Lake County housing authority signals support to pursue sales-tax exemption for modular housing purchase

The Lake County Regional Housing Authority board on July 22 agreed to work with county staff and developer Oakwood to pursue a sales- and use-tax exemption for a planned 40-unit modular housing project, saying the exemption is needed to avoid a large tax bill that would raise costs for the project and prospective buyers.

Board members and staff said the sales-tax liability would be triggered when the factory-built modules ("boxes") are shipped, currently expected in approximately October, and that Oakwood has asked for assurance that the transaction will not saddle the project or buyers with an additional seven-plus percent tax on the purchase.

Why it matters: Board members and county staff said the added tax — discussed in the meeting as as much as roughly $600,000 against the whole purchase price or about $296,000 if applied only to the modules valued at about $4,000,000 — would materially affect the affordability of homes intended for sale to local buyers. Board members pressed staff for clear calculations, legal opinions and written agreements before taking a formal vote.

What the board discussed - Proposal and mechanism: County and developer staff presented a plan to use the regional housing authority and a ground-lease model so the housing authority can claim a sales-tax exemption provided under state statute for housing authorities. Chris Lloyd (identified in the discussion as the originator of the ground-lease idea) and county staff proposed a short-term ground lease so the authority would not take title to…