FOR IMMEDIATE RELEASE
CONTACT: Carmel McGuire
(202) 266-8207
amoriarty@nahb.com www.nahb.org
RISING PROPERTY TAX ASSESSMENTS THREATENING
AFFORDABLE HOUSING PROPERTIES
NAHB Urges States to Consider New Approach to Appraising
Subsidized Rental Properties
Concerned that skyrocketing property tax bills are jeopardizing
the preservation and development of affordable rental housing,
the National Association of Home Builders (NAHB) is urging state
and local governments across the country to adopt more
appropriate ways for assessing property taxes on rental apartment
communities financed with Low Income Housing Tax (LIHTC) Credits and
other government subsidy programs.
"Soaring property values are pushing up property tax bills for
all commercial properties owners; however, owners of tax credit
and other subsidized affordable properties cannot recoup these
costs by raising their rents, which is what the owners of
market-rate properties do," explained Lance Swank, chief operating
officer of The Sterling Group and chairman of NAHB's Multifamily
Housing Credit Group. "Assessing properties that have
rent-restricted units or that are subject to income limitations, at the same
rate and in the same manner as market-rate properties is putting
thousands of affordable units at risk."
This includes a significant number of LIHTC units. The LIHTC
program, which Congress created in 1987 as a funding source for
low- and moderate-income housing, is the primary catalyst for
affordable housing in the United States, producing almost 100,000
units annually. The program works by allowing federal tax credits
to offset development costs for new construction or
rehabilitation of affordable housing projects. In exchange for the credits,
property owners agree to rent restrictions that are affordable to
people whose incomes are 60 percent or lower than the area
median.
Tax credit owners and developers worry that rising operating
costs--including high tax assessments--will impact not only the
properties already in service, but also the financial feasibility
of all affordable housing produced with tax credits in the
future.
To protect the financial viability of affordable housing
properties, NAHB is urging states legislators across the country to
adopt an income-approach to their tax assessment methodology. Such
an approach would mean that tax assessors would be required to
consider restrictions on rental income when appraising affordable
housing properties. Currently only 14 states require tax
assessors to use the income methodology or a similar approach when
addressing the valuation of affordable properties.
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