479 B.R. 47
8th Cir. BAP2012Background
- U.S. Bank appeals an order valuing the debtor Lewis and Clark Apartments, LP’s collateral at $3.5 million under § 506(a).
- The appeal asks whether the valuation order is final and, alternatively, whether leave to appeal as an interlocutory order should be granted.
- The property is a Low Income Housing Tax Credit (LIHTC) project with a complex ownership structure and rent/use restrictions tied to tax credits.
- Tax credits (state and federal) are available to owners for ten years and run with the land beyond ownership changes, contingent on compliance.
- The debtor asserts the tax credits are available to a subsequent owner, while the bank asserts a direct security interest in the credits themselves.
- The bankruptcy court valued the property without attributing value to the remaining tax credits; the bank sought to include them in the valuation for plan confirmation purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the valuation order is final or appealable as interlocutory. | U.S. Bank contends interlocutory appeal is warranted. | Lewis and Clark argues the order is non-final. | Interlocutory appeal allowed; the order itself is not final. |
| Should LIHTC tax credits and restrictions be included in valuing the secured collateral under § 506(a)(1)? | Bank argues tax credits are assets separate from the property and not to be valued with the real estate. | Debtor argues credits are not part of the property value and should not affect value. | Credits and restrictions affect value and must be considered in valuing the property. |
Key Cases Cited
- In re Creekside Senior Apartments, LP, 477 B.R. 40 (6th Cir. BAP 2012) (tax credits run with the land and affect property value)
- Addison v. Seaver (In re Addison), 540 F.3d 805 (8th Cir.2008) (finality/appealability considerations in bankruptcy)
- In re Coleman Enters., Inc., 275 B.R. 533 (8th Cir. BAP 2002) (finality/appealability standards under 28 U.S.C. § 158)
- Gaines v. Nelson (In re Gaines), 932 F.2d 729 (8th Cir.1991) (finality requirements; when an order leaves nothing for court to do)
- Zahn v. Fink (In re Zahn), 526 F.3d 1140 (8th Cir.2008) (earlier rulings reviewed as part of confirmation appeal)
- Assocs. Commercial Corp. v. Rash, 520 U.S. 953 (1997) (valuation framework and what constitutes collateral value under 11 U.S.C. § 506(a))
- In re Creekside,, 477 B.R. 54 (6th Cir. BAP 2012) (reiterates that LIHTC rights run with the land and affect valuation)