In its upcoming session, the Wisconsin Supreme Court will examine a case related to the appropriate methodology for assessing low-income housing developments. This is an issue that has resulted in differing opinions in other states.
Which Assessment Approach is Correct?
In Regency West LLC vs. The City of Racine the key question is whether the sales comparison approach, the income approach, or the cost approach is the proper method to assess Section 42 low-income housing.
Under Section 42, developers receive tax credits for building affordable housing. The owner of the Regency West Apartments sued the City of Racine in 2013, alleging the subsidized housing complex was overvalued in 2012 and 2013. The case went to trial in 2014 and was dismissed by County Circuit Judge Gerald Ptacek. Then in September 2015, the Wisconsin Court of Appeals dismissed an appeal of Ptacek's ruling. The Supreme Court will render its decision after being petitioned by the owner of Regency West.
No Definitive Precedent
There is no general agreement about whether local governments should include the value of federal tax credits in their valuation of low-income properties for tax assessment.
The following are just some examples of the wide variety of legal opinions expressed.
The Mississippi Supreme Court ruled tax credits should not be part of the valuation equation in Willow Bend Estates LLC and Woodyard Gardens LLC v. Humphreys County Board of Supervisors and Margaret Parks, Tax Assessor for Humphreys County, Mississippi
The Idaho Supreme Court ruled the value of Section 42 tax credits should be included in the valuation process in Brandon Bay Limited Partnership v. Payette County, Idaho
It is not known just when the Wisconsin Supreme Court will issue its ruling on property tax assessment of low-income housing projects. However, the case has been scheduled for oral arguments.