Heron Lake II Apartments, L.P. v. Lowndes Cty Bd. of Tax AssessorsAnnotate this Case
The owners of residential properties in Lowndes County appealed a final superior court order that declared OCGA 48-5-2(3) (B.1), which excluded low-income housing income tax credits from consideration for the purpose of assessing ad valorem tax, was unconstitutional for violating the taxation uniformity provision of the Georgia Constitution. The properties at issue were eligible to receive federal and state low-income housing income tax credits. In exchange for receiving a ten-year award of tax credits, the property owners agreed to lease their rental units to eligible low-income tenants at below-market rents set by the state Department of Community Affairs (GDCA) for thirty years or more. During the credit period, the owner may not sell, transfer, or exchange the property without first requesting GDCA’s approval of the proposed sale, transfer, or exchange. After being awarded state and federal income tax credits by the GDCA, the property owners in this case “sold” the tax credits to investors in that they allowed investors to purchase limited partnership interests. The tax credits would “flow through” the partnerships to the limited partners, who would then use the tax credits to reduce their individual income tax liabilities. The Lowdnes County Board of Tax Assessors filed for a declaration as to the constitutionality of OCGA 48-5-2 (3) (B.1), which precluded the Assessors from considering the tax credits in determining the fair market value of the real property at issue. After review of the trial court's judgment, the Supreme Court affirmed: "inasmuch as OCGA 48-5-2 (3) (B.1) exempts these income tax credits from consideration in determining the fair market value of the properties at issue, the statute grants preferential treatment for ad valorem taxation purposes and creates a subclass of tangible property other than as permitted by the State Constitution."