Supreme Court of California Justia
Citation 58 Cal. 4th 482; 316 P.3d 1188; 167 Cal. Rptr. 3d 74; 2014 Cal. LEXIS 426

Holland v. Assessment Appeals Bd.

Filed 4/16/14 (unmodified version attached)

IN THE SUPREME COURT OF CALIFORNIA

JOSEPH E. HOLLAND, as Assessor, etc., )

Plaintiff and Appellant,
S205876
v.
Ct.App. 2/6 B229656
ASSESSMENT APPEALS BOARD NO. 1, )

Defendant and Respondent; )
Santa Barbara County
Super. Ct. No. 01244457
RANCHO GOLETA LAKESIDE
MOBILEERS, INC., et al.,
Real Parties in Interest and
Respondents.

ORDER MODIFYING OPINION AND
DENYING PETITION FOR REHEARING

THE COURT:
The opinion herein, filed January 23, 2014, appearing at 58 Cal.4th 482, is
modified as follows:
On page 487, of the majority opinion, in the first paragraph, following the
phrase “In this case, the Assessor for the County of Santa Barbara (Assessor)
reassessed,” insert the following phrase after the word “reassessed” and before the
word “two:” “26 subsequent transfers of individual interests in.” In the same
sentence, delete the word “owned” and substitute the word “held.” The new
sentence should read as follows: “In this case, the Assessor for the County of
1


Santa Barbara (Assessor) reassessed 26 subsequent transfers of individual interests
in two mobilehome parks held by resident-controlled nonprofit corporations after
certain residents sold both their mobilehomes and their interests in the
corporation.”
This modification does not affect the judgment.
The petition for rehearing is denied.
2
Filed 1/23/14 (Unmodified version)

IN THE SUPREME COURT OF CALIFORNIA

JOSEPH E. HOLLAND, as Assessor, etc., )

Plaintiff and Appellant,
S205876
v.
Ct.App. 2/6 B229656
ASSESSMENT APPEALS BOARD NO. 1, )

Defendant and Respondent; )
Santa Barbara County
Super. Ct. No. 01244457
RANCHO GOLETA LAKESIDE
MOBILEERS, INC., et al.,
Real Parties in Interest and
Respondents.

In 1978, California voters adopted Proposition 13, which added article XIII
A to our state Constitution. This amendment limited the rate at which real
property in this state may be taxed and the extent to which the assessed value of
real property may be increased. As relevant here, real property may be taxed at no
more than 1 percent of its “full cash value,” with “full cash value” defined to mean
either the assessed value of that property in the 1975–1976 tax year or the
property’s value at the time of a subsequent “change in ownership,” subject to an
adjustment for inflation. (Cal. Const., art. XIII A, §§ 1, subd. (a), 2, subds. (a) &
(b).) Thus, real property generally is taxed based on its value at the time of
acquisition, not its current value. The task of defining when there has been a
change in ownership that triggers reassessment has been left largely to the
1


Legislature. (Pacific Southwest Realty Company v. County of Los Angeles (1991)
1 Cal.4th 155, 160–161.)
This case concerns the assessment of certain types of mobilehome parks.
Mobilehome parks in California may be organized in a number of ways. In 1985,
the Legislature passed a statute intended to encourage one particular form of
organization. Pursuant to what is now Revenue and Taxation Code section 62.1,
subdivision (a)(1), a “transfer . . . of a mobilehome park to a nonprofit corporation,
stock cooperative corporation, limited equity stock cooperative, or other entity
formed by the tenants of a mobilehome park, for the purpose of purchasing the
mobilehome park” is deemed not to be a change in ownership of the park. (All
undesignated statutory references are to the Revenue and Taxation Code.) Thus,
section 62.1, subdivision (a)(1) allows the residents of a mobilehome park to form
a nonprofit corporation or similar entity to take ownership of the park without
triggering reassessment.
Subsequently, in 1988, the Legislature introduced Senate Bill No. 1885
(1987–1988 Reg. Sess.) in part to address a problem in the tax treatment of
mobilehome parks that emerged under section 62.1. Transfers of interests in
mobilehome parks held by a nonprofit corporation, unlike those held by a
condominium or stock cooperative, did not constitute a change in ownership under
the Revenue and Taxation Code. (See §§ 61, 65.1.) Therefore, once a
mobilehome park was purchased by a nonprofit corporation or similar entity,
subsequent transfers of membership shares were not subject to reassessment. As
explained in an analysis of Senate Bill No. 1885 prepared by the State Board of
Equalization (SBE), “[p]utting a park into a nonprofit mutual benefit corporation
ownership could mean that no part of the park would ever be reappraised again,
since transfers of individual interests in a nonprofit corporation do not trigger
reappraisal. This would give mobilehome parks much more favorable treatment
2
than the average homeowner.” (SBE, analysis of Sen. Bill No. 1885 (1987–1988
Reg. Sess.) Mar. 24, 1988, p. 2.)
In amending section 62.1, the Legislature crafted a rule to facilitate what it
viewed as equitable tax treatment of these property interests: Where a
mobilehome park has been purchased by a nonprofit corporation or similar entity,
any subsequent transfers “of shares of the voting stock of, or other ownership or
membership interests in, the entity that acquired the park . . . shall be a change in
ownership of a pro rata portion of the real property of the park . . . .” (§ 62.1,
subd. (b)(1).) The Legislature defined the term “ ‘pro rata portion of the real
property’ ” as “the total real property of the mobilehome park multiplied by a
fraction consisting of the number of shares of voting stock, or other ownership or
membership interests, transferred divided by the total number of outstanding
issued or unissued shares of voting stock of, or other ownership or membership
interests in, the entity that acquired the park . . . .” (§ 62.1, subd. (b)(2).) Thus, no
change of ownership occurs when the residents of a mobilehome park form a
nonprofit corporation or similar entity that purchases the park. But if one of the
residents subsequently transfers his or her interest in the entity that owns the park,
that transfer will constitute a change in ownership of a “pro rata portion” of the
park.
In this case, the Assessor for the County of Santa Barbara (Assessor)
reassessed two mobilehome parks owned by resident-controlled nonprofit
corporations after certain residents sold both their mobilehomes and their interests
in the corporation. The mobilehomes themselves, which are classified as personal
property, were assessed separately. (§§ 5801, 5810.) Following the guidance of
the SBE, the Assessor appraised the real property interest subject to reassessment
— i.e., a fraction of the mobilehome park itself — by subtracting the estimated
market value of the mobilehome from the total price paid for both the mobilehome
3
and the membership interest in the corporation owning the park. We are asked to
determine whether section 62.1, subdivision (b) (hereafter section 62.1(b))—
which states that a transfer of a membership in an entity that owns a mobilehome
park is a “change of ownership of a pro rata portion of the real property of the
park” — requires an assessor to instead appraise such an interest by first
estimating the value of the entire park and then multiplying that value by the
fractional interest in the park that was transferred. We conclude that it does not.
Section 62.1(b) simply describes a unit of real property that is subject to
reassessment; it does not mandate any particular formula for appraising this unit.
Accordingly, we reverse the judgment of the Court of Appeal, which affirmed the
denial of the Assessor’s petition for a writ of mandate.
I.
Rancho Goleta Mobilehome Park (Rancho Goleta) was purchased in 1992
for $9.4 million by Rancho Goleta Lakeside Mobileers, Inc., a nonprofit
corporation whose members are residents of the park. Silver Sands Village
Mobilehome Park (Silver Sands) was similarly purchased by a nonprofit
corporation formed by park residents, Silver Sands Inc., for $1.5 million in 1998.
All of the residents in these parks — including both those residents who hold
interests in the corporations that own the parks and the handful of residents who
do not — entered into a lease with the corporation that entitles each resident to a
specific mobilehome space. During the 2001 calendar year, a total of 26 members
of these two corporations sold both their membership interests and their
mobilehomes to incoming residents of the parks.
In 1999, the SBE issueD an advisory letter to county assessors that
described how mobilehome parks should be assessed following such transfers of
individual interests in resident-owned mobilehome parks. (Letter No. 99/87,
Individual Transfers in Resident-Owned Mobilehome Parks (Dec. 31, 1999) (LTA
4
No. 99/98).) LTA No. 99/87 explained that such a sale “conveys to its holder in
substance: (1) the outright ownership of a particular mobilehome, and (2) the
exclusive right to occupy a particular space within the park.” (Id. at p. 3.) The
letter observed that the phrase “pro rata portion of the real property” in section
62.1(b) is “the fractional interest in the park that is conveyed by the transferred
share of stock.” (Ibid.) It also observed that the “appraisal unit” to be considered
in calculating the fair market value of this interest is “the individual mobilehome
space and the mobilehome,” as “it is clear that what persons in the marketplace
commonly buy and sell as a unit is not the entire park, but rather the fractional
interests conveyed by the individual interests.” (Id. at p. 4; see § 51, subd. (d)
[defining appraisal unit]; 18 Cal. Code Regs., § 324, subd. (b).) Thus, “if the
reported purchase price was negotiated in the open market at arm’s length, then it
is our view that the entire amount should be reflected in the combined assessments
of the mobilehome and the underlying interest in the park.” (LTA No. 99/87, at
p. 3.) LTA No. 99/87 concluded that the “most reasonable way of allocating the
value” between the mobilehome and the underlying fractional interest in the park
was to employ what has been termed the extraction method: “(1) extract from the
reported purchase price the value of the mobilehome itself, using the N.A.D.A.
Manufactured Housing Appraisal Guide or another recognized value guide, and
then (2) assign the remainder of the purchase price to the interest in the park.”
(Ibid.)
The Assessor applied LTA No. 99/87’s extraction method of appraisal in
reassessing both Rancho Goleta and Silver Sands for the 2002–2003 tax year. In
response, the corporations that owned these parks filed applications for changed
assessment with Santa Barbara County Assessment Appeals Board No. 1 (Appeal
Board). At the parties’ request, the Appeal Board consolidated the hearing on
these applications and then bifurcated the proceedings into two phases, with the
5
first focusing on questions of law and the second on the valuation of the parks.
After conducting extensive hearings, the Appeal Board issued an opinion in the
first phase resolving the issues of law adversely to the Assessor. It determined
that the appraisal method set forth in LTA No. 99/87 was inconsistent with section
62.1(b). That statutory provision, the Appeal Board concluded, prescribed the
following formula for appraising the portion of the park subject to reassessment:
“Fractional Interest x FMV [Fair Market Value] of Entire Real Property of Park =
FMV of Fractional Interest.”
At the second phase, the parties presented evidence regarding the proper
valuation of the parks. Both corporations submitted the reports of an expert
appraiser, who concluded that Rancho Goleta’s fair market value during 2001 was
$13 million and that Silver Sands’ fair market value ranged from $2.25 million to
$ 3.4 million during 2001. The Assessor, in turn, submitted evidence that the two
parks should be valued at approximately $39.8 million and $15.6 million,
respectively. The Assessor arrived at these values through a so-called “market
approach,” which, like the extraction method described in LTA No. 99/87,
subtracted the estimated market value of the mobilehome from the total purchase
price paid for both the mobilehome and the interest in the entity owning the park,
and then used that figure to calculate the value of the entire park.
In a second opinion, the Appeal Board rejected the appraisals submitted by
the Assessor and instead used those submitted by the two corporations to calculate
the value of the interests subject to reassessment. Finding that the Assessor’s
“market approach” was the “very same market approach model, but on a larger
scale,” that it had already rejected as inconsistent with section 62.1(b), the Appeal
Board concluded that “[w]hat was invalid on a small scale does not become
legitimate by its use on a much larger scale.”
6
The Assessor filed a petition for a writ of mandate, which the Appeal Board
and the corporations owning the two parks (collectively, respondents) opposed.
After the trial court denied the petition, a divided Court of Appeal affirmed. The
court concluded that while “[a]rguably, the Assessor presents a reasonable method
for the taxation of changes in mobilehome ownership, . . . it is not the method set
forth in section 62.1, subdivision [(b)].” Instead, the court found that the formula
adopted by the Board “conforms to and embodies the plain meaning of the
statute.” It went on to reject the Assessor’s various challenges to the Appeal
Board’s application of that formula. In dissent, Justice Yegan argued that the
court had failed to give proper deference to the SBE and concluded that although
section 62.1(b) “establishes the formula for determining what portion of a
mobilehome park’s real property is subject to separate assessment,” the statute “is
silent . . . on the method assessors are to use in determining the value of the
membership interest.”
II.
The question presented is whether section 62.1(b) simply defines a unit of
property that is deemed to change ownership for assessment purposes, or whether
it also prescribes the manner in which that unit of property is to be appraised.
Applying well-established rules of statutory construction, we conclude that the
former interpretation is correct: Section 62.1(b) does not compel an assessor to
appraise fractional interests in resident-owned mobilehome parks using the
formula adopted by the Appeal Board.
Our goal in construing a statute is “to determine and give effect to the intent
of the enacting legislative body.” (People v. Braxton (2004) 34 Cal.4th 798, 810.)
“ ‘We first examine the words themselves because the statutory language is
generally the most reliable indicator of legislative intent. [Citation.] The words of
the statute should be given their ordinary and usual meaning and should be
7
construed in their statutory context.’ [Citation.] If the plain, commonsense
meaning of a statute’s words is unambiguous, the plain meaning controls.” (Fitch
v. Select Products Co. (2005) 36 Cal.4th 812, 818.) If, however, the statute is
susceptible to more than one interpretation, we “may consider various extrinsic
aids, including the purpose of the statute, the evils to be remedied, the legislative
history, public policy, and the statutory scheme encompassing the statute.
[Citation.]” (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003.)
Moreover, “ ‘ “[i]t is a settled principle of statutory interpretation that language of
a statute should not be given a literal meaning if doing so would result in absurd
consequences which the Legislature did not intend.” [Citations.]’ ” (Horwich v.
Superior Court (1999) 21 Cal.4th 272, 276.)
The text of section 62.1(b) offers little support for the Appeal Board’s
interpretation. As noted, the relevant statutes provide that if a mobilehome park
has been transferred to certain resident-owned entities and has been excluded from
reassessment pursuant to section 62.1, subdivision (a), “any transfer . . . of shares
of the voting stock of, or other ownership or membership interests in, the entity
that acquired the park . . . shall be a change in ownership of a pro rata portion of
the real property of the park.” (§ 62.1(b)(1).) “For the purposes of this
subdivision, ‘pro rata portion of the real property’ means the total real property of
the mobilehome park multiplied by a fraction consisting of the number of shares
of voting stock, or other ownership or membership interests, transferred divided
by the total number of outstanding issued or unissued shares of voting stock of, or
other ownership or membership interests in, the entity that acquired the park . . . .”
(§ 62.1(b)(2).)
The meaning of this statutory language is clear: When a membership
interest in a resident-owned entity that owns a mobilehome park is transferred, a
fraction of the underlying real property will be deemed to have changed
8
ownership. Any contention that section 62.1(b) also identifies a method for
appraising this fractional interest appears to rest on a misunderstanding of the term
“pro rata.” That term simply means “[p]roportionately; according to an exact rate,
measure, or interest.” (Black’s Law Dict. (9th ed. 2009) p. 1340, col. 2; see
Merriam-Webster’s Collegiate Dict. (11th ed. 2003) p. 997 [defining “pro rata” as
“proportionately, according to an exactly calculable factor”]; Rosenberg v. Frank
(1881) 58 Cal. 387, 405 [providing various examples of the definition of the term
“pro rata,” including: “ ‘To divide or distribute proportionately; to assess pro
rata,’ ” “ ‘according to a certain part, in proportion” and “(L. according to the
rate) (com.) in proportion’ ”].) Although the term is often used to describe the
distribution of a sum of money (see, e.g., id. at p. 406), its usage is not restricted to
the division of money. In section 62.1(b), the interest that is being divided
“proportionally” is “the real property of the park” (§ 62.1(b)(1)), and the rate (or
proportion) according to which it is being divided is “the number of shares of
voting stock, or other . . . membership interests, transferred divided by the total
number of outstanding issued or unissued shares of voting stock of . . . or
membership interests in, the entity that acquired the park” (§ 62.1(b)(2)). Thus, if
there are 100 equal membership interests and one of these interests is transferred,
then the “pro rata portion of the real property of the park” is simply 1/100 of the
park.
Respondents, echoing a rationale adopted by the Court of Appeal below,
contend that whereas the Appeal Board’s formula for appraising these interests
“ ‘gives meaning to the term multiply as used in Section 62.1[(b)](2)’ . . . [,] the
SBE’s interpretation ‘makes the term multiply completely meaningless since no
multiplication occurs under the SBE’s approach.’ ” But this argument
presupposes that section 62.1(b) prescribes a method for appraising the pro rata
portion of the park. In fact, section 62.1(b) says nothing about how to appraise
9
this interest. It does not, for example, provide that the underlying real property
interest must be appraised as a pro rata portion of the total value of the park. It
also does not make any reference to “full cash value” or “fair market value” of the
total real property of the park. Rather, the relevant “multiplication” contemplated
by section 62.1(b) occurs simply in defining the interest to be valued: The real
property interest deemed to have changed ownership is the total real property of
the park multiplied by the fractional interest in the entity owning the park that has
been transferred. In other words, the formula set forth in section 62.1(b) is not, as
the Appeal Board concluded, “Fractional Interest x FMV of Entire Real Property
of Park = FMV of Fractional Interest.” Rather, it is simply: Fractional Interest (in
Entity Owning the Park) x Entire Real Property of Park = Fractional Interest in
Real Property of Park. Section 62.1(b) is silent as to the method that must be used
in appraising the interest defined by this formula.
To the extent that the statutory text leaves any room for alternative
interpretations, legislative history supports the conclusion that section 62.1(b)
simply defines a unit to be appraised and not a method of appraisal. The
Legislature’s purpose in enacting this provision was to eliminate a potential
loophole that had been discovered following the passage of the exemption codified
in what is now section 62.1, subdivision (a). Like the SBE analysis (see ante, at p.
2), an analysis prepared for the Assembly Committee on Revenue and Taxation
explained: “[I]f a park were purchased by a nonprofit mutual benefit corporation,
it is possible that no part of the park would ever be appraised again. Transfers of
individual interest in a nonprofit corporation do[] not trigger a property
reappraisal. Thus, current law could allow mobilehome parks more favorable tax
treatment than the average homeowner receives.” (Assem. Com. on Rev. &
Taxation, analysis of Sen. Bill No. 1885 (1987–1988 Reg. Sess.) Aug. 1, 1988, p.
2.)
10

Section 62.1(b) eliminated this problem by defining an interest in the
underlying real property itself that would be deemed to change ownership within
the meaning of Proposition 13 when interests in the owning entity were
transferred. There is no indication in the legislative history that section 62.1(b)
was intended to do anything beyond what was necessary to close this loophole.
The analysis for the Assembly Committee on Revenue and Taxation explained:
“If the original stockholders (tenants) in the nonprofit organization transfer their
stock or ownership interests in the park to a new owner, the transferred property
will be subject to a change of ownership reappraisal. The new owner’s pro rata
portion of the real property of the park is considered a change of ownership for tax
purposes.” (Assem. Com. on Rev. & Taxation, analysis of Sen. Bill No. 1885
(1987–1988 Reg. Sess.) Aug. 1, 1988, pp. 1–2.) A similar analysis for the
Assembly Ways and Means Committee explained that section 62.1(b) “provides
that subsequent transfers of shares in the mobilehome park are changes of
ownership for property tax purposes.” (Legisl. Analyst, analysis of Sen. Bill No.
1885 (1987–1988 Reg. Sess.) Aug. 6, 1988, p. 1.) The fact that this provision was
to be codified in section 62.1, in a subsection of the Revenue and Taxation Code
that defines what will constitute a change of ownership triggering reassessment
(see Auerbach v. Assessment Appeals Bd. No. 1 (2006) 39 Cal.4th 153, 161),
further confirms the understanding that section 62.1(b) merely defines a unit of
property that is deemed to have changed ownership.
Respondents point to one snippet of the SBE’s legislative bill analysis in
arguing that the Legislature also intended to enact a particular method for valuing
this interest. The SBE sponsored Senate Bill No. 1885 (1987–1988 Reg. Sess.),
which contained what is now section 62.1(b). In an early legislative bill analysis,
the SBE, after explaining the purpose of the provision and identifying how it
accomplished this purpose, went on to offer the following comments: “This
11
amendment attempts to parallel as closely as possible the tax treatment accorded
condominium and stock cooperatives. A perfect match is not possible, however,
because the transfer of a share or membership interest in a nonprofit corporation is
not the same thing as a transfer of ownership of a condominium or stock
cooperative interest, which relates to specific identifiable property. Thus, rather
than following the pattern prescribed in Section 65.1(b), which provides for
reappraisal of the specific unit or lot transferred as well as a share of the common
area, the amendment provides for a straight pro rate adjustment. [¶] Thus, any
differences in a value between mobilehome spaces in a particular park cannot be
recognized under this method.” (SBE, analysis of Sen. Bill No. 1885 (1987–1988
Reg. Sess.) Feb. 2, 1988, pp. 2–3, italics added.)
Other than the final, italicized sentence above, this explanation provides
little support for respondents. The first three sentences of the excerpt quoted
above explain that because an owner of a condominium has a formal, exclusive
interest in specific identifiable property that a member of a nonprofit corporation
does not, section 65.1, subdivision (b) identifies the interest in property to be
reappraised when a condominium unit is sold as “the unit or lot transferred and the
share in the common area reserved as an appurtenance,” while section 62.1(b)
identifies the comparable interest as “a pro rata portion of the real property of the
park.” It does not follow that a statute defining an interest in the latter fashion
must also require a particular and distinct manner of appraising that interest.
The final, italicized sentence does indicate that the SBE contemplated a
particular manner in which the interest defined by section 62.1(b) would be
appraised and that all such interests would be valued equally. Notably, however,
this italicized sentence was omitted from later versions of the SBE’s bill analysis
submitted to the Legislature. The omission occurred after the bill was amended to
incorporate a provision requiring that an assessor provide a separate assessment of
12
“a pro rata portion of the real property of a mobilehome park” that has changed
ownership if certain conditions are met (§ 2188.10, subd. (a)) — an amendment
that perhaps prompted the SBE to reconsider how such interests may be appraised.
In any event, the earlier version of the SBE’s bill analysis on which respondents
rely shows at most that the SBE might have believed, at one point in time, that the
most appropriate way to assess these interests was the manner advocated by
respondents here. It does not demonstrate that the SBE — or, for that matter, the
Legislature — ultimately or ever believed that section 62.1(b) compels such a
method of appraisal.
The Court of Appeal suggested that giving section 62.1(b) its plain meaning
would produce absurd results by way of the following hypothetical, which was
first set forth by the Appeal Board: “ ‘[I]f 3 purchasers simultaneously paid
$300,000 for a mobile home and an ownership interest in the park and they
acquire spaces that are immediately adjacent to each other and that are identical
for purposes of this example, and if the values of the mobile homes respectively
vary from $75,000 to $125,000 to $175,000, the underlying values of the real
property, the spaces, for tax assessment purposes would [under the Assessor’s
method] respectively vary from $225,000, $175,000 and $125,000.’ . . . The
Board’s method of valuation, on the other hand, results in the same value being
assigned to substantially similar properties . . . .” This hypothetical begs an
obvious question: If the adjacent spaces are indeed identical, why would these
three purchasers have paid the same amount in order to acquire mobilehomes
whose values vary widely? These are not the sort of purchasing decisions one
would expect to find in a well-functioning market. If each of these purchasers was
in fact willing to pay the same amount for a mobilehome and the interest in the
corporation, and if the mobilehome values were as varied as the hypothetical
indicates, then the natural presumption would be that the sites associated with
13
those mobilehomes actually differed in value. There is nothing odd about the
possibility that two equal fractional interests in property could be assessed at two
different values for tax purposes. One 1/100 interest in a park could be appraised
differently from another 1/100 interest in the same park, depending on its location,
shape, available views, and possibly other factors. And if the market reveals that
two equal fractional interests in property do not, in fact, have the same value, there
is no reason to construe section 62.1(b) contrary to its plain meaning in order to
eliminate such discrepancies.
A final reason for concluding that section 62.1(b) does not mandate the
valuation formula adopted by the Appeal Board is that we owe a degree of
deference to the SBE’s interpretation of the statute, even though that interpretation
is embodied only in an informal advice letter to the county assessors. (See
Auerbach v. Los Angeles County Assessment Appeals Bd. (2008) 167 Cal.App.4th
1428, 1441 (Auerbach); Watson Cogeneration Co. v. County of L.A. (2002) 98
Cal.App.4th 1066, 1071, fn. 2.) “An agency interpretation of the meaning and
legal effect of a statute is entitled to consideration and respect by the courts . . . .”
(Yamaha Corporation of America v. State Board of Equalization (1998) 19 Cal.4th
1, 7 (Yamaha).) Such deference is warranted because “the agency will often be
interpreting a statute within its administrative jurisdiction . . . [and] may possess
special familiarity with satellite legal and regulatory issues.” (Id. at p. 11.) The
degree to which “judicial deference to an agency’s interpretation is appropriate . . .
is . . . fundamentally situational” and will depend on the extent to which the
agency’s expertise will provide it with a “ ‘comparative interpretative advantage
over the courts’ ” and the degree to which it appears that the agency has carefully
considered the issue. (Id. at p. 12; accord, Skidmore v. Swift & Co. (1944) 323
U.S. 134, 140.)
14
The SBE undoubtedly has expertise in property tax matters. (See Yamaha,
supra, 19 Cal.4th at p. 14; Auerbach, supra, 167 Cal.App.4th at p. 1441.)
Moreover, the SBE might be expected to have particular familiarity with the
provision at issue here because the SBE sponsored its passage. Respondents
nevertheless contend that no deference to the SBE’s understanding of section
62.1(b) is appropriate because its current interpretation of the statute is not
longstanding and conflicts with its prior interpretation. (Cf. Yamaha, at p. 13
[“ ‘[a] vacillating position . . . is entitled to no deference’ ”].) Respondents point
to an earlier advice letter, circulated a month after the effective date of section
62.1(b), that did not explicitly recommend the extraction method of appraisal later
set forth in LTA No. 99/87. (See Letter No. 89/13,Mobilehome Park Exclusion
(Feb. 1, 1989) (LTA No. 89/13).) Again, however, respondents confuse the SBE’s
suggested method of appraisal for these real property interests with the SBE’s
interpretation of section 62.1(b) itself. Although LTA No. 89/13 did not
recommend the extraction method of appraisal, it also did not state that such an
approach was forbidden by section 62.1(b) or that section 62.1(b) established any
particular method of appraisal. Rather, LTA No. 89/13 reflected the SBE’s
understanding that section 62.1(b) simply defined a unit of property subject to
reassessment: “Upon the transfer of any ownership interest in the entity of either
an originally issued share or an unissued share to a new participant, a change in
the ownership of a pro rata portion of the real property of the park has taken place.
A new base-year value is established for that portion of the real property.” (LTA
No. 89/13, p. 2.) Even if the SBE’s understanding of how to appraise that unit of
property has evolved as it has gained a greater understanding of the market in
these interests, its interpretation of section 62.1(b) has not. The SBE’s consistent
interpretation further confirms our conclusion that section 62.1(b) does not
mandate any particular appraisal formula.
15
The Appeal Board’s decisions in this case were premised entirely on its
contrary construction of section 62.1(b). Because this interpretation was
erroneous, the Appeal Board necessarily abused its discretion, and the Assessor’s
petition for a writ of administrative mandate should have been granted. (See Code
Civ. Proc., § 1094.5, subd. (b); Merrill v. Department of Motor Vehicles (1969) 71
Cal.2d 907, 923; In re Esperanza C. (2008) 165 Cal.App.4th 1042, 1061; Natter v.
Palm Desert Rent Review Com. (1987) 190 Cal.App.3d 994, 1004.) In reaching
this conclusion, we make no judgment as to the proper means of appraising these
property interests. We hold only that the extraction method of appraisal is not
foreclosed by section 62.1(b).
CONCLUSION
For the reasons above, we hold that the Court of Appeal erred in concluding
that section 62.1(b) establishes a particular formula for appraising the fraction of
real property that is deemed to change ownership upon transfer of an interest in the
resident-owned entity that owns a mobilehome park. Accordingly, we reverse the
judgment of the Court of Appeal and remand for further proceedings consistent
with this opinion.
LIU, J.
WE CONCUR: CANTIL-SAKAUYE, C. J.

KENNARD, J.
CHIN, J.
CORRIGAN, J.
MCINTYRE, J.*
*
Associate Justice of the Court of Appeal, Fourth Appellate District,
Division One, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
16



CONCURRING OPINION BY WERDEGAR, J.
I concur in the majority’s holding that Revenue and Taxation Code section
62.1, subdivision (b)1 does not by its terms mandate use of the appraisal formula
adopted in this case by the Santa Barbara County Assessment Appeals Board No.
1 (Appeals Board). I also concur, therefore, in the majority’s direction to the
lower courts that the Santa Barbara County Assessor’s petition for administrative
mandate should be granted (maj. opn., ante, at p. 16); that petition prayed only for
reversal of the Appeals Board’s decision and remand to that body for further
proceedings consistent with California law. For reasons explained below,
however, I greatly doubt the alternative appraisal formula recommended by the
State Board of Equalization (SBE) and used by the assessor, the so-called
“extraction” method (see maj. opn., ante, at p. 5), is consistent with either the
language or the intent of section 62.1, subdivision (b).
Section 62.1, subdivision (b)(1) provides that the transfer of an individual
share or membership interest in a mobilehome park owned by a nonprofit
corporation or similar entity formed by park residents constitutes a change in
ownership of “a pro rata portion of the real property of the park.” Subdivision
(b)(2) of the statute defines “pro rata portion of the real property” as “the total real
property of the mobilehome park multiplied by a fraction consisting of the number

1
All further statutory references are to the Revenue and Taxation Code.
1



of shares of voting stock, or other ownership or membership interests, transferred
divided by the total number of outstanding issued or unissued shares of voting
stock of, or other ownership or membership interests in, the entity that acquired
the park.”
As the majority observes, section 62.1, subdivision (b) defines the unit of
real property that is subject to reassessment upon transfer of an individual share or
membership in a nonsubdivided member-owned park; the statute’s language does
not itself prescribe a mandated appraisal method. (Maj. opn., ante, at p. 4.) But
the statute’s delineation of the property interest subject to reassessment is
nonetheless important. The phrase “pro rata portion of the real property of the
park” (§ 62.1, subd. (b)(1)) strongly suggests the unit to be appraised is an
undivided portion of the park’s property, that is, a fractional part of the entire
property rather than any individual mobilehome space or any other geographically
specific piece of the park’s land. If any doubt existed on this point, the next
paragraph (id., subd. (b)(2)) makes it explicit by defining the pro rata portion as a
fractional part of the whole, where the fraction is determined by dividing the
number of shares or interests transferred by the total outstanding shares or
interests.
The statute thus could not be clearer that the property unit subject to
reassessment, and hence the unit that must be appraised, is an undivided fractional
interest in the entirety rather than a specific physical portion of the park’s land. In
this respect, section 62.1, subdivision (b) differs crucially from the parallel
provision for transfers of units or lots within condominium and similar subdivided
complexes, which provides that the property to be appraised is “the unit or lot
transferred and the share in the common area [appurtenant to] such unit or lot.”
(§ 65.1, subd. (b), italics added.)
2

The legislative history shows the Legislature was aware of this distinction
and understood that under section 62.1, subdivision (b), the transfer of an
individual membership interest in a nonsubdivided mobilehome park would not
result in reassessment of the particular mobilehome space associated with the
membership. As explained in a bill analysis written by the SBE, the provision that
became section 62.1, subdivision (b) was intended to parallel the treatment of
condominium and cooperative unit sales — but only up to a point. The parallel
could not be exact because unlike in those sales, no particular space was being
transferred in a membership sale: “A perfect match is not possible, however,
because the transfer of a share or membership interest in a nonprofit corporation is
not the same thing as a transfer of ownership of a condominium or stock
cooperative interest, which relates to specific identifiable property. Thus, rather
than following the pattern prescribed in Section 65.1(b), which provides for
reappraisal of the specific unit or lot transferred as well as a share of the common
area, the amendment provides for a straight pro rata adjustment.” (SBE, analysis
of Sen. Bill No. 1885 (1987–1988 Reg. Sess.) Feb. 2, 1988, pp. 2–3, italics added;
see maj. opn., ante, at p. 12.)
When a share of a nonsubdivided mobilehome park is transferred,
therefore, section 62.1, subdivision (b) mandates that an undivided pro rata portion
of the entire park property, not any particular physical part of the park’s land, be
reassessed. The statute’s premise, as the legislative history explains, is that sale of
an interest in a nonsubdivided park does not transfer ownership of any individual
unit or lot. Rather than reassess the individual mobilehome space, the assessor
must therefore make what the bill analysis referred to as a “straight pro rata
adjustment” to the assessed value. (SBE, analysis of Sen. Bill No. 1885 (1987–
1988 Reg. Sess.) supra, at p. 3.) Whatever appraisal method is used, it must be
aimed at valuing the undivided pro rata interest deemed to have been transferred
3

under section 62.1, subdivision (b), not a specific mobilehome space (even if one
is associated by lease with the transferred share).
The SBE’s extraction method does not appear to meet this criterion.
According to the SBE advisory letter upon which the assessor in this case relied,
the extraction method is premised on the view that the sale of a membership share
transfers ownership of the associated space. Because “[t]he ownership of a
fractional interest in the park represents exclusive ownership of the individual
underlying space,” the letter reasons, sale of a share or membership transfers “the
exclusive right to occupy a particular space within the park.” (SBE Letter No.
99/87, Individual Transfers in Resident-Owned Mobilehome Parks (Dec. 31,
1999) pp. 3-4 (LTA No. 99/98), italics added.) Under this view, it follows that
“the appraisal unit is the individual mobilehome space and the mobilehome.” (Id.
at p. 4, italics added.) Ignoring the distinction it had made in the 1988 bill
analysis, the SBE states in the 1999 advisory letter that under section 62.1,
subdivision (b), transfers of shares in nonsubdivided parks are to be treated “on a
par with” transfers of condominium and cooperative housing units. (LTA No.
99/98, supra, at p. 3.)2
Granted that section 62.1, subdivision (b) specifies only the property unit to
be reassessed and does not mandate any particular appraisal method, the statute
nonetheless appears to preclude the SBE’s extraction method, because the latter
appraises the wrong unit of real property: it seeks to value the particular
mobilehome space rather than an undivided share of the park’s total property.

2
As the Court of Appeal majority observed, “[i]f the Legislature had
intended to treat resident-owned mobilehome parks in a manner similar to
condominiums, stock cooperatives, and subdivided mobilehome parks, it could
have amended section 65.1 to include them.”
4



While section 62.1, subdivision (b) provides that the real property transferred by a
membership share sale is an undivided “pro rata portion” of the park’s real
property, the SBE’s 1999 advisory letter states the real property transferred, and
hence the real property to be reassessed, is the “individual mobilehome space.”
(LTA No. 99/98, supra, at p. 4.)
The SBE’s extraction method, in seeking to capture the market value of
individual mobilehome spaces, may reflect market realities. But section 62.1,
subdivision (b) is premised on an assumption seemingly inconsistent with the
extraction method — that membership shares in park corporations, unlike
condominium units, do not carry with them ownership of particular real property.
Because, on this legislative view, no specific real property is transferred with sale
of a park membership, the statute specifies the unit to be reassessed as an
undivided pro rata portion of the whole rather than any individual mobilehome
space. For this reason, I doubt the SBE’s method may validly be applied to the
properties at issue here.
I do not understand the majority to hold that the Appeals Board, on remand,
must approve use of the SBE’s extraction method or any similar appraisal method.
I therefore concur in the judgment of the majority.
WERDEGAR, J.
5

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Holland v. Assessment Appeals Board No. 1
__________________________________________________________________________________

Unpublished Opinion


Original Appeal
Original Proceeding
Review Granted
XXX 208 Cal.app.4th 1412
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S205876
Date Filed: January 23, 2014
__________________________________________________________________________________

Court:

Superior
County: Santa Barbara
Judge: James W. Brown

__________________________________________________________________________________

Counsel:

Dennis A Marshall, County Counsel, and Marie A. LaSala, Deputy County Counsel, for Plaintiff and
Appellant.

Douglas W. Walker, Kevin L. Morris; Nicholas S. Chrisos, County Counsel (Orange), James Clement
Harman, Deputy County Counsel (Orange); Glenn Beloian; Sandeep Mitra; Walter Joseph DeLorrell III;
James B. Rooney for California Assessors’ Association, Dennis Draeger, San Bernardino County Assessor,
Webster J. Guillory, Orange County Assessor, Larry Ward, Riverside County Assessor, Lawrence E. Stone,
Santa Clara County Assessor, and Ernest J. Dronenburg, Jr., San Diego County Assessor, as Amici Curiae
on behalf of Plaintiff and Appellant.

Kamala D. Harris, Attorney General, Kathleen Kenealy, Chief Assistant Attorney General, Susan Duncan
Lee, Acting Solicitor General, Paul D. Gifford, Assistant Attorney General, W. Dean Freeman, Felix E.
Leatherwood and Stephen Lew, Deputy Attorneys General, for State Board of Equalization as Amicus
Curiae on behalf of Plaintiff and Appellant.

Dennis A. Marshall, County Counsel, and Jerry F. Czuleger, Deputy County Counsel, for Defendant and
Respondent.

David C. Fainer, Jr., for Real Parties in Interest and Respondents.

The Gibbs Law Firm, Gerald R. Gibbs and David L. Gibbs for The Associates Group for Affordable
Housing, Inc., Palm Beach Park Association, Inc., and Summerland by the Sea, Inc., as Amici Curiae on
behalf of Real Parties in Interest and Respondents.



Counsel who argued in Supreme Court (not intended for publication with opinion):


Marie A. LaSala
Deputy County Counsel
105 E. Anapamu Street, Suite 201
Santa Barbara, CA 93101
(805) 568-2950

James Clement Harman
Deputy County Counsel
333 West Santa Ana Boulevard
Santa Ana, CA 92702-1379
(714) 834-5257

Jerry F. Czuleger
Deputy County Counsel
105 E. Anapamu Street, Suite 201
Santa Barbara, CA 93101
(805) 568-2950

David C. Fainer, Jr.
1114 State Street, Suite 200
Santa Barbara, CA 93101
(805) 899-1300


Petition for review after the Court of Appeal affirmed the judgment in action for writ of administrative mandate. This case presents the following issue: Under Revenue and Taxation Code section 62.1, what is the proper method for determining the assessed value of the real property interest in a mobilehome park after a transfer of a membership interest in the nonprofit corporation that owns the park?

Opinion Information
Date:Citation:Docket Number:
Wed, 04/16/201458 Cal. 4th 482; 316 P.3d 1188; 167 Cal. Rptr. 3d 74; 2014 Cal. LEXIS 426S205876M

Jul 2, 2014
Annotated by Kara Hollis

Facts

The Rancho Coleta Mobilehome Park and the Silver Sands Village Mobilehome Park were both owned by nonprofit corporations whose members were residents of the park. All residents entered into leases with the corporation entitling them to a specific mobilehome space. In 2001, 26 members of the two corporations sold both their membership interests and their mobilehomes, triggering a change in ownership under Revenue and Taxation Code section 62.1. Originally, section 62.1 did not classify a transfer of a mobilehome park to a nonprofit corporation, or other entity formed by the tenants of the mobilehome park, as a change in ownership of the park. As such, the park’s full cash value, defined as either the assessed value of the property in the 1975-1976 tax year or the property’s value at the time of a subsequent “change in ownership,” was not reassessed for tax purposes when there was a sale of membership interests within the corporation. Given this loophole, the legislature amended section 62.1 so that where a mobilehome park has been purchased by a nonprofit corporation or similar entity, any subsequent transfers of shares of membership interest shall qualify as a change in ownership “of a pro rata portion of the real property of the park.” The legislature defined “pro rata portion of the real property” such that if one of the residents of a mobilehome park owned by a nonprofit corporation subsequently transferred his or her interest in the entity that owns the park, that transfer constitutes a change in ownership of a “pro rata portion” of the park. The Assessor for the County of Santa Barbara reassessed the 26 transfers pursuant to the method suggested by the state Board of Equalization’s (SBE) advisory letter. The SBE recommended the “extraction method,” in which the value of the mobilehome was deducted from the reported purchase price of the mobilehome and membership interest to determine the value of the interest in the park.

Procedural History

The nonprofit corporations that owned Rancho Coleta and Silver Sands Village Mobilehome Parks filed applications for changed assessment with the Santa Barbara Country Assessment Appeals Board after the Assessor applied the SBE recommended extraction method of appraisal in reassessment for the 2002-2003 tax year. The Appeals Board ruled in favor of the corporations on legal issues, determining that the appraisal method recommended by the SBE was inconsistent with section 62.1(b). On the issue of proper valuation of the parks, the Appeals Board again found in favor of the corporations, rejecting the Assessor’s “market approach” on the same grounds as the extraction method. The Assessor then filed a petition for a writ of mandate, which was denied by the trial court. The Court of Appeal affirmed, finding the formula adopted by the board in line with the plain meaning of section 62.1.

Issues

Whether section 62.1(b) defines a unit of property that is deemed to change ownership for assessment purposes, or whether it also prescribes the manner in which that unit of property is to be appraised.

Holding

Revenue and Taxation Code section 62.1 does not mandate a particular formula for appraising the pro rata portion of the mobilehome park which has experienced a change in ownership.

Analysis

The court first looked to the language of the statute to conclude that section 62.1 clearly stipulated when a change in ownership occurred but did not identify a method for appraising the fractional interest whose transfer triggered the change in ownership.
Legislative history also supported the conclusion that section 62.1 only defined a unit to be appraised and not a method of appraisal as the purpose of the amendment to section 62.1 was to close a loophole that allowed preferential tax treatment to mobilehome parks as compared to the average homeowner. The court found no indication in the legislative history that section 62.1(b) was intended to do anything beyond what was necessary to close the loophole.
The court, however, did note that a degree of deference was owed to SBE’s interpretation of the statute, given that the agency “undoubtedly” had expertise in property tax matters. Justice Werdegar’s concurring opinion, however, agreed that section 62.1 did not indicate a method for appraisal, but also believed the method suggested by the SBE was not consistent with the language or intent of section 62.1(b). Justice Werdegar instead argued that the statute demanded reassessment of an “undivided fractional interest in the entirety rather than a specific physical portion of the park’s land,” and as such, the SBE’s extraction method, which appraises the particular mobilehome space rather than an undivided share of the park’s total property.