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Mobile Home Taxes

Tonya Lew and Bryon Clark talk in March of 2018 about barely making the deadline for paying the property tax on their mobile home in Missoula before it would go up for auction along with nearly 200 others for being delinquent. The couple said working minimum-wage jobs and running on a tight budget makes it hard to factor in the property tax bill.

The residents of more than 22,000 of Montana’s oldest and least-valuable mobile homes will no longer have to pay an annual property tax thanks to bipartisan legislation created by the Montana Legislature and signed by Gov. Steve Bullock on Thursday.

Senate Bill 204, sponsored by Sen. Margie MacDonald, a Democrat from Billings, exempts mobile or manufactured homes worth less than $10,000 and over 28 years old from taxation, beginning in 2020. The bill will not affect the 2019 reappraisal cycle.

In Missoula County, about 2,170 of the roughly 5,000 mobile homes would be exempt under the new law, according to county treasurer Tyler Gernant. Missoula is in the midst of a years-long affordable housing crisis.

Statewide, about 22,225 homes will now be exempt, according to the bill's fiscal note. Missoula County has more homes that will be affected than any other county, MacDonald said.

If there are an average of two residents in each home, that’s nearly 45,000 people who will be affected at a cost of just $169,000 to total statewide revenue.

“I thought it was a long shot, but people realized it was unjust to kick people out of their homes for a tax bill of $75,” MacDonald said. “That’s not what Montana is about. So it was great to have such strong support. It’s usually rich people getting tax breaks.”

The bill’s passage was powered in large part by proponents from Missoula, including community activist Svein Newman, Gernant and others. They worked with MacDonald to convince her to introduce the bill and testified at the Capitol on its behalf.

They argued that the state was spending a lot of money sending out notices and hiring Sheriff’s deputies to post notices, while only bringing in small amounts of tax revenue and forcing people out of their homes. Often, mobile homes residents who were delinquent on their tax bills were evicted and the homes were sold at auction to the highest bidder.

In March 2018, the Missoulian profiled several mobile home residents who were struggling to pay their tax bills. The amounts due ranged from $191 to $1,500, but many residents said they struggled to pay bills or were caught off guard by the tax every year.

Tonya Lew, who lives in the Travois Village trailer park in Missoula with her partner, was stressed out when she spoke with the Missoulian.

“It’s a shock to find out that your home could be sold right out from under you,” she said. “We both have minimum-wage jobs, and we kind of run behind on our (electricity bill) and our groceries, and we didn’t have this payment calculated in. So we’re going to make it just by the skin of our teeth.”

After reading the Missoulian story, Newman organized a crowdfunding effort to raise $10,000 to pay the late tax bills on 31 homes. Many dozens more were eventually auctioned off, however, so Newman and others took their fight to lawmakers.

“In this instance, the state is acting on the realization that if counties are spending over $150 to chase a $70 debt and making somebody homeless in the process, then nobody wins,” Newman said in an email to the Missoulian.

Newman told a Senate committee earlier this year that the county and city taxpayers have to pay for services for people who suddenly find themselves homeless.

“These are single working parents, seniors living on fixed incomes, some really great people who found themselves in a tough spot,” he said. “Another potential issue is avoided costs. If somebody loses their home because of a $70 tax bill, how will they afford a security deposit on an apartment, much less get back into home ownership?"

Taxpayers in any community often pay more for services for the homeless than it would to cost to house them permanently, he said.

"If they wind up at a homeless shelter and needing food assistance, in government-subsidized housing, at the ER from an elements-related injury, or any of several dozen other scenarios, the cost to taxpayers and the public could easily balloon into the thousands from any given small debt," Newman explained.

Gernant told the Missoulian the new law will cause Missoula County to lose less than one-tenth of 1% of the total tax revenue the county collects, or about $150,000.

“So there’s a huge bang for your buck here in terms of what you’re getting and what you’re losing,” he said. “This is also an important issue because these tend to be the folks most vulnerable to losing their homes."

He also said the mobile home auction is one of the worst parts of his job.

"There’s not pleasure in being the person who kicks someone out of their home," he said. "This happens almost every year. Every year there’s a story about we’re kicking people out of their homes and in a state that has an affordable housing crisis, these are affordable homes for these folks.”

The Montana County Treasurer’s Association opposed the bill, saying it would exempt too many properties in smaller, rural counties. However, its members were divided. According to the Montana Department of Revenue, the highest percentage of taxable value that would be exempted under the proposed law would be .23% of the total taxable value in Lincoln County. That’s less than one quarter of 1%.

“It’s more humane and cost-effective to fix the problem on the front end,” Newman said. “Nobody should lose a home that they own for a debt that's smaller than taking their family out to a nice dinner.”

Maureen Rude, the acting chair of the Montana Housing Coalition, said her organization strongly supported the bill.

“We have been working on getting state resources for housing for many years to do new housing and redevelop existing housing, but preserving affordable housing people are already in is really important,” she said. “And as you know, a lot of people live in mobile homes. They are old and don’t have a lot of value, and one way to preserve home ownership is to keep people there so they don’t have to move. This bill keeps people in (their homes) instead of losing them for a very small tax bill.”

Unlike mobile homes, homes classified as real property have a three-year lien foreclosure process and an auction period.

“With mobile homes, someone can go from homeowner to homeless for virtually no money and in just a few months,” Newman explained.

Gernant said revenue that will be lost was previously distributed among the county, the city of Missoula and local school district. However, the lost tax income represents less than one-tenth of 1% of the total revenue for each of those entities. And he said the county was spending an astronomical amount on sending out notices.

“We sent out 1,000 notices the first time, then 500 the second time, and staff had to research every property,” he said. “Then we posted 200 to 300, which costs about $150 for each one because the deputies have to research each one and go out to each property, and sometimes go back multiple times.”

Although the law doesn’t take effect until Dec. 31, Gernant said his office has decided they can collect taxes through other means this year rather than holding an auction.

“We can do that for one year, but we probably couldn’t do that forever without this law,” he said. Gernant credited Newman with rallying support for the bill.

“This is a fantastic example of the power of citizens,” Gernant said.

The bill was amended during the Legislature so that no owner may receive more than two exemptions. Under state law, mobile home owners who don’t own the land underneath their homes are still subject to property taxes, and that will continue for mobile and manufactured homes that don’t meet the exemption requirements.

The Missoulian reached out to several lawmakers who voted against the bill but did not receive any calls back.

Newman said local journalism is an integral part in solving issues in Montana communities.

“In my mind, one of the big values of local reporting is connecting a community to stories and needs that it may not otherwise see, and sparking and facilitating dialogues about solutions,” Newman said. “While (the new legislation) feels like a common-sense idea, I suspect it's one that may never have come forward were it not for local storytelling.”

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