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When is a mobile home real estate?

New Illinois law taxes mobile homes on private property the same as stick-built homes. Owners will see much higher bills.

By Teresa Mears Dec 31, 2010 4:33PM

This article is by Jim Suhr of The Associated Press.


Larry and Carolyn Herrin bristle at chatter that a future highway construction project could cut through their one-acre spread in Fairview Heights, Ill., forcing them to move their mobile home along with its two covered porches and attached two-car garage.


A new state law could make them pay dearly for it.


The measure, scheduled to take effect Saturday along with nearly 200 other new Illinois laws, requires a factory-assembled home on private property and not part of a mobile home park to be assessed and taxed as real property. Gone would be the days of such affected properties being taxed by counties at 15 cents per square foot -- a rate that drops over time as the home ages.


If the Herrins are able to stay put, they would not be affected by the law, which exempts existing homes until they're sold, transferred or relocated.


But if they have to move, their tax burden could spike to a couple thousand dollars from just a few hundred now for their 2,000-square-foot home. And that doesn't include what they'd have to shell out to have the home muscled out to its new setting.


It's not immediately clear how many property owners would feel the pinch or whether it could transform the landscape of rural Illinois, where mobile homes dotting the countryside have proven an affordable, comfortable option for many.


"I do think it would keep some people from buying a mobile home," Carolyn Herrin insisted. "They want to be able in their older years to afford the home they're in. And if that home is going to be taxed as real estate, I think that's going to hurt."


While Herrin, 64, takes issue with assertions that property owners like her aren't paying their fair share, the head of a taxpayers watchdog group considers the new law overdue and says it will level the tax load between the some mobile home owners and owners of similarly valued "stick-built" dwellings.


"What's fair is fair," said Tom Johnson, president of the Taxpayers' Federation of Illinois, which endorsed the change. "Obviously mobile homes have changed dramatically over the years, and we thought the law needed to be updated, and appropriately apply the property tax burden."


Backers of the measure said it was needed to clear confusion and inconsistency statewide over how such properties are taxed. The measure also shuts a decades-old loophole legislators say allowed certain owners of manufactured homes -- in some cases valued at $100,000 or more -- to avoid paying property taxes based on the home's fair market value. Existing state law taxed such homes at a lesser rate, based such criteria as the home's square footage and age.


Lawmakers who pushed the measure figured that owners of mobile homes outside of trailer parks weren't paying their fair share for taxpayer-subsidized services such as roads while licensed operators of mobile home parks provide their tenants with "substantial" services.


The disparity is distinct: While the owner of a $100,000 mobile home could be paying $500 a year under the previous tax law, an owner of a $100,000 custom-built home pays thousands of dollars in property taxes, although both get the same governmental services.


So as of Saturday, under the new legislation, all manufactured homes outside of mobile home parks will be assessed based on their fair market value, while such dwellings in trailer parks are taxed according to the home's square footage and age.


"It's not going to make many people happy," said newly retired State Rep. Bill Black, a Danville Republican who was a key sponsor of the bill. But "this is an attempt to clarify what is real estate and what is not."


None of that is sitting well with the Herrins, who've lived for the past three years in the 2,000-square-foot mobile home next door to a century-old, two-story house they sold to a friend. Larry Herrin, a retired Air Force veteran who has had both knees replaced and is afflicted with a painful blood disease that further hinders his mobility, found the old house to have too many steps to handle any longer.


The Herrins would rather not have to move again, though they may not have a choice if at least a decade's worth of talk about diverting some traffic from nearby Interstate 64 through their neighborhood becomes a reality. Fairview Heights city leaders have eyed the Herrins' neighborhood as a possible option in easing congestion on nearby Illlinois Route 159 and stimulating development on that side of town, though the project lacks funding for now.


Black insisted the change was "not meant to be a cash cow for local governments" looking for new revenue sources to fill budget gaps. He said the law could be tweaked if it's pummeled by too many objections from angry property owners.


"It's going to have to be fine-tuned," he said. But "I don't think it'll have a chilling effect."


Black said lawmakers consulted an array of constituency groups in drafting the legislation and trying to curry support for it.


Carolyn Herrin's brother, Kevin Wilson, supports the change, even though it might cost him business.


As president of Scott-Banzai Mobile Homes, a 47-year-old Okawville dealer of mobile and modular homes, Wilson questions whether the motivation behind the new law was merely to help cash-strapped counties restock their coffers.


And while it could dissuade some consumers from buying mobile homes such as those he sells, he figures it's time for those affected by the new law to pay up.


"It's an adjustment people are going to have to make," he said. "As long as it's assessed properly, I don't have a problem with it."


Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Mar 12, 2011 5:46PM

There really are "mobile homes," but your article wasn't talking about them. You meant to say, manufactured homes, which are as "stick built" as any other type of house, including what you meant to say, which is site built.


The factory-built house doesn't have much in the way of curb appeal, but then again it costs one helluva lot less than a site-built house of equivalent size, construction, and indoor amenities (and curb appeal you pay for through the nose). The thrifty (by choice or necessity) and those who don't give a fig about keeping up with the Joneses are especially fond of manufactured houses.


Once a manufactured house is sited on a crawl space, permanently anchored, surrounded by yard, garage, and sidewalks, it should be taxed as real property . . . because that's what it is.

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