BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2046 (Allen/Huffman) - Property taxation: change in ownership
exclusion for floating homes.
Amended: May 21, 2012 Policy Vote: G&F 6-1
Urgency: No Mandate: Yes
Hearing Date: August 16, 2012
Consultant: Mark McKenzie
SUSPENSE FILE.
Bill Summary: AB 2046 would establish a new exclusion from
change in ownership provisions that would otherwise require a
reassessment for property transfers of floating home marinas to
current tenants of berths at the marina, under specified
conditions.
Fiscal Impact:
Based on limited data, the Board of Equalization (BOE)
estimates that the bill would result in a statewide reduction
in property tax revenues of approximately $212,000 annually.
Assuming 50 percent of the statewide property tax revenues
offset General Fund obligations to schools pursuant to
Proposition 98, the State General Fund impact would be
approximately $106,000 due to increased state backfill
provided to schools. Actual General Fund impacts would depend
upon a number of factors (see staff comments).
Likely minor reimbursable mandate costs related to the
imposition of new duties on local tax officials related to the
new change in ownership exclusion. (General Fund)
Background: Existing law generally requires a reassessment of
real property to current fair market value when there is a
change in ownership. Subject to specified limitations, the
State Constitution and statutory provisions allow exceptions to
change in ownership requirements for property transfers between
spouses, domestic partners, parents and children, grandparents
and grandchildren, and persons that own property in joint
tenancy, as specified. Existing law also provides a change of
ownership exclusion for a transfer of a mobilehome park if
purchased by an entity formed by the tenants renting at least
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51% of the spaces prior to the transfer and those tenants
represent at least a 51% ownership share of the park. However,
once excluded, any subsequent change of ownership of shares of
stock or other equity ownership in the park purchased by former
renters results in a pro rata change in ownership, that
particular share in the park would be reassessed at current
market value.
One unusual factor in the assessment of mobilehomes is that the
structure is assessed separately from the underlying real
property on which it stands. Unless a person owns both the
mobilehome and the lot, the mobilehome owner pays property tax
on the structure and rents a space from a mobilehome park owner,
who is responsible for paying the property taxes on the park
itself. This structure also applies to floating homes that rest
in permanent berths on a marina. Floating homes are
legally-permitted residences that have no means of
self-propulsion, are permanently moored in a marina, and
connected to shoreside utilities and services. Generally,
floating home marinas are privately owned and homeowners are
charged monthly berthage fees.
Proposed Law: AB 2046 would exclude a transfer of a floating
home marina to an entity representing a majority of current
tenants from "change in ownership" provisions that result in a
reassessment to current fair market value.
This exclusion would apply for transfers to a nonprofit
corporation, stock cooperative corporation, limited equity stock
cooperative, or other entity formed by the tenants of a floating
home marina for purposes of purchasing the marina, provided the
entity represents participation of at least 51% of individual
renting tenants and those persons would represent at least 51%
of the ownership interest in the entity acquiring the marina.
Once an exclusion has been provided, any subsequent sales of
shares or ownership interest in the entity that acquired the
marina would be subject to a proportionate change in ownership
subject to reassessment, unless the marina has been converted to
a condominium or other cooperative ownership arrangement.
The bill would also require a floating home marina that does not
utilize recorded deeds to file an annual report with the county
assessor's office by February 1 that includes owner contact
information, situs information on each unit, the dates of
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ownership acquisition, and other specified registration
information.
Staff Comments: This bill is intended to provide a property tax
benefit for purchases of floating home marinas by marina tenants
that is currently provided for purchases of mobilehome parks.
By ensuring property taxes remain unchanged, this bill would
remove a significant barrier for floating homeowners who wish to
cooperatively purchase a marina.
Mobilehomes and floating homes have important characteristics in
common for property tax purposes; tenants own the structure and
the park or marina owner owns the underlying property. There
are also important distinctions that the Committee may wish to
consider as well. For instance, the price of a mobilehome and
mobilehome park tend to be lower than the price of a floating
home and marina. In addition, mobilehome parks generally
provide housing for low and moderate income residents, but there
is no corresponding evidence related to the owners of floating
homes. When the Legislature enacted the exclusion from change
in ownership provisions for purchases of mobilehome parks, many
park residents were in danger of being displaced because many
parks were being sold and converted to uses that provided a
higher value to park owners. It is unclear that floating home
marinas face similar challenges.
An informal review of for-sale listings of floating homes in
Richardson Bay marinas indicates that the homes themselves can
range in value from $250,000 to $3 million. The ownership
interests in marinas themselves rarely change, so information on
current values is difficult to ascertain. Committee staff is
aware of a failed attempt by a floating home ownership group to
purchase Waldo Point Harbor in the Richardson Bay near Sausalito
for $8.5 million in 1991.
The BOE estimates that this bill could result in a loss of
$212,000 in property taxes statewide, but indicates that the
estimate is based on limited data. This figure is derived from
the potential value of one Marin County marina property that is
currently assessed at $8.5 million, but current market value is
unknown. Based upon an inflator BOE uses to determine market
value for rail transportation property, and assuming this one
property represents 50 percent of the marinas affected by the
bill, yields the estimated figure noted above.
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It is unclear how many floating home owners in the state would
be interested in assuming ownership of marinas, but it would
likely be an unusual occurrence. However, the revenue impacts
of even a single transfer in ownership could result in annual
property tax losses in the hundreds of thousands annually.
Actual costs would depend upon the difference between the
factored base year value and current market value of a marina
subject to the new exclusion at the time of purchase, and the
number of property transfers to which the exclusions would
apply. An additional consideration of the state General Fund
impact would be whether school districts in the area are basic
aid since the state does not backfill property losses in these
areas.