The Supreme Court of Georgia handed down a ruling Tuesday impacting how affordable housing properties in the state are taxed after the owner of a Lowndes County apartment complex challenged the valuation of its property as too high.
In a unanimous decision, Justice Verda M. Colvin ruled in favor of the Gateway Pines apartment complex in the city of Hahira, Georgia, finding affordable housing developments that take advantage of federal low-income housing tax credits can be assessed based on their projected income.
However, the justice said assessors should not count the credits under the Low-Income Housing Tax Credit program when determining the fair market value of a development. The 22-page decision reversed a Court of Appeals ruling in favor of the Lowndes County Board of Tax Assessors.
According to the court’s decision, assessors may take a cost, sales comparison or income-based approach when valuing property. The county argued that the high court justices should affirm the appeals court, which found that the income approach should not be used when determining the fair market value of Section 42 properties.
But the court disagreed, and sided with the apartment complex owner which had challenged the $5.4 million valuation for the 2018 tax year.
Credit: TNS
Credit: TNS
Georgia’s Low-Income Housing Tax Credit incentivizes developers to build and preserve affordable housing and cap rents. The tax credit has created or rehabilitated more than 95,000 units between 2001 and 2021, according to a 2022 University of Georgia report, Revisiting the Economic Impact of Low-Income Housing Tax Credits in Georgia.
John R. Bartholomew, a partner at the Barnes Law Group, argued the case in June with attorney and former Gov. Roy Barnes.
In a phone interview, he said the law firm was “thrilled” with the court’s ruling.
“In terms of its impact, I think that this case is going to help preserve affordable housing in Georgia and maybe even expand the supply of it,” Bartholomew said.
He said the case was about “fair tax treatment of affordable housing in Georgia” and his firm had seen some tax assessors across the state treat affordable housing as if it were market rate or even luxury housing when determining its value.
“If property taxes go up, the total number of developments that can be funded goes down,” the attorney said. “When you ensure fair tax treatment for affordable housing properties, you are ensuring that it’s likely that more developments will be funded in the end.”
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