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FY2012-20 Amending Title 3 Revenue and Finance Section 3.35.085 Regarding LIHTC Assessments Introduced by: Borough Manager Requested by: Borough Assessor 1 Drafted by: Borough Assessor Introduced: 04/19/2012 2 Amended: 05/03/2012 3 Public Hearing: 05/03/2012 4 Adopted: 05/03/2012 5 KODIAK ISLAND BOROUGH 6 ORDINANCE NO. FY2012 -20 7 8 AN ORDINANCE OF THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 9 AMENDING TITLE 3 REVENUE AND FINANCE, CHAPTER 3.35 REAL PROPERTY 10 TAX BY ADDING SECTION 3.35.085 METHOD OF DETERMINING 11 THE ASSESSED VALUE OF PROPERTY THAT QUALIFIES 12 FOR A LOW - INCOME HOUSING UNDER 26 USC 42 13 14 WHEREAS, according to Alaska Statute 29.45.110(d), the Kodiak Island Borough 15 Assessor is required to value low- income housing tax credit projects existing as of January 16 1, 2001, the effective date of the legislation, based on the actual income derived from the 17 property, which can result in a value that is less than the full and true value required by 18 Alaska Statute 29.45.110(a); and 19 20 WHEREAS, these projects must be qualified and recognized under the United States 21 Tax Code 26 USC. 42; and 22 23 WHEREAS, AS 29.45.110(d) requires the borough assembly to determine by ordinance 24 whether the projects that qualify on or after January 1, 2001, shall be assessed based on 25 the actual income which is from restricted rents versus market rents; and 26 27 WHEREAS, to date there are no low- income housing projects in the Kodiak Island 28 Borough receiving the benefit of the restricted rent income approach to value; and 29 30 WHEREAS, Fir Terrace Apartments located at 2610 Mill Bay Road, containing sixty (60) 31 units total has applied for consideration under AS 29.45.110(d)(2); and 32 33 WHEREAS, in accordance with AS 29.45.110(d)(2), the Kodiak Island Borough Assembly 34 finds that properties that first qualify for the low- income housing tax credit exemption after 35 January 1, 2001 may be exempt from tho full and truo valuo roquiromont undor AS 36 29.45.110(a)(d)(1) method of assessment and may be assessed bacod on tho actual 37 - 38 income -tax crodit using the full and true value requirement under AS 29.45.110(a) or 39 may be assessed based on the actual income derived from the property without 40 adjustment based on the amount of any federal income tax credit. The assembly 41 shall determine on a parcel by parcel basis whether such property shall be valued at its full 42 and true value or based on its restricted rents. 43 44 NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND 45 BOROUGH THAT: 46 47 Section 1: This ordinance is of a general and permanent nature and shall become a 48 part of the Kodiak Island Borough Code of Ordinances; and Kodiak Island Borough Ordinance No FY2012 -20 Page 1 of 2 49 50 Section 2: That Kodiak Island Borough Code Title 3 Revenue and Finance, Chapter 51 3.35 Real Property Tax is hereby amended by adding Section 3.35.085 to 52 read as follows: 53 54 3.35.085. Method of determining the assessed value of property that qualifies 55 for a low- income housing tax credit under 26 USC 42. 56 A. In accordance with AS 29.45.110(d) (1), the full and true value of all property 57 within the Kodiak Island Borough that first qualifies for low- income housing tax 58 credit under 26 USC 42 before January 1, 2001, shall be based on the actual 59 income derived from the property and may not be adjusted based on the 60 amount of any federal income tax credit for the property. 61 62 B. Pursuant to AS 29.45.110(d)(2), the full and true value of all property within the 63 Kodiak Island Borough that first qualifies for a low- income housing credit under 64 26 USC 42 on or after January 1, 2001, shall be exempt from the requirement 65 that the value be based on the actual income derived from the property. For 66 property that first qualifies for a low- income housing credit under 26 USC 42 on 67 or after January 1, 2001, the assembly may determine, by parcel, whether the 68 property shall be assessed based on AS 29.45.110(a) or on the basis of actual 69 income derived from the property without adjustment based on the amount of 70 any federal income tax credit given for the property. Once the manner of 71 assessment of the property has been determined under this subparagraph, the 72 assembly may not change the manner of assessment of that parcel of property 73 if debt relating to the property incurred in conjunction with the property 74 qualifying for the low- income housing tax credit remains outstanding. 75 76 C. To secure an assessment based upon the actual income derived from the 77 property under this section, an owner of property that qualifies for the low - 78 income housing tax credit under 26 USC 42 shall apply to the assessor before 79 May 15 of each year in which the assessment is desired. The property owner 80 shall submit an application on forms prescribed by the assessor and shall 81 include information that may reasonably be required by the assessor to 82 determine the entitlement of the applicant and to assess the property under this 83 subsection. All such applications shall be forwarded to the assembly for 84 determination, by resolution, for a determination of the manner of assessment. 85 86. ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 87 THIS THIRD DAY OF MAY 2012 88 89 KODIAK ISLAND BOROUGH 90 91 r r •�(fi 92 Jelbme M. Selby, Borough yor 93 , — ._. 94 A tit 97 Nova M. Javier, M , Borough Clerk Kodiak Island Borough Ordinance No. FY2012 -20 Page 2 of 2