BILL ANALYSIS Ó
SB 477
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Date of Hearing: August 26, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 477
(Leyva) - As Amended August 18, 2015
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|Policy |Local Government |Vote:|7 - 0 |
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| |Revenue and Taxation | |9 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill authorizes qualified mobilehome owners, beginning July
1, 2016, to apply to the State Controller (SCO) to defer payment
of property taxes through the Senior Citizens and Disabled
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Citizens Property Tax Postponement (PTP) Program. Recent
amendments exclude houseboats and floating homes from
eligibility.
FISCAL EFFECT:
1)Unknown expenditures for new PTP loans to mobilehome owners,
likely in the range of $150,000 to $200,000 (GF) in 2016-17
and 2017-18, decreasing to $75,000 to $125,000 (GF*) in future
years, based on historical demand. Staff assumes higher
amounts in the initial years due to pent up demand.
2)Unknown SCO administrative costs, potentially over $100,000
(GF*) 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.
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 SCO. (GF)
4)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.
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*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.
COMMENTS:
1)Purpose. According to the author, "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)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
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program. The PTP was permanently suspended and all funding
was eliminated by SBx3 8 (Ducheny), Chapter 4, Statues of
2009, as a budget action to address severe General Fund
shortfalls during the recession. Prior to suspension, the
program was available to persons over 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 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), Chapter 703, Statutes of 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.
Mobilehomes were specifically excluded from the reenacted PTP
program 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,
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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.
Twenty-nine 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.
1)Related
Legislation:
a) AB 587 (Chau), pending in the Senate Transportation and
Housing 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.
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b) AB 999 (Daly), pending in the Senate 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.
1)Prior Legislation:
a) AB 2231 (Gordon), Chapter 703, Statutes of 2014,
reinstated 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.
b) SBx3 8 (Ducheny), Chapter 4, Statues of 2009,
permanently suspended and eliminated all funding for the
PTP program.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081
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