requires
applicants to have a 40 percent equity stake in their homes,
rather than 20 percent, and requires a loan to be due and
payable when the taxpayer refinances the home or enters into a
reverse mortgage. AB 2231 also deleted all provisions in the
PTP statutes pertaining to mobilehomes, except to wind down PTP
mobilehome activity by providing for repayment of existing loans
made prior to 2009.
AB 2231 established the Senior Citizens and Disabled Citizens
Property Tax Postponement Fund (PTP Fund), transferring any
outstanding loan repayment amounts to the PTP Fund and
continuously appropriating revenues to the SCO to fund the
program, including administrative costs and property tax
postponement disbursements. The PTP Fund has a cap of $20
million in 2016-17, which is lowered to $15 million in 2017-18
and each year thereafter. Any amounts that exceed this cap are
transferred to the General Fund. The fund currently has a
balance of about $7 million.
Proposed Law:
SB 447 would restore provisions of law deleted by AB 2231,
thereby allowing eligible owners of mobilehomes to apply to the
SCO to defer payment of property taxes through the PTP.
Specifically, this bill would:
SB 477 (Leyva) Page 3 of
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Authorize the SCO to accept new claims for property tax
postponement from mobilehome owners (including owners of
houseboats and floating homes), beginning on July 1, 2016.
Specify the contents of a lien executed by the SCO that
secures all sums paid or owing for postponed property taxes.
Require the SCO to transmit the notice of lien to HCD, and
require HCD to amend the permanent title record of the
mobilehome to reflect the property taxes are subject to
postponement, which attaches a lien to the mobilehome. HCD
would be required to impose a moratorium on any amendments to
the title record for purposes of transferring ownership or
creating any security interests until the lien is released.
Direct the SCO to reduce obligation amounts by the amount of
any payments received.
Provide for the SCO 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 release of the lien to the
mobilehome owner, who must send the release of lien to HCD
with a fee of $6.
Make conforming changes to require that a mobilehome owner
must have a 40 percent equity share in the home to be eligible
for a PTP loan.
Specify that houseboats and floating homes that have
delinquent property taxes at the time of application are not
eligible for a PTP loan.
Related
Legislation: AB 587 (Chau), pending in the Assembly
Appropriations Committee, would establish a tax abatement
program until 2019, allowing mobilehome owners to bring their
title into compliance without having to pay all of the past due
taxes and fees on the home, often accrued by a previous owner.
AB 999 (Daly), pending in the Assembly Appropriations Committee,
would establish due process requirements for mobilehome park
owners to dispose of an abandoned mobilehome without first being
required to pay any unpaid property taxes on the mobilehome.
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Staff
Comments: The re-enacted program deliberately excluded
mobilehomes because they tend to depreciate in value over time,
there is a widespread failure to record changes of ownership
(which would trigger a loan repayment), and PTP loans for
mobilehomes have historically had higher default and loan
discharge rates. Only about one percent (about $580,000) of
outstanding PTP loan balances is attributable to
detached/non-affixed mobilehomes (those not attached to a
permanent foundation). Since 2008, 16 percent of the
outstanding mobilehome loan accounts have been discharged,
representing 35 percent of the outstanding mobilhome loan
proceeds. By comparison, nine percent of the outstanding
single-family home PTP loan accounts have been discharged in the
same period, representing six percent of outstanding loan
proceeds for this group. The SCO indicates that 67 of the 227
outstanding mobilehome PTP loans have gone to collection. 29 of
those accounts have been deemed uncollectable and discharged
thus far, and the SCO estimates that most of the remaining loans
will eventually be discharged.
Prior to the suspension of the previous PTP in 2009, the SCO
authorized an average of 220 loans each year for
detached/un-affixed mobilhomes over three years, with an average
of $106,400 annually in loan proceeds over that period. The
average loan amount for individual loans ranges from $400 to
$500. Staff estimates that the restored program for mobilehome
owners is likely to experience increased demand in the first few
years, decreasing to historical average demand in the future.
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