Court decision on the value of mobile home spaces in ownership parks

by Will Cunningham
(Santa Barbara, CA)

There is a debate between the County of Santa Barbara and the residents of two mobile home parks located within the County. These two parks are ownership parks, meaning the residents own a portion of the corporation that owns the land, park, and operation. So, the County wants to collect property taxes and they do this by placing a value on the home separately from the land.

The issue is that the residents feel that the County should tax the Corporation for the land value, and then only tax themselves individually on their home values (which is much less). The residents feel that they are being double taxed - once on the value of their space, and once at the Corporation level (well, and on the home too).

This has been going back and forth for a long time, but there was an update it looks like - here is the first portion of an article that covers this:


"A county assessor erred when it valued the mobilehome spaces in a mobilehome park, underlying a mobilehome, by subtracting the value of the mobilehome from the purchase price of the mobilehome, as established by a valuation manual. The court of appeal held, in a 2-1 decision, that the proper method of valuation was contained in a statute that requires valuation to be based on a pro rata portion of the real property of the mobilehome park. (Assessor for County of Santa Barbara v. Assessment Appeals Board No. 1, (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., May 16, 2012).
Facts
Rancho Goleta Park (“RGP”) and Silver Sands Village Park (“SSVP”) are mobilehome parks that were formerly owned by for-profit corporations, but were purchased by tenants who formed non-profit corporations to purchase the parks. Each resident that so desired purchased a membership in the non-profit corporation, which conveyed an undivided interest in one of the parks but did not give the purchaser a right to occupy a specific space within a park. The right to occupy a specific space was conveyed through a lease between the mobilehome owner and the corporation. The rent for each individual space was based on a share of the park’s operating expense. RGP has 200 spaces and cost $9.4 million to purchase in 1992. SSVP has 80 spaces and cost $1.5 million to purchase in 1998.
California’s taxation system provides the sale of real property accompanied by a change or transfer of ownership constitutes a taxable event that triggers a change of assessment. As a general rule, the value of real property for a change of assessment is determined by the “full cash price” or “fair market value” of the property. When it came time in 2001 to reassess the transfer of ownership for RGP and SSVP, the Assessor for Santa Barbara County (“Assessor”) relied on a letter opinion of the State Board of Equalization (“SBE”) to arrive at the value of the space underlying a mobilehome by subtracting the value of the mobilehome from the mobilehome’s purchase price as established by an authorized valuation manual.
RGP and SSVP appealed the reassessments to the Assessment Appeals Board No. 1 (“Board”) asserting that Assessor erred when it failed to value the underlying spaces by the method set out in Revenue and Taxation Code section 62.1, subdivision (c)(2), which requires that the value of a space underlying a mobilehome in their tenant-owned parks be calculated on a “pro-rata” portion of the fair market value of the entire mobilehome park. The Board concluded the Assessor used the wrong method to reassess the underlying spaces and instead should have applied the method set out in section 62.1(c). The Assessor filed a petition for writ of mandate. The trial court upheld the Board’s decision."

Read the full article and the decision here:
http://www.jdsupra.com/post/documentViewer.aspx?fid=53e52178-63ae-438e-b6dd-873c350a9284

This article was written by: by Kronick, Moskovitz, Tiedemann & Girard on 5/30/2012

Effectively, the County was in error and should be valuing the resident's land value based on their equal ownership portion of the whole park, not the market value of the individual space.

Feel free to comment below! I am not an expert and welcome other ideas on this topic.