DeKalb Tax Assessors Take Heat Over LIHTC Valuations

The valuation of low income housing tax credit (LIHTC, also called affordable housing) properties has been a hot topic in Georgia over much of the last decade. LIHTC properties are developed in conjunction with various federal and state tax credits, offered in exchange for keeping some or all of the apartment units ‘affordable’ based on the area’s median income.

The valuation of LIHTC properties for property tax purposes is tricky under Georgia law. Georgia’s constitution requires uniformity in the valuation of properties within each ‘class’, and LIHTC properties are not a separate class of commercial property. Valuing LIHTC properties in the same manner as other commercial properties, including multifamily properties with market rental rates, may fail to take into account the lower rental rates, higher expenses, and limits on transferability that are part of LITHC properties. Case law has further complicated the valuation process by putting limits on the use of the sales approach.

In a recent article in the AJC, LIHTC developers griped about the stance the DeKalb Tax Assessors have taken on LIHTC property valuation, often valuing LIHTC properties substantially higher than other jurisdictions. The Georgia Court of Appeals will soon rule on a pending LIHTC case out of DeKalb County, which could impact valuation methods, specifically as to LIHTC properties under construction.

What can be done to fix this issue? A referendum to create a separate class of LIHTC property and its own valuation methodology failed the last time it was introduced. I’ll be watching to see what impact the courts and legislature will have on this important issue.

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