Current through Register Vol. 50, No. 9, September 20, 2024
A. In
making appraisals of any real property, including but not limited to
residential, commercial and industrial land and improvements, the assessors
shall follow the criteria and requirements in
Section
111 of the Tax Commission's Rules
and Regulations.
B. The following
procedure shall be used for assessing, listing and placing transferred property
and property upon which improvements have been made after the date of the
reappraisal as set by the Tax Commission:
1.
Improvements shall be added to the rolls based upon the condition of things
existing on January 1 of each year. The value of the improvements shall be in
accordance with the uniform valuation date and quadrennial reappraisal cycle as
determined by the Tax Commission.
C. In assessing affordable rental housing,
the income approach is recommended. As defined in this Section,
affordable rental housing means residential housing consisting
of one or more rental units, the construction and/or rental of which is subject
to section 42 of the Internal Revenue Code (26
USC 42), the Home Investment Partnership
Program under the Cranston-Gonzalez National Affordable Housing Act
(42
USC 12741 et seq.), the Federal Home Loan
Banks Affordable Housing Program established pursuant to the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989
(Public Law 101-73), or any other federal, state or similar
program intended to provide affordable housing to persons of low or moderate
income and the occupancy and maximum rental rates of such housing are
restricted based on the income of the persons occupying such housing.
1. When utilizing the income approach in
appraising affordable rental housing as defined herein, the total potential
and/or anticipated rental income a property may generate shall be limited by
the covenants and restrictions that burden the property. Hypothetical (or
anticipated) market rent shall not be utilized in appraising affordable rental
housing without taking into account the covenants and restrictions burdening
the property.
2. Audited financial
statements shall be submitted to the assessor as an attachment to the LAT
filing, or as soon thereafter as practicable, but no later than June 15 of each
year. For properties under construction and newly constructed property prior to
the first full year of operation, the owner shall provide net operating income
based on projected or pro-forma operating income and expense
information.
3. The capitalization
rate shall be set by the Tax Commission in conjunction with its rulemaking
session.
a. It is recommended that the
capitalization rate for affordable rental housing properties categorized as
tier 1 shall be within a range of 5.5-6.5 percent, increased by the effective
tax rate; for affordable rental housing properties categorized as tier 2 shall
be within a range of 6.5-7.5 percent, increased by the effective tax rate; and
for affordable rental housing properties categorized as tier 3 shall be within
a range of 7.5-8.5 percent, increased by the effective tax rate. The tiers are
as established and defined by the Real Estate Research Corporation for
Apartment Investment Properties. These capitalization rates shall remain in
effect until modified by the Tax Commission in accordance with its rulemaking
authority.
4. When
performing a valuation of any affordable rental housing property, the assessor
shall not consider any of the following in determining fair market value:
a. Income tax credits available to the
property under section 42 of the Internal Revenue
Code.
b. Below-market
interest rate on financing obtained under the Home Investment Partnership
Program under the Cranston-Gonzales National Affordable Housing Act, or the
Federal Home Loan Bank Affordable Housing Program established pursuant to the
Financial Institution Reform, Recovery, and Enforcement Act of 1989.
c. Any other federal, state, or similar
program intended to provide or finance affordable rental housing to persons of
low or moderate income and requiring restricted occupancy and rental rates
based on the income of the persons occupying such housing.
NOTE: Also see, Chapter 1,
§111. D thru D.3. and
Chapter 2,
§213. G thru
G.3.
5. The
income approach is recommended when assessing affordable rental housing.
However, if another approach to value is utilized, the covenants and
restrictions burdening the property must be considered and given the
appropriate and proportional weight in the valuation process.
a. Although not recommended, if the sales
comparison (market) approach is utilized to value affordable rental housing,
the assessors office must compare sales of comparable rent restricted
properties. For affordable rental housing properties, the assessor must either
use sales of other affordable rental housing properties (with the same or
substantially similar restrictions and covenants) or, if that data isnt
available, calculate adjustments to the sales of non-rent restricted, but
otherwise comparable, properties. The assessor must specifically consider the
restrictions on rent, transferability of the property, and the other covenants
burdening the subject property in calculating and applying these
adjustments.
b. Although not
recommended, if the cost approach is utilized to value affordable rental
housing, the assessor must calculate and subtract economic and functional
obsolescence due to the restrictions on rent, the transferability of the
property, and the other covenants burdening the subject property from the
replacement cost. The assessor must consider all of the covenants burdening the
subject property in calculating and applying obsolescence.
6. If an approach other than the income
approach is utilized to value affordable rental housing, the assessor should
also perform an income approach to value to verify the accuracy of the value
determined by the other approach(es). If the income approach to value is
substantially different (more than 10 percent) than the other approach(es) to
value, it is strongly recommended that the income approach to value be used to
ensure a fair and accurate valuation and assessment of the subject property.
D. All real property
shall be reappraised based on a mandatory quadrennial reappraisal cycle, as set
forth herein.
1. All real property shall be
reappraised for the 2016 tax year in all parishes. Beginning in tax year 2016,
all real property is to be valued as of January 1, 2015.
2. All real property shall be reappraised for
the 2020 tax year in all parishes. Beginning in tax year 2020, all real
property is to be valued as of January 1, 2019.
3. All real property shall be reappraised for
the 2024 tax year in all parishes. Beginning in tax year 2024, all real
property is to be valued as of January 1, 2023.
E. The annual ratio studies of the Tax
Commission shall be performed in accordance with the uniform valuation date and
quadrennial reappraisal cycle as determined by the Tax Commission.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
47:1837 and
R.S.
47:2323.
