Taxes tighten housing squeeze

September 20, 2018

Bonnie Budge keeps a nice, clean park. The 30-some mobile homes on her property are a tidy mix of single- and double-wides, each with its own style, painted and accented in bright colors like blue, green, pink. Signs remind drivers to slow down for playing children.

The Jackson native has owned the mobile home park since 1986. But this is the first time she’s seen her property tax bill skyrocket by 1,100 percent in one year.

“I’ve never seen a jump like that,” said Budge, 86. “Ever.”

Budge is fighting the tax jump to keep housing affordable for her tenants, mostly working families. Although she and others are struggling with the huge, single-year hike, Teton County Assessor Melissa Shinkle said the state has mandated the change following years of valuation errors, and she could even face a misdemeanor if she doesn’t impose it. As the state-ordered tax increases augment the impacts of already soaring property values in Teton County, the only remedy for residents might be convincing lawmakers to change state law to provide some relief.

Patty Nelson has lived in Budge’s mobile home park on Cache Creek Drive for nearly 50 years.

“Bonnie is an excellent landlady,” Nelson said. “She’s very strict, but she has high standards for this neighborhood and this mobile home park.”

Your yard has to be kept up. She doesn’t like junk hanging around.

Budge has also, Nelson said, “bent over backwards, in many ways, to keep nice young families living affordably. Not cheaply, but affordably, in good living conditions.”

Budge estimates that 80 to 100 workers live there, like Armando Tzompa Lopez, a 10-year resident. He works at Albertsons and Dollar Car Rental. He loves having a spacious unit for his wife and three boys, and his own parking spaces.

“The way you need to live in Jackson, you don’t have a choice. You have to have two jobs, no matter what, to survive,” Tzompa Lopez said. “Most of the money’s going to rent and bills and everything.”

He said a substantial lot rent increase would deeply affect his family’s bottom line, and they might have to move to a smaller place.

Felix Morales agreed. He lives in Budge Mobile Park and works as a chef. He’s putting his two kids through college.

“I like it, because it’s very nice, and it’s quiet, and this is my place I can afford,” Morales said. “When you have a family and you want an apartment that’s three bedrooms, it’s over $2,000. That’s why I live here.”

Nelson said the mobile homes allow people to own a home and live in Jackson “without being rich.” She said a huge tax increase would make the mobile home park unaffordable.

Nelson is retired (with a part-time temp job) and depends on social security to pay the bills. A fixed income makes sudden rent spikes a challenge. The 75-year-old has been in Jackson since 1949. If her housing costs shoot up, she said, she might be forced to move away to live with her sister in Riverton.

“That’s the way it kind of circles around,” Nelson said. “Because by raising her taxes she has to raise our rents. It just does not make sense to me. Everybody here are good people that make a good honest living, and this is where we can afford to live. You might say they’re kicking 30-some families out of the valley.”

State-mandated updates

Mobile home parks were some of the hardest-hit properties after the Teton County Assessor’s Office made valuation updates ordered by the state. In 2018 overall assessments of property in Teton County increased about 17 percent.

The dramatic shift is owed to changes mandated by the Wyoming State Board of Equalization, which in 2016 and 2017 ordered the Teton County Assessor to immediately fix historic valuation errors and comply with Department of Revenue rules. For years county assessors and staffers would make baseless value adjustments willy-nilly to placate disgruntled property owners, resulting in a patchwork of erroneous values that didn’t follow state laws, many sources said. The state board said the county has “consistently failed” to value commercial properties uniformly and at their full market values, as required by law, and has undervalued many residential properties too.

One such area of commercial undervaluation and inconsistency was mobile home parks. Some of the seven parks in the county were valued as residential, while others were valued as commercial. Part of the state’s order involved a requirement to shift tax valuations of all the county’s mobile parks from residential to commercial.

“If the real estate generates an income, is rented out, used for investment, or falls into a number of other categories other than being a private residence, it can be considered commercial real estate,” read an Aug. 30 memorandum to county assessors from Department of Revenue Administrator Brenda Arnold. Only single-family homes, then, are valued residentially.

Shinkle inherited this mess of inconsistent and outdated valuations, when she was appointed in August 2017 and has been tasked with implementing the state’s changes. Shinkle said she regrets that the result has been substantial tax and rent hikes and struggled with implementing the state’s new mobile park valuations.

“This was a very difficult area of appraisal for me,” Shinkle said, “as the majority of park operators/owners charge very, very reasonable rents and provide what I believe is the best form of affordable housing in this county.”

But she doesn’t have much of a choice when it comes to applying state statutes. Deputy County Attorney Keith Gingery said that if the assessor fails to follow orders from the state, she can be criminally charged with a misdemeanor.

“She’s an elected official with some independence, but not a lot of independence,” Gingery said. “You have to follow the rules of the Department of Revenue and the State Board of Equalization.” Gingery added he’s proud of Shinkle for following the laws as she’s required to, even though it may lead to unpopular decisions.

If the county fails to listen to the state’s directives the state steps in and “equalizes,” or takes over, assessments countywide. That means property owners lose their right to appeal their assessments, Shinkle said.

“For me, as an assessor, I certainly don’t want taxpayers to lose their right to appeal,” Shinkle said. “That’s their right to due process.”

Battling the tax change

Budge is fighting the state-ordered change in mobile home park assessments. She appealed it to the County Board of Equalization, a board made up of Teton County commissioners. Budge said she couldn’t absorb a 1,100 percent tax increase and would have to pass it on.

“These are good solid citizens, and this is hard on them,” Budge told commissioners. “It’s really, really hard on them to take an additional hit, and I think that should truly be considered.”

Stacy Saunders, Budge’s granddaughter, spoke on her behalf at the county hearing. Saunders said the family is appealing to be a voice for working families that will end up paying for the tax increase.

“This is a decision Teton County will be making that will affect one of the most vulnerable segments of the population,” Saunders said.

Ultimately the county board remanded Budge’s tax assessment to the Assessor’s Office for reconsideration.

Following the remand Shinkle said she plans to look at alternatives for valuing mobile home parks, countywide, to see if there’s any other way within the law. She said she is hopeful the state board will weigh in and offer some clarity and guidance on the laws and what she’s allowed to do.

Morales said he appreciates Budge fighting the raised rents.

“She’s a good person, so she wants to take care of everyone,” Morales said. “I’m thinking it’s not fair, because they increase the taxes way too much, because they’re thinking it’s not residential property. They’re thinking it’s commercial, but it’s not. ”

Other trailer parks feel it

Other mobile home parks in Teton County are already seeing the impacts of the state-ordered changes. Evans Mobile Court, south of town, hiked lot rents from $375 a month to $500. Mobile home owners take out mortgages to buy their trailers and then rent a place to park their home.

Steve and Della Walsh own Evans, and didn’t appeal their assessment. Steve Walsh said the family regrets increasing rents but didn’t have a choice after its property tax assessment shot up 896 percent. Some of that cost had to be passed on to tenants.

“We’ve obviously always been one of the least expensive mobile parks in the county, if not the state,” Steve Walsh said, “trying to maintain affordable housing for people.

“That’s all you hear about from the town and county, is ‘provide affordable housing.’ All of the sudden we’re gonna have to jump everyone’s rent 30 percent just to make up the difference,” he said.

The rent increase is definitely affecting residents. John Doran has been in the valley for 30 years and works as a transportation security officer at the airport. He’s moved around a bit, and finally settled down in a home at Evans. The increase in lot rent, amounting to an extra $1,500 a year, means Doran is considering moving away.

“They always put all this emphasis on trying to improve employee housing, making it more affordable, and then you just get nailed,” Doran said.

Still, mobile home parks aren’t the only type of housing feeling the squeeze from the state-ordered updates to tax assessments. Andrea Riniker owns a seven-unit apartment complex south of town, which is classified as commercial for tax purposes. She said her appraisal doubled in 2018.

When property tax goes up it makes it tough for landlords not to raise rents on housing that may have been affordable for Teton County workers. Like many landlords Riniker had no choice but to up rents. She too sees a “disconnect” between the county’s affordable housing goals and tax policy.

“How do we, out of one side of our mouth, talk about how important it is to have affordable housing here and not be scrambling to try to ameliorate the effect of an enormous tax increase in one year?” Riniker asked. “In one year.”

Affordable housing

While this year saw particularly sharp increases as Teton County gets into compliance, soaring property values are a long-term concern for the community’s character. Many worry about the impacts of property tax increases on longtime residents who are retired and living on fixed incomes, including Clarene Law, who’s seen big tax hikes on her employee housing.

“What about people who are on fixed incomes?” Law asked. “It’ll translate to inflation and lack of affordability. And it’s just likely to continue outward migration out of Teton County into Alpine and Driggs and Victor, Idaho. Which to me, upsets the whole community. It tears the heart right out of us when you get too high.”

‘Seems like it’s just greed’

Some sense that the state-ordered tax changes are a product of the state unfairly seeking money from Teton County. Evans resident Ron Engelhart wants answers from the state on why they’re being squeezed.

“It seems like it’s just greed,” Engelhart said. “How can we get some more money, and squeeze some money out of these people.”

Fifty-year resident Craig Carpenter, who’s frustrated with property tax increases on his 38-year-old home, agreed.

“The rest of the counties look at Teton County as a cash cow,” Carpenter said. “That’s one reason I never expect to see any property tax relief at a state level. You’ve got 22 other counties that are loving that Teton County is being raked on property taxes.”

But others say that’s not quite right. Gingery said state revenue from oil and gas industries dwarfs Teton County’s property tax contributions.

“We contribute very little for the state budget,” Gingery said. “The state budget is oil and gas, and we don’t come close to what oil and gas contribute.”

For Wyoming House Rep. Mike Gierau, D-Teton, who is running for the Wyoming Senate, the root of the issue is the rapidly increasing property values in Jackson Hole, and the state ordering Teton County to follow the laws that apply to all counties.

“What’s happened in Teton County is the values have gone up faster than the assessors have been able to reassess property,” Gierau said. “The state came in and said, ‘You’ve got to get legal.’”

Gingery said while the property tax system works well elsewhere in Wyoming, it presents a challenge in Teton County, where oftentimes the land value drives up valuations.

“You could have a shack, but if it’s sitting on a nice piece of land in Teton County, there’s a lot of value there,” he said.

Legislative solutions

2018’s tax increase was a doozy, to make up for past mistakes. Shinkle doesn’t expect such drastic year-over-year changes moving forward, and aims to prevent this from happening again. However, the wildly expensive Teton County real estate market still portends that rising property values — and therefore taxes — are the new normal: tax assessments are based on sale prices, and if land continues to be pricey, so are taxes. If the property down the street sells for $2 million, even if you’ve lived in your modest home for 50 years, that sale affects your tax bill.

Local economist Jonathan Schechter said the property tax structure is worth studying and suited to a policy solution.

“The challenge is basically pretty clear: ‘How do we make sure that people who have lived here a long time don’t become victims of crazy spikes in property values that creates a situation where they can’t afford their house?’” Schechter, who is running for Jackson Town Council, said.

“That’s the fundamental challenge,” he said. “Due to no fault of their own, they’re being punished for being good stewards of the land, or they’re being punished for having created a community that’s so desirable.”

The county could lower the property tax rates, and it did this year — slightly. But Teton County already doesn’t tax the maximum allowable rate like every other Wyoming county, and relies on those funds for services.

All other solutions would have to come from the state Legislature, as the Teton County assessor is bound to follow state rules.

Shinkle suggested another fix to help local residents could be a homestead exemption, embraced by many other states. It allows for owners of primary residences, who have owned that home for a certain amount of time, to exempt a certain amount of property value from taxation.

“That, to me, would speak to residents who have owned their homes for 20, 30, 40 years who are now retiring on fixed incomes,” Shinkle said.

For example, homeowners might get $100,000 off their assessed value, they might be required to pay property taxes only on the value they purchased a home for.

Schechter suggested another idea to explore is to make property taxes progressive by taxing the first $500,000 of value at a particular rate, and increasing that rate for each additional $500,000. Or Wyoming could follow in Utah’s footsteps, he said, by taxing second homes at a higher level than primary residences.

Gierau said a program several years ago provides property tax relief for seniors on a fixed income, but the state stopped funding it.

“If we want to put money back in there, we can, and I would be a strong advocate for doing that,” Gireau said. “The question is where is it going to come from. What project gets cut, and what programs get cut to fund that?”

He said options include removal of certain sales tax exemptions, or additional local-option sales tax to offset those lost revenues.

Schechter said the people of Teton County and their representatives should work together to learn what’s working — and not working — in other states and present a solution to Cheyenne.

“We are citizens of the state of Wyoming, and good, long-standing citizens of the state of Wyoming are being punished or are being forced to leave the county or leave the state to no fault of their own,” Schechter said. “It’s a function of the way Wyoming has written its laws, and that’s just not fair.”

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