Alabama House Bill HB259

Alabama 2023 Regular Session

• Introduced: 4/5/23
• Refer: 4/5/23

Caption

Relating to tax abatements; to specify that the method of determining fair market value of real or personal property by a tax abatement recipient appealing an ad valorem tax assessment in circuit court shall be the same method used by the county granting the tax abatement; and to exclude consideration of obsolescence in determining fair market valuation of real or personal property for the duration of an abatement.

Impact

If enacted, HB 259 is expected to create a more uniform procedure for evaluating the fair market value of properties benefiting from tax abatements. Supporters of the bill argue that these changes will simplify the appeals process for businesses by eliminating disputes related to valuation methods. By aligning the methods used by tax abatement recipients with those of the county, the bill aims to promote fairness and transparency in tax assessments. However, the restriction against considering obsolescence may draw criticism, as this could lead to higher property valuations that do not reflect the true depreciated value for certain businesses, especially those with older or less functional properties.

Summary

House Bill 259 aims to revise regulations around tax abatements granted to industrial or research enterprises. Specifically, the bill mandates that a recipient of such tax abatements must use the same method employed by the county for determining the fair market value of their property when appealing a county's tax assessment. Furthermore, it prohibits the inclusion of any form of obsolescence, including both functional and economic obsolescence, in the calculations for fair market valuation for the entire duration of the tax abatement. This approach seeks to standardize property value assessments across different entities and limit potential variances caused by differing valuation methodologies.

Contention

The main contention surrounding HB 259 revolves around the exclusion of obsolescence from property evaluations. Critics may argue that this aspect of the bill fails to account for the realities faced by businesses that suffer from depreciation, which can often severely impact their financial viability. The prohibition of obsolescence consideration may pressure businesses to accept inflated tax assessments, potentially driving up costs associated with taxation. There is also a concern regarding the potential effects on local revenue generation, as inflated valuations of tax-abated properties could lead to increased tax liabilities that do not reflect the actual economic circumstances of affected businesses.