Existing law, on and after February 20, 2009, prohibited a person from filing a claim for postponement, and prohibited the Controller from accepting applications for postponement of ad valorem taxes, under the Senior Citizens and Disabled Citizens Property Tax Postponement Law. Existing law, as of July 1, 2016, makes inoperative the prohibition against a qualifying person, as specified, filing a claim for postponement and the Controller from accepting applications for postponement under the program and repeals this prohibition on January 1, 2017. Existing law does not allow owners of mobilehomes, houseboats, and floating homes to seek postponement of ad valorem taxes when the prohibition is lifted.

This bill would authorize an owner of a mobilehome or floating home, who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.

Because this bill would provide for additional categories of expenditures from the Senior Citizens and Disabled Citizens Property Tax Postponement Fund, a continuously appropriated fund, it would make an appropriation.

Because this bill would require local entities to process property liens under the expansion of the property tax postponement program, it would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law, on and after February 20, 2009, prohibited a person from filing a claim for postponement, and prohibited the Controller from accepting applications for postponement of ad valorem tax, taxes, under the Senior Citizens and Disabled Citizens Property Tax Postponement Law. Existing law, as of July 1, 2016, makes inoperative the prohibition against a qualifying person, as specified, filing a claim for postponement and the Controller from accepting applications for postponement under the program and repeals this prohibition on January 1, 2017. Existing law does not allow owners of mobilehomes, houseboats, and floating homes to seek postponement of ad valorem taxes when the prohibition is lifted.

This bill would authorize an owner of a mobilehome or floating home, who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.

Because this bill would provide for additional categories of expenditures from the Senior Citizens and Disabled Citizens Property Tax Postponement Fund, a continuously appropriated fund, it would make an appropriation.

Because this bill would require local entities to process property liens under the expansion of the property tax postponement program, it would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law, on and after February 20, 2009, prohibited a person from filing a claim for postponement, and prohibited the Controller from accepting applications for postponement of ad valorem tax, under the Senior Citizens and Disabled Citizens Property Tax Postponement Law. Existing law, as of July 1, 2016, makes inoperative the prohibition against a qualifying person, as specified, filing a claim for postponement and the Controller from accepting applications for postponement under the program and repeals this prohibition on January 1, 2017. Existing law does not allow owners of mobilehomes, houseboats, and floating homes to seek postponement of ad valorem taxes when the prohibition is lifted.

This bill would authorize an owner of a mobilehome or floating home, who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.

Because this bill would provide for additional categories of expenditures from the Senior Citizens and Disabled Citizens Property Tax Postponement Fund, a continuously appropriated fund, it would make an appropriation.

Because this bill would require local entities to process property liens under the expansion of the property tax postponement program, it would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Date of Hearing: August 26, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

SBPCA Bill Id:SB 477

Author:(Leyva) – As Amended Ver:August 18, 2015

Urgency: No State Mandated Local Program: Yes Reimbursable: 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 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.

*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 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, 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.

3. Related Legislation:

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.

1. 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.

4. Prior Legislation:

1. 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.

2. 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

Date of Hearing: July 13, 2015

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

SBPCA Bill Id:SB 477

Author:(Leyva) – As Amended Ver: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.

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:

1. 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,

2. 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 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 amount of the obligation secured by the lien for postponed property taxes is paid in full or otherwise discharged:

1. Direct the tax collector to remove the information required to be entered from the secured roll; and,

2. 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 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.

4. Enacts the following administrative provisions for the PTP Program:

1. The lien secures all sums paying and owing under PTP;

2. The lien is secured when the Controller transfers funds to the county;

3. 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;

4. A notice of lien is required to bear the Controller’s facsimile signature; and,

5. 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:

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 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 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.

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.

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

Date of Hearing: July 1, 2015

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Brian Maienschein, Chair

SBPCA Bill Id:SB 477

Author:(Leyva) – As Amended Ver: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:

   1. 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.

   2. 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 all sums paid or owing, as specified.

   3. 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.

   4. 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:

      1. 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;

      2. The identification number of the notice of lien which has been assigned the lien by the Controller;

      3. The notice of lien shall be transmitted to the Department of Housing and Community Development (HCD) at its office in Sacramento, California;

      4. 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;

      5. HCD shall provide the Controller with an acknowledgment of receipt of the notice of lien and amendment of the permanent title record; and,

      6. 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.

   5. Requires, from the time of filing a notice of lien, a lien to attach to the mobilehome for which property taxes have been postponed.

   6. 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.

   7. 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:

      1. Direct the tax collector to remove from the secured roll the information required to be entered, as specified; and,

      2. 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.

   8. 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.

   9. 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.

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:

1. States that the lien secures all sums paying and owing under PTP;

2. Provides that the lien is secured when the Controller transfers funds to the county;

3. 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;

4. Allows the notice of lien to bear the Controller’s facsimile signature;

5. Prescribes specified information appear on the lien; and;

6. 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 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 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 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.

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

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

 THIRD READING  

Bill No: SB 477

Author: Leyva (D)

Amended: 4/29/15

Vote: 27

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/22/15

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

SUBJECT: Property tax postponement: mobilehomes and floating homes

SOURCE: Golden State Manufactured-Home Owners’ League

DIGEST: This bill adds mobilehomes to the property tax postponement (PTP) program.

ANALYSIS:

Existing law:

1. Enacts the Senior Citizens and Disabled Citizens Property Tax Postponement Law, 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.

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:

1. States that the lien secures all sums paying and owing under PTP,

2. Provides that the lien is secured when the Controller transfers funds to the county,

3. 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,

4. Allows the notice of lien to bear the Controller’s facsimile signature,

5. Prescribes specified information appear on the lien, and

6. Authorizes the Controller to design the form and content of the notice of lien.

5. Directs the Department of Housing and Community Development (HCD) to maintain a title registry for all the state’s mobilehomes.

This bill:

1. Expands PTP eligibility to include mobilehomes by amending several sections of the Government Code that govern PTP to incorporate mobilehomes, with some modifications.

1. Instead of sending the notice of lien to the county, directs the Controller to transmit it to HCD at its Sacramento office,

2. Requires HCD to amend the permanent title record of the mobilehome to reflect that the property taxes have been postponed upon receipt of the lien,

3. Requires HCD to provide the Controller with acknowledgement of receipt and amendment of the permanent title lien,

4. Additionally requires HCD to 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 until released or authorized by the Controller,

5. Directs the Controller to maintain a record of all properties against which HCD has been notified to withhold transfer of title, including the claimant’s name, a description of the mobilehome against which the lien is charged, and the amount secured by the lien,

6. Requires the Controller to provide a written statement showing the amount of the obligation secured by the lien on the mobilehome in addition to any other information as will reasonably enable a person or entity to determine the amount that must be paid to the Controller to release or discharge the lien for postponed taxes, similar to traditional homes enrolled in PTP, and

7. States that once a notice of lien is filed, the lien attaches to the mobilehome for which taxes have been postponed.

2. Directs the Controller to reduce any obligation amounts by the amount of payment received.

3. Provides that the Controller must release the lien upon satisfaction of all amounts it secures, and direct the tax collector to remove specified information required of PTP properties from the secured roll, and transmit a release of lien to the owners of the mobilehome or the owner’s heirs or assigns. Once the owners, heirs, or assigns receive the release of lien, they must send it to HCD with a $6 fee.

4. Adds “mobilehomes” to the law’s definition of “residential dwelling,” thereby applying the new higher equity requirement of 40%, compared to the former 20%.

5. States that any real property surrounding the mobilehome necessary for its use as a home is included for purposes of PTP.

6. Provides that the bill’s expansion of PTP includes houseboats and floating homes, but excludes them if taxes are already delinquent.

7. States that should the Commission on State Mandates find that this bill constitutes a reimbursable state mandate, reimbursement may be made pursuant to existing statutory provisions.

Comments

In 2009, due to budgetary constraints, and fewer funds flowing back to the Controller’s Office (SCO) as a result of diminishing sales prices, the Legislature prohibited persons from filing new claims under the PTP program, and the Controller from accepting applications (SBX3-8, Ducheny, Chapter 4, Statutes of 2009-10, Third Extraordinary Session). However, the Legislature resuscitated the program last year by removing SBX3-8’s prohibition, albeit with tightened eligibility criteria, and a requirement for the SCO to transfer to the General Fund repayments received above a $20 million total (AB 2231, Gordon, Chapter 703, Statutes of 2014). Before 2009, PTP included mobile and manufactured homes in the program, as many low-income persons and seniors live in these homes; however, AB 2231 didn’t include mobilehomes in the new program. Advocates for mobile and manufactured homeowners want to expand the PTP program to again include them.

The Legislature reestablished PTP last year to benefit many low-income and disabled taxpayers who have difficulty paying their property taxes; however, it didn’t provide any additional funds, so the Controller can only pay property taxes with funds from previous repayments, currently $7 million. While this figure will increase over time, the Controller can’t likely meet current demand given the program’s lengthy hiatus, so she plans on paying claims out of available funds on a first-come, first-served basis starting this fall. 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 including any additional funds. As a result, the Controller may have to grant fewer applications for homeowners eligible under the current program. Additionally, mobilehomes usually depreciate in 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.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, SB 477 results in 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.

SUPPORT: (Verified 5/28/15)

Golden State Manufactured-Home Owners’ League (source)

California Assessors’ Association

Howard Jarvis Taxpayers’ Association

Western Center on Law and Poverty

20 individuals

OPPOSITION: (Verified 5/31/15)

Western Manufactured Housing Communities Association

ARGUMENTS IN SUPPORT: According to the author, last year, AB 2231 (Gordon) reestablished the PTP Program, which provides property tax assistance to certain lower-income households. However, in reinstating the program, AB 2231 removed mobilehomes from eligibility. This leaves mobilehome owners, many of whom are lower-income seniors and/or disabled, vulnerable to a tax sale of their homes. SB 477 reinstates mobilehome owners as eligible participants in the State PTP Program. This will ensure that low-income disabled persons and seniors who live in mobilehomes are not at risk of losing their homes because of property taxes. The State PTP Program helps ensure that lower-income residents and households in California who cannot meet their taxes do not lose their home to a tax sale.

ARGUMENTS IN OPPOSITION: Western Manufactured Housing Communities Association states, “By increasing the scope of the PTP program to include mobilehomes, it's more likely that mobilehome park owners will have to take responsibility for tax-defaullted mobile homes, and have to pay costs to remove them.”

Prepared by: Colin Grinnell / GOV. & F. / (916) 651-4119

5/31/15 11:40:44

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SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 477 (Leyva) - Property tax postponement: mobilehomes and floating homes

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 477 would authorize qualified mobilehome owners to apply to the State Controller (SCO) to defer payment of property taxes through the Senior Citizens and Disabled Citizens Property Tax Postponement Program (PTP).

Fiscal Impact:

• 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*)
  
  

• Unknown SCO administrative costs, potentially over $100,000 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. (General Fund*)
  
  

• 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. (General Fund)
  
  

• 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.

*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. See AB 2231 background.

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 program. The PTP was permanently suspended and all funding was eliminated by SBx3 8 (Ducheny), Chap. 4/2008-09 3^rd Ex. Session, 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 to this pattern 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), Chap 703/2014, 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.

AB 2231 established the Senior Citizens and Disabled Citizens Property Tax Postponement Fund (PTP Fund), transferring any outstanding loan repayment amounts to the PTP Fund and continuously appropriating revenues to the SCO to fund the program, including administrative costs and property tax postponement disbursements. The PTP Fund has a cap of $20 million in 2016-17, which is lowered to $15 million in 2017-18 and each year thereafter. Any amounts that exceed this cap are transferred to the General Fund. The fund currently has a balance of about $7 million.

Proposed Law:

SB 447 would restore provisions of law deleted by AB 2231, thereby allowing eligible owners of mobilehomes to apply to the SCO to defer payment of property taxes through the PTP. Specifically, this bill would:

• Authorize the SCO to accept new claims for property tax postponement from mobilehome owners (including owners of houseboats and floating homes), beginning on July 1, 2016.

• Specify the contents of a lien executed by the SCO that secures all sums paid or owing for postponed property taxes.

• Require the SCO to transmit the notice of lien to HCD, and require HCD to amend the permanent title record of the mobilehome to reflect the property taxes are subject to postponement, which attaches a lien to the mobilehome. HCD would be required to impose a moratorium on any amendments to the title record for purposes of transferring ownership or creating any security interests until the lien is released.

• Direct the SCO to reduce obligation amounts by the amount of any payments received.

• Provide for the SCO to release the lien upon satisfaction of all amounts it secures, directing the tax collector to remove specified information required of PTP properties from the secured roll, and transmitting release of the lien to the mobilehome owner, who must send the release of lien to HCD with a fee of $6.

• Make conforming changes to require that a mobilehome owner must have a 40 percent equity share in the home to be eligible for a PTP loan.

• Specify that houseboats and floating homes that have delinquent property taxes at the time of application are not eligible for a PTP loan.

Related Legislation:

AB 587 (Chau), pending in the Assembly Appropriations 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.

AB 999 (Daly), pending in the Assembly 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.

Staff Comments:

The re-enacted program deliberately excluded mobilehomes 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, 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. 29 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.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

PROPERTY TAX POSTPONEMENT: MOBILEHOMES AND FLOATING HOMES.

Adds mobilehomes to the property tax postponement program.

Background and Existing Law

The Senior Citizens and Disabled Citizens Property Tax Postponement Law (PTP) 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 SCO, 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 back to SCO 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 SCO to transfer to the General Fund repayments received above a $20 million total (AB 2231, Gordon, 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-served basis.

Before 2009, PTP included mobile and manufactured homes in the program, as many low-income persons and seniors live in these homes; however, AB 2231 didn’t include mobilehomes in the new program. Advocates for mobile and manufactured homeowners want to expand the PTP program to again include them.

.

Proposed Law

Senate Bill 477 expands PTP eligibility to again include mobilehomes by amending several sections of the Government Code that govern PTP, with some modifications, including:

• Ensuring that the lien secures all sums paying and owing under PTP, providing that the lien is secured when the Controller transfers funds to the county, requiring the lien to be evidenced by a notice of lien for property taxes executed by the Controller or his or her authorized delegate, allowing the notice of lien to bear the Controller’s facsimile signature, and prescribing specified information on the lien. Modifications to this section for mobilehomes include:

  • Instead of sending the notice of lien to the county, SB 477 directs the Controller to transmit it to the Department of Housing and Community Development (HCD) at its Sacramento office, which serves as the title registry for all the state’s mobile homes,

  • Upon receipt of the lien, the bill directs HCD to amend the permanent title record of the mobilehome to reflect that the property taxes have been postponed,

  • The measure requires HCD to provide the Controller with acknowledgement of receipt, and amendment of the permanent title lien,

  • Upon receipt of the notice of lien from the Controller, SB 477 also requires HCD to 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 until released or authorized by the Controller,

  • The bill states that once a notice of lien is filed, the lien attaches to the mobilehome which is eligible for PTP

• Directing the Controller to reduce obligation amounts by the amount of payment received.

• Providing for the Controller to release the lien upon satisfaction of all amounts it secures, directing the tax collector to remove specified information required of PTP properties from the secured roll, and transmitting a release of lien to the owners of the mobilehome or the owner’s heirs or assigns. Once the owners, heirs, or assigns receive the notice of lien, they must send it to HCD with a $6 fee.

• Adding “mobilehomes” to the law’s definition of “residential dwelling,” thereby applying AB 2231’s higher equity requirement of 40%, compared to the former 20%.

SB 477 also provides that real property surrounding the mobilehome necessary for its use as a home, and makes conforming changes to ensure that the bill’s expansion of PTP to mobilehomes doesn’t include houseboats and floating homes.

The bill also provides that its changes are optional if the Commission on State Mandates determines that they’re a reimbursable mandate. The measure also applies this provision to AB 2231’s changes that modernized PTP by replacing references to “certificates of eligibility” to “electronic funds transfers.”

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “Last year, AB 2231 (Gordon) Chapter 703, Statutes of 2014 reestablished the Property Tax Postponement Program, which provides property tax assistance to certain lower-income households. However, in reinstating the program, AB 2231 removed mobilehomes from eligibility. This leaves mobilehome owners, many of whom are lower-income seniors and/or disabled, vulnerable to a tax sale of their homes. SB 477 would reinstate mobilehome owners as eligible participants in the State Property Tax Postponement Program. This proposal would ensure that low-income disabled persons and seniors who live in mobilehomes are not at risk of losing their homes because of property taxes. The State Property Tax Postponement Program helps ensure that lower-income residents and households in California who cannot meet their taxes do not lose their home to a tax sale.”

2. Tradeoffs. The Legislature reestablished PTP last year to benefit many low-income and disabled taxpayers who have difficulty paying their property taxes; however, it didn’t provide any additional funds, so the Controller can only pay property taxes with funds from previous repayments, currently $7 million. While this figure will increase over time, the Controller can’t likely meet current demand given the program’s lengthy hiatus, so she plans on paying claims out of available funds on a first-come, first-served basis. 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 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.

3. Another way? PTP is a popular program that targets low-income and disabled homeowners who can demonstrate they have more than 40% equity in their homes. The state transfers funds to county tax collectors, who deposit the transfers with the county along with other property tax revenues, who repays the state when the lien securing the loan is repaid upon sale or refinancing. When repayments exceed $20 million, the Controller must transfer any repayment back to the General Fund. One way to accommodate the increased demand from adding mobilehomes would be to eliminate this repayment requirement. While a one-time General Fund appropriation would help more homeowners more quickly, allowing repayments to stay with the PTP fund will also help.

4. Cart and horse. Mobilehomes are different than traditional residential properties in California in many ways, especially for tax purposes. For many years, mobilehomes paid the Vehicle License Fee to the Department of Motor Vehicles, but in 1980, the Legislature provided that any mobilehomes sold after July 1, 1980, pay the property tax instead. However, many mobilehomes are not on the local property tax rolls, and don’t go through escrow when transferred. As such, allowing PTP for mobilehomes may require additional work for the Controller and tax collectors to ensure applicants actually have title to the mobilehome, without which repayment of postponed property taxes could be jeopardized. While AB 587 (Chau) attempts to improve the title registration process, it may be premature to expand PTP to mobilehomes given this risk, especially when PTP funds are limited. The Committee may wish to consider deferring action on SB 477 until the current process for establishing ownership is improved.

5. Mandates. SB 477 contains some curious local mandate reimbursement provisions, stating that “any action required of a local agency to give effect to PTP that has been determined by the Commission on State Mandates to be a reimbursable mandate, shall be optional.” This language appears in two places, and appears to have the effect of making optional duties of tax collectors to implement PTP should the Commission approve a reimbursement claim, including one part of existing law. The Committee may wish to consider deleting this language.

6. Technicals. Committee Staff recommends the following technical amendments.

• Make a conforming change to 16181 after any mention of “real property” to also include “mobilehome.”

• Page 4, Line 18, after “receipt” add “notice of lien”

• Page 4, Line 30, strike “eligibility for the postponement of taxes has been granted” and replace with “taxes have been postponed.”

• Page 6, Line 32 change “Section 2514” to “Section “2515.”

Support and Opposition

(4/17/15)

Support: California Assessors’ Association; Golden State Mobilehome Owners League; Howard Jarvis Taxpayers Association; 20 Individuals; Western Center on Law and Poverty.

Opposition: Unknown.

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