BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2046 HEARING: 7/3/12
AUTHOR: Allen FISCAL: Yes
VERSION: 5/21/12 TAX LEVY: Yes
CONSULTANT: Grinnell
FLOATING HOMES AND PROPERTY TAXES
Tenant purchases of floating home marinas are the same as
mobile home parks.
Background and Existing Law
Section One of Article XIII of the California Constitution
provides that all property is taxable unless explicitly
exempted by the Constitution or federal law. The
Constitution limits the maximum amount of any ad valorem
tax on real property at 1% of full cash value, usually the
purchase price, plus any locally-authorized bonded
indebtedness. Assessors reappraise property whenever it is
purchased, newly constructed, or when ownership changes.
However, a change of ownership generally does not include
any situation where one person continues to own or reside
in the home, such as placing property in a trust, creating
a life estate, or purchasing the land under a mobile home.
Assessing mobile homes for property tax purposes generally
differs from typical assessment: one taxpayer (the mobile
homeowner) is assessed for the value his or her structure,
while another (the mobile home park owner) pays tax on the
park under the structure, unless the owner both owns the
home and the park, in which case he or she is assessed for
both. When tenants who rent the individual spaces in the
park want to buy it, state law provides that the transfer
does not constitute a change-in-ownership subject to
reassessment, subject to specified conditions. However,
once excluded, any subsequent change of ownership of the
shares of stock or other equity ownership in the park
purchased by the former renters results in a pro rata
change in ownership, that particular share in the park
would be reassessed to current market value.
AB 2046 - 5/21/12-- Page 2
As fixed structures with no means of self-propulsion that
rest in permanent berths in marinas, floating homes are
subject to property taxes. Floating homes are connected to
utilities and services. Floating home marinas are privately
owned and charge homeowners monthly berthage fees. Five
marinas of 400 floating homes can be found in Richardson
Bay in Sausalito, California.
Proposed Law
Assembly Bill 2046 extends provisions applicable to mobile
home parks to transfers of floating home marinas to current
tenants of berths at the marina. The measure excludes
these transfers from the definitions of change of
ownership, thereby precluding reassessment of the marina to
fair market value upon transfer, so long as:
The transfer is to a nonprofit corporation, stock
cooperative corporation, limited equity stock
cooperative, or other entity formed buy tenants to
purchase the marina.
The currently renting tenants seeking to purchase
the marina total at least 51% of its berths through
the ownership of an aggregate of at least 51% of the
voting stock of the entity described above.
Should any of the tenants that are excluded from
the reassessment under this bill subsequently sell or
transfer their share, that pro rata share shall be
reassessed to fair market value, unless the marina has
been converted to a condominium, stock cooperative
ownership, or limited equity cooperative ownership, or
is otherwise precluded.
The measure further requires a floating home marina that
does not utilize recorded deeds to file a report on or
before February 1st of each year with:
The full names and mailing addresses of each owner,
The situs address including berth and dock number
of each unit,
The date ownership was acquired, and
The Department of Housing and Community Development
decal number.
New resident owners, purchasers, or transferees of a
AB 2046 - 5/21/12-- Page 3
floating home in a park must file a preliminary change in
ownership report or a change in ownership statement. The
measure imports a definition of "floating home marina" from
the Civil Code and "pro rata portion of the real property"
from the mobile home park exclusion.
State Revenue Impact
BOE estimates property tax revenue losses of $212,000
resulting from AB 2046.
Comments
1. Purpose of the bill . According to the author, "Many
people use floating homes as their principal residences,
just like owners of mobile homes. Proposition 13 provides
protection from unfair or excessively burdensome property
taxes, and given that floating home marina tenants
presently use and occupy marinas, it is excessively
burdensome to require a property tax reassessment when
marina tenants wish to purchase the marina as a group.
Just as in mobile home parks, the tenants of a floating
home marina do not own the land underneath their homes
where they reside. Instead, they rent a berth in a marina
from the owner or operator of the park, or, in the case of
a mobile homes, a site from the mobile home park's owner or
operator. The ownership structure of a mobile home is the
same as that of a floating home, but the tax benefits are
only available for purchases of mobile home parks, and not
floating home marinas. AB 2046 would protect floating home
marina tenants from excessively burdensome property taxes
by allowing the marina tenants to purchase their respective
floating home marina without triggering a reassessment of
property taxes. The purchase of a floating home marina by
current tenants should not trigger a property tax
reassessment due to "change in ownership" because tenants
have lived and paid taxes on that property and are not
entirely "new" owners. Additionally, floating homes are
already categorized with mobile homes for many other legal
purposes, so it makes sense to bring them into alignment
for property tax assessment. Passing this bill will help
bring financial stability to floating home owners by
allowing the marina tenants to form neighborhood
associations in an effort to purchase marinas without
triggering a reassessment of property taxes."
AB 2046 - 5/21/12-- Page 4
2. Hope floats . AB 2046 applies laws that allow tenants
of mobile homes to purchase the park to owners of floating
homes that want to acquire the marina. As mobile homes and
floating homes have important characteristics for property
tax purposes in common - tenants own the structure and the
park or marina owner owns the surrounding property -
differential tax treatment shouldn't exist. While no
specific set of tenants is seeking to buy a marina at the
moment according to the Floating Homes Association, a
significant financial barrier will be removed should the
Legislature enact AB 2046.
3. Yes we can. The Legislature has clear power to enact
change in ownership exclusions according to case law,
despite the objections of critics. In 2005, three County
Assessors sued BOE asserting that Rule 462.240(k) which
provides an exclusion from the definition of change of
owner-ship for property transfers between registered
domestic partners is unauthorized by the California
Constitution in Strong v. Board of Equalization (Case
CO52818/Sup Ct. 05AS01701). The Assessors argued that
neither BOE nor the Legislature has the authority to create
exclusions beyond those listed in the Constitution. BOE
responded that because the Constitution is silent on this
issue, the definition is left to the BOE and the
Legislature. Sacramento Superior Court denied the claim in
2003, siding with BOE, and the California Court of Appeal
affirmed the decision. While the flash point in the
lawsuit was BOE's rule that was later enacted into state
law, the case appears ended up as a fight between defining
the relevant powers delegated by the people through the
Constitution to the Legislature and administrative
agencies. Had the Court found the Assessors to be correct,
all statutory exclusions from change of ownership would
have been rendered invalid.
Assembly Actions
Assembly Revenue and Taxation Committee: 6-2
Assembly Appropriations Committee: 12-5
Assembly Floor: 48-25
AB 2046 - 5/21/12-- Page 5
Support and Opposition (6/28/12)
Support : Floating Homes Association
Opposition : Unknown.