HB13 Alabama 2014 Session

This bill would provide further for appraisals of the fair and reasonable market value of rented or leased Class II real property constituting affordable rental housing. Appraisals for any such Class II property having a restriction either by law or by a restrictive covenant that runs with the land would be required to take into account the net operating income attributable to the property based on such restrictions, utilizing capitalization rates annually determined by the Department of Revenue

This bill would additionally provide that, for ad valorem tax appraisal purposes, the impact on fair and reasonable market value of such Class II property of legal restrictions and binding covenants of record on occupancy and rentals with respect thereto must be considered by tax assessors, boards of equalization, and others charged with appraisal of property for ad valorem tax purposes, and that the value of any tax credit becoming available as a result of such restrictions would not be considered in the appraisal unless retained by the legal owner of such Class II property

This bill would also clarify the ad valorem tax status of such tax credits and require the Department of Revenue to promulgate rules for its implementation

Relating to the ascertainment of the fair and reasonable market value for ad valorem tax purposes of certain Class II property; to provide that the appraisal of the fair and reasonable market value for ad valorem tax purposes of rented or leased Class II real property the occupancy or rentals for which are restricted by law or restrictive covenant running with the land by reason of the use of such property in providing affordable rental housing in the State of Alabama shall be ascertained, as of October 1 of each year, commencing with the ad valorem tax year commencing October 1, 2013, taking into account the actual net operating income attributable to the property for the then immediately preceding year, capitalized at a market value capitalization rate for such year to be determined annually by the Department of Revenue pursuant to certain criteria; to provide that every county tax assessor or other county or state officer charged with the duty of assessing property for ad valorem tax purposes, as well as each county board of equalization and each agent of the Department of Revenue, in forming judgments as to the proper appraisal of the fair and reasonable market value of such Class II real property, would be required to consider the impact on the value of all applicable legal restrictions and restrictive covenants of record on the occupancy and rentals thereof, and would be prohibited from considering the value of federal or state income tax credits utilized in connection with such restrictions by any person or persons other than the legal owner thereof required to make return of the property for ad valorem tax purposes, nor the replacement cost approach to the appraisal of such Class II property except in cases where the value produced by such an approach is less than the value produced by the income approach for the property and deemed reflective of the fair and reasonable market value thereof; to require the Department of Revenue to determine annually capitalization rates for use by county tax assessors or other county or state officers charged with the duty of assessing property for ad valorem tax purposes, as well as by county boards of equalization and agents of the Department of Revenue, in making appraisals of such Class II property taking into account the net operating income therefrom; and to promulgate rules for the implementation of this act.