H1700 Passes out of the House, on to the Senate

H1700, the bill to prevent the displacement of residents from manufactured housing communities, exited the North Carolina General Assembly’s House this week. It passed by a vote of 113 to 5, with two abstentions. The bill, in its fourth version, goes to the Senate this week. Its first stop will be with the Senate Committee on Commerce, Small Business, and Entrepreneurship, chaired by Senator R.C. Soles, Jr.

The bill seeks to reward park owners that sell to resident owned groups or to non-profits. The carrot behind the bill is to provide a financial incentive. In an earlier version, the “carrot” consisted of a seven percent credit on the likely capital gain made by the owner.

Paul Stam, a Republican from Apex, pointed out that the bill’s structure would do little in instances when park owners sold their land at little or no profit.

An early solution proposed to change the language to a tax deduction, and potentially to use the sales price of the park as a basis instead of the profit.

The bill that emerged from the House reflects this compromise. It will provide park owners a deduction on the federal income that is utilized as the basis for state sales tax. That deduction will be equivalent to five percent of the sales price of the park. While the percentage is smaller and only represents a deduction, the basis is larger.

A second provision in the bill also portends good things for manufactured housing. Park owners who decide to sell will have three days to notify not just park residents but also the North Carolina Housing Finance Agency. The 180 day advance notice period, prior to closure, still remains. While the bill prompts no legal response from NCHFA as a result, it seems likely that the steady stream of park closures are certain to bring this issue to the hearts of minds of policy makers within the institution.