BILL ANALYSIS Ó
SB 477
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Date of Hearing: July 1, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
SB
477 (Leyva) - As Amended April 29, 2015
SENATE VOTE: 40-0
SUBJECT: Property tax postponement: mobilehomes and floating
homes.
SUMMARY: Authorizes qualified mobilehome owners to apply to the
State Controller to defer payment of property taxes through the
Senior Citizens and Disabled Citizens Property Tax Postponement
(PTP) Program. Specifically, this bill:
1)Adds mobilehomes to the PTP Program, as follows:
a) Requires all sums paid by the Controller, together with
interest thereon, to be secured by a lien in favor of the
State of California when funds are transferred to the
county by the Controller upon the mobilehome for which
property taxes have been postponed.
b) Requires the lien to be evidenced by a notice of lien
for postponed property taxes executed by the Controller, or
the authorized delegate of the Controller, and shall secure
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all sums paid or owing, as specified.
c) Allows the notice of the lien to bear the facsimile
signature of the Controller, and requires the signature to
be of the person who is in the office at the time of
execution of the notice of lien. Provides that the notice
of lien is valid and binding notwithstanding the person
having ceased to hold the office of Controller before the
date of filing.
d) Requires the form and contents of the notice of lien for
postponed property taxes to be prescribed by the
Controller, and to include, but not be limited to, all of
the following:
i) The name or names of the registered owner or owners,
legal owner or owners, if different than the registered
owner or owners, and the names, if any, of all junior
lienholders;
ii) The identification number of the notice of lien
which has been assigned the lien by the Controller;
iii) The notice of lien shall be transmitted to the
Department of Housing and Community Development (HCD) at
its office in Sacramento, California;
iv) Upon receipt of the notice of lien for postponed
property taxes from the Controller, HCD shall amend the
permanent title record of the mobilehome to reflect that
the property taxes on the mobilehome are subject to
postponement;
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v) HCD shall provide the Controller with an
acknowledgment of receipt of the notice of lien and
amendment of the permanent title record; and,
vi) From the time HCD receives the notice of the lien
from the Controller, HCD shall 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 in the mobilehome, until released by the
Controller in the manner prescribed, or an authorization
for the amendments is given by the Controller in writing.
e) Requires, from the time of filing a notice of lien, a
lien to attach to the mobilehome for which property taxes
have been postponed.
f) Requires the Controller to reduce the amount of the
obligation secured by the lien against the mobilehome by
the amount of any payments received for that purpose and by
notification of any amounts paid by the Franchise Tax
Board, as specified.
g) Provides, if at any time the amount of the obligation
secured by the lien for postponed property taxes is paid in
full or otherwise discharged, that the Controller, or the
authorized delegate of the Controller, shall, in the case
of a mobilehome:
i) Direct the tax collector to remove from the secured
roll the information required to be entered, as
specified; and,
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ii) Transmit a Release of Lien to the owner of the
mobilehome or the owner's heirs or assigns. Requires the
owner, or the owner's heirs or assigns, to transmit the
Release of Lien, and a fee of six dollars ($6), to HCD.
Requires HCD, upon receipt of the Release of Lien and the
fee, to terminate the restriction on the permanent title
record, as specified.
h) Adds "mobilehomes" to the definition of "residential
dwelling" in the Revenue and Taxation Code, states that the
registered owner of a mobilehome shall be deemed to be the
owner of the mobilehome, and makes conforming changes to
ensure that mobilehomes do not include houseboats and
floating homes.
i) Requires the Controller to maintain a record of all
properties against which HCD has been notified to withhold
the transfer of title. Requires the record to include, but
not be limited to, the names of each claimant, a
description of the mobilehome against which a lien is
charged, and the amount of the lien.
2)Provides, if the Commission on State Mandates determines that
this act contains costs mandated by the state, that
reimbursement to local agencies and school districts for those
costs shall be made, as specified.
EXISTING LAW:
1)Enacts the PTP Program, which 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.
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2)Requires the Controller to secure repayment of postponed taxes
by recording a lien against the claimant's property, which is
satisfied when the home is sold or refinanced.
3)Allows the Controller to pay property taxes for new applicants
when liens are satisfied out of sales proceeds.
4)Enacts the following administrative provisions for the PTP
Program:
a) States that the lien secures all sums paying and owing
under PTP;
b) Provides that the lien is secured when the Controller
transfers funds to the county;
c) Requires the lien to be evidenced by a notice of lien
for property taxes executed by the Controller or his or her
authorized delegate, and recorded in the county recorder's
office in the county in which the property is located
within 14 days of transfer of funds;
d) Allows the notice of lien to bear the Controller's
facsimile signature;
e) Prescribes specified information appear on the lien;
and;
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f) Authorizes the Controller to design the form and content
of the notice of lien.
5)Directs HCD to maintain a title registry for all the state's
mobilehomes.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill contains:
1)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*)
2)Unknown [State Controller] administrative costs, potentially
over $100,000 in staff time, to process new loans for
mobilehome owners. In addition, [State Controller]
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*)
3)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 [State Controller].
(General Fund)
4)Likely reimbursable mandate costs for duties imposed on county
tax administration officials. Staff notes that the previous
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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.
COMMENTS:
1)Bill Summary. This bill authorizes qualified mobilehome
owners to apply to the State Controller to defer payment of
property taxes through the PTP Program. This bill is sponsored
by the Golden State Mobilehome Owners League.
2)Background and Previous Legislation. The PTP Program 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 the Controller, 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
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back to the Controller as a result of diminishing sales
prices, the 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 Controller to transfer to the
General Fund repayments received above a $20 million total
[AB 2231 (Gordon), Chapter 703, Statutes of 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-serve basis.
Before 2009, the PTP Program included mobile and manufactured
homes in the program,
as many low-income persons and seniors live in these homes;
however, AB 2231 did not include mobilehomes in the new
program. Advocates for mobile and manufactured homeowners
want to expand the PTP Program to again include them.
3)Author's Statement. According to the author, "The (PTP)
Program helps ensure that lower-income households who cannot
meet their taxes do not lose their home to a tax sale. During
budget negotiations in 2009, the PTP was suspended as part of
cost-cutting measures. Last year, AB 2231 reinstated the PTP.
However, the legislation eliminated the eligibility of mobile
or manufactured housing to apply. This leaves mobilehome
owners, many of whom are lower-income seniors, vulnerable to a
tax sale of their homes."
4)Policy Consideration. 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
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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.
5)Arguments in Support. Supporters note that the bill would
expand the PTP to cover mobilehomes and floating homes and
would thereby extend property tax relief to seniors and
disabled persons.
6)Arguments in Opposition. The Western Manufactured Housing
Communities Association (WMA) opposes the bill unless it is
amended to address WMA's concerns "with the property tax
postponement program as it relates to mobilehomes that are of
little or no value?WMA is concerned that the deferral (of
taxes) will end up exceeding the value of the home and the
parkowner will be saddled with a home that has negative
equity."
7)Conflicting Legislation. Provisions of this bill conflict
with SB 801 (Governance and Finance Committee) and may need
amendments to resolve the conflict, should both bills continue
through the legislative process.
8)Double-Referral. This bill is double-referred to the Revenue
and Taxation Committee.
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REGISTERED SUPPORT / OPPOSITION:
Support
Golden State Mobilehome Owners League (GSMOL) [SPONSOR]
California Assessors' Association
California Credit Union League
California Rural Legal Assistance Foundation
Educational Community for Homeowners
Fountain Valley Estates Homeowners Association
GSMOL, Chapter 1128
Howard Jarvis Taxpayers Association
Los Casas Homeowner's Assoc. Inc.
North Santa Barbara County Manufactured Homeowners Team
Orcutt Ranch Home Owners Association
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Ranch Club Homeowners Association
San Luis Obispo Mobilehome Residents Assistance Panel
San Marcos Mobilehome Residents Association
Santa Cruz County Manufactured/Mobile Homeowners Association
Sea Oaks Mobilehome Park
Western Center on Law & Poverty
Individual letters (8)
Opposition
Western Manufactured Housing Communities (unless amended)
Analysis Prepared by:Debbie Michel / L. GOV. / (916)
319-3958
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