HLS 15RS-181 ENGROSSED
2015 Regular Session
HOUSE BILL NO. 682
BY REPRESENTATIVE KLECKLEY
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
TAX/AD VALOREM TAX: Establishes guidelines for the valuation of affordable rental
housing for purposes of ad valorem property tax
1 AN ACT
2To enact R.S. 47:2323(E), relative to ad valorem property tax; to provide with respect to
3 assessments of certain immovable property; to define affordable rental housing for
4 purposes of assessment; to provide for methods to be used for valuation of affordable
5 rental housing; to provide for effectiveness; and to provide for related matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 47:2323(E) is hereby enacted to read as follows:
8 ยง2323. Criteria for determining fair market value; real and personal property;
9 unoccupied residential immovable property
10 * * *
11 E. Affordable Rental Housing.
12 (1) In determining the fair market value of affordable rental housing, as
13 defined in this Subsection, the assessor shall adhere to the following guidelines:
14 (a) The income method of valuation shall be utilized. In applying the
15 income method of valuation, the actual rental income from rent-restricted units in the
16 property shall be used.
17 (b) Tax credits granted, and any financing upon terms more favorable than
18 market terms, shall not be considered as a component of value or as income to the
19 property.
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 15RS-181 ENGROSSED
HB NO. 682
1 (2) The capitalization rate utilized in applying the income approach to
2 valuation shall be determined and established on a periodic basis by the Louisiana
3 Tax Commission.
4 (3) "Affordable rental housing" means residential housing consisting of one
5 or more rental units, the construction and rental of which is subject to Section 42 of
6 the Internal Revenue Code (26 U.S.C. 42), the Home Investment Partnership
7 Program under the Cranston-Gonzales National Affordable Housing Act (42 U.S.C.
8 12741 et seq.), the Federal Home Loan Banks Affordable Housing Program
9 established pursuant to the Financial Institutions Reform Recovery and Enforcement
10 Act (FIRREA) of 1989 (Public Law 101-73), or any other similar federal or state
11 program.
12 Section 2. This Act shall become effective on January 1, 2016; if vetoed by the
13governor and subsequently approved by the legislature, this Act shall become effective on
14January 1, 2016, or on the day following such approval by the legislature, whichever is later.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 682 Engrossed 2015 Regular Session Kleckley
Abstract: Establishes guidelines for use by an assessor in the valuation of affordable rental
housing for purposes of ad valorem property tax assessment.
Present constitution requires the assessment of property for purposes of ad valorem taxation.
The assessed value of a property is based on a percentage of the property's fair market value.
Present law requires that uniform criteria be used by an assessor in the determination of fair
market value for real and personal property. Fair market value is determined by using any
of the following generally recognized appraisal procedures: the market approach, the cost
approach, or the income approach.
Proposed law establishes the following guidelines to be used by an assessor in determining
the fair market value of affordable rental housing:
(1)The income method of valuation shall be used, with application of the income
method based upon the actual rental income from rent-restricted units.
(2)Tax credits and financing upon terms more favorable than market terms shall be
excluded from the valuation.
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HB NO. 682
Present law requires that in using the income approach, an assessor shall use an appraisal
technique in which the anticipated net income is processed to indicate the capital amount of
the investment which produces the net income.
Proposed law requires the La. Tax Commission to establish the capitalization rate to be used
in applying the income approach to valuation.
Proposed law defines "affordable rental housing" as residential housing consisting of one or
more rental units, the construction and rental of which are subject to the requirements of the
federal low-income housing tax credit, and which may have participated in other federal or
state low income housing program benefits.
Effective Jan. 1, 2016.
(Adds R.S. 47:2323(E))
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.