Actual Expenses Establish Low-Income Housing Value in Dispute

"The actual expenses, coupled with the rent restrictions, would cause a willing buyer to pay less for this type of a housing project as opposed to a market-rate apartment complex. Thus, the taxpayer carried its burden in proving that its property tax assessment was excessive..." By Gregory F. Servodidio, Elliott B. Pollack as published by Affordable Housing Finance Online, June 2013 Property owners and assessment authorities continue to clash over the proper valuation for property tax purposes of rent-restricted, low-income housing. One of the most recent disagreements flared up in the small town of Beattyville, the county seat of Lee County in east central Kentucky. A developer had converted a former Beattyville school into 18 units of low-income housing apartments. In connection with that conversion, authorities placed a restrictive covenant on the land use, to remain in place for 30 years. Under the restrictions, the Beattyville School Apartments could only...
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Is a Consensus Emerging on LIHTC Property Valuations?

"Rental rates and asset values have fallen to staggering lows, while snowballing vacancy has sapped income from commercial projects across property types and markets. And with local governments determined to maximize revenue from shrinking tax bases, it is more important than ever that property owners know the best recipes to minimize tax bills..." By Douglas S. John, Esq., as published by Affordable Housing Finance, November 2011 For two decades, owners and managers of low-income housing tax credit (LIHTC) projects have labored to control property taxes that for many are their single largest expense. It has been a hard fight, as local assessing authorities, state legislatures, and courts have struggled to develop clear policies on the many complicated valuation issues that LIHTC properties create. The last 10 years have brought significant clarification in many jurisdictions. At least 32 states have established some statewide guidance to taxpayers on LIHTC valuation, with 17...
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Don't Be Afraid to Protest Property Tax Assessments

"Analyze the costs and potential tax savings associated with an appeal to ensure that the protest makes economic sense... ." By Gilbert D. Davila, Esq. - as published by Affordable Housing Finance - News Headlines Online, April 2010 Low-income housing tax credit (LIHTC) property owners must monitor their tax valuations without fail, especially given the current economic climate. When they receive their property tax assessments, owners should ask themselves the following questions: Should I appeal? LIHTC owners should familiarize themselves with valuation laws and the definition of market value in their taxing jurisdiction before deciding whether to appeal an assessment. Taxable value can hinge on how the assessor treats tax credits. Analyze the costs and potential tax savings associated with an appeal to ensure that the protest makes economic sense. Most successful valuation appeals consist of attacking errors made by the assessor, so consider the time, resources, and documents that...
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The Tax Credit Conundrum

States moving to address proper valuations of LIHTC projects "The cost approach calculates the expense of replacing a building with a similar one. That doesn't work in this context because without the tax credit subsidy, LIHTC projects could not be built in the first place..." By Michael Martone, Esq., and Michael P. Guerriero, Esq., Affordable Housing Finance, September 2010. An unfair property valuation by a local tax assessor can cripple the operation of a low-income housing tax credit (LIHTC) operation. Unfortunately, the inconsistency and uncertainty of how assessors value completed developments is a common impediment to financing LIHTC projects. Without guidance at the state level, local assessors may value projects without consideration of the regulations that encumber the property and limit its income producing potential. Tax assessments based upon the highest use, rather than the actual use, of the property can even prevent development altogether. The majority of states base...
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Controlling LIHTC Property Taxes

Tips to help affordable housing owners control their tax burden "Being a unique property type established largely as a creature of government funding/subsidy programs, affordable housing assessment challenges should not take a cookie-cutter approach." By Elliott B. Pollack, Esq. as published by Affordable Housing Finance, in a Web Exclusive AHF Newsletter, June 2009 When it comes to property tax considerations for affordable housing, one expert summed it up well. He wrote: "Opinions on the proper assessment of affordable housing real property are varied, and decisions on the best method to use in developing these assessments vary from jurisdiction to jurisdiction." Thus, controlling the tax burden of affordable housing properties is a difficult matter about which to generalize. However, based on available guidance and experience, a number of questions should be researched by owners in all jurisdictions: Is there a state statute of general application that addresses the valuation of affordable...
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Gain Control of Property Taxes

"Buyers of completed projects have potentially the most difficult assessment problem to overcome. In the eyes of the assessment community, the purchase price proves the market value of the property." By Kieran Jennings, Esq. as published by Affordable Housing Finance Newsletter, January 2009 Local tax assessment rules and practices have a lasting effect on returns to developers and owners of affordable housing. Investors face many difficulties—uncertainty about property taxes should not be one of them. A developer who builds a property is subject to a different set of risks than a buyer who purchases a property as an ongoing project or for rehabilitation. When a builder constructs affordable housing, in many cases, taxing authorities have reasonably good records regarding land sales and construction costs. Therefore the assessor's knee-jerk reaction is typically to value the property at the total cost of land and construction. For the assessor, it's fast, easy, and...
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Tips for Reducing Affordable Housing Property Taxes

"The first thing any taxpayer needs to know to determine if they want to appeal their taxes is whether a reduction in assessed value yields tax savings. In states that place no limits on the amount of tax increase possible, owners can be certain that reduction in assessed value will generate a tax savings. However, several states' laws require the taxes rise by only a limited percentage in a given year." By J. Kieran Jennings, Esq., as published by Affordable Housing Finance, Summer Special Edition 2007 Affordable housing owners looking for ways to save money and eliminate non-productive overhead should start by examining their property taxes. That doesn't require taxpayers to become experts in real estate tax law; they need only a working knowledge of the issues to identify when or if should hire an expert . The basic issues The first step in this process is to learn how...
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How Owners Can Keep Property Tax Bills in Check

"Creating an ongoing dialogue with the assessor becomes the key to avoiding excessive property tax valuations. This dialogue should educate the assessor about the distinctive nature of LIHTC properties and send the message that the LIHTC owner will be cooperative, yet aggressive in protesting excessive property valuations." By Gilbert D. Davila, Esq., as published in Affordable Housing Finance, February 2007 The unique characteristics of low-income housing tax credit (LIHTC) projects make it difficult for assessors to appraise these properties for property tax purposes, and can ultimately lead to excessive valuations. However, LIHTC owners need not despair, as they can use several methodologies to determine whether property taxes are excessive and challenge those assessments. How to recognize excessive taxation: Errors in basic data The initial step calls for a review of the basic data contained in the taxing authority's property records. This examination offers the LIHTC owner the first and easiest...
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American Property Tax Counsel

Recent Published Property Tax Articles

Oregon Law Offers Potential For Property Tax Reductions

Properties under construction and projects subject to governmental restriction can take advantage of legislative provisions the state provides.

The Portland metropolitan area is undergoing an unprecedented boom in commercial construction that extends from downtown to the suburbs and into just about every product type.Many taxpayers are preparing to pay larger tax...

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Property Taxes Should Reflect Retail’s Apocalyptic Times

Instead, assessors continue to ignore the clear fact that brick-and-mortar retail is in massive decline.

The retail sector is experiencing its darkest period ever, and taxing entities must come to grips with declining shopping center values.

News reports confirm that national retailers are closing stores at a record pace. In 2017 alone...

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Where Has All The Value Gone In Retail?

Telltale signs can signal opportunities for tax reductions in declining retail properties.

For a number of years the mantra in the retail industry has been that retail property values and shopping center values, in particular, will continue to decline because consumers make purchases online rather than in brick-and-mortar stores. While this...

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