BILL ANALYSIS Ó
SB 477
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Date of Hearing: July 13, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
SB
477 (Leyva) - As Amended April 29, 2015
2/3 vote. Fiscal committee.
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.
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2)Requires all sums paid by the Controller, together with the
interest thereon, be secured by a lien in favor of the State
of California upon a mobilehome for which property taxes have
been postponed when funds are transferred to the county by the
Controller.
3)Requires a lien to be evidenced by a notice of lien for
postponement property taxes executed by the Controller, or the
authorized delegate of the Controller, and shall secure all
sums paid or owing.
4)Allows the notice of lien to bear the facsimile signature of
the Controller, and requires the signature to be made by a
person who is in the office at the time of the execution of
the notice of lien. The notice of lien is valid and binding
notwithstanding the person having ceased to hold the office of
Controller before the date of filing.
5)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:
a) 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; and,
b) The identification number of the notice of lien which
has been assigned the lien by the Controller.
6)Requires the notice of lien to be transmitted to the
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Department of Housing and Community Development (HCD) at its
office in Sacramento, California.
7)Requires HCD to amend the permanent title record of the
mobilehome to reflect that the property taxes on the
mobilehome are subject to postponement upon the receipt of the
notice of lien for postponement property taxes from the
Controller.
8)Requires HCD to provide the Controller with an acknowledgement
of receipt of the notice of lien and amendment of the
permanent title record.
9)Requires, beginning at the moment HCD receives the notice of
lien from the Controller, HCD to impose a moratorium on any
other amendments to the permanent title record of the
mobilehome for purposes of transferring ownership interest or
transferring or creating any security in the mobilehome, until
released by the Controller or an authorization for the
amendments is given by the Controller in writing.
10)Provides that a lien shall attach to the mobilehome for which
property taxes are postponed the moment a notice of lien is
filed.
11)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
(FTB), as specified.
12)Requires the Controller, or the authorized delegate of the
Controller, to do all of the following if at any time the
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amount of the obligation secured by the lien for postponed
property taxes is paid in full or otherwise discharged:
a) Direct the tax collector to remove the information
required to be entered from the secured roll; and,
b) Transmit a Release of Lien to the owner of the
mobilehome or the owner's heirs or assigns. The owner, or
the owner's heirs or assigns, shall transmit the Release of
Lien, and a fee of six dollars to HCD. Upon receiving the
Release of Lien and the fee, HCD shall terminate the
restriction on the permanent title record.
13)Adds mobilehome to the definition of "residential dwelling"
in the Revenue and Taxation Code (R&TC), and provides that the
registered owner of the mobilehome is deemed to be the owner
of the mobilehome.
14)Provides that if a mobilehome is not assessed as real
property that is located on land owned by the claimant,
"residential dwelling" will include the land on which the
mobilehome is situated and so much of the land surrounding it
as reasonably necessary for use of the mobilehome as a home.
15)Requires the Controller to maintain a record of all
properties against which HCD has been notified to withhold the
transfer of title. The record shall include, but is not
limited to, the names of the claimant, the description of the
mobilehome against which a lien is charged, and the amount of
the lien.
16)Requires the Controller, upon written request of any person
or entity having a legal or equitable interest in a mobilehome
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that is subject to a lien for postponement taxes, to issue a
written statement within 10 working days showing the amount of
the obligation secured by the lien as of the date of the
statement and any other information as will reasonably enable
the person or entity to determine the amount to be paid to the
Controller in order to obtain a certificate of release or
discharge of the lien for postponed taxes.
17)Provides that houseboats and floating homes shall not be
eligible for postponement if property taxes are delinquent at
the time of the application for postponement is made.
18)Provides that "residential dwelling" includes houseboats and
floating homes.
19)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)Allows, under the PTP, the 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.
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.
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4)Enacts the following administrative provisions for the PTP
Program:
a) The lien secures all sums paying and owing under
PTP;
b) The lien is secured when the Controller transfers
funds to the county;
c) The lien is required 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) A notice of lien is required to bear the
Controller's facsimile signature; and,
e) The Controller is authorized 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: Unknown
COMMENTS:
1)Author's Statement : The author has provided the following
statement in support of this bill:
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The PTP 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 costs-cutting measures. Last year, AB
2231 reinstated the PTP. However, the Legislature
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
2)Arguments in Support : The Educational Community for
Homeowners states that "[m]obilehome owners are no different
than real property owners in terms of owning and occupying
their home. In fairness they should be treated the same and
allowed the same opportunity to postpone ad valorem taxes."
Additionally, the Howard Jarvis Association states that the
"PTP is a valuable program that had been instrumental in
keeping thousands of seniors, blind, and disabled individuals
in their home. Nearly 6,000 homeowners benefitted from the
program across nearly all counties in California. Many have
been in the program at least 20 years and the majority are
over 70 years old. 208 claimants approved in 2009, the year
the program was eliminated, were 90 years old." Howard Jarvis
further states that it "understands that the State Controller
has some implementation concerns regarding PTP for mobile and
floating homes, which is why they were not included in last
year's bill. Notwithstanding these issues, this policy is one
deserving of support. Many low-income seniors and those with
disabilities live in mobile homes and deserve to be able to
take advantage of this resource. No property owner should
have to risk foreclosure because they have to choose between
paying for medicine and paying their property tax.
California's record $107 billion budget should more then be
able to offset any nominal, extremely short-term costs to
broadening this program."
3)Arguments in Opposition : The Western Manufactured Housing
Communities Association is "concerned that the deferral of
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taxes will end up exceeding the value of the home and the
parkowner will be saddled with a home that has negative
equity." Specifically, the Western Manufactured Housing
Communities Association states that several "communities had
mobilehomes with 100% equity that were abandoned during the
recent economic downturn. Some of these homes had little
resale value and had to be removed at the parkowner's expense.
It would also be helpful if the legislation could provide an
expedited process for a tax lien sale. County tax collectors
are loath to use this process while residents reside in the
home but it could be helpful to property owners who must
engage in a lengthy legal process to remove the homes, missing
out on several months' rent." As a solution, the Western
Manufactured Housing Communities Association would like the
mobilehomes to be valued at a minimum $10,000 to be eligible
under the program and require the State Controller's office to
take responsibility for the home through a tax lien sale
within 30 days if the parkowner does not wish to purchase the
home and have the home remain in the park.
4)Background : California has several property tax programs
benefiting the elderly and disabled individuals, including
property tax reappraisal relief, property tax assistance, and
property tax postponement. The assistance program provides a
direct grant to qualifying seniors and disabled individuals
who own or rent a residence. The assistance program, which is
administered by the FTB, was established in 1967 to provide
direct property tax relief to seniors living on a fixed
income. The program was later expanded to include renters who
meet the income requirement and to homeowners who are blind
and or disabled, regardless of their age.
Unlike the assistance programs that refund a percentage of
property taxes paid, the postponement program allows eligible
homeowners to defer payment of all, or a portion, of the
property taxes on their residence. The program was enacted in
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1977, after the passage of a constitutional amendment
authorizing the postponement of property taxes (California
Constitution, Article 13, Section 8) and is administered by
the Controller's Office. The constitutional amendment was in
response to concerns that senior homeowners on fixed incomes
could lose their homes because of the inability to pay raising
property tax bills. Originally designed for individuals over
62 years of age, the program is now also available to eligible
blind and disabled persons, regardless of age.
The State has not provided funding for the assistance program
since the 2007-08 Budget; as such, California has not paid
claims more recently than those made in 2008. On February 20,
2009, the postponement program was indefinitely suspended as
part of the budget reductions to the state's General Fund
programs. [SBx3 8 (Ducheny), Chapter 4, Statutes of 2009.]
The funding of the program was eliminated and the Controller
was prohibited from accepting new applications after February
20, 2009.
In response to the suspension of the postponement program,
Governor Brown signed AB 1090 (Blumenfield), Chapter 369,
Statutes of 2011, creating the County Deferred PTP for Senior
Citizens and Disabled Citizens. Under this new program,
counties may join the program by adopting a resolution
indicating the county's intention to participate.
Participating counties must establish a Property Tax Deferral
Fund within its Treasury, which will be used to make payments
equivalent to the amount of deferred property taxes. Payments
from the Property Tax Deferral Fund will be made to the county
and will be processed in the same manner as all other property
tax payments. Since the enactment of the County Deferred
Property Tax program, only one county has adopted a resolution
indicating its intention to participate.
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The PTP program was reinstated last year with the enactment of
AB 2231 (Gordon), Chapter 703, Statutes of 2014. Although the
program was reinstated, AB 2231 specifically removed mobile
homes from the definition of "residential dwelling." The
author and supporters of the bill had expressed an interest in
improving the long-term sustainability of the program. As
such, the Controller's Office suggested eliminating
mobilehomes from the definition of a "residential dwelling"
because mobile homes tend to depreciate over time, leaving
very little value to pay off the lien. The PTP is funded
solely from what is currently in the fund and the accounts
receivable that come in. As of March 31, 2015, the balance in
the fund is just over $7 million. The amount outstanding as
of February 2015 is just under $68 million, which reflects
loans on 5,154 homes.
5)Depreciation of Mobilehomes : Mobilehomes were specifically
removed form from the PTP program when it was reinstated in
2014 as a way of improving the long-term sustainability of the
program. Because mobile homes tend to depreciate rather than
appreciate over time, there is usually little value left in
the home to pay off the outstanding lien when the home is
sold, which puts additional financial pressure on the fund.
As explained by the Controller's office, the discharge rate
for PTP loans (when the state writes off the loan as a loss)
is higher for mobilehomes (16%) than for traditional homes
(6%). However, the potential of causing serious financial
strain on the existing PTP program seems relatively minor.
Traditionally, mobilehomes have not been a large part of the
program, constituting only 4% of outstanding accounts, and
less than 1% of outstanding loans in 2008.
6)Double Referral : This bill was double-referred to the
Assembly Committee on Local Government, and passed that
committee on a 7 - 0 vote on July 1, 2015. For additional
discussion of this bill's provisions, please refer to that
committee's analysis.
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7)Previous Legislation : AB 2231 (Gordon), Chapter 703, Statutes
of 2014, reinstates the PTP program to provide property tax
deferment to seniors and disabled persons, made changes to
improve the long term sustainability, and removed mobilehomes
from the PTP program.
REGISTERED SUPPORT / OPPOSITION:
Support
California Credit Union League
Educational Community for Homeowners
Howard Jarvis Association
Opposition
Western Manufactured Housing Communities Association
Analysis Prepared by:Carlos Anguiano / REV. & TAX. / (916)
319-2098
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