HERON LAKE II APARTMENTS, L.P. v. LOWNDES COUNTY BOARD OF TAX ASSESSORS
299 Ga. 598
Ga.2016Background
- Owners of Lowndes County residential rental properties received federal and state low-income housing tax credits under IRC § 42 and OCGA § 48-7-29.6 in exchange for long-term rent restrictions and covenants. Investors obtained the tax benefits via limited partnership interests.
- OCGA § 48-5-2(3)(B.1) (effective 2001) bars assessors from considering those income tax credits when determining fair market value for ad valorem tax purposes.
- OCGA § 48-5-2(3)(B)(vi) (as amended 2014) requires assessors, when valuing real property, to apply rent limitations, operational requirements, and other restrictions imposed in connection with eligibility for those same tax credits.
- Lowndes County Board of Tax Assessors sought a declaratory judgment that OCGA § 48-5-2(3)(B.1) is unconstitutional under the Georgia Constitution’s taxation uniformity provision (Art. VII, § I, Par. III(a)).
- The superior court declared § 48-5-2(3)(B.1) unconstitutional; property owners appealed and the Georgia Supreme Court affirmed the superior court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 48-5-2(3)(B.1)’s exclusion of Section 42 tax credits from valuation violates Georgia’s taxation uniformity clause | Owners: Tax credits are intangible personal property separate from real property and may be treated differently; statute valid | Assessors: Credits are tied to the real property, affect fair market value, and exempting them creates an unconstitutional subclass of tangible property | Held: § 48-5-2(3)(B.1) unconstitutional; credits are part of the real property bundle and cannot be preferentially excluded under the uniformity clause |
| Whether Section 42 tax credits can be considered in fair market value despite APM language excluding intangible benefits like goodwill | Owners: APM excludes intangible benefits; credits are transferable and thus intangible, so should be ignored | Assessors: Credits are inextricably tied to the property, affect sale price, and thus must be considered under statutory fair market value factors | Held: Credits affect what a knowledgeable buyer would pay and are properly considered in valuing property; APM definition does not bar consideration of these credits |
Key Cases Cited
- Blevins v. Dade Cty. Bd. of Tax Assessors, 288 Ga. 113 (2010) (constitutional limits on classifying tangible property for ad valorem taxation)
- Pine Pointe Housing, L.P. v. Lowndes Cty. Bd. of Tax Assessors, 254 Ga. App. 197 (2002) (Section 42 credits are a stream of value tied to the property and may be considered in valuation)
- Morton v. Glynn Cty. Bd. of Tax Assessors, 294 Ga. App. 901 (2008) (bundle-of-rights concept and consideration of property interests in valuation)
- Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 286 Ga. 731 (2010) (de novo review standard for constitutional questions)