Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #012
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 13th day of March, 2018, are as follows:
BY HUGHES, J.:
2017-C-0955 ERROL G. WILLIAMS, ASSESSOR, PARISH OF ORLEANS v. OPPORTUNITY
C/W HOMES LIMITED PARTNERSHIP AND LOUISIANA TAX COMMISSION (Parish of
2017-C-0957 Orleans)
At issue in these consolidated cases is the correctness of
administrative decisions issued by the Louisiana Tax Commission
(“Commission”) on review of the valuations, for the 2014 and 2015
tax years, by the Orleans Parish Tax Assessor (“Assessor”) of a
low-income housing development, owned by Opportunity Homes
Limited Partnership (“Opportunity Homes”), for purposes of
assessment of ad valorem taxes. The Commission ruled in favor of
Opportunity Homes for both tax years. The administrative
decisions were upheld by the district court but reversed by the
appellate court. Accordingly, we reverse the appellate court
rulings and reinstate the Louisiana Tax Commission decisions,
modifying the Orleans Parish Assessor’s assessments of the fair
market value of the Opportunity Homes Limited Partnership
property to $1,525,000 for both the 2014 and 2015 tax year.
APPELLATE COURT JUDGMENT REVERSED; TAX COMMISSION DECISIONS
REINSTATED.
WEIMER, J., additionally concurs and assigns reasons.
03/13/18
SUPREME COURT OF LOUISIANA
No. 2017-C-0955
CONSOLIDATED WITH
No. 2017-C-0957
ERROL G. WILLIAMS, ASSESSOR, PARISH OF ORLEANS
VERSUS
OPPORTUNITY HOMES LIMITED PARTNERSHIP
AND LOUISIANA TAX COMMISSION
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FOURTH CIRCUIT, PARISH OF ORLEANS
HUGHES, J.
At issue in these consolidated cases is the correctness of administrative
decisions issued by the Louisiana Tax Commission (“Commission”) on review of
the valuations, for the 2014 and 2015 tax years, by the Orleans Parish Tax Assessor
(“Assessor”) of a low-income housing development, owned by Opportunity Homes
Limited Partnership (“Opportunity Homes”), for purposes of assessment of ad
valorem taxes. The Commission ruled in favor of Opportunity Homes for both tax
years. The administrative decisions were upheld by the district court but reversed
by the appellate court. For the reasons that follow, we reverse the appellate court
and reinstate the assessment values as determined by the Commission.
FACTS AND PROCEDURAL HISTORY
The factual and procedural history of this case was concisely set forth by the
appellate court as follows:
Opportunity Homes describes itself as a “scattered-site, low
income affordable housing development.” It consists of thirty-two (32)
single- and double-unit residential buildings. The separate properties
are connected by way of a Tax Credit Regulatory Agreement
(“TCRA”). Opportunity Homes notes the TCRA prohibits separation
and sale of the various properties, and restricts the chargeable rents to
“no more than sixty percent (60%) of the Area Median Income
(“AMI”)” for an extended period of time, but the rates are even lower
for some buildings.
Pursuant to the powers and authority delegated to him by La. R.S.
47:1903, La. R.S. 47:1957, and La. R.S. 47:2323, Assessor Williams
determined the fair market value (“FMV”) of Opportunity Homes’
scattered-site properties using what is known as the “market approach.”
In using this particular approach, Assessor Williams determined the
FMV of Opportunity Homes’ properties to be $4,200,900 and
$4,083,610 for tax years 2014 and 2015, respectively.[1]
Pursuant to its authority under La. Const. Art. VII, § 18, the
Commission reviewed the “correctness” of Assessor Williams’
assessment. At a January 13, 2015 hearing, counsel for Opportunity
Homes noted that in 2013, the same properties were valued at
$1,525,000, and assessed accordingly. The Commission relied on
assessments by Randy Harrington, its own staff appraiser, who used
what is known as the “income approach” and reached FMVs of
$1,525,000 for both tax years 2014 and 2015, which assessments
specifically excluded the value of “Low Income Housing Tax Credits”
(“LIHTCs”) received by the taxpayer for encumbering the properties
with below-market-value rents. Counsel for Opportunity Homes noted
that pursuant to adopted and promulgated regulations, the income
approach is the “recommended” approach for determining the FMV of
“affordable rental housing.” Based on the foregoing, the Commission
moved to accept the staff recommendations as to each tax year.
As a result of the Commission’s actions, on September 2, 2015,
Assessor Williams commenced suit in the district court pursuant to La.
R.S. 47:1998, La. R.S. 47:1989 and La. R.S. 49:964. The district court
affirmed the Commission’s decision, finding that the Commission’s
decision “was not in violation of any constitutional or statutory
provisions, was not in excess of its statutory authority, was not made
upon unlawful procedure, or affected by other error of law, was not
arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.” The district court further noted the
decision “was clearly supported by the testimony and preponderance of
the evidence before it, where [the Commission] had the opportunity to
judge the credibility of witnesses by first-hand observation.”
Williams v. Opportunity Homes Limited Partnership, 16-1185, pp. 1-3 (La. App.
1
Thereafter, Opportunity Homes first requested review, as to the fair market values determined by
the Assessor, before the Orleans Parish Board of Review, which reduced the valuation of the
subject property to $1,525,000 for the 2014 tax year and maintained the Assessor’s $4,083,600
valuation for the 2015 tax year. The Assessor appealed the Board of Review ruling on the 2014
tax year valuation ($1,525,000) to the Commission, and Opportunity Homes appealed the Board
of Review ruling on the 2015 tax year valuation ($4,083,600) to the Commission.
2
4 Cir. 5/10/17), 220 So.3d 188, 189-90. Upon review, the appellate court ruled that
the Commission’s decisions were “in violation of statutory provisions, in excess of
its authority, . . . based upon unlawful procedures,” and “legally incorrect.” Id., 16-
1185 at p. 4, 220 So.3d at 191. Accordingly, the appellate court reversed and
reinstated the Assessor’s fair market values for the 2014 and 2015 tax years. Id.
Both Opportunity Homes and the Commission sought review in this court,
and we granted the writ applications. Williams v. Opportunity Homes Limited
Partnership, 17-0955, 17-0957 (La. 10/27/17), 228 So.3d 1228, 228 So.3d 1231.
Opportunity Homes urges this court to reverse, contending the appellate court
decision: is in conflict with other jurisprudence, harms the administrative authority
of the Commission; negatively impacts statewide uniformity for ad valorem property
assessment and taxation; misinterprets jurisprudence and law (including the
Louisiana Administrative Procedure Act (“APA”), La. R.S. 49:950 et seq., relative
to review of administrative agency decisions); and, alternatively, should have
remanded the matter to the Commission to determine whether the market/sales
comparison approach could have been applied to value the subject property so as to
ensure statewide uniformity. The Commission additionally asserts that the appellate
court erred in reversing the decisions of the Commission and the district court since
there was “no evidence to reinstate prior assessed values of the Orleans Parish
Assessor.”
LAW AND ANALYSIS
The essence of the dispute between the Assessor and Opportunity Homes is
whether the method of valuing Opportunity Homes’ low-income housing
development for purposes of ad valorem taxation should be via the “market
approach,” as asserted by the Assessor, or via the “income approach,” as asserted by
Opportunity Homes.
As stated in La. Const. Art. VII, § 18(A), “[p]roperty subject to ad valorem
3
taxation shall be listed on the assessment rolls at its assessed valuation, which . . .
shall be a percentage of its fair market value. The percentage of fair market value
shall be uniform throughout the state upon the same class of property.” 2 Each
assessor is authorized by La. Const. Art. VII, § 18(D), to “determine the fair market
value of all property subject to taxation within his respective parish or district except
public service properties, which shall be valued at fair market value by the Louisiana
Tax Commission or its successor.”
The fair market value shall be determined in accordance with criteria
established by law, which must be uniformly applied throughout the state. La.
Const. Art. VII, § 18(D); La. R.S. 47:2323(A). Fair market value is defined by La.
R.S. 47:2321 as “the price for property which would be agreed upon between a
willing and informed buyer and a willing and informed seller under usual and
ordinary circumstances; it shall be the highest price estimated in terms of money
which property will bring if exposed for sale on the open market with reasonable
time allowed to find a purchaser who is buying with knowledge of all the uses and
purposes to which the property is best adapted and for which it can be legally used.”
In furtherance of maintaining the uniformity required by La. Const. Art. VII,
§ 18(D), La. R.S. 47:2323(A) provides that “[u]niform guidelines, procedures and
rules and regulations as are necessary to implement said criteria shall be adopted by
the Louisiana Tax Commission only after public hearings held pursuant to the
2
Paragraph B of La. Const. Art. VII, § 18, provides (in pertinent part):
The classifications of property subject to ad valorem taxation and the percentage of
fair market value applicable to each classification for the purpose of determining
assessed valuation are as follows:
Classifications Percentages
1. Land 10%
2. Improvements for residential purposes 10%
3. Electric cooperative properties, excluding land 15%
4. Public service properties, excluding land 25%
5. Other property 15%
4
Administrative Procedure Act.” Furthermore, each assessor is required by Section
2323(B) to “follow the uniform guidelines, procedures, and rules and regulations in
determining the fair market value of all property subject to taxation within his
respective parish or district,” and “[a]ny manual or manuals used by an assessor shall
be subject to approval by the Louisiana Tax Commission or its successor agency.”
Three approaches for determining fair market value are set forth in Section
2323(C), as follows: “The fair market value of real and personal property shall be
determined by the following generally recognized appraisal procedures: the market
approach, the cost approach, and/or the income approach.” In utilizing the market
approach, an assessor is required to “use an appraisal technique in which the market
value estimate is predicated upon prices paid in actual market transactions and
current listings.” La. R.S. 47:2323(C)(1). In utilizing the cost approach, an assessor
is required to “use a method in which the value of a property is derived by estimating
the replacement or reproduction cost of the improvements; deducting therefrom the
estimated depreciation; and then adding the market value of the land, if any.” La.
R.S. 47:2323(C)(2). In utilizing the income approach, an assessor is required to “use
an appraisal technique in which the anticipated net income is capitalized to indicate
the capital amount of the investment which produces the net income.” La. R.S.
47:2323(C)(3).
Revised Statute 47:1837(D) requires: “In order to promote compliance with
the requirements of the constitution and laws of the state, the tax commission shall
issue and, from time to time, may amend or revise rules and regulations containing
minimum standards of assessment and appraisal performance . . . .” 3 In compliance
3
The responsibility of the Commission as the supervisory state agency over parish tax assessors
is clear. See also La. R.S. 47:1957(A) (“All taxable property in the state, except public service
properties, shall be assessed by the several assessors. The assessors shall be responsible, under the
supervision of the tax commission, for listing and assessing all property within their respective
parishes, except such property as is subject to direct assessment by the tax commission . . . .”)
(emphasis added); La. R.S. 47:1990 (“The tax commission may change or correct any and all
assessments of property for the purpose of taxation, in order to make the assessments conform to
5
with that responsibility, the Commission issued the following recommendation in
2009, in La. Admin. Code, Title 61, Part V, § 303(C), which provides:
In assessing affordable rental housing, the income approach is
recommended. As defined in this Section, affordable rental housing
means residential housing consisting of one or more rental units, the
construction and/or rental of which is subject to Section 42 of the
Internal Revenue Code (26 USC 42), the Home Investment Partnership
Program under the Cranston-Gonzalez National Affordable Housing
Act (42 USC 12741 et seq.), the Federal Home Loan Banks Affordable
Housing Program established pursuant to the Financial Institutions
Reform, Recovery and Enforcement Act (FIRREA) of 1989 (Public
Law 101-73), or any other federal, state or similar program intended to
provide affordable housing to persons of low or moderate income and
the occupancy and maximum rental rates of such housing are restricted
based on the income of the persons occupying such housing.
(Emphasis added.)
Notwithstanding the recommendation of La. Admin. Code, Title 61, Part V, §
303(C), that the income approach be employed by assessors in the valuation of
affordable rental housing developments, the Assessor employed the market approach
in his valuation of the Opportunity Homes property for the 2014 and 2015 tax years.
Paragraph (E) of La. Const. Art. VII, § 18, states that “[t]he correctness of
assessments by the assessor shall be subject to review first by the parish governing
authority, then by the Louisiana Tax Commission or its successor, and finally by the
courts, all in accordance with procedures established by law.” See also ANR
Pipeline Company v. Louisiana Tax Commission, 02-1479, p. 5 (La. 7/2/03), 851
So.2d 1145, 1149 (“[C]orrectness challenges are subject to review under La. Const.
Art. 7, § 18(E) by the parish governing authority and the [Commission] before being
reviewed by Louisiana courts . . . .”) (footnote omitted).
“Judicial review of decisions of the [Commission] is authorized by La. R.S.
47:1998(A)(1); the extent of that review is governed by La. R.S. 49:964(F) and (G)
the true and correct valuation . . . .”); Palmer v. Louisiana Forestry Commission, 97-0244 (La.
10/21/97), 701 So.2d 1300, 1303 (“When the legislature has declared its will and fixed a ‘primary
standard,’ agencies such as the Commissions in the case sub judice have the power to ‘fill up the
details.’”).
6
of the Administrative Procedure Act.” Panacon v. Louisiana Tax Commission,
97-2093, p. 4 (La. App. 1 Cir. 1/8/99), 747 So.2d 572, 573-74; Kansas City
Southern Railway Company v. Louisiana Tax Commission, 95-2319, p. 3 (La.
App. 1 Cir. 6/28/96), 676 So.2d 812, 815. See also La. R.S. 49:967(A) (“Chapter
13 [the Administrative Procedure Act] of Title 49 of the Louisiana Revised Statutes
of 1950 shall not be applicable to the Board of Tax Appeals, the Department of
Revenue, with the exception of the Louisiana Tax Commission that shall continue
to be governed by this Chapter in its entirety, unless otherwise specifically provided
by law . . . .”).
Review is confined to the administrative record established before the
Commission. See La. R.S. 49:964(F); Panacon v. Louisiana Tax Commission, 97-
2093 at p. 4, 747 So.2d at 574. See also Metro Riverboat Associates, Inc. v.
Louisiana Gaming Control Board, 01-0185, p. 7 (La. 10/16/01), 797 So.2d 656,
661 (holding that review of an administrative decision is limited to the administrative
record and a district court may not receive evidence when sitting as an appellate
court).
Pursuant to La. R.S. 49:964(G), the reviewing court may only reverse or
modify the agency decision if substantial rights of the appellant have been prejudiced
because the administrative findings, inferences, conclusions, or decisions are: (1) in
violation of constitutional or statutory provisions; (2) in excess of the statutory
authority of the agency; (3) made upon unlawful procedure; (4) affected by other
error of law; (5) arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion; or (6) not supported and sustainable by a
preponderance of evidence as determined by the reviewing court. The reviewing
court shall make its own determination and conclusions of fact by a preponderance
of evidence, based upon its own evaluation of the record reviewed in its entirety
upon judicial review; however, when the agency had the opportunity to judge the
7
credibility of witnesses by first-hand observation of demeanor on the witness stand
and the reviewing court does not, due regard shall be given to the agency’s
determination of credibility issues. La. R.S. 49:964(G).
In its review of the Assessor’s decision to apply the market approach, in this
case, to value Opportunity Homes’ affordable housing development, the
Commission concluded that the Assessor erred in failing to utilize the recommended
income approach. We first examine the administrative record established before the
Commission to ascertain whether there was a preponderance of the evidence to
support the Commission’s conclusion.
The Commission stated in both of its August 6, 2015 written decisions that
the “pre-filed” exhibits of the Assessor and Opportunity Homes were “entered into
the record.” Also, the Commission’s staff appraiser,4 Randy Harrington, testified at
the January 13, 2015 hearing before the Commission, and his written appraisals of
the Opportunity Homes property for the 2014 and 2015 tax years, consisting of 27
pages each, were introduced into evidence. 5
Mr. Harrington’s appraisal reports described the property as an “LIHTC Rent
Restricted Scattered Site Residential Housing Complex,”6 consisting of 32 buildings
4
See La. R.S. 47:1835(A) (“The tax commission may appoint or employ all necessary agents,
assistants, auditors, clerks, inspectors, investigators, or other experts and employees required in
the defense, determination, or development of assessments, and assessment procedures, and
valuation of property, including the hiring of experts such as legal counsel and analysts, auditors,
appraisers, and witnesses . . . .”).
5
Although Mr. Harrington was a member of the Commission’s staff, counsel for Opportunity
Homes submitted Mr. Harrington’s appraisals into evidence during the January 13, 2015
Commission hearing, stating, “We would ask that the commission accept [on] appeal as evidence,
the appraisals of Mr. Harrington for both . . . ‘14 and ‘15 . . . .” There was no objection by opposing
counsel.
6
The Assessor argues that, since Opportunity Homes failed to introduce the tax credit regulatory
agreement (“TCRA”) into evidence before the Commission (only proffering it in the district court),
there is no record evidence establishing what restrictions encumber the subject property. However,
the factual information appearing in Mr. Harrington’s appraisals establishes the property as a low
income housing tax credit (“LIHTC”) complex and points out some of the resulting restrictions on
the property. In addition, the petition for judicial review, filed by the Assessor in the district court,
explicitly describes the nature of, and restrictive agreements relative to, the property, including its
LIHTC status, the land use restriction agreement (“LURA”) (which the Assessor therein
acknowledges “depresses the rent that can be charged and, therefore, reduces the benefits of
8
and 54 rental units, used as low income multi-family housing. With respect to the
methodology used in his appraisals, each appraisal report stated:
The sales comparison approach will not be utilized in establishing an
estimated market value in this report. The market for Low Income
Housing Tax Credit (LIHTC) complexes differ[s] from typical
residential investment properties, due to inherent restrictions on income
return, and the inability of the property owners to sell the projects
without the expressed approval of the federal government and then only
after certain regulatory requirements have been satisfied. These
government subsidized projects present circumstances not normally
found in other similar commercial properties.[7]
* * *
The Income Approach to Value is the most reliable indicator of value
for income producing properties and should be relied upon, when
detailed financial income and expense is available and/or market data
information is available. The income approach to value in this appraisal
report will utilize the actual gross income, actual rents collected and
expenses from the income/expense statements supplied by the taxpayer.
Due to the restricted rents enforced on the subject property the Income
Approach to Value is the only applicable approach utilized in the report.
* * *
The Sales comparison approach to value was not utilized in the
analysis. There have been no sales of LIHTC properties that we were
able to locate within the state. According to the information gathered
for this assignment, these properties are not typically sold due to the
regulations and restrictions associated with these type properties.
In addition to a location map, subject photograph, neighborhood, site and
demographics statements, statements of project parameters and definitions, Mr.
ownership”) and the fact that a TCRA was executed.
7
The extensive rules, regulations, and restrictions applicable to LIHTC property are set forth in
26 U.S.C. § 42. Pursuant to 26 U.S.C. § 42, a housing project may qualify for LIHTC status, if,
in addition to meeting other requirements, a certain minimum percentage “of the residential units
in such project are both rent-restricted and occupied by individuals whose income is 60 percent or
less of area median gross income,” and the property must remain affordable for at least 30 years
(consisting of a 15-year “compliance period” and a 15-year “extended use period”). See 26 U.S.C.
§ 42(g). In addition, “scattered site projects” (buildings that would, but for their lack of proximity,
be treated as a project for purposes of § 42) are required to be so treated if dwelling units in each
of the buildings are rent-restricted residential rental units. See 26 U.S.C. § 42(g)(7). Further, tax
credits may be “recaptured” on an LIHTC property if the building is disposed of, unless “it is
reasonably expected that such building will continue to be operated as a qualified low-income
building for the remaining compliance period,” necessitating administrative approval of
prospective purchasers. See 26 U.S.C. § 42(j). See also 26 U.S.C. § 42; 26 C.F.R. § 1.42-0 - 26
C.F.R. § 1.42a-1; and La. R.S. 40:600.91(A)(3)(b) (relative to the Louisiana Housing Corporation,
which handles the local LIHTC approval process).
9
Harrington’s appraisal reports also included his effective tax rate calculation, income
analysis, reconciliation analysis, income and expense balance sheets provided by
Opportunity Homes, and a statement of conditions and qualifications. Mr.
Harrington certified in his appraisal reports that, for each tax year, the value of the
Opportunity Homes property was $1,525,000. Mr. Harrington testified, during the
January 13, 2015 hearing before the Commission, in support of his written appraisal
reports.
None of the factual data that formed the basis for Mr. Harrington’s 2014 and
2015 appraisals was directly contradicted by any evidence submitted by the
Assessor. The only evidence presented to the Commission by the Assessor was “pre-
filed” prior to the hearing and consisted of: (1) appeal documents for the 2014 tax
year, consisting of three pages for each of the 32 housing units; one page was the
Assessor’s letter notifying Opportunity Homes of his appeal to the Commission and
the other two pages were appeal documents for the 2014 tax year that were presented
to the Commission, stating: the municipal address and square footage of each unit;
the Assessor’s 2014 tax year assessment; the amount per square foot utilized by the
Assessor to calculate fair market value for each unit (ranging from $44.64 to $145.83
per square foot); a statement that the fair market value listed was “supported by
comparable sales data;”8 and the Board of Review’s valuation for each unit; (2) a
2010 article from The Appraisal Journal, entitled “Appraising Low-Income Housing
Tax Credit Real Estate; and (3) a 2006 “Advisory Opinion 14” from The Appraisal
Foundation. No other evidence was presented by the Assessor during the
Commission hearing, and the Assessor called no witnesses during the hearing. 9
8
Although the Assessor’s appeal documents, submitted to the Commission, state that the amount
per square foot utilized to calculate fair market value for each unit was “supported by comparable
sales data,” the “comparable sales data” was not submitted by the Assessor to the Commission.
9
We note that, even though the January 13, 2015 hearing transcript witness list included Thomas
Sandoz and Jacqueline Frick of the “Orleans Parish Assessor’s Office” and the Commission’s
August 6, 2015 decisions stated that the testimony of Mr. Sandoz was submitted into evidence, the
10
The Assessor presented the Commission with no testimony or documentation
to explain how he arrived at the assessment values for Opportunity Homes’ 32
housing units, nor was any information revealed concerning the “comparable sales
data” the Assessor used to support his valuations or whether the low-income housing
tax credits were incorporated within that valuation. 10 In contrast, the lengthy and
detailed appraisals made by Randy Harrington explained that there were no sales of
low income housing tax credit (“LIHTC”) complexes found within the entire state,
which could be used as comparables to Opportunity Homes’ LIHTC property. Mr.
Harrington further explained that LIHTC complexes differ from typical residential
investment properties because the rents are limited to below other rental property in
the area, that sales of the LIHTC properties must be approved by federal government
after regulatory requirements have been met, and that LIHTC properties are not
typically sold because of the stringent regulations and requirements. However,
because LIHTC properties are income-producing and financial data, including rents
received and expense statements, are available, the income approach is the most
reliable indicator of the value of such properties. Mr. Harrington further went into
great detail as to how he derived the total fair market value of the Opportunity Homes
LIHTC development, in the amount of $1,525,000 for both the 2014 and 2015 tax
years.
It is important to keep in mind that a fair market value, as defined by La. R.S.
47:2321, supra, involves the determination of the highest price that a property could
hearing transcript reflects only that Mr. Sandoz was asked whether he had any comment, and he
replied, “I don’t have any.”
10
Counsel for the Assessor has asserted that the LIHTC credit amounts were not factored into his
valuations of the Opportunity Homes property for purposes of the 2014 and 2015 assessments.
However, we note that, in the Assessor’s district court petition for judicial review, he alleged that
the Commission decisions were erroneous in being “exclusive of all forms of income and benefits
derived from the property, namely Low Income Housing Tax Credits.” Further, one of the
Assessor’s assignments of error presented to the appellate court argued that LIHTC credit amounts
should be included in the fair market value. See Williams v. Opportunity Homes Limited
Partnership, 16-1185 at pp. 4-5, 220 So.3d at 191-92.
11
bring on the open market, which would be: (1) agreeable to a willing and informed
buyer and seller; (2) under usual and ordinary circumstances; (3) allowing a
reasonable time for finding a buyer with knowledge of all the legally available uses
and purposes for which the property is best adapted. As applied in the case of the
Opportunity Homes LIHTC properties, a well-informed buyer would be aware of all
the federal regulations governing LIHTC properties, including the 30-year term
during which the property would be rent-restricted to a minimum percentage of low-
income tenants. Such impediments would negatively affect the value of the property
and would render it so economically dissimilar to unrestricted and unregulated
commercial property as to prohibit fair market value comparison. Because the
market approach to determining fair market value, as stated in La. R.S.
47:2323(C)(1), involves the use of a comparison to “prices paid in actual market
transactions and current listings” and there are no actual available market
transactions involving LIHTC properties, it would be impossible to perform a market
approach appraisal that produced an accurate fair market value for LIHTC
properties.11
Thus, we conclude that the preponderance of the evidence supported the
Commission’s determination that the income approach was the appropriate method
for determining the property values and that $1,525,000 was the correct fair market
value for each tax year at issue. Having ruled on this basis, we find no need to
address the remaining issues raised in the writ applications.
We find no conflict between La. R.S. 47:2323, providing parish assessors a
choice of three generally recognized appraisal methods to utilize to determine fair
market value (the market approach, the cost approach, and/or the income approach),
and La. Admin. Code, Title 61, Part V, § 303(C), which recommends the use of the
11
However, we do not foreclose the possibility that appropriate LIHTC property comparables
might become available in the future so as to make a market approach analysis feasible at that
time.
12
income approach for assessing affordable rental housing, such as the Opportunity
Homes LIHTC development. This case turned purely on the facts established before
the Commission, proving that the income approach was the more appropriate method
for determining fair market value in this case. Consequently, the appellate court
erred in holding that the Commission’s decisions were in violation of statutory
provisions, in excess of its authority, based upon unlawful procedures, and legally
incorrect.12
DECREE
Accordingly, we reverse the appellate court rulings and reinstate the Louisiana
Tax Commission decisions, modifying the Orleans Parish Assessor’s assessments of
the fair market value of the Opportunity Homes Limited Partnership property to
$1,525,000 for both the 2014 and 2015 tax year.
APPELLATE COURT JUDGMENT REVERSED; TAX
COMMISSION DECISIONS REINSTATED.
12
The appellate court stated, in pertinent part: “A plain reading of the statute supports the
Assessor’s position that he may use any of the three (3) generally-accepted methodologies in
assessing affordable housing.” Williams v. Opportunity Homes Limited Partnership, 16-1185
at p. 9, 220 So.3d at 194.
13
03/13/18
SUPREME COURT OF LOUISIANA
No. 2017-C-0955
CONSOLIDATED WITH
No. 2017-C-0957
ERROL G. WILLIAMS, ASSESSOR, PARISH OF ORLEANS
V.
OPPORTUNITY HOMES LIMITED PARTNERSHIP
AND LOUISIANA TAX COMMISSION
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FOURTH CIRCUIT, PARISH OF ORLEANS
WEIMER, J., additionally concurring.
I additionally concur in the opinion to emphasize this result is based on the
limited record and the briefs and arguments of the parties to this litigation. See La.
Const. art. VII, § 18.