Saturday, April 13, 2024

There’s No Place Like A Fairly Taxed Home—Even If It’s A Trailer

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How a retired Pennsylvania couple changed the lives of hundreds of struggling residents of affluent Chester County by challenging inflated real estate tax assessments on their mobile homes.


Chester County, Pennsylvania, with its rolling farmland and proximity to both Philadelphia and the corporate haven of Wilmington, has the highest median income (nearly $110,000) and percentage of college graduates (55%) in the state. It’s also home to billionaire Campbell Soup heir Mary Alice Dorrance Malone and her Iron Spring Farm horse breeding and training operation.

So it might seem an unlikely spot for a project dedicated to righting a little known tax wrong that can crush those living in mobile homes (a.k.a. trailer parks) in a handful of states. But each year, Chester County’s farmers produce 500 million pounds of mushrooms (roughly half the nation’s crop) and 130,000 tons of hay (an essential element in mushroom compost). And that requires farm workers. With the median home price in Chester almost $570,000, agricultural workers and others at the bottom of the pay scale have a hard time finding affordable housing. The result: Chester County’s 213,000 housing units include about 6,000 mobile homes.

That’s not so unusual. According to the Manufactured Housing Institute, a trade group, 22 million Americans, the majority of them with incomes of less than $40,000, live in such housing and 71% say their primary reason is affordability. Although Congress substantially strengthened construction and safety standards for “manufactured housing” in 1976, the price per square foot is still as much as 50% less than for site-built houses. The nonprofit Lincoln Institute for Land Policy has for years promoted manufactured housing—and zoning changes that would allow more of it—as one solution to the nation’s housing affordability crisis. Even the Biden Administration has gotten on the bandwagon as part of its Housing Supply Action Plan.


In 2018, retired scientists Debbie and Randy Blough didn’t know much about mobile homes. But they were volunteering together at the Honey Brook Food Pantry in a poorer part of Chester County, when pantry leader Ken Ross introduced them to a young family who owned a mobile home and was being pushed over the edge financially by a jaw-droppingly high real estate tax bill. “We’re going to do something about this,” Debbie told Randy as they left the pantry that day.

Retired scientists Debbie and Randy Blough, shown with their daughter, Kelly Blough, after receiving the Pennsylvania Legal Aid Network’s 2022 Excellence Award for Lay Advocacy.

Legal Aid of Southeastern PA

Randy, a federal nuclear safety inspector for 27 years, and Debbie, a chemist, both now 71, began researching the problem. What they discovered and what they did about it has already helped nearly a thousand Pennsylvania families. It turned out other pantry users had the same problem—at the extreme, one pantry client had purchased a used trailer for $800 that carried a $1,300 a year tax bill. (By comparison, the average real estate taxes paid by homeowners in Pennsylvania come to 1.49% of their properties’ value, according to the Tax Foundation.)

What the Bloughs learned was the outsized tax bills burdening pantry clients were the result of a flawed state tax assessment system being applied in a ham-handed fashion to mobile housing, without regard for its unique characteristics.

While traditional site-built or stick-built houses typically increase in value over time (assuming they’re properly maintained), mobile homes tend to do the opposite—like cars and trucks they often depreciate. For example, a brand new three-bedroom, two-bath, “The Breeze” model mobile home manufactured by Clayton Homes, and sold in Paradise, Pennsylvania, would set you back about $140,000, before options. The same model from 2013, in good condition (and also without upgrades) can be had for $69,620 in southeastern Pennsylvania, according to an estimate from J.D. Power. (The average price for a new factory-built house was $128,300 last year, although that doesn’t include the land to put it on.)

What about the land under mobile homes? Doesn’t that appreciate? It may, but about half of mobile home dwellers don’t own the land that sits under their houses. Instead, they rent a pad in a dedicated park. Almost all states consider a mobile home personal property–the same as a car–at original purchase, but the tax treatment typically changes once the home is moved to its final destination, even if the mobile homeowner doesn’t own the land. In the Keystone State, mobile homes are subject to real estate tax so long as they are permanently attached to land or connected with water, gas, electric, or sewage. (If the homeowner doesn’t own the land, that’s taxed separately to the landowner.)

Here’s why that can turn into a tax nightmare for mobile homeowners. Best practice is to reassess properties at least every three years—that’s what neighboring Maryland does, for example. But Pennsylvania, and a handful of other states don’t require counties to reassess properties on any fixed schedule. The typical period between reassessments in Pennsylvania has been 20 to 25 years. That ends up rewarding homeowners whose property values are rising faster than average and punishing mobile homeowners and those who live in declining neighborhoods. Indeed, in 2020, neighboring Delaware’s Chancery Court ruled the lack of mandatory reassessments there—one county hadn’t done reassessments since 1973—violated the state constitution’s requirement that taxpayers be treated equally. (A court ordered reassessment is underway, while a bill that would require reassessments every five years has passed Delaware’s House and is pending in its Senate.)

True, property owners who believe the assessed value of their property is too high can file an appeal—commercial property owners routinely do this, to great effect. But the process can be intimidating for homeowners. In addition to completing paperwork and meeting deadlines (by law, the filing deadline for appeals in Pennsylvania is May 1st through the first business day in August), there’s the specter of a hearing before a County Board of Assessment; in some counties, the county has the opportunity to cross-examine a property owner, which to an average citizen may feel like being put on trial. That’s why entire departments at law firms are dedicated to helping well-heeled homeowners appeal property taxes.

When they first learned about the assessment problem in 2018, the Bloughs were already helping pantry clients to apply for food stamps and deal with utility shut-offs. So they jumped into filing real estate appraisal appeals too. That year they filed 22 appeals, with Randy appearing at the hearings to argue cases. They won them all, saving those households a total of $20,000 in just that year. The Bloughs’ work was featured in a Philadelphia Inquirer story, which caught the eye of a local United Way official, Chris Saello, who connected them with Legal Aid of Southeastern, Pa., a not-for-profit which provides help in civil matters to low income and vulnerable people in the suburban counties around Philadelphia: Bucks, Chester, Delaware and Montgomery.

LASP took over their ad hoc appeals operation, launching the Chester County Mobile Home Tax Reassessment Project, with funding from United Way, which pays the $25 appeal filing fee for each homeowner. From 2019 through 2022, the project lodged 903 successful tax appeals, saving homeowners an average of $872 a year each on their taxes—-or more than $8 million over the next decade.

The project is now run by Sara Planthaber, a 28-year-old staff attorney at LASP, with pro bono help from local lawyers and students from nearby law schools, including the University of Pennsylvania, Drexel, Villanova, and Temple. Planthaber herself had no interest in tax law—while earning her law degree at the University of Pittsburgh, she picked up a masters in social work, focusing on older adults. But the reassessment project appealed to her sense of fairness; clients aren’t asking for special tax breaks, just to be treated equally under the existing tax laws.

Sara Planthaber, who runs the Chester County assessment appeals program, and Brian Doyle, a Legal Aid attorney who coordinates pro bono efforts, confer with a tax appeal client.

LASP

“These homeowners have been overpaying for years and years,” Planthaber says, noting that the tax savings aren’t limited to one year. “The first year [after the appeal] is a huge relief. But over time, you really see the difference.” Saving several hundred dollars every year can have a significant impact on a family’s financial future. For those families, Planthaber stresses, “That’s a lot of money.”

Plus, as Planthaber runs it, the tax assessment program can be a gateway to help clients in wider ways. She cites the case of a recently widowed woman in her 80s, whose 1970s mobile home hadn’t been reassessed since its original purchase and appeared to be over-assessed by 300%. She couldn’t afford to pay for needed repairs to her plumbing and roof, let alone her taxes, but was adamant that she wanted to continue to live independently in her own home. The team got the assessment slashed and got the widow into a program that makes home repairs for a sliding fee, based on her ability to pay. “Thank you,” she told the team, “for allowing me to live in my home.”

With results like those, you’d expect that clients would be lining up to ask for help. That isn’t the case, Planthaber says. Some homeowners aren’t aware of the program, while others are suspicious. Older adults worry that they might have to add any real estate savings to their income tax return (they don’t), while those who might have a newly granted status as an immigrant, or a status that remains in limbo, fear that filing a petition in court could subject them to immigration proceedings. Others worry that a filing could spark interest in an old parking ticket or other outstanding legal issues. And still others fear that the whole program might be a scam—an understandable reaction when anyone asks for personal information these days. (Some actually come by the Legal Aid office just to check if it’s for real, she says.)

To spread the word, the program posts flyers in mobile home parks and community centers and does in-person outreach at places potential clients trust, like libraries and the food pantry where it all started. The program is currently limited to Chester County homeowners who do not own the land where the mobile home is located and those who haven’t appealed their taxes in five years—the latter marks the spot on the depreciation curve where appealing makes sense. If a case is accepted, the program gathers information about the home, including the year it was purchased, the size and dimensions of the home, the model, and the manufacturer. If the home was purchased within the last three years, the homeowner is asked to provide evidence of the purchase price since that tends to be most reflective of value.

Outreach: Even during the height of the Covid-19 pandemic, officials from Legal Aid of Southeastern PA and United Way went out to recruit mobile homeowners for the assessment appeal program.

LASP

That information is used to build a case for the home’s value. Sometimes, however, records are scarce and Planthaber gets creative. When clients don’t know the dimensions of their home, for example, she turns to Google Maps where she can use a tool to estimate the size of the home from photos. Clients who need help identifying the make and model of their home can typically find that information on the title. If they can’t find their title, Planthaber suggests contacting their homeowner’s insurance company or the park where they lease the land (the information might be on the lease agreement). And if that doesn’t work, staff members or volunteers sometimes stop by the mobile home to look for model information—it can usually be found on a metal plate outside the house or in the kitchen cabinets.

This information is fed into a third-party program that can provide a current value for the mobile unit, typically with data from the National Automobile Dealers Association, which offers a Kelley Blue Book-like estimate for mobile homes for a fee. (That fee, too, is paid by the program.)

Armed with this information, Planthaber and her team file a petition with the Chester County Board of Appeals. The homeowner is given a hearing date, but since they’re represented by legal counsel, they don’t have to appear in person—a huge relief for those who fear the court system. Typically, within a month, the homeowner has a new lower assessment for the coming year; the relief is not retroactive.

Planthaber praises Chester County’s Board of Appeals as being generally receptive to her team’s requests. There’s even a specific form at the county level for mobile home assessments, a nod to the idea that they may function differently from other home value appeals. The form is relatively new and went into effect after the mobile home appeal project got started. It wasn’t however, created completely from scratch–staffers at LASP say that it’s based on a pre-existing form out of Franklin County, PA.

Last year, the program lodged a record high 246 appeals. It feels like the natural expansion of the program would be to push into surrounding counties. Planthaber says they’ve tried, but it hasn’t gotten off the ground. Philadelphia County, for example, has historically struggled with property assessments, but the overall property tax bill for the typical owner-occupied residence there was just $1,131 in 2021, as the city relies heavily on a wage and net profits tax. In comparison, Chester County has one of the highest median property taxes in the country at $5,722—more than twice the national average.

But Planthaber doesn’t think the program will run out of work: once they’ve reached all who qualify, they intend to double back and file new assessment appeals for those they helped in the program’s early days. By then, their homes will have depreciated further in value—-enough to make a new appeal worth the effort.

As for the Bloughs? They’ve been pleased to see United Way and LASP take over financing and filing reassessment appeals, but still want to see the broader inequity addressed. “I’d like to see the system fixed for all Pennsylvania mobile homeowners,’’ says Randy. “That’s a mighty task that will surely require new champions to take up the cause.”

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