2005 Regular Session
To: Ways and Means
By: Representative Watson
AN ACT TO AMEND SECTION 27-35-50, MISSISSIPPI CODE OF 1972, TO PROVIDE THE MANNER IN WHICH THE APPRAISAL OF AFFORDABLE RENTAL HOUSING SHALL BE MADE FOR THE PURPOSE OF ARRIVING AT THE TRUE VALUE OF THE PROPERTY; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 27-35-50, Mississippi Code of 1972, is amended as follows:
27-35-50. (1) True value shall mean and include, but shall not be limited to, market value, cash value, actual cash value, proper value and value for the purposes of appraisal for ad valorem taxation.
(2) With respect to each and every parcel of property subject to assessment, the tax assessor shall, in ascertaining true value, consider whenever possible the income capitalization approach to value, the cost approach to value and the market data approach to value, as such approaches are determined by the State Tax Commission. For differing types of categories of property, differing approaches may be appropriate. The choice of the particular valuation approach or approaches to be used should be made by the assessor upon a consideration of the category or nature of the property, the approaches to value for which the highest quality data is available, and the current use of the property.
(3) Except as otherwise provided in subsection (4) of this section, in determining the true value of land and improvements thereon, factors to be taken into consideration are the proximity to navigation; to a highway; to a railroad; to a city, town, village or road; and any other circumstances that tend to affect its value, and not what it might bring at a forced sale but what the owner would be willing to accept and would expect to receive for it if he were disposed to sell it to another able and willing to buy.
(4) (a) In arriving at the true value of all Class I and Class II property and improvements, the appraisal shall be made according to current use, regardless of location.
(b) In arriving at the true value of any land used for agricultural purposes, the appraisal shall be made according to its use on January 1 of each year, regardless of its location; in making the appraisal, the assessor shall use soil types, productivity and other criteria set forth in the land appraisal manuals of the State Tax Commission, which criteria shall include, but not be limited to, an income capitalization approach with a capitalization rate of not less than ten percent (10%) and a moving average of not more than ten (10) years. However, for the year 1990, the moving average shall not be more than five (5) years; for the year 1991, not more than six (6) years; for the year 1992, not more than seven (7) years; for the year 1993, not more than eight (8) years; and for the year 1994, not more than nine (9) years; and for the year 1990, the variation up or down from the previous year shall not exceed twenty percent (20%) and thereafter, the variation, up or down, from a previous year shall not exceed ten percent (10%). The land shall be deemed to be used for agricultural purposes when it is devoted to the commercial production of crops and other commercial products of the soil, including, but not limited to, the production of fruits and timber or the raising of livestock and poultry; * * * however, enrollment in the federal Conservation Reserve Program or in any other United States Department of Agriculture conservation program shall not preclude land being deemed to be used for agricultural purposes solely on the ground that the land is not being devoted to the production of commercial products of the soil, and income derived from participation in the federal program may be used in combination with other relevant criteria to determine the true value of such land. The true value of aquaculture shall be determined in the same manner as that used to determine the true value of row crops.
(c) In determining the true value based upon current use, no consideration shall be taken of the prospective value such property might have if it were put to some other possible use.
(d) In arriving at the true value of affordable rental housing, the assessor shall use the appraisal procedure set forth in the land appraisal manuals of the State Tax Commission, which procedure shall prescribe that the appraisal shall be made according to actual net operating income attributable to the property, capitalized at a market value capitalization rate prescribed by the State Tax Commission that reflects the prevailing cost of capital for commercial real estate in the geographical market in which the affordable rental housing is located adjusted for the enhanced risk that any recorded land use regulation places on the net operating income from property. Any tax credits, income generated from tax credits or other governmental subsidiaries, shall not be considered as income attributable to the property and shall be exempt from ad valorem taxation. The owner of affordable rental housing shall provide to the county tax assessor on or before June 15 of each year, an accurate statement of the actual net operating income attributable to the property for the immediately preceding year prepared in accordance with generally acceptable accounting principles and any other information prescribed by regulations issued by the State Tax Commission. As used in this paragraph:
(i) "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 USCS 42), the Home Investment Partnership Program under the Cranston-Gonzalez National Affordable Housing Act (42 USCS 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 person occupying such housing.
(ii) "Land use regulation" means a restriction imposed by an extended low-income housing agreement or other covenant recorded in the applicable land records or by applicable law or regulation restricting the maximum income or residents and/or the maximum rental rate in the affordable rental housing.
(5) The true value of each class of property shall be determined annually.
(6) The State Tax Commission shall have the power to adopt, amend or repeal such rules or regulations in a manner consistent with the Constitution of the State of Mississippi to implement the duties assigned to the commission in this section.
SECTION 2. This act shall be considered declaratory of existing policy on assessment of real property used for affordable rental housing under Section 112, Mississippi Constitution of 1890.
SECTION 3. This act shall take effect and be in force from and after January 1, 2005.