Council moves to discontinue reduced tax rate on manufactured homes
Public hearing set for next council meeting
The Chino Valley Town Council members decided at their regular meeting Tuesday, Feb. 26, to move forward with discontinuing a reduced tax rate on manufactured homes.
The rate, reduced from 4 to 2 percent in December 2016 went into effect in March 2017, said Finance Director Joe Duffy. The reduction came after the management of Clayton Homes asked the council to consider granting them some sales tax relief because it was hurting their business.
“Manufactured homes have a separate distinction set in the tax code and are one of the very few businesses or business categories where we can have a separate tax rate,” Duffy said.
In the past four years though, the number of manufactured homes built in Chino Valley has been decreasing, he said. In 2015, 55 building permits were issued for manufactured homes. It went up to 60 in 2016, down to 40 in 2017 and fell again to 31 in 2018. In contrast, the number of building permits for single-family residences went up over the last four years, climbing to 140 in 2018 from 36 in 2015.
However, when looking at the total sales tax collected from manufactured homes, it has also risen the past four years. The town collected $2,156,779 in 2015, $3,874,304 in 2016, $6,550,597 in 2017 and $10,779,796 in 2018. What that tells him is that most of the largest increase in sales is for sales outside of Chino Valley, Duffy said.
Councilman Jack Miller said he was against a reduced tax rate on manufactured homes from the beginning. It should be fair across the board, Miller said.
“I don’t think it’s fair to have a break in taxes against premanufactured versus stick built,” he said. “That’s like saying McDonalds can sell their hamburgers cheaper than … Sonic.”
The decision to move forward with discontinuing the reduced tax rate on manufactured homes was approved in a 4-1 decision. Councilman Mike Best voted against the motion, Councilman Corey Mendoza abstained and Councilwoman Annie Lane was absent.
Moving forward means going through a public hearing process, Duffy said, presenting a schedule seeing council setting a public hearing at the council meeting Tuesday, March 12, and holding the public hearing Wednesday, May 15, which is when council can decide to discontinue the reduced tax rate. It would go into effect Thursday, Aug. 1.